29.06.2008

• Finally the government seems to have firmed up its stand on the nuclear deal
• The Government on Saturday made up its mind to go to the International Atomic Energy Agency (IAEA) for finalising the India-specific safeguards agreement provided the Samajwadi Party comes on board. The government is keen to notify the safeguards agreement with the IAEA secretariat by July 15. This sets the stage for the formal withdrawal of support by the Left parties.
• Looks interesting. Let’s wait and see whether the proviso becomes a reality.
• Field Marshal Manekshaw, as we noted, is no more.
• But can financial journalists be good obituary writers? My impression that they are too engrossed in reading some tables with data, graphs etc., got shattered when I read this story from – who else? – Mythili Bhusnurmath. I have become a great fan of her for the last couple of years; having been reading every one of her articles in ET. Look at the personal touch! A great tribute for a really great man. Long live Sam Manekshaw.
• Such obituary pieces do help you; at a later stage in your lives. As civil servants and humans, you will have to one day, say a few things about departed souls; both as part of your official duties and also as part of duties in your personal life. We have something to learn even from them. So, don’t think that it is an unnecessary diversion for us.
• In fact if you are into reading some personality development stuff like Robin Sharma, Norman Vincent Peale or a Stephen Covey, all of them tell you that at one point of time or the other that you should imagine how others would be writing or saying about you on the day you departed. This is what makes obituaries interesting.
• PDP withdraws from J&K government
• In the 87-member house, NC has 24, Congress 22, PDP 18, Panthers Party four and CPI (M) two seats as BJP and its allies have two seats besides one each to Awami League, and Democratic Movement. Rest 14 are with independents.
• What triggered the withdrawal? There is an ongoing agitation against the land transfer to SASB. The mass unrest revolves round nearly 100-acres land which the government transferred to the Shri Amarnathji Shrine Board (SASB). Suspecting it would be used to effect demographic changes in Kashmir, agitators want the order be cancelled. Though National Conference (that made the law in 2000 and set up SASB) and PDP (that processed the land diversion file) insist the mass apprehensions are unfounded but want the order be withdrawn to prevent the peace process from getting derailed.
• The housing bubble in the US is yet to play in full, say experts. See an excerpt from an article that appeared today:
• The housing crisis is entering a new and frightening stage. On June 24, Standard & Poor’s announced that the S&P/Case-Shiller 20-City Home Price Index had fallen more than 15% in April from a year earlier. Adjusted for inflation, the decline is the biggest since 1940-42, according to data collected by Yale University economist Robert Shiller. The risk for the financial system and the economy is that the price drop, already horrifying, will start feeding on itself. When home values fall low enough, hard-pressed homeowners become less able or less willing to keep paying their mortgages. That forces lenders to repossess homes and then dump them back on the market at fire-sale prices, which depresses prices further and leads to even more foreclosures.
• One more cause for the rise in foreclosures is due to ‘the ticked-off factor.’ Even homeowners with high credit scores feel cheated that they’re paying more than they can afford for a house that is worth far less than the debt on it. This is perhaps leading to what is being referred to as ‘buying and bailing’ -- that is, buying an additional house while their credit is still good, then walking away from the old one unless they can cut a favourable deal with the lender. But banks are receptive to lending for such purchases because they figure the buyer will be able to afford the new, cheaper place.
• India Japan to sign currency swap deal
• Remember what we noted on 17^th June, 2007 about this?
• The deal is about to be signed today in Basel, Switzerland by the governors of the respective central banks. It will be effective immediately.
• The swap arrangement will enable both the countries to swap yen and rupees against US dollar up to $3 billion. That means, Japan will accept rupees and give US dollars to India if the need arises and India too will accept yen against dollars. However, drawing beyond 20% of the stipulated amount ($3 billion) would require India to have an IMF (International Monetary Fund)- support programme.
• A picture is worth a thousand words. You will find the saying really meaningful once you look at this graphic about Canadian oil reserves.
• The current high prices of crude have made extraction of oil from the Canadian tar sands economically viable.
• World Stroke Day
• June 24. On this day, the World Health Organisation (WHO) observes ‘World Stroke Day’ to draw attention to the fact that stroke is becoming a global problem and expected to assume epidemic proportions in the developing world.
• BTW what is stroke? These symptoms signify stroke.
• Sudden numbness or weakness of the face, arms, or legs
• Sudden confusion or trouble speaking or understanding others
• Sudden trouble seeing in one or both eyes
• Sudden trouble walking, dizziness, or loss of balance
• Sudden severe headache with no known cause
• All of the symptoms of stroke appear suddenly, and often there is more than one symptom at the same time
• Wanna have lunch with Warren Buffet?
• Be prepared to shell out $2.1 mn for the honour.
• Read this story, which says that a certain Chinese guy had bid $2.1 mn to have lunch with the investment guru – Warren Buffet, as part of the latter’s yearly fund raising efforts for charity.

