31.07.2008

  • Titbits about Kinetic scooter
    • The scooter was launched in 1984 as India’s first gearless scooter, by the Kinetic group. The group itself made its debut with Luna in 1974.
    • Penetration levels for scooters are still low at 48 vehicles per 1,000 people.
  • What is the FSSA?
    • Food Safety & Standards Act.
    • The ministry of health has proposed a clause, making it mandatory for all packaged foods to contain nutritional labelling under this upcoming Act.
    • According to this, all packaged foods need to declare mandatory nutritional labelling of protein, fat, carbohydrate and energy content. Besides, claims need to be quantified.
    • The implementation of the Act involves integrating packaged food laws that fall under the Agriculture and Health ministries. This is causing some delay in its implementation.
    • As of now, food-regulation norms, including labelling, fall under the Prevention of Food Adulteration (PFA) Act. Once the FSSA is implemented, the existing PFA will be repealed.
  • Look at how under recoveries are hitting the oil behemoths…
    • Refining and marketing leader — Indian Oil Corporation (IOC) — has recorded a sharp decline of 71% in the net profit for Q1 2008-09 owing to the huge surge in crude oil prices and skewed pricing structure.
    • Net profit of the company fell to Rs 415 crore in the first quarter of the current fiscal on a turnover of Rs 80,735 crore. The company had registered a net profit of Rs 1,468 crore in the same period last year on a gross turnover of Rs 58,205 crore.
    • The company’s profit slipped despite it earning the highest ever gross refining margin (GRM) this quarter. The average GRM of the company in the Q1 of current fiscal was $16.81/barrel compared to $10.70/barrel in the same period last year. This GRM compares favourably with that of RIL.
  • Domestic Convertible Bonds
    • In these instruments, the equity component is carved out from a hybrid instrument of debt and equity. Announced in this year's budget, this instrument got a leg up from the finance ministry, which has asked market regulator SEBI to implement this decision within two months.
    • Companies can strip the equity component from convertible bonds so as to trade them separately. This is expected to develop the market for corporate bonds, which the government thinks is the best way to fund the country’s infrastructure requirements.
    • Companies that issue convertible bonds are able to borrow funds at a lesser cost as the investor agrees to accept a lower interest because of the option to convert debt into the company’s equity. This difference in the interest burden is the value of the equity component, which is being separated into a new instrument now.
  • One more nail in the coffin of the WTO talks
    • The anticoncentration clause.
    • Championed by the US, it stipulates that sensitive tariff lines not subject to full tariff cuts cannot be concentrated in one particular sector. This limits the developing countries’ flexibility to decide which items they would like to protect.
  • But are the talks dead for good?
    • No. Most countries have realised the huge spin-offs from lower tariff barriers and have lowered them unilaterally. India being a prime example — our peak tariff rate is now 10%, down from about 30% at the start of the Doha Round. Even so, it is important that the collapse of the mini-ministerial does not cause the world as a whole to lose faith in multilateral trade pacts; the alternative ‘spaghetti bowl’ of bilateral agreements is both messier and less equitable, especially to developing countries.
    • This will ensure that dawn of realisation that a return to the negotiating table, sooner rather than later, is the way to go.
  • Estimate of our fiscal deficit
    • The farm loan waiver, the Pay Commission award, oil bonds, and rising off-budget subsidies for oil and fertiliser consumers could take the real fiscal deficit to anything between 6 and 7.5% of GDP.
  • On policy reform of defence offset
    • I have excerpted for you from a very good article that appeared in today’s ET. Look at it here.
  • On VAT reform
    • Some of you have been asking me to write something on taxation in India. I have not been able to do so as I was hard pressed for time.
    • But today’s ET carried an article on VAT that lists three concerns that need to be addressed to see VAT succeed in India. A good read.
  • Priciest foods
    • Edible gold leaf is the most expensive with a price tag of $15,000 per pound.
    • White truffles and caviar are the next costliest food items.
    • Then comes the Indian saffron, at fourth place.

