Indian Current Affairs: 10.06.2008

It stands for Diversity and Inclusion.
Workplaces are beckoning women who left their careers midway to take care of families. Scores of companies across sectors are wooing them back not just to improve their talent pipeline, but also balance their diversity scale.

What are the typical instruments available to a government to deal with oil price shocks?

The central government has three revenue neutral instruments to deal with the periodic oil shocks. They are raising administered prices of petroleum products, reducing central taxes on them, and increase other commodity taxes and taxes on income. The choice of these instruments has to be governed by their effects on growth and income distribution in the economy.

It is estimated that the gross fiscal deficit of the government both central and state — including the debt waiver, the wage hike, and all off-budget subsidies — will increase to well over 7% of GDP in the 2008-09 financial year from an estimated 5.7% in the 2007-08 financial year. What negative consequences will flow out of such a scenario for the economy?

Debating about oil price shocks, Tushar Poddar of Goldman Sachs gives a very good analysis. Follow it up here.

Yesterday we were noting about the stamp duty imbroglio between the Centre and States. Some more details about it:

At Rs 36,872 crore, stamp duty accounts for a significant share — close to 9% — of the total tax revenues of states (according to budget estimates 2007-08). In the case of states like Maharashtra, it is even higher — 13.5% of total tax revenues.

It is growing at about 25% per annum and clocked revenues of Rs 200,000 crore. About three fourths of the revenues come from exports, and that too in a highly competitive global environment. Finally, this industry created over 300,000 direct jobs last year, and four times as many indirectly.

Is more less or less more? That's the question that begs an answer. Reads like Sharukh Khan's "Is the hot chick cool or the cool chick hot?" question; isn't it?
The Prime Minister’s Economic Advisory Council had done a ballpark calculation which showed that consistent with a broad money supply (M3) growth of 17%, the economy could perhaps absorb up to $30 billion of excess capital inflows, after meeting the current account deficit. So if the current account deficit were, say 1.5% of GDP or $15 billion, the total net capital inflows should be of the order of $45 billion. However, the actual net inflows in 2007-08 were possibly over $90 billion, almost double the amount which could possibly be absorbed by the system.
But this year, the problems are of a different nature. If oil prices remain high, at near current levels, India’s current account deficit could well exceed 2% of GDP, assuming the economy grows at about 8%. Going by Dr Rangarajan’s rough formula, at 2% plus current account deficit, India could do with a net capital inflow of up to $50 billion in 2008-09. The worry is whether it will get inflows of that order.
With high inflation and a widening trade and current account deficit, India cannot afford to have its capital inflows slowing beyond a point. This will remain the biggest policy worry for the government throughout 2008.

The government is thinking about a statutory fitness regime for all vehicles — cars and two-wheelers — to examine their technical efficiency, failing which they would be taken off the roads.
Currently, only commercial vehicles such as taxis, buses and trucks undergo such tests, and they form 30% of the 15 crore vehicles on Indian roads.
The ministry of road transport and highways in India plans to test every vehicle at regular intervals
In the first phase, all private vehicles more than three years old will be checked bi-annually, and those over nine years old will be checked every year
Motorcycles that are more than two years old will be tested once every two years, and those more than eight year old will be tested every year
To carry out the tests on more than 11 crore privately-owned vehicles, a national inspection and certification body will be set up

This is a report prepared by the Commission On Growth and Development. The report is titled “Strategies for Sustained Growth and Inclusive Development” and was released late last month.
It identified 13 countries that experienced average growth rate of 7% or more for over 25 years, starting 1950. Take a look at the 13 countries that it identified here.
India and Vietnam are on the way to join the group of countries experiencing sustained period of high growth. To reach the level of the OECD countries by 2050, India would need to grow at 7.4% annually.

This is a term used in the telecom industry. It refers to end-to-end processes put in place to identify revenue leakage in the chain. Key reasons for revenue leakage are data loss between systems, external frauds and inadequate controls and procedures. Globally large telcos deploy automated solutions for revenue assurance, with tolerable limits of under 1%.
Domestic telcos lost 2.5% of revenues in 2007-08 and at this average rate, the revenue leakage would touch nearly $2 billion in the next two years, according to a survey by Ernst & Young (E&Y).
The amount lost was a whopping $750 million in 2007-08 owing to lack of focus on revenue assurance (RA). This is up from 2% ($550 million) in the previous year.

With sky-high ATF (Aviation Turbine Fuel) prices, fuel now accounts for about 40% of the operational cost of a typical airline.
Many of the India airline companies are reported to be in default or behind schedule in paying their fuel bills.
Every Indian airline company is reported to be losing about $40 per passenger that they carry.

An American military supercomputer, assembled from components originally designed for video game machines, has reached a long sought-after computing milestone by processing more than 1.026 quadrillion calculations per second.
The new machine is more than twice as fast as the previous fastest supercomputer, the IBM BlueGene/L, which is based at Lawrence Livermore National Laboratory in California. The new $133 million supercomputer, called Roadrunner in a reference to the state bird of New Mexico, was devised and built by engineers and scientists at IBM and Los Alamos National Laboratory, based in Los Alamos, New Mexico.
It will be used to solve classified military problems to ensure that the nation’s stockpile of nuclear weapons will continue to work correctly as they age. The Roadrunner will simulate the behaviour of the weapons in the first fraction of a second during an explosion.

Its discovery was on record as belonging to American Hiram Bingham in 1911.
But now new evidence surfaced that it was actually discovered well before by a German Augusto Berns, in 1867.

Indian Current Affairs