28.06.2008

• Normally a Saturday is one which we expect to bring some non-negative, if not good news. But that is not to be. See what the lead story says:
• Crude oil prices crossed $142 per barrel on Friday, fuelled by recent geopolitical factors like Israel’s threat to bomb Iran and ethnic unrest in Nigeria. Worse, it is now expected to cross the $150-mark in a month. The latest rally, after a brief lull, comes a day after Opec president Chakib Khelil predicted that crude oil prices are likely to rise to between $150 and $170 a barrel. India’s oil import bill is expected to go up from $68 billion in 2007-08 to almost $110 billion this fiscal.
• What does this recent hike mean for India? Prices of other oil products that are linked with international prices of crude, will go up significantly. Already, the hike in prices of naphtha, furnace oil and other products are contributing as much as half of the overall increase in inflation on account of oil. The most disturbing fact about the present crude oil crisis is that while global oil consumption grew by 1.1% or 1,000,000 barrels per day in 2007, the global oil production fell by 130,000 barrels per day.
• Last week, finance minister P Chidambaram had said increase in oil prices was due to “unregulated over-the-counter markets and futures trading in oil”. At the recently held meeting of energy ministers in Jeddah, he proposed a Price Band Mechanism. As per this, consuming countries must guarantee that oil prices will not fall below an agreed level and producing countries must guarantee that oil prices will not rise above a guaranteed level.
• Look at this graphic; it gives you details of under-recoveries and monthly highest prices of crude since January.
• As long as our political class keeps indulging in populism – unrealistic subsidy patronages, quota politics and the like – there is no way we can rescue ourselves from the chaos that stares us in our face in the near future. Do we need another 1991 like situation to jolt us out of our slumber? Looks like so for me. (Remember? In 1991 we had to swallow the indignity of mortgaging and selling our gold to the Bank of England and the Central Bank of Japan to get the necessary foreign exchange to pay for our imports. And we had to accept the preconditions of IMF to tide over the balance of payments crisis.)
• A look at the reasons for the liquidity crunch being faced by banks; for lending to the agriculture sector
• First, only about 10% of the total agriculture credit (Rs 16,000 crore) extended in 2007-08 has been recovered by co-operative banks. The nationalised banks, which have a marginal presence in the agricultural credit sector, have reported slightly better recovery between 10% and 30%, sources said.
• The second reason why banks are facing liquidity crunch is because the 50% reimbursement from the Centre would come in only by September-end.
• Mobile gaming is going great guns.
• Want to have a picture of where it is headed? Look at this graphic.
• Why is a loose monetary policy of the US detrimental to a country like India?
• In a world where capital is mobile, a loose monetary policy in the US has serious implications for developing countries like India where the exchange rate regime is a managed, rather than a free, float. Loose monetary policy means lower interest rates. This results in flow of dollars to India, as there is huge interest rate differential. This limits monetary policy options of national authorities as they are de facto forced to adopt the same loose policy. The RBI’s purchase of dollars in a bid to keep the rupee from appreciating, for instance, led to an infusion of rupees into the system. This imposes a huge cost on the system as the rupees then have to be mopped up (sterilised in technical jargon) by issuing bonds that, typically, carry a higher rate of interest than the interest earned on bonds bought with the resultant forex reserves. It also makes domestic monetary policy a hostage to US economic fundamentals resulting, for instance, in keeping monetary policy loose even when domestic policy prerogatives might call for monetary tightening.
• Some excellent commentary on how the Centre’s authority has got undermined over the last two decades:
• The political authority of the central government has been weakened because the coalitional partners do not share any common national political world view. A federal system of government can be effective only when a minimum national consensus exists among major political players especially on all-India issues. The coalitional federal Centre either of the NDA or the UPA has been practising the politics of ad-hocism as fragmented coalition groups and ideologically antagonistic political formations have failed to evolve any national consensus on all-India issues.
• The Constitution makers had expected that an effective federal Centre would play the role of a ‘stabiliser’ in a competitive democratic political system, but the Centre ever since the 1990s has become itself politically shaky, even unstable, and in this situation the Centre cannot play the role of providing effective democratic leadership to the whole country. A federal Centre is meant for the whole country in which state governments perform their own constitutional responsibilities and the Centre is the only arbiter if there is any violation of the Constitution. Unfortunately, the complete fragmentation of the party system and the weakening of all-India parties have directly adversely impacted normal functioning of the Centre.
• Wind power scenario in our country
• India is the fourth-largest wind power producer in the world. While India generated 12,400 mw of renewable energy by the end of Tenth Five Year Plan, wind power contributed almost 8,760 mw of installed capacity to it.
• So far, the major driver of growth in wind power has been the provision of 80% accelerated depreciation, which has attracted private investors with strong balance sheet to the sector.
• The ministry of new and renewable energy (MNRE) has announced a generation-based incentive (GBI) of 50 paise per unit of electricity for investors who do not have access to benefit of accelerated depreciation. This is expected to provide new and large independent producers a level playing field.
• If you were to get a chance to interact with an economist of great repute, especially one who is at the centre of a country’s policy making group, you wouldn’t know what to ask. Even when you do, chances are that what is replied by him/her will not give you enough time to scrutinize and get clarifications. That’s why papers like ET are the best bet for lesser mortals like us. Look at today’s ET interview of Arvind Virmani. It answers many of the questions that quiz our mind.
• Worth a read. Don’t miss it. It is here.
• I told you I am a fan of Kamala Haasan; didn’t I?
• His recent film Dasaavatharam is going great guns. It is expected to break quite a few records. Look at some specifics here.
• EURO 2008
• Spain trounces Russia 3-0 in semi-finals to reach the finals. It will meet Germany in the finals.
• Wimbledon
• Watching the action there?
• What a pleasure watching such power tennis from Federer. His opponent, Marc Giquel displayed no less a great game.
• But the shock of the evening was reserved for us from Ana Ivanovic, the top seed. She crashed out of the tournament!! Couldn’t believe it. She lost to Chinese wildcard Zheng Jie, the World No. 133.
• The chase for the 2008 women’s title is now thrown wide open.
• Obituary: Sam Manekshaw. The five-star general, one of only two army officers to be honoured with the rank of Field Marshal, passed away early on Friday at the military hospital, Coonoor, after a long battle with a lung disease. He was 94. Many of you are youngsters. You need to know something about our past and present heroes. Field Marshal Sam Manekshaw (Full name: Sam Hormusji Framji Jamshedji Manekshaw) is one such personality that you can’t afford to not know about. Read the piece that appeared in today’s ET here.
• Here is a picture of the hero.
• He was the architect of India’s successful war with Pakistan in 1971 that ultimately led to the creation of Bangladesh. He participated in 5 wars in all during his illustrious career spanning four decades. Recipient of countless military awards, he was one of the two Field Marshals that India ever had. The other FM is KM Cariappa.

27.06.2008

• Banks start raising PLRs
• PLR – Prime Lending Rate. This is the rate at which a bank typically intends to lend money to its borrowers. The cue for this rate is derived from the policy rates announced by the RBI. Usually SBI’s PLR is the lowest because of its sheer size of operations. PLRs of various banks in the country range from 12.5% to 13.5% as of now.
• More than 70% of loans are given at sub-PLR rates — a negotiated rate between the borrower and the lender which is below bank’s PLR. As a majority of the loans disbursed by banks are at a floating rate linked to the PLR rate, existing corporates and retail borrowers will have to pay a higher interest rate on their loans. In case of SBI, about 15% of loans are at a fixed rate while 85% is on a floating rate basis.
• Our top companies by net sales and profits
• It is RIL, Tata Steel, Hindalco, ICICI Bank and Tata Motors. Look at the figures.
• Want to know how trading of crude in futures markets globally is adversely impacting the price situation in crude?
• I have not come across a better explanation than this one found in today’s debate. It is from TNR Rao, former Petroleum Secretary of our country. Very good one.
• Going by the logic explained, stricter margin requirements in our commodity markets also should keep the unrealistic price rise in our commodities markets under check.
• We may not be reading or noting about subprime crisis any longer as we have already learnt the basics from an academic point of view. But look at the havoc it is still wreaking!
• US banks may need to raise $65 billion of additional capital to cope with mounting losses from a global credit crisis that will not peak until 2009. As of May, Citigroup had raised $42 billion, including capital injections from sovereign wealth fund Government of Singapore Investment Corporation. The bank has also suffered more than $46 billion of write-downs and credit losses in the last three quarters.
• What is the fuel bill of our Indian Railways?
• It is reportedly about Rs. 8,000 crore per annum.
• EURO 2008
• Germany beat Turkey 3-2 in the semi-final at Basel, Switzerland. They will meet either Spain or Russia in finals on Sunday at Vienna.
• Wimbledon
• Watched Wimbledon? What a surprise! Sharapova sent packing by an unknown Russian - Alla Kudryavtseva, fellow Russian and ranked 154 in the world rankings. She was beaten 6-2 6-4. Kudryavtseva displayed lot of composure and looked like she had nothing to lose in the play. It was Maria who was under tremendous pressure right from the beginning.
• Take a look at how the other seeded players have fared in their initial rounds.
• How many more surprises are there in store for us?