30.07.2008

  • Quarterly review of the credit policy by RBI
    • Repo rate increased by 50 basis points to 9%.
    • CRR hiked by 25 basis points to 8.75%. This is expected to suck out Rs. 9,000 crore from the system.
    • The combined effect would be that interest rate sensitive sectors like banking, automobiles and real estate would be hit, as higher interest rates would hurt demand for credit, as most of the purchases in these segments would be on borrowed money.
    • The PLR (Prime Lending Rate) of banks which is between 12.75% yo 13.25% at present will see a hike. Private banks’ PLR in contrast is higher at about 15%. This will also go up.
    • Capital formation was at 35.9% of the GDP in FY07
    • Savings grew by 34.8% in FY07
    • Growth in money supply at 20% is 2.5% above the target.
    • GDP growth expectations for 2008-09 lowered to 8%
  • The RBI appears to be worried about the high credit deposit ratio of 82.4%. Why?
    • First, it could mean that banks are over-stretching themselves to keep their loan meters ticking, especially after meeting the mandatory reserve ratios and other concessional loans.
    • A high CD ratio also indicates that bank are probably messing up their asset liability equation by borrowing short term money (perhaps through the RBI’s repo window) to create a long term asset. This is highly dangerous for the health of banks.
  • What do you think could be the US budget deficit?
    • It was projected to be $407 bn when President Bush presented the budget in February, 2008.
    • Now it is estimated to climb to a record $490 bn by 2009. This would be 3.3% of the GDP.
  • EPFO selects four private fund managers
    • EPFO, having about 4.5 crore workers contributing to its corpus has selected 4 private fund managers – HSBC AMC, ICICI Prudential AMC, SBI and Reliance Capital AMC as its fund managers. They would manage the about Rs. 30,000 crore annual additions to its corpus.
    • Central PF Commissioner: A. Vishwanathan.
  • 15th ministerial meeting of the NAM – Non Aligned Movement
    • It is going on at Tehran.
    • India spoke strongly about terrorism with Pranab Mukherjee describing it as one of the most serious threats to global peace.
    • Iranian President Ahmedinejad would like us believe that NAM can present an alternative to the UN Security Council.
  • Big money, big sport
    • Look at the figures for Beijing Olympics!
    • It raked in about $1.5 bn in sponsorship fees from close to 65 advertisers. This is three times the money that Athens Olympics (2004) raised.
  • Developments on the mobile number portability (MNP) regime
    • You might remember that in November 2007, the government had approved the introduction of MNP. At that time it said that details would be firmed up and announced in course of time. Now it has come up with the modalities.
    • An MCHA – Mobile Number Portability Clearing House Administrator - would be identified through auction route. MCHA would set up an NPDB – Number Portability Database - that will have the mobile numbers of all cellular users. All service providers will then link their networks to that NPDB.
    • Surveys have shown that 25 to 50% of all mobile users in India are unhappy with their operators, and are willing to switch to another service provider if allowed to retain their number.
  • India and the US pull the ‘trigger’ on WTO talks
    • The ongoing mini-ministerial talks collapsed because of differences between the US and Indian positions.
    • The issue was ‘triggers.’ Triggers enable developing countries to raise tariffs when imports surge. WTO Director General Pascal Lamy suggested a compromise of 40% over the average of previous three years. India rejected this on the ground that this high trigger would ensure that developing countries cannot apply higher tariffs till their farmers are ruined.
  • Oil pricing issue: BK Chaturvedi committee
    • There are three methods of fixing the administered price of oil. Trade parity price, import parity price and export parity price.
    • Based on the recommendations of the Rangarajan Committee the government had shifted to the trade parity pricing regime from import parity regime in 2006. In trade parity model, the weighted average of the import and export parity prices is taken in the ratio of 80:20.
    • Now the BK Chaturvedi committee seems to be recommending a shift to export parity model. This is expected to reduce fuel prices by about 3% on an average. If this happens, the estimated losses of oil companies would come down to about Rs. 2 lakh crores from the Rs. 2.45 lakh crores for 2008-09.

