26.05.2008

• Farm loan waivers are only temporary fixes and do not address the underlying issues. But what is it that should be done to address those 'underlying' issues? Can you comment?
• It is no secret that farmers get only a fraction of the end-consumer price, the bulk of the benefit being cornered by middlemen. There is a need to integrate farmers with the market to increase realisation. That requires better physical infrastructure such as good roads to enable farmers to bring produce to the market, entry of large retail chains to cut down intermediation costs, and a functioning futures market for more informed cropping.
• The government also needs to channel resources away from input subsidies to investment in irrigation, power and communications infrastructure. This would help mitigate risks of monsoon failures or ill-informed decisions.
• Essentially, the thrust should be on empowering farmers so that they have a greater control over their environment. In fact, with food prices skyrocketing and an era of shortages looming large, these are no longer just farmers’ issues but that of larger food security.
• Subsidies on petroleum products in India are distorted and do not benefit the really needy. Comment
• The subsidy on petrol, about 10% of the total, goes mostly to car and two-wheeler owners, who together constitute about 30% of all households. The relatively poor 70% households have no stake in petrol subsidy.
• Nearly 40% of the subsidy on cooking gas, according to a TERI (The Energy Research Institute) paper, goes to the top 6.75% of the population. As for kerosene, 40% of it goes into adulteration, benefiting relatively better-off dealers.
• Diesel, which accounts for the bulk of under-recoveries, could be benefiting the relatively deprived only inasmuch as it is used in public transport. But a large portion of it is likely going into captive power generation or private transport, again the undeserving.
• Some commentary on Basel norms
• The Basel I approach was just a one-size-fits-all approach for capital regulation in particular, with all corporate borrowers carrying the risk weight of 100%. Also, it gave rise to significant gaps between the measurement of regulatory capital and the actual economic risk experienced by banks. To overcome this approach, the Basel II norms were recommended to cover a comprehensive range of risk (credit, market and operational).
• In the context of the dismal failure of the BRT (Bus Rapid Transport) system in the country's capital, Delhi what could you have done, had you been in-charge of the project from the word 'start'? (Sometimes, this is how you are asked questions in the interviews.)
• Firstly, reliable data would have been collected on all aspects such as intensity/volume of traffic at different locations of the corridor and also at different points of time during the day over a reasonably long period. Further, this data would have been collected for all modes of transport — both slow and fast moving and also on the number of pedestrians passing by.
• Secondly, I would have examined minutely how the proposed traffic in future plan will take care of the existing traffic requirement with an eye on increase in traffic. Also it would have been ensured that reduction in congestion and pollution will be there as a result of the project. To achieve it, simple computer-based mathematical models would have been used.
• Lastly, while doing the above study, cost-effectiveness of the project would have been kept in mind. Two impact assessment studies with regard to quantum of (a) reduction in congestion on the roads and (b) reduction in air pollution would have been carried out using available mathematical/statistical techniques.
• Can you identify the positive fallout of the act of declaring warehouse receipts as negotiable instruments?
• With the promulgation of the Warehousing (Development and Regulation) Act, 2008, warehouse receipts will become a negotiable instrument. Assuming that at any time, about 15-20% of the annual agricultural produce is stored in warehouses; the Act has the potential to inject over $30 billion of agricultural credit.
• If you are asked to comment on whether or not the Government of India is right in dictating lending policies of public sector banks, you can't get a better and well-reasoned argument than this one coming from Cherian Varghese, former CMD of Union Bank of India.
• Look at it. It is here. I am in full agreement with him. I am sure, you too would be.
• It is widely perceived that there is a disconnect between the past and present (contemporary) in the art scene in India. What could be done to eliminate this disconnect and radically alter the role of art and culture in India’s developmental framework?
• The importance of economic triggers needs to be understood in redeveloping our artistic and cultural infrascape. Taking the platform of credible and regulated art funds to the masses over the coming years is one part of the process.
• Utilising the transparency and power of public auctions so as to open out the domestic market for antiquities, leading to an archival, intellectual and financial resurgence is another constituent.
• Creating world-class private-public sector archival and educational institutes which disseminate a new flow of information, knowledge and experiences is another pivotal requirement.
• Publishng hundreds of well produced and designed (text) books of intellectual and artistic rigour is another piece of the jigsaw.
• Creating new bridges between worlds that would normally never connect or relate is another need, such as transforming the sports stadium into a major sports-cultural complex.
• Inter-linking the cultural and artistic disciplines, from the arts to cinema to literature, so as to clarify the underlying creative and ethical values, is another essential strand to be woven together.
• Further, if we recognise that the creativity in us cuts through all social, caste, age and economic barriers, we have an immense opportunity before us, which could provide a unique egalitarian generation and redistribution of wealth when the appropriate material infrastructure is put into place.
• In this context, the following fact is worth our noting:
• Modern Indian art was barely a $1 million market in 1997, today it is $400 million without any real public sector support.
• Composition of our GDP with reference to manufacturing and agriculture:
• The share of manufactures in gross domestic product has been stagnant at about 17% since the early 1990s. While the share of agriculture in the GDP has significantly declined, to less than a fifth.
• IIBI being wound up
• Kolkata-based term lending institution, Industrial Investment Bank of India, has reached its last lap of being wound up following the board’s decision to auction most of its assets including performing loans, bad loans and properties owned by the company. The financial institution (FI) will initially sell the bad loans, which are worth around Rs 1,030 crore, through an auction which will be held in June.
• Government owned IIBI started working towards winding its business way back in 2005 after IDBI rejected government’s proposal to merge the Kolkata based institution with itself.
• High level of bad loans and poor capital was one of the key reasons the government decided to close it down. In fact, as per RBI data, IIBI’s capital adequacy ratio (CAR) was negative at 64% while its bad loans stood at 13% for March ’06. It had a loan book of Rs 1,006 crore with Rs 874 crore of standard asset while the balance Rs 132 crore were sub-standard and doubtful assets as on March ’06.
• Copenhagen Concensus Center
• It is a group of world’s smartest economists, also comprising five Nobel Laureates. It will compile an overview of how best to solve ten of the world’s biggest challenges.
• The last time the expert panel had come together in 2004, CCC had drawn a lot of flak.
• Oldest man to scale Mount Everest
• A 76-yearold Nepalese man reached the summit of Mount Everest on Sunday and became the oldest person to climb the world’s highest mountain. Min Bahadur Sherchan reached the 29,035-foot summit early in the morning with his climbing guides. Sherchan was just 25 days away from his 77th birthday.
• Petrol to be sold at market prices?
• Looks like there is some consensus in the Cabinet about hiking petrol prices by about Rs. 10 to 16 per litre, so that it is sold at near market prices. Even if this is done, it is not expected to make an impact on the inflation figure because it has an insignificant weightage in the WPI figure.
• The WPI consists of three major groups — primary articles (with 22.02% weightage), manufactured products (63.75% weightage) and fuel, power, light and lubricants (14.23% weightage). The third group is subdivided into three categories with following weightage assigned — coal mining (1.75%), electricity (5.49%) and mineral oil (6.99%). Among the mineral oil category, diesel has the highest weightage of 2.02%, followed by LPG (1.88%). Petrol has only 0.88% weightage.
• BJP wins in Karnataka
• While BJP has secured 110 seats out of the 224 that ther for grabs, it is still short of the simple absolute majority by 3 seats. That still leaves so much scope for keeping the BJP government on tenter-hooks.