26.06.2008

• IDEA Cellular’s merger with Spice Telecom
• You can’t get a better picture of a complicated M&A deal from any piece other than this. Here it is reproduced verbatim:
• HOW DOES THE DEAL CHANGE THE TELECOM LANDSCAPE?
• India will now have 11 telecom operators instead of 12 & the pecking order will change. Idea set to become the fifth-largest operator with over 31 million users. It is now just 5 million subscribers away from BSNL
• WHAT DOES IT MEAN FOR IDEA CELLULAR?
• AV Birla Group co gets a foothold in Punjab and Karnataka, 4.4 million subscribers, a strategic investor in Telekom Malaysia (TM) and a net income of Rs 4,500 crore. Idea turns a debt-free company
• WHAT HAVE MODIS AND SPICE SHAREHOLDERS GAINED?
• Modis made a cool Rs 2,720 crore by selling stake in the loss-making venture. This includes a non-compete fee of Rs 544 crore. Spice shareholders get 49 shares in Idea for every 100 shares held
• HOW DOES TELEKOM MALAYSIA INTERNATIONAL BENEFIT?
• It becomes a strategic investor in the 5th-largest operator in the world’s fastest-growing telecom market. TMI has 44 m users across 10 countries; Idea adds 31m to that. TMI will have one member on the new Idea board
• DEAL DYNAMICS
• STEP 1 Idea to acquire the Modis’ 40.8% stake in Spice
• STEP 2 Idea to make 20% open offer for Spice jointly with TM
• STEP 3 Idea to merge Spice Comms with itself
• STEP 4 TM to buy 14.99% in merged co via preferential issue
• Will the present bout of inflation augur the end of the high growth phase of the past five years?
• I am sure you can predict the answer to such a question from an eternal optimist like TT Ram Mohan. Look at his reasons as to why it won't affect the high growth phase.
• 1. Base effect. In May-August 2007, the wholesale price index remained virtually unchanged going by monthly averages. At a time of rising food, oil and metal prices, this is bound to result in a spike in the inflation rates in the corresponding months this year.
• 2. Food prices are seeing some moderation. Rabi crop has been good; kharif is expected to be so. There is enough room for end-user industries to absorb the increase in prices of intermediate products. Oil prices are going to ease to below $100 per barrel before the end of the year.
• 3. Investment banks may be getting badly hit because of the turmoil in financial markets. But what is bad for investment banking is not necessarily bad for the Indian economy.
• 4. The Indian economy has become investment-led since 2002-03. The surge in investment may be expected to underpin growth this year as well.
• 5. A slowdown in earnings is built into the present forecasts; further downward revisions and the jitters in the stock market appear unwarranted.
• 6. Prospects for the world economy look better in the second half of the year compared to those in the first half. This means that we can expect Indian economic growth to accelerate in the second half.
• Human genomes change with age
• Individual human genomes change throughout a person’s life influenced by environmental or nutritional factors, which may explain why illnesses such as cancer come with age, a study has claimed. Researchers at Johns Hopkins University found that the so called epigenetic marks on the sequence of a person’s DNA modify over the course of their life and the extent of such changes is similar among family members.
• What are epigenetic marks? (The search for an answer to this doubt led me to this useful glossary. Stash it away for future reference.)
• These are features not directly governed by the genetic code and influence the way genes are expressed.
• Then what is epigenetics?
• The studies of heritable changes in gene function that occur without a change in the sequence of nuclear DNA and the processes involved in the unfolding development of an organism.
• Centre to ask states to switch to specific duties on petro products?
• The high-level committee constituted by the prime minister (headed by former cabinet secretary B K Chaturvedi) to examine fuel pricing in the country is of the view that state governments should follow the Centre’s footsteps and adopt a specific duty regime for petro-products to remove the impact of spiral in prices.
• States earned a whopping Rs 65,000 crore as tax revenues from the oil sector in 2007-08.
• Airport operators refuse to lower their charges
• We all know that airlines are facing humungous losses this year -- estimated to be in the region of Rs. 8,000 crores. Airport charges contribute about 12% of the airlines’ total input cost, with fuel sharing 40% followed by wage bill of nearly 22%.
• While the government has taken some steps to reduce the fuel charges for airlines, efforts in the direction of reducing airport handling charges appear to have come to a naught. AAI (Airports Authority of India) which manages 126 airports in the country is the largest airport operator. It refused to lower its charges saying that it has not increased them since 2001. Even the private operators like GMR, GVK etc., which operate the new airports at Delhi and Mumbai also refused to lower their charges.
• As per an estimate, airport charges in India are 50-60% higher than global airport charges.
• Renewable power purchase may turn must for DISCOMs
• Power distribution companies will now have to mandatory buy a minimum quantum of green power while purchasing power for their consumers. The government is working on a new set of regulations by which distribution companies will have to have a mix of conventional and nonconventional power in their kitty. Distribution companies normally have to buy power from generating companies within and outside the state to meet the electricity requirements of the state.
• The idea behind the move is to see that every state includes some green power (power generated from nonconventional sources like wind power, solar power, biogas) in their total power consumption green (power from unconventional sources) for its consumers.
• We have seen that recently the RBI has increased the repo rate by 50 basis points to 8.5%.
• What are the rates like in other countries? Look at this good graphic.
• What is bluecasting?
• The use of bluetooth technology for marketing.
• It is enjoying much improved standing as it now gets a small share of the ad budget as a learning cost. At one time it was largely ignored by most brands because of a lack of awareness and resistance to work with the technology.
• Bluecasting enables cost-effective, targeted ads with rich-media content to be transmitted over short distances of about 10 metre.
• What is hydroponic farming?
• It is the cultivation of plants in nutrient solution rather than soil.