29.07.2008

  • What are the two conferences that are expected to evolve a successor treaty to the Kyoto Protocol?
    • Poland (December 2008)
    • Copenhagen (December 2009)
  • National Action Plan on Climate Change (NAPCC)
    • Firstly, it states that India’s per capita GHGs emission would at no point exceed that of the developed countries.
    • Secondly, India has stuck to its earlier stand of not committing to specific emission reduction targets or energy efficiency targets.
    • Thirdly, the plan would be implemented through eight missions, viz., (a) enhancing solar energy contribution in total energy mix, (b) introducing energy efficiency steps, (c) promoting sustainable habitats, (d) saving Himalayan glaciers, (e) water resource management, (f) protecting mountain eco-systems, (g) improving eco-system services and (h) making agriculture more resilient and adaptable to climate change.
  • France is a nuclear power of different kind
    • It has produced 42,000 MW of nuclear power in just 10 years starting 1989 to 1999. Today, 70% of its energy is nuclear.
  • Drain of Wealth theory?
    • The Drain of Wealth theory was first propounded by Dadabhai Naoroji in 1867. It was set in a perspective of economic colonisation of India to service the needs of Industrial revolution in Britain.
  • Why is GDP deflator not the best bet yet to measure inflation?
    • The most fool-proof measure of inflation is the national income deflator, also called the GDP deflator. This is defined as ratio of GDP at current prices and GDP at constant prices. Since GDP also includes services, the GDP deflator is a more comprehensive measure of prices of goods and services.
    • The only problem is that the GDP deflator is available with a lag of two months, which makes it dated for policy purposes. Also, because it includes services, it is of limited use as far as most vulnerable population is concerned. The services component in their consumption basket is very limited. To that extent, any policy response based on the GDP deflator could impose undue hardship on the vulnerable. For them, food products-dominated basket would be a more relevant measure.
  • India's green power efforts
    • The country is considering imposition of a carbon tax on polluting power stations. The proposal would club India with a select group of countries that tax carbon emissions directly and boost the renewable energy initiative.
    • The gross installed capacity of grid interactive renewable power in the country is estimated at 11,273 mw, 8% of the total installed generation capacity in the country.
  • Who propounded the concept of 'lean management'?
    • Jim Womack and his co-authors Daniel T Jones and Daniel Roos published ‘The Machine that Changed the World.’
    • It changed the way many companies linked the markets to the shopfloor — and introduced a new term to managers’ lingo: ‘lean production’.
  • WTO talks terminology
    • Single undertaking: It means that nothing is decided until everything being discussed is agreed upon.
  • Carbon equalisation measures (An excerpt from KG Narendranath’s article on WTO matters)
    • The European Parliament is likely to take up a legislative proposal envisaging them. As per the proposal, these could be either in the form of a carbon tax or an obligation on developing country exporters to purchase international reserve allowances to sell their products in the EU. In either case, the measure would inflate the cost of exports from developing countries to the 27-country bloc. On the face of it, this is an attempt to “provide incentive to emerging economies to reduce the emission intensity” of their industries through “market-based measures.” The noble intentions notwithstanding, the fact of the matter is such measures could be legitimately seen as disguised protectionism. Of course, even if the law is enacted in 2009, it will come into effect only in 2013, after the expiry of the Kyoto Protocol.
    • One obvious question is if the measures that the EU is planning are WTO-compatible. Most experts say since the proposed carbon tax could take tariff levels above the bound rates, they violate the WTO. Of course, Article 20 of GATT allows WTO members to take certain measures for environmental reasons and it is doubtful whether the proposed EU measures would qualify under this exception.
  • Who is Jack Trout?
    • He is a well known marketing strategist. He advises several Fortune 500 companies.
    • With his 1981 classic book, ‘Positioning’, Jack Trout and co-author Al Ries changed the language and practice of marketing strategy. In more than two-and-a-half decades since then, Mr Trout has authored or co-authored some of the best-selling marketing books of all time, including 'Marketing Warfare', 'Bottom-Up-Marketing', and 'The 22 Immutable Laws of Marketing'.
    • He will be India shortly.
  • I can’t disagree with today’s ET editorial more
    • Today, while commenting on our intelligence failure concerning the recent bomb blasts, it says:
      • “After all, it would be hard to imagine how Indian Muslims would want to cooperate with the legal-judicial system they find alienating. The gradual waning of Muslims’ trust in the Indian state is on account of its institutional apathy towards them. The failure of the system to punish the perpetrators of sundry anti-minority pogroms, such as the anti-Sikh riots of 1984 or the post-Godhra massacre of 2002, has exposed our legal-judicial system.”
    • Oh! What a discovery? I would like to ask the author of the editorial, why only champion Muslims? Has there been a consequent enhancement in trust of the other communities toward the Indian state? I am really saddened that respectable papers like the ET also are falling prey to such populist posturing. Loss of trust in the Indian state’s ability to handout speedier justice, is there with every community that lives within its borders. No single community alone is affected by it. All are equally affected. By saying that Muslims alone are suffering because of this, is nothing but playing politics of the journalistic kind. Hope ET does a review of its opinion and be the neutral umpire that it has always been.
  • On National Investment Fund
    • All the proceeds from disinvestment in PSUs cannot be taken as part of revenue but must go instead to the National Investment Fund. But 75% of the annual income of the fund can be used for financing select social sector schemes while the balance 25% can be used to meet the capital investment requirements of profitable and revivable PSUs.
  • Language lessons: nincompoop
    • A stupid foolish person.
    • Synonyms: ninnies, poops