25.06.2008

• The expected has happened: RBI Guv hikes CRR and repo rates
• Perhaps this is the one time that the market has been able to predict correctly what Dr. Reddy would do. He hiked the repo rate and the CRR by 50 basis points each.
• Repo rate is the rate at which RBI lends money to banks. CRR (Cash Reserve Ratio) is the percentage of DTL (Demand and Time Liabilities) that the banks have to keep with the RBI in the form of cash.
• Take a look at this good graphic which says something about the impact of these measures.
• The actual name of Jinnah House is “South Court”
• Take a look at this very good piece that gives us a bit of history.
• Jinnah House was built by Md. Ali Jinnah, the father of Pakistan in Mumbai in 1936. Soon after partition the Government of India could have declared it as enemy property; but it didn’t out of respect for Jinnah.
• Jinnah’s daughter Dina Wadia and the mother of our very own Nusli Wadia, the chief of Bombay Dyeing group of industries, is now battling it out in the Mumbai High Court for regaining the property. She lives in US.
• What are inflation indexed bonds?
• Inflation-indexed bonds (also known as inflation-linked bonds or colloquially as linkers) are bonds where the principal is indexed to inflation. They are thus designed to cut out the inflation risk of an investment.
• The first known inflation-indexed bond was issued by the Massachusetts Bay Company in 1780.
• With inflation rising and no signs of it dissipating in the near future, senior citizens who are dependent on the fixed income they derive out of their retirement savings are the worst affected lot. If inflation indexed bonds are introduced it would mitigate their problems to a certain extent.
• Have time for some raillery?
• Read this. You will love it. Very light and enjoyable reading.
• A look at the DTH market
• DTH – Direct to home. This segment refers to those having an antenna in their homes which enables them to receive TV signals from a satellite directly.
• Of the 5-6 million DTH users in the country, Dish TV has over 3.3-million subscribers, Tata Sky has over 2.5-million DTH subscribers.
• Currently, out of 120-million TV households in India, 70 million have cable connection. By 2015, 40% of the pay TV universe (cable TV and DTH) are likely to comprise DTH users, significantly up from around 5% now, according to industry projections.
• You have heard of BPO, LPO, KPO etc. But about PPO?
• It stands for person to person offshoring. It comprises of services offshored by small-time businesses and entrepreneurs seeking operational and cost efficiency. The array of services offered ranges from online tutoring, website development, and graphic design to writing and translation services, accounting and tax preparation services and landscape design services among others.
• Experts say that revenue from the PPO segment was in excess of $250 million and that it was projected to grow over $2 billion by 2015.
• Is speculation to be blamed for the current global crude price rise?
• I excerpt for you the line of argument put forth in today’s ET editorial:
• “…the fact remains that speculative activity in oil can reportedly be done on the cheap. At the New York Mercantile Exchange (NYMEX), the premier energy futures market, the initial margin requirement to garner 1,000 barrels of crude, valued at well over $100,000, is just about $3,375! The low margin is one reason why at NYMEX and the InterContinental Exchange, average daily contracts added up to nearly 800 million barrels per day (a contract corresponds to 1,000 barrels) of oil last year. Note that the average daily global production in 2007 was only 86 million barrels. The sustained purchases of oil futures appear to have created a parallel demand for crude.”
• When sustained purchases of a commodity in futures can create parallel demand for the commodity and then drive up the prices, will the same logic not apply to our own domestic commodity markets? Were our Comrades far off the mark when they were blaming the commodity futures trading for the price rise in agriculture commodities?
• Will ban on crude futures at NYMEX and ICE bring down the crude prices globally?
• Before you jump to any conclusions on these questions, do read this editorial, which is a well written piece striking a fine balance between the arguments. It is here.
• RBI goes slow on credit derivatives
• The RBI has yet again decided to keep the introduction of credit derivatives in India. While this is understandable given the fact that the global financial power houses are still licking their wounds in the aftermath of the subprime bloodbath, I find some sane counsel in today’s ET editorial on the subject:
• “Innovation is an integral part of business, be it banking or anything else. What is important is not to frown upon it because it poses risks but to frame suitable prudential guidelines and back this with competent supervision and market intelligence so that misdeeds are promptly brought to light. In the subprime crisis, for instance, it is arguable whether the problems can be laid at the door of credit derivatives or poor supervision.”

23.06.2008

• The consequences of inflation on the SME (Small and Medium Enterprises) sector
• In a bid to tackle inflation, the RBI is expected to launch monetary tightening measures i.e., increase the repo rate (rate at which it lends money to banks). An increase in repo rate makes the banks pass on the lending rates to the borrowers. Thus bank lending rates are expected to increase. Currently the repo rate is at 8%.
• SMEs depend largely on bank borrowings unlike the big industries, which can rely on debt (debentures), quasi-debt instruments, overseas borrowings etc. Besides the latter have lot of negotiating clout with the banks for better interest rates. SMEs lack such negotiation prowess.
• The lack of alternatives such as quasi-debt instruments and overseas borrowings put SMEs at a disadvantage. So they end up getting adversely affected in times of high inflation.
• Is there a case for increasing deposit rates?
• Inflation, the rate of price rise, is considered as the scale at which the real value of the rupee erodes. Inflation is much higher than the maximum interest being paid on deposits by a bank or any government saving scheme, including PF (Provident Fund).
• The real rate of interest is defined as deposit rate minus the rate of inflation, which is over 11% for the week ended June 7.
• For those depending on earning from deposits, such as elderly people and pensioners, the real rate of interest on short term deposits has been negative for sometime now as inflation has been over 7% since March 22 this year.
• Provident fund (PF) trustees will press for increasing the interest rates on PF to at least 12% to prevent value erosion of deposits of over four crore government and nongovernment employees in the wake of soaring inflation.
• A very good graphic about the political calculus on nuclear deal
• Look at it here.
• A look at the hired car market
• According to the industry players, the taxi business is worth some Rs 9,000 crore with a total of 2,35,000 taxis plying the country’s roads.
• Why is red wine considered healthy?
• Red wine contains higher levels of antioxidants called polyphenols, which are said to lower cholesterol, protect heart and prevent cancer.
• Researchers have now developed a way to boost the anti-oxidant content of white wine, so that it has health benefits similar to red wine.
• Tax cuts failure to stimulate economy
• Tax cuts were supposed to stimulate savings and employment.
• When George Bush was elected, he claimed that tax cuts for the rich would cure all the economy’s ailments. The benefits of tax-cut-fuelled growth would trickle down to all — policies that have become fashionable in Europe and elsewhere, but that have failed.
• Even in the US, tax cuts did not result household savings going up; instead they have plummeted to zero. Similarly, labour force participation is lower than in the 1990s. What growth did occur benefited only the few at the top.
• Gates to leave Microsoft
• Bill Gates, a Harvard University dropout who ushered in the home computer age and made billions of dollars along the way will have his last official day of work at Microsoft on June 27. He founded Microsoft with friend Paul Allen in 1975.
• It’s not cricket alone; even Tennis at Wimbledon is plagued by betting
• More than £450 million was bet on Wimbledon matches last year through just one British internet site, Betfair. One player is on record saying he turned down a £70,000 offer to lose in the first round at Wimbledon. A first-round loser at Wimbledon takes home £10,250.
• More than the quantum of betting it is the allegations of match fixing that are raised by Betfair that is the cause for worry.
• Wimbledon chief executive Ian Ritchie played down the reports on illegal betting, saying that there was no hard evidence of match-fixing in professional tennis and no one had produced fresh allegations.
• Grand Prix racing
• Ferrari’s Felipe Massa won Formula One’s French Grand Prix at Magny-Cours.
• Remember our noting about the Svalbard global seed vault?
• Came across a good pic explaining about it. It is here. Take a look.
• Frederic Chopin
• The renowned 19th century Polish-French pianist and composer died at the age of 39, of what is believed to be tuberculosis. But leading Polish medical experts are betting that DNA tests on his heart — perfectly preserved in what appears to be cognac — could prove he suffered from cystic fibrosis.
• Cystic fibrosis is a genetic illness which clogs the lungs with excess thick and sticky mucus.
• On his untimely death, his heart was brought to Poland by his elder sister Ludwika from Paris. It is preserved in a crystal urn filled with alcohol in Warsaw’s sprawling and ornate baroque Church of the Holy Cross.
• Euro 2008 final stages
• On 25^th June Germany will play Turkey in one semi final and on 26^th June Russia will play Spain in the other semi final match.
• The final is slated for 29^th June.