28.07.2008

  • Bangalore, Ahmedabad and then…
    • Life goes on. We have by now perfected the art of getting on with life in spite of bomb blasts. It is time terrorists learn that their antics are giving them nothing more than a few scalps. It is they who should do lot of introspection than the governments. If they are trying to divide communities, they have miserably failed. If they are trying to administer a shock to the community or country at large, they have failed equally miserably. If they are trying to gain international attention or sympathy, nothing is coming their way. What are they going to achieve by these killings? Time for them to introspect. As usual, political parties will blame each other on various counts; but life goes on. People with nefarious designs can keep trying their best; but they will not achieve their desires. Life will go on. And that is important. It should go on.
  • Research results on polar light patterns
    • Heard about aurora borealis and aurora australis? These are the scientific names for the phenomenon of coloured light displays in the sky, usually observed at night, at the polar regions of the earth. This dance of lights occurs once every two or three days. Scientists remained clueless so far about why these phenomena occur. Now, they appear to have found the reasons, courtesy Themis.
    • Themis is a fleet of five small satellites. It has observed the beginning of a geomagnetic storm in February, while ground observatories in Canada and Alaska recorded the brightening of the northern lights. The observed storm about 1,28,747 kilometres from the earth was triggered by a phenomenon known as magnetic reconnection. Every so often, the earth’s magnetic field lines are stretched like rubber bands by solar energy, snap, are thrown back to earth and reconnect, in effect creating a short circuit.
    • This study enabled NASA to find that magnetic explosions about one-third of the way to the moon cause the northern lights or aurora borealis, to burst in spectacular shapes and colours, and dance across the sky. The findings should help scientists better understand geomagnetic storms that can knock out satellites, harm astronauts in orbit and disrupt power and communications on the earth.
  • EU and the US promise freer movement for our professionals at the WTO talks
    • While the EU proposed replacing the current restrictive regime of economic needs test and labour market test with a fixed quota for professionals every year, the US said that the administration was willing to address issues related to additional concessions in movement of workers and professionals with the Congress.
    • The economic needs test is a non-tariff barrier which requires that it be proved that the economy of the country to which a worker is travelling to for providing services, really requires his/her services.
    • As many as thirty members of the WTO with interest in liberalisation of the services sector including India, Australia, the EU, the US, Pakistan, Brazil, Canada, Malaysia and Mexico participated in a ‘signalling’ conference on Saturday, in which, they indicated the areas where they could give concessions and where they would want more openings in the markets of other countries. The ‘signalling’ conference was designed to give members an idea about the direction in which the services talks could go once issues in other areas like agriculture and Nama (industrial goods) were resolved.
  • An international body for Tea under the aegis of FAO to be launched?
    • Leading tea producers like India, Sri Lanka, Kenya, China and Vietnam have decided to set up a body with an aim to coordinate among themselves for the better functioning of the industry in member countries.
    • Progress on the SPTF (Special Purpose Tea Fund): The Rs 4,700 crore fund, that was set up for replantation and rejuvenation of the ageing tea bushes in the country, has enabled about 11,000 hectare to be brought under replantation and rejuvenation.
  • On weak global leadership
    • Today’s ET has a thought provoking article from one of my favourite authors - Jeffrey Sachs. His argument is that there is a serious dearth of global leadership to solve global problems. He says that there are four problems contributing to this. Look at them:
    • One is the incoherence of the American leadership.
    • The second problem is the lack of global financing. The hunger crisis can be overcome in poor countries if they get help to grow more food. The global energy and climate crises can be overcome if the world invests together to develop new energy technologies. Diseases such as malaria can be overcome through globally coordinated investments in disease control. The oceans, rainforests, and air can be kept safe through pooled investments in environmental protection.
    • The third problem is the disconnection between global scientific expertise and politicians.
    • The fourth problem is that the G-8 ignores the very international institutions — notably the United Nations and the World Bank — that offer the best hope to implement global solutions.
  • Can there be a limit to optimism?
  • About beach volleyball
    • The game was invented by William G Morgan in 1895 in Holyoke, Massachusetts YMCA. When he went to Holyoke after finishing school from Springfield, he realised that not many people were interested in playing basketball. So he came up with a new game which was more recreational. Initially, a basketball was used without a net and the game involved throwing the ball from one group to the other.
    • This leisurely sport was brought to India around 70 years ago when some physical education trainers went abroad for training. YMCA, College of Physical Education, Chennai, took it seriously and started volleyball training in India. Later, the Volleyball Federation of India was formed and since then, the Indian team started participating in world championships, Asian Games, Asian Championship, Commonwealth Championship and many other international tournaments. India won the gold medal at the Invitation Asian Meet in Japan in 1955. In the third and fourth Asian Games held at Tokyo and Djakarta, India won the bronze and silver medals, respectively.
    • Despite the successes, beach volleyball in India has been on the fringes of the sporting world till now and has not yet managed to get a favourable place in the visual media as the organisers find it difficult to get sponsors.

26.07.2008

  • Volkswagen Group’s plan for India
    • The Volkswagen Group is reportedly entering the Rs 43,000-crore Indian commercial vehicle (CV) market.
    • It plans to sell business vans, buses and trucks in India, the world’s fourth-largest CV market, in a phased manner from early next year.
  • The way to brand building for smaller companies
    • For small businesses branding is a big challenge. A host of small advertising agencies are helping these companies with their communication needs and brand building. In return, what these agencies get apart from retainer fees is a percentage of the profit as the companies grow, and this is usually around 5-20%.
  • Learn on the Go
    • Companies like EnableM, Tata Interactive, 24x7 Learning, Airtel, IMS and NIIT are coming up with offering lessons in maths, English and science on mobile and PDAs. And what is more, you can also take your preparatory tests, such as CAT and IIT-JEE, on your handset.
    • How does MLearning (Mobile Learning) hold promise?
      • One, it offers an interactive learning experience.
      • Two, accessibility of mobile devices in remote areas. The platform can be used anywhere, anytime, including schools, home or when in transit.
      • Last but not least, it is far cheaper than computers.
  • Olympian failures?
    • We all know how poorly we fare at Olympics. Our non-performance has spurred our previous President to think out loud at a public function, whether the Indian Army can do something about it. That is how the idea that if our army decides to use one brigade only for sports, we will have arrived in the international sports scene, is born.
    • Take a look at three issues about India’s Olympic discourse over the past four years:
      • Olympics is clearly seen as a barometer of national pride and therefore viewed through a nationalist gaze;
      • Olympic failures are blamed on sports management bodies which are seen as parochial and only interested in politics;
      • The Indian Army, perceived as an apolitical edifice of the nation, is now seen by many as the last resort, capable of salvaging India’s dream of winning Olympic medals.
    • With corporates also making a beeline for encouraging sports (remember the efforts of Vijay Mallya, Sunil Mittal etc.?) in a big way, let us hope by 2020, we will have our place of pride in the international sports scene.
  • What a punch? The commentary on the state of our politics in today’s piece by Raghunathan is worth an excerpt. If you write a critique like this in your essay paper, you will surely walk away with excellent marks. Gulp err… chew it:
    • Now that the monkey is off the government’s left shoulder, everybody can get back to work — especially make up for lost time on the nuclear deal. If a sulking Karat sacks Somnath from the party to assuage his badly bruised ego, well, one merely wonders what a sensible Somnath was doing in the CPM all this time anyway.
    • Today, when the distinction between political allies, opposition, blackmailers and posture-mongers, and in some cases even crooks, is rapidly beginning to blur, politics has been reduced to nothing beyond the votes of illiterate masses for the next election by hook and more often by crook.
    • How are Karat & Co, with their blinkered, dated and absurd allegiance to some effete ideology and views like “no employment is better than partial employment” more qualified than the PM to tell us what is good for India? What have Karat & Co ever administered anything beyond their little party offices to contest what a Manmohan or a Kalam thinks is good for the country? Somnath or Budhadeb speak a different language precisely because they have administered either a Loksabha (no joke in this country) or a state.
    • I can’t agree with him more.
  • Remember the name of our CAG – Comptroller and Auditor General?
    • Vinod Rai. He was a former Secretary in the Ministry of Finance.
  • Some banking terms related to payment systems
    • EFT: Electronic Funds Transfer. It is a system whereby anyone who wants to make payment to another person / company etc. can approach his bank and make cash payment or give instructions / authorisation to transfer funds directly from his own account to the bank account of the receiver / beneficiary. Complete details such as the receiver’s name, bank account number, account type (savings or current account), bank name, city, branch name etc should be furnished to the bank at the time of requesting for such transfers so that the amount reaches the beneficiaries’ account correctly and faster. RBI is the service provider for EFT. As of now, EFT facility is available for transfer of funds between bank branches in about 15 major cities and towns across the country.
    • Real Time Gross Settlement (RTGS) system, introduced in India since March 2004, is a system through which electronic instructions can be given by banks to transfer funds from their account to the account of another bank. The RTGS system is maintained and operated by the RBI and provides a means of efficient and faster funds transfer among banks facilitating their financial operations. As the name suggests, funds transfer between banks takes place on a ‘real time’ basis. Therefore, money can reach the beneficiary instantaneously and the beneficiary’s bank has the responsibility to credit the beneficiary’s account within two hours.
    • NEFT: National Electronic Fund Transfer. National Electronic Funds Transfer (NEFT) system is a nation wide funds transfer system to facilitate transfer of funds from any bank branch to any other bank branch.
    • Electronic Clearing Service (ECS) is a retail payment system that can be used to make bulk payments / receipts of a similar nature especially where each individual payment is of a repetitive nature and of relatively smaller amount. This facility is meant for companies and government departments to make/receive large volumes of payments rather than for funds transfers by individuals. The ECS facility is available in 47 centres across India operated by RBI at places where it manages the clearing houses and by SBI and its associates in other centres. The ECS is further divided into two types – ECS (Credit) to make bulk payments to individuals/vendors and ECS (Debit) to receive bulk utility payments from individuals.
    • CTS: Cheque Truncation Systems. It is a system of cheque clearing and settlement between banks based on electronic data/images or both without physical exchange of instrument. As straight through processing and automated payment processing are enabled by CTS faster realisation is accompanied by a reduction in costs for the customers and the banks. The banks have additional advantage of reduced reconciliation and clearing frauds.
    • While reading today’s ET, I came across the phrase ‘cheque truncation’ and decided it is time to recap some of these important payment systems that exist in the country. For more detailed information, you can look at RBI’s FAQ on the subject here.
  • Internet penetration figures of US and China
    • Overtaking the US, China’s internet-user population has reached 253 million by the end of June. The US is estimated to be having about 230 mn users. In contrast India has about 42 mn internet users.
    • China also had the largest number of broadband subscribers at 214 million, more than 80% of the total domestic internet population.