21.06.2008

• Inflation at all time high in 13 years!
• The wholesale price inflation shot up to a 13-year high of 11.05% for the week ended on June 7. The steep hike in the price index, almost 2.3% as compared to the previous week (8.75%), has been primarily fuelled by a sharp increase in industrial and motor fuel prices. Inflation rates could cross 13% over the next few weeks, primarily driven by global oil prices. Crude oil continued to hold firm at $136.22 on Friday.
• Even as I was writing our daily mail yesterday, the TV channels started reporting the story. We will have plenty on our plates in the coming weeks, if not months, on this issue.
• Having tinkered with a slew of fiscal measures, the government appears to have run out of options on the fiscal front. It will perhaps start looking at RBI governor for tighter monetary conditions to tame inflation. So what should you expect? A rise in interest rates and mopping up of money from the markets.
• But, how much can this help? At least in the near term it doesn’t hold any promise. Because, the current bout of inflation is basically driven by international commodity prices. Higher crude prices translate into higher inflation numbers for us with a bit of lag. That is what we are seeing in play.
• Look at this pic which gives a bird’s eye view of the possible fallout.
• The poor show on inflation front had already affected the stock markets. The BSE sensex tanked 517 points yesterday. Perhaps more downward swing is inevitable in the days to come.
• Nuclear option and oil prices
• Newspaper reports say that John McCain the US Presidential nominee from the Republican Party is all for nuclear power. Citing India, China and Russia as examples, he wants to revive America’s own nuclear programme by building 100 new plants to solve its growing energy problem.
• Currently, there are 104 reactors in the country supplying some 20% of electricity consumed. No new nuclear power plant has been built in the US since the 1970s. Every year, these reactors spare the atmosphere from the equivalent of nearly all auto emissions in America.
• US had stopped building nuclear reactors after the Three Mile Island incident in 1979.
• Know something about Afghan art and culture
• Afghanistan is home to the Bronze Age site of Tepe Fullol; the Greco-Bactrian city of Aï Khanum; the trading settlement of Begram, which flourished in the first and second centuries AD; and the roughly contemporary necropolis of Tillya Tepe.
• You can take a look at some of the art pieces from Afghanistan here.
• Excerpts from a very good editorial comment on quota politics
• Though the following was written in the context of Rajasthan, it applies to the nation as a whole.
• The preponderant logic of mainstream politics has been identity management through quota-based patronage. The point now is to render such politics redundant in the long term. The BJP, on its part, can avert the imminent threat of a renewed caste agitation only if it starts engaging the Gurjars, and other caste groups, politically. An engagement that would articulate the question of empowerment, not merely as one of political visibility, but primarily of social transformation. That would effect rapid economic diversification and level the hierarchical social ground by breaking the traditional caste-occupation correlation.
• It would, however, be too much to expect that a serious electoral contender such as the BJP would adopt such politics on its own, even as its rivals fan caste discontent against it to score quick electoral gains. Such engagement can actually take root only when all political parties come together to jettison the patronage-centric paradigm of cynical electoral politics.
• What could be the consequences of walking out of WTO talks?
• In a very good article arguing for continuing with our efforts at the Doha round of talks, Prashant Goyal gives a very good answer for the above question.
• A walk-out is not permissible as the WTO agreement is a package deal. A country can opt out of the WTO wholly. It cannot do so selectively i.e., agreeing to stay for say agriculture and opting out for manufacture and services etc.
• Opting out of WTO on account of differences in agriculture is not sustainable. In a globalising world even if India were to ban imports, to tackle domestic surplus, our prices would still be affected. For instance, if Vietnam floods the world market with its competitive pepper, our domestic price of pepper would crash because of lowered opportunity for our exports. Moreover, we need the backup guarantee of liberal imports to maintain consumer price stability and safeguard our food security, in case of domestic shortfall.
• When import bans will not work, the country can as well use the WTO forum to get an acceptable deal for its agri-exports.
• The costs associated with rejoining WTO would be very prohibitive. Look at China for instance. It did not join WTO initially. When it decided to join, despite 50% of its population being dependent on agriculture, it was forced to bring down its average bound tariff on agri-imports to under 16% (India’s around 114%), for being allowed to accede to WTO.
• Read his full article here. It is worth a read.
• Know what is para banking?
• Para-banking activities include bancassurance, depository service, life insurance, mutual funds, credit and debit cards, etc.
• On our farm suicides
• Recent media reports suggested that in 2006, 17,000 farmers committed suicide in India. Is it normal or abnormal? Look at an excerpt from an article that appeared in today’s ET:
• Keeping in view that about nine lakh people commit suicide in the world in a year, the world average when applied to India would mean 1.5 lakh suicides here (since one out of six people live in India). Similarly as roughly two-thirds of the people in India are connected with agriculture and allied activities, this would mean that if the world average norms had prevailed, then 100,000 suicides would take place in households engaged in agriculture and allied activities in India.
• India’s CERs (Carbon Emission Reductions) in great demand internationally
• China is a bigger player in garnering CERs. Against its share of 30%, India and Brazil have only 28% and 14% share respectively.
• But due to the recent floods and natural calamities in China its projects are expected to get delayed. This is making India and Brazil hot destinations for CER credits.
• Of the total 1,084 project activity validated as CDM projects till May, 333 projects are from India. CERs issued to Indian projects till May amount to 39,334,542. CER futures for February 2009 on the MCX platform is trading at Rs 1,427 per contract.
• World population numbers
• Today it is 6.7 bn. It is expected to reach 7 billion in 2012, even as the global community struggles to satisfy its appetite for natural resources, according to a new US government projection.
• China has a population of 1.32 bn and India has 1.13 bn.
• The US ranks third, with 304 million.
• Look at China’s population clock here.