25.07.2008

  • Oil down by over $23 to $124 since record
    • What a relief! Look at what news can do to us? Till last week, the economy – whether of the world or of our country – seemed headed for slower growths and higher inflation, on the back of high crude prices. Now, inflation is reported to have cooled slightly: 11.89% over last week’s 13 year high of 11.91%.
    • New record oil discoveries north of Arctic pole are reported. Some 90 billion barrels of oil and nearly a third of the world’s undiscovered natural gas remain untapped under an area north of the Arctic Circle, US government scientists estimate, in the largest-ever survey of the area’s energy potential. All told, the area accounts for about a fifth of the world’s undiscovered, technically recoverable oil and natural gas reserves.
    • All of a sudden I see so many bits and pieces that can fall together into place making the ride a non-turbulent one, if not a smoother one.
    • Philosophically speaking, I think it is the herd mentality that grips us, that is the root cause of our despair or hope.
  • Language lessons: carpe diem
    • Used as an admonition to seize the pleasures of the moment without concern for the future. This is used both an interjection and a noun.
    • Seize the day, seize the moment, enjoy the present.
  • The four phases of globalization
    • If you are looking for a good essay on globalization, this is one piece that you can’t afford to miss. Written by Alok Sheel, a civil servant whose writings we usually follow keenly, this piece is useful both for those pursuing economics and international relations as subjects of study. Recommend it.
  • The debate on Press Note 1
  • SBI - State Bank of Saurashtra merger
    • The government on Thursday approved the merger of State Bank of Saurashtra (SBS) with its parent State Bank of India (SBI). The move would make way for the merger of other six associate banks of State Bank of India (SBI) with itself. The amalgamation would help SBI take on competition in a better way.
    • The Centre would have to repeal the State Bank of Saurashtra Act 1950, and amend the SBI Subsidiary Act 1959, to effect the SBI-SBS merger. The government would delete references to the SBS Act from the SBI Subsidiary Act, 1959, wherever it occurs.
  • Gates and Bloomberg to help fight smoking in India and China
    • Bill Gates, one of the world’s richest men, and Michael Bloomberg, New York mayor, have jointly committed to invest $500 million towards anti-smoking efforts in developing countries like India and China. The investment, spread over 4-5 years, is aimed at helping developing countries implement policies and increase funding for tobacco control.
  • International students in US and UK
    • Last year the US had seen an enrolment of 83,000 international students. Many of them from India.
    • Similarly the UK has seen enrolments of 26,000 from India alone.

23.07.2008

  • Government wins trust vote
    • It was a day of high drama, backstage deals and frayed nerves; but the government carried the day with it.
    • For the first time ever in my life, I took a kind of political time-out and watched the proceedings of the Lok Sabha live for a major part of the day. I was really impressed with the performances put up by Lalu Prasad Yadav, Rahul Gandhi and Omar Abdullah. Even Asaduddin Owaisi from Hyderabad, didn’t do bad.
    • Now that the Government has proved its majority, it should in right earnest go ahead with the nuclear deal. At the same time it should also carry forward the reform agenda that it has kept on the backburner because of staunch opposition from the Left during the last four years and a half.
      • One of the important pending reform measures is insurance sector reform. The insurance Bill was stuck due to the Left’s opposition on liberalising norms for entry of more private and foreign players and raising the FDI limit in the sector to 49% from the existing 26%.
    • Let us hope the Government gets into fast track mode now.
  • An editorial comment in today’s ET on the Left’s denouement is worth an excerpt here:
    • … the trust vote outcome should awaken it to the fact that its blinkered anti-US intransigence cannot yield any political dividend. Its anti-Congress politics, driven by its traditional compulsions on the ground in West Bengal, Kerala and Tripura, is completely meaningless. That has, unfortunately enough, compelled it to stand together with the BJP on an issue that could have toppled a secular formation. Such anti-Congressism, unlike, say, 1989 when both the LF and the BJP came together to lend outside support to the V P Singh-led government, has no resonance today. It has only served to render the Left’s position more tenuous even for the so-called political representatives of the Muslim community. Such anti-Congress politics is, clearly, at the root of its current isolation.
  • Ballpark estimates of training expenditure in India Inc
    • Typically, Indian companies spend anywhere between 0.5% and 2% of their turnover on training. People-oriented businesses like IT and ITeS spend about 3-5% of their revenue on upgrading employee skills.
  • Dolly and crude prices – are we getting a breather from high crude prices?
    • Tropical storm Dolly in the Gulf of Mexico bore down on oil and gas installations on Monday. In spite of that the oil prices continued their downward slide, as forecasters pronounced that it may not become a major hurricane.
    • Oil prices tumbled $4 a barrel on Tuesday. The decline offered further evidence that investors, who drove prices to a new high above $147 a barrel, are now quickly pulling money out of the market.
    • There are indications that the price of oil is killing demand, especially in the US.
    • The dollar’s decline has been a major factor in oil’s ascent, as investors bought dollar-denominated crude contracts as a hedge against a weakening greenback.
  • Making green power mandatory
    • Government is toying with the idea of a new mandate that forces all future conventional power generation firms to also use renewable sources for producing energy. Companies may have to ensure minimum 5% of their future generation projects to come from green sources.
    • Right now, under the tariff-based bidding process initiated for thermal power projects, there is no pre-condition on generation from renewable energy sources. This would change under the proposed law.
    • Indian Renewable Energy Development Agency chairman & managing director: Debashish Majumdar
  • WTO talks: the US offer of cuts in its OTDS (Overall Trade Distorting Subsidies) in agriculture
    • The US has announced that it will be willing to slash these subsidies to $15 bn provided it was given significant market access in Nama and agriculture.
    • But the G20 and G33 countries are not enthused by the offer. They said, as against the current $7 bn figure, this represents more than 100% hike in US farm subsidies. They are expecting the figure to be around $12 to13 bn.
    • Bound rates: These are caps beyond which countries cannot increase their subsidies or tariffs.
    • Green room: The room (in WTO headquarters) where the participating trade ministers meet every evening to discuss offers.
    • Two of the principles that we need to understand in the context of WTO talks:
      • The principle of less than full reciprocity. In terms of this, developed countries are required to commit themselves to proportionately higher duty reductions relative to developing countries. This was meant to give developing countries flexibility in tariff reduction. But its effect has been largely negated, thanks to a new ‘anti-concentration’ clause.
      • Anti-concentration clause: It stipulates that sensitive tariff lines subjected to full tariff cuts cannot be concentrated in one particular sector or sub-sector.

22.07.2008

  • Mutual fund switch under tax scanner
    • A mutual fund switch by itself is not any violation of law. But tax on the profit made out of such switches, if not reported and paid for, is a violation. Profits on switches made within one year to purchase units in another fund, attract short term capital gains tax @15%. Many of such profits on switches are stated to be unreported.
    • Hence the IT department is reported to be looking at such transactions.
  • Corporate entry into primary education to get government okay
    • At present private sector is allowed to invest in primary education with the condition that the profits earned out of the activity have to be ploughed back and utilized for their stated objective of providing education. Hence trusts, charitable institutions and societies have been the preferred form of private intervention in primary education. Profits are not subjected to tax.
    • But this is set to change, with the government thinking of allowing profit making private companies to enter the primary education sector. This is with the condition that they have to have a public sector participant on board and also that their profits are subject to tax.
    • I am sure some of you may have strong objections to such proposals. I welcome your ideas on this.
  • The course of the nuclear deal in the weeks to come
    • Even as the Indian government battles it out back home in the Parliament for the nuclear deal and its own survival, some NSG countries are reported to be having reservations. But the Foreign Secretary appears confident of convincing them.
    • Once the IAEA board of governors approves the deal in its meeting on August 1, the US will approach Germany (the current Chair of NSG) to call for a meeting of NSG to push for an exemption.
  • Have a view on premium SMSes?
    • Premium SMSes are messages made to some special numbers which attract hefty charges from customers for each message. Normally we see such numbers being used for contests and promotions etc.
    • TRAI is particularly concerned about these premium SMSes, whose tariffs range from Rs 2-10 on three counts.
      • First, the tariffs for premium SMSes cannot be multiple times higher than normal text messages since the nature of services offered in both cases were the same.
      • Second, while the volume of premium SMSes have witnessed a massive increase in the last two years, telcos have cashed in rather than voluntarily reducing the charges.
      • Third, many customers are not fully aware of premium SMS rates as their tariffs are not ‘widely publicised’.
    • Service providers say that charges for these premium SMSes are high because revenues earned through them are often shared with the content provider, broadcaster and other stakeholders. But ask any of these stakeholders, they say that what the telcos share is a pittance.
    • Latest figures released by sector regulator TRAI reveal that customer preference for texting in India has hit an all-time low. From close to 8-9% of the operators’ revenues at one point, texting now provides GSM players with 4.3% of their total revenues, while for CDMA operators, it is a mere 1.8%.
  • What is the difference between a business jet and a micro jet?
    • Look at this graphic which gives superb details.
    • Speaking of jets, GVHL (Global Vectra Helicorp Ltd) a company that specializes in offshore helicopter services to India’s oil and gas sector, is reported to be toying with the idea of offering shuttle services in major metros where traffic jams are proving to be a headache. The fare is likely to vary from Rs 4,000-5,000 per trip according to the distance.
  • Developments on WTO talks – the G20 stand on subsidies and tariffs
    • THE powerful G-20 group of developing countries such as India, China and Brazil has stepped up pressure on developed nations like the US to substantially reduce their billions of dollars worth of trade-distorting farm subsidies and make steep duty cuts in products with high tariffs.
    • The developed countries, however, are unwilling to place caps on farm tariffs, despite the fact they are pushing for caps on industrial tariffs. G20 champions tariff simplification and wants that all farm tariffs should be converted into ad valorem (tariffs based on the value of the product). Rich nations have been resisting full conversion to ad valorem as they want to retain a large number of specific, compound, mixed and complex tariffs to provide another layer of protection.
  • The government is reportedly considering monopoly purchase of costly patented drugs and devices and make them available to patients at a lower price by obtaining bulk discount from the manufacturer.
    • This is one measure that is sure to raise the hackles of many. You should be having a view point on this.
    • Though many countries do have a negotiated system of purchase for costly drugs, the point is that all these purchases are for the public healthcare systems. However, the Indian government is proposing that it acts as a single window for the entire requirement of the country for a particular drug, including for private hospitals. This is nothing but monopoly, that has the following associated ills:
      • Poor availability, diversion, lack of transparency in pricing and a disincentive for competing products.
      • Interference with the practice of medicine as monopoly purchases would effectively select one from many therapeutic equivalents available. Since all drugs are not equally effective, by discouraging other therapeutic equivalents the monopoly purchases risk denying appropriate treatment.
    • Look at this ET editorial. Worth a read.
  • Ever heard of ‘check kiting’?
    • Very interesting. Look at this.
    • It would be equally interesting to look at the dictionary definitions of a kite in this context.
      • A piece of negotiable paper representing a fictitious financial transaction and used temporarily to sustain credit or raise money.
      • A bank check drawn on insufficient funds to take advantage of the time interval required for collection.
      • A bank check that has been fraudulently altered to show a larger amount.
  • Have a better example than this to explain soaring high?
    • Yelena Isinbayeva. Pole vaulter from Russia. Has set world records 22 times so far. She will be leading Russia’s charge at Beijing Olympics.