20.06.2008

• Congress ready to sacrifice the government?
• The Congress has reportedly decided to go ahead with the IAEA safeguards agreement, even if the Left withdraws its support to the government.
• This is what is expected given the current scenario wherein the Left sees itself losing some vote bank because of its support to the UPA government and the Congress also feels that it is losing support among middle classes because of its dithering on the nuclear deal.
• Having lasted more than 4 years of its term, the Congress may be thinking it is time it put its foot down firmly on Left’s intransigence even at the cost of losing its support and let the government collapse.
• It is really ironical that while Russia and China have such an agreement with the US, the Left in India opposes the country having such a deal.
• What is driving up international crude prices?
• Though we have noted about this in the recent past, one more time from a different perspective won’t do us any harm. Take a look at the expert speak:
• Most economists dismiss the idea that speculation is responsible for the price rise. If speculation were really the cause, they argue, there should be an increase in oil inventories, because higher prices would reduce consumption, forcing speculators to accumulate oil. The fact that inventories have not risen supposedly exonerates oil speculators.
• But, contrary to economists’ claims, oil inventories do reveal a footprint of speculation. Inventories are actually at historically normal levels and 10% higher than five years ago. Furthermore, with oil prices up so much, inventories should have fallen, owing to strong incentives to reduce holdings.
• Coupled with this, is the fact that financial firms are increasingly involved in leasing oil storage capacity. The financial markets can now mobilise tens of billions of dollars for speculative purposes. This has enabled traders collectively to hit upon a strategy of buying oil and quickly re-selling it when end users accommodate higher prices — a situation that has been aggravated by the Bush administration, which has persistently added oil supplies to the US strategic reserve, further inflating demand and providing additional storage capacity.
• Who is the FCI (Food Corporation of India) CMD?
• Mr. Alok Sinha
• India’s wheat production comfortable?
• India’s wheat production has touched a record 78 million tonne in 2007-08 season.
• The FCI has procured 221.64 lakh tonne till Wednesday compared to 110.37 lakh tonne in the year-ago period.
• Switzerland asks UBS and Credit Suisse to build buffer capital
• Still reeling from the shock of seeing UBS (the world's largest bank) write $37 billion off dud investments, Switzerland’s Federal Banking Commission, which is the counterpart of our RBI, has suggested raising capital requirements for the investment banks.
• China's incursions into Sikkim
• We have noted this some time back in the recent past. But the incursions seem to have not stopped.
• In the latest episode, the People’s Liberation Army entered the Indian side of the border around northern Sikkim called the “Finger area” and returned after some time. A previous incursion into this territory was also called “minor and local” by government officials. However, the constant incursions are significant in the light of Chinese claims over the territory in Sikkim.
• The incursions could be China’s way of putting pressure on India over the border dispute.
• Whether or not it is a tactic, India should respond appropriately and strengthen its border with China.
• India signs a DTAA (Double Taxation Avoidance Agreement) with Syria - highlights
• This agreement has revised a 1985 agreement and will cover all taxes imposed on total income or on elements of income, including taxes on gains from alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises.
• It incorporates improvements over the existing agreement by including anti-abuse provisions and providing for source-based taxation of capital gains from alienation of shares.
• The agreement provides that business profits may be taxed in the source state if the activities of an enterprise constitute a permanent establishment in the source state. Permanent establishment includes especially a branch, factory, place of management, sales outlet etc.
• This agreement will provide further impetus to the economic ties between India and Syria by facilitating mutual economic cooperation.
• JJ Sobha makes the grade to Olympics
• This may sound a bit like promoting a known face. I hope all of you would allow me to indulge in this. She used to practice in the same grounds where I go for a morning walk and exercise. She is an excellent athlete by all counts and deserves an all-round applause and best wishes from us. Good performance – whether it is in exams or in sports, needs encouragement.
• She is a heptathlete. Her 6043 point performance in Madurai Inter-State Athletic Championship saw her through with the selection. Her previous bests were 6172 and 6211 back in 2004. But an Olympic win requires somewhere between 6400 and 6500. Olympic Gold winner last time scored 6980.
• BTW know what all events are covered in heptathlon for women?
• 100 m hurdles
• high jump
• shot put
• 200 m run
• long jump
• javelin throw
• 800 m run
• The first four events are contested on the first day and the remaining three on the second day.
• The version for men is conducted indoors and consists of:
• 60 m
• long jump
• shot put
• high jump
• 60 m hurdles
• pole vault
• 1000 m
• The current heptathlon world record is 7291 points. It was set by Jackie Joyner-Kersee at the 1988 Summer Olympics in Seoul, Korea, on September 24, 1988. Whew! Where do our athletes stand with this kind of performances?

19.06.2008

• On dual fuel pricing policy
• You might have read what we noted on 16^th June about the government’s move to authorise sale of only branded fuels for commercial establishments and urban areas.
• Take a look at a scathing criticism of this move in today’s ET editorial. Worth a read. Shouldn’t miss such pieces. It is here.
• I am fully in agreement with the criticism. I am sure any economist also would be. Not that any political party is unaware of the solution being suggested by the editorial, but the million dollar question is - how can you make it politically palatable? Any ideas?
• On NREGS
• This is another editorial that is singing praises for the NREG scheme of the government. While I am in agreement with the larger outcome – that of raising the income of farmhands, because of its introduction – I am of the view that there is a danger that it will also degenerate into another kind of economic sop, if corrective action is not taken immediately.
• I have noticed –in my village – that farmhands see it as an easy way to earn Rs. 100 to 150 per day for just a couple of hours work. There is a problem with this. They are happy that they got their day’s earnings. They prefer to waste the rest of their time in the day, by pursuing leisure activities. They prefer to while away their time rather than working and earning more on the farms. This has created a kind of artificial shortage of farmhands in the rural areas. If this continues, farmers will find that they cannot continue with farming at some point in time in the future. Such conclusions will have drastic consequences for the country. Therefore there is an urgent need for the government to also ease the restrictions on the landholding pattern and encourage corporate farming and/or economically viable landholding patterns which are amenable for mechanized farming.
• On Heisenberg’s principle of uncertainty
• I came across this excellent explanation of this principle in an essay today.
• Werner Heisenberg stated a principle of uncertainty in physics which won him the Nobel in 1932, that is, you cannot simultaneously assess the location as well as the future movement of an atomic particle; to do so, you have to hit it with another atomic particle and that act changes both the position and momentum of the target particle.
• India’s performance at Cannes
• Look at this pic which depicts the spectacular performance put up by India’s ad agencies at the Cannes awards.
• Vasundhara Raje’s solution to the Gurjar aspirations
• The Rajasthan government has succeeded in containing the Gurjar ire by announcing a 5% reservation for the community in the state. In an election year masterstroke, chief minister Vasundara Raje also announced 14% reservation for economically backward class among the general category which includes castes like Brahmin, Baniya, Rajput, Kayastha etc.
• The only question that remains is whether these measures go against the Supreme Court ruling on the ceiling of reservation. Once the two quotas are implemented, the total reservation would be 68%, which could lead to litigation as it crosses the reservation ceiling of 50% ruled by the Supreme Court. A legal expert, Abhinav Sharma, however claimed, “in the SC judgement on Indira Sawhney case, a nine-judge bench said that in special case the reservation can go beyond 50%.”
• Is it a case of opening the pandora’s box of reservations among the forward castes? Let’s wait and watch as to how this evolves.
• If you are working long hours before the computers, beware of the ‘computer vision syndrome’
• An article in today’s paper highlights the problems associated with long hours of working before computers.
• Computer vision syndrome is associated with multiple symptoms like pain, watering and redness of eyes, blurred vision, eye strain, burning sensation and headache. A person can also experience effects like colour fringes and after images when looking away from the computer screen. Some people develop eye dryness and untreated complications can lead to chronic eye dryness.
• The eye blinking rate reduces when a person works on a computer. While the normal blink rate is reported to be 12-15 times a minute, blinking reduces to 2-3 times a minute when working on a computer.
• Taking frequent breaks – every 30 minutes – while working for long hours before the computers is suggested by doctors.
• Seedings at Wimbledon
• The grand party of Tennis is about to begin on 23^rd June.
• Roger Federer and Ana Ivanovich were given the top seedings for men and women respectively. India’s Sania Mirza is placed 32rd. Wimbledon seeds only 32 players in men and women singles and 16 teams in doubles.
• For a complete list of the seedings look at this.
• The winners will take home ₤750,000 as prize money.

18.06.2008

• Bulk deal in Ranbaxy likely
• So reads today’s ET headline. What is a ‘bulk deal’ and what is a ‘block deal’ in stock markets?
• There are two SEBI circulars which define these two varieties of deals.
• A bulk deal, as defined by a circular dated January 2004, is one where the total quantity of shares bought or sold is more than 0.5% of the number of equity shares of the company listed on the exchange. This is applicable even when the deal is struck through multiple transactions as long as the cumulative shares under consideration exceed the 0.5% threshold. There is no price range condition that is imposed in bulk deals.
• A block deal on the other hand, is one where a trade with a minimum quantity of 5 lakh shares or having a minimum value of Rs 5 crore executed through a single transaction on the stock exchange. This is subject to conditions like time period of trade, delivery-based trading and more significantly a price range, which is not to exceed more than 1% from the existing market price or the closing price of the stock on the previous day.
• You might have known by now that Ranbaxy promoters decided to sell their entire holding of 34.82% stock in the company to Daiichi Sankyo of Japan for a consideration of Rs. 9,576.3 crore. The agreement between provided that the transaction will happen through a stock market transaction.
• On 14.06.2008 we noted something about this deal. Have a look at it, to get a perspective of what we are noting about.
• India’s performance at Cannes
• Indian advertising’s Cannes campaign stayed well on course on Monday, with six more bronze Lions coming its way. With four Lions already in the kitty, Monday’s wins take India’s tally to 10— just two gongs short of its previous best-12 Lions each in 2006 and 2007.
• Is it time to have a rethink on our Union?
• In an editorial today ET argues, as did Bimal Jalan the former Governor of RBI the other day, that there is a case for relooking at our Union. What is the context?
• THE Centre’s bid to get state governments to share some of the cost of rising oil prices running afoul of the empowered group of state finance ministers.
• In the case of taxation, not only did the framers of our constitution incorporate provisions for amending the Constitution, but they also provided for the mechanism of independent Finance Commissions to go into sharing of tax revenues. This worked reasonably well when state governments were run by the same party as at the Centre. However, with the rise of regional parties and the greater responsibility of the states to deliver in areas such as health, education, many state governments have begun to chaff at what they see as an unfair distribution of taxation powers.
• While this is the position on the economic front, it is the Centre which finds itself in an uncomfortable position while dealing with issues like terrorism. Without help from the states, all its efforts to tackle issues like insurgency and terrorism cannot progress much.
• So, is it time to re-draw the distribution of powers – economic and political between the centre and the states? Looks like so.
• India has succeeded by becoming a place where people can think of things that never were, ask why not, and then just do it.
• So ends, the last sentence in today’s ET op-ed by SSSA Aiyar. If I were to set a General Essay paper, that surely would be my choice. Read his article here. Worth a read. A very good piece about liberalization in our country – post 1991.
• What are the causes for rising demand for separate states?
• In a very good debate, on the case for reorganization of our states, Peter Desouza (who? He is Director of Indian Institute of Advanced Studies) listed four very good reasons as to why the demand for separate states has arisen.
• Firstly, it is the growth in population. A fivefold growth in the electorate since Independence, to in excess of 650 million, necessarily means that the current federal form is probably inadequate to meet the voters’ rising aspirations.
• Coupled with this is the second cause, the deepening of India as a democracy of communities. Democracy has created an assertive politics of communities that now, enjoying their arrival on the big stage, want a home of their own.
• This ambition gets fuelled, the third cause, by the increasing attention that community leaders get from the media and those who count. Yesterday’s nobody has become today’s somebody. Community politics makes one a somebody.
• The fourth is the development deficit. Since community politics is necessarily sectoral, some gain and some lose. And the losers react. India’s federal experiment is a record of such reactions. As a result, we have new states, special status states, a council of states, autonomous councils, development boards, and special schedule states. And yet the demands keep coming.
• European scientists discover cluster of ‘super earths’
• EUROPEAN researchers said they discovered a batch of three ‘super earths’ orbiting a nearby star, and two other solar systems with small planets as well.
• The planets are bigger than Earth — one is 4.2 times the mass, one is 6.7 times and the third is 9.4 times. They orbit their star at extremely rapid speeds — one whizzing around in just four days, compared with Earth’s 365 days, one taking 10 days and the slowest taking 20 days.
• The trio of planets orbit a star slightly less massive than our Sun, 42 light-years away towards the southern Doradus and Pictor constellations.
• US accuses India of arms conspiracy
• THE US, has claimed that the Indian government agencies conspired with Parthasarathy Sudarshan, CEO of Cirrus Electronics, to obtain secret weapons technology for India’s missile programme. The Indian embassy in Washington, however, denied this by saying that Cirrus Electronics, Singapore had responded to the requirement of Indian organisations through a transparent, public and open tendering process.
• He was accused by the US administration of conspiring to violate US export restrictions by directing at least seven American firms he did business with to send deliveries to Singapore or to the office in South Carolina, where Sudarshan then re-exported the items to India. Mr Sudarshan was sentenced to 35 months in jail and slapped a $60,000 fine by a US court for shipping restricted military technology to Indian government entities engaged in missiles and fighter jet production and space programme.
• Golf
• He has won four Masters titles, the first one by 12 strokes. He has won three United States Opens, the first by 15 strokes. He has won three British Opens, the first by eight strokes. He has won four PGA Championships, one of them by five strokes.
• Who are we talking of? Who else can be; except Tiger Woods.
• He won the United States Open at Torrey Pines Golf Course.

17.06.2008

• India’s performance at Cannes
• Winning a Grand Prix Lion at the Cannes advertising festival is a dream come true for any ad man in the world. This is considered as the advertising fraternity’s equivalent of the Oscars or the Grammy awards.
• The Times of India’s Lead India campaign done by JWT has become the first-ever entry from India to win a Grand Prix Lion at this festival.
• A look at how the fine print of tax proposals takes away the promised benefits
• This concerns the income tax exemption for IT companies operating out of SEZs.
• Under the SEZ Act, profits earned by the unit are 100% tax exempt in the first five years, and 50% tax exempt for the next five years. The 50% tax exemption can be extended for another five years based on the amount re-invested in the SEZ unit.
• IT companies which have got a year’s respite on the extension of tax sops for STPI units are in for a surprise on the SEZ front. Already, TCS, Infosys Technologies and Wipro get some amount of their revenues from SEZs and continue to add new capacities in SEZs.
• Under Section 10AA(1), which defines the benefits under SEZs, 100% of the export profits from the unit are tax exempt. But Section 10AA(7), which defines how these profits will be computed, says that the profits from the SEZ unit are to be multiplied by the ratio of the export sales from the unit to the total turnover of the assessee. In other words, if a company has a turnover of Rs 10,000 crore and if it does Rs 5,000 crore of exports from the SEZ unit leading to a profit of Rs 1,000 crore from the unit, the entire Rs 1,000 crore will not be tax exempt. Only 50% of Rs 1,000 crore (where 50% is the export sales of the unit as a percentage of the company’s total turnover) or Rs 500 crore will be exempt. This significantly reduces the tax exemption the company can get on profits from SEZs at least in the initial years, when a greater percentage of their exports come from outside of SEZ units.
• Backdoor methods for tackling the fuel price subsidy hole?
• Look at this figure; it details how the government proposes to handle the fuel subsidy issue, albeit in a surreptitious way.
• Some of the central public sector enterprises that are being wound up
• National Instruments (NIL)
• Bharat Ophthalmic Glass (BOGL)
• Bharat Wagon and Engineering Company (BWEL)
• Tyre Corporation of India
• Hindustan Photo Films Manufacturing
• Know anything about nostro accounts and vostro accounts? These terms are used in banking
• Look at this “first principle” column to get a feel.
• How big or small is our debt market, when compared with the markets in other countries? Or as a proportion of our GDP?
• Look at this. A very good graphic.
• Ever heard of Loving vs. Virginia case?
• It is a landmark case dating to 1967 in which the US supreme court struck down laws against interracial marriage. Mildred Loving, died on May 2 this year, her husband Richard having died back in 1975. She was a coloured person married to a white man.
• Speaking of marriages, I know you can very well guess that homosexual marriages are banned in India. Right? But what section of the IPC (Indian Penal Code) proscribes them?
• It is Section 377.
• Theories of extinction
• Crashing asteroids or volcanic eruptions are believed to have wiped out dinosaurs 65-million years ago and caused other mass extinctions. But a new study suggests that there have been other culprits as well, most notably the gigantic ebb and flow of oceans.
• Since life appeared on earth 3.5-billion years ago, it is believed as many as 23 mass extinctions took place. During the past 540-million years, five well-documented extinctions wiped out the bulk of marine plants and animals species. In case of dinosaurs, a crater suggests they were wiped out as the result of a large asteroid crashing into the planet. But the causes of other mass extinctions have been murky, at best — scientists have been unable to pin down the exact causes.
• How freaky can football frenzy get?
• Look at this article about Austria’s topless female football players beating Germany in beach football.

16.06.2008

• RIL’s objection to RCOM-MTN merger – should such spanners be thrown in the works?
• It is very surprising that Anil Ambani’s elder brother decided to put a spanner in the works of RCOM-MTN merger. Whose interests is it trying to protect? Of the shareholders? I have serious reservations on this. In fact the merger should help the shareholders, many of whom are RIL’s shareholders also.
• Having been a highly educated and a top notch businessman in the world in his own right, I think with this one step, Mukesh Ambani is undoing what all he has earned – whatever may be the outcome. He ought to allow Anil Ambani go ahead with the deal and create one of the world’s largest telecom giants.
• Anil Ambani for his part also should not try and pull off some similar trick. It will only do them both some damage in the long run.
• Look at the synopsis of the controversy here.
• Commercial establishments to get only branded fuel?
• Hospitals, hotels, malls, cinema halls and other commercial establishments will not be able to avail subsidised diesel anymore. They have to buy costlier premium (or branded) diesel. Public sector oil companies IOC, BPCL and HPCL plan to stop supply of subsidised diesel to commercial establishments. Retail price of branded fuel is not regulated by the government and its price could be substantially raised, depending on the demand.
• Branded fuel is costlier (petrol Rs 4 per litre and diesel Rs 2.25 per litre) than the normal fuel in Delhi.
• One more high-profile CEO loses his job due to subprime crisis?
• This time it is AIG’s Martin Sullivan.
• AIG – American International Group is insurance major. One of its units issues credit-default swaps that promise to reimburse investors for losses on securities that included subprime assets. The business started issuing swaps a decade ago.
• In just a year after he took over the job in 2005, AIG showed record performance with $14 bn in earnings. But by 2007 it started showing declines in profits and by the 4^th quarter of 2007-08, it posted $5.29 bn loss.
• That’s the corporate world for you. Have guts to head a financial conglomerate? Most of these losses, mind you, are reported to be related to a revaluation of the assets it holds; they are not losses that are booked yet.
• Looks there is only one way for corporate head honchos – down. After working for a couple of years at the helm of affairs, one should be prepared to retire – mostly licking wounds.
• Know the meaning of ‘Kalaignar’?
• All of you might know that Tamilnadu Chief Minister Mr. Karunanidhi is often referred to as ‘Kalaignar.’ Ever wondered what it meant?
• Being a non-Tamil, I didn’t know the meaning till today; when one of ET editorials revealed it to me. It means ‘creative artist.’
• You might know that he is originally from the cinema field.
• Inflation and rate of returns on investments
• With inflation touching the 8.75% levels, the debate about negative returns is appearing again. If you have invested in a bank fixed deposit which gives you a 7-8% rate of return, you are actually earning a negative real rate of return on your investment (rate of return minus rate of inflation).
• What could be the consequence of negative returns? When inflation is high, there is a natural incentive to consume more in the present as inflation acts as a disincentive to save for future consumption. This is because your money is worth more today than it will be tomorrow. This is especially true if your investments are rendering a negative return.
• The best way to cope with a situation where you could potentially be receiving negative returns is to move your portfolio away from low-yielding fixed income instruments, like bank fixed deposits, towards assets that offer a better rate of returns. Time and again, studies have shown that the return on equity and equity-linked instruments have typically beaten inflation by a substantial margin, over the long term.
• Experts say that over the past 10 years, India has never had a negative rate of return for extended periods of time. There may have been short periods when inflation temporarily overtook the rate of return on fixed income instruments. But those were aberrations and were promptly reversed.
• In this context, one concept that is worth our attention is Fisher relation. This explains the co-movement between interest rates and the inflation expectations. This is stated to be not very strong in India. This means that any rise in the inflation rate in India need not necessarily be followed with a hike in the domestic interest rates. It also depends on factors other than inflation.
• What is regulatory dissonance?
• You might remember that RBI is very unhappy with Sahara India group and has sought to impose severe restrictions on its deposit taking practices.
• But the IRDA, the insurance regulator of the country is not worried by its practices and it is business as usual for the IRDA and the Sahara Group.
• A situation like this is what is defined by the term regulatory dissonance. Regulators take opposing views.
• On corporate social responsibility
• We would be seeing some debate or the other about this catch phrase time and again in the press. This is a favourite general essay topic.
• Take a look at a very good piece written by RC Bhargava, Chairman of Maruti Suzuki India Limited here. Worth a read.
• Look at the Euro 2008 championship update
• It is here.