21.07.2008

  • Play ‘reverse arbitrage’ in stocks in these tough times
    • Know anything about this concept?
    • As futures of many key index stocks are quoting at a significant discount to spot prices, some aggressive foreign fund houses are learnt to have been borrowing shares heavily in a bid to cash in on the situation. These overseas players borrow the shares for an interest charge, sell the shares in the market, and simultaneously buy an equivalent quantity of the futures of that stock that are available at discount. This entire transaction is known as ‘reverse arbitrage’ in market parlance.
    • The difference between the sale price of the shares and the purchase price of the futures is the profit for the foreign fund house. This difference, also called spread, has to be wide enough for this investor to be able to lock in a neat profit after paying the interest charge on the borrowed shares.
    • Reverse arbitrage, though perfectly legitimate, also tends to drag down prices in a scenario where there is not enough buying support. Stock futures quoting at a discount means investors are bearish in their outlook on the stock prices. So when shares are sold to capture the arbitrage opportunity, the prophecy becomes self-fulfilling. Incidentally, the same mechanism was in force, but in the opposite direction, when the market was rising. When investors were selling futures and buying shares, indices would rise as a result of the cash market purchases.
  • Nepal prez poll run-off today
    • Remember anything about a run-off poll? We noted this for the first time on 10th May 2007 in connection with Presidential election in East Timor.
    • Now Nepal is set to witness a run-off poll in connection with its Presidential elections in view of the emergence of a clear winner.
    • Nepali Congress (NC) candidate Ram Baran Yadav and Maoist candidate Ram Raja Prasad Singh are in the fray.
  • What are Mirchi Kaan awards about?
    • They celebrate and laud the best work in radio advertising.
    • For the year 2008, Leo Burnett were the runners-up with 11 awards and O&M (Ogilvy and Mather) had amassed the maximum with 13.
  • I am sure many of you would have heard about IDRBT, the Hyderabad based Institute for Development and Research in Banking Technologies. But have you heard about AdRBT?
    • It stands for Ad Ring Back Tone. It is the new wave of advertisement. Via AdRBTs, each time a person calls he will hear an ad instead of a ring tone.
    • Here’s how AdRBTs work: When a caller calls an AdRBT subscriber he gets to hear an ad instead of the normal ring (until the called party answers the call). When the ad is being played the caller has the option of pressing “#” as a response to hear the product/offer being advertised. This key press is recognised and remembered by the system. Once the call ends the system triggers an action such as delivery of the offer through a coupon or automatic call back giving information about the product or a WAP URL push, etc.
    • RCOM created one of the first of its kind AdRBTs for the Reliance Power IPO, which hit the markets in January 2008. Reliance Power jingle was estimated to have been heard 800 million to 1000 million times, which is 3-5 times over other traditional media reaching millions of people across the globe.
  • Mumbai to have exclusive e-waste dumpsite
    • Mumbai, which tops the list in generating the highest amount of electronic waste in the country, is all set to have an exclusive site for dumping e-waste. Maharashtra Pollution Control Board (MPCB) and Mumbai Metropolitan Region Development Authority (MMRDA) officials would be finalising a landfill site exclusively to treat and dump ewaste.
  • Language lessons: gobsmacked
    • slang astonished and astounded
    • Eg: The one thing about India that leaves the world continuously gobsmacked is the country’s boundless entrepreneurial spirit.
  • The entrepreneurial Indian farmer
    • If you are asked to state four things that demonstrate the ‘never say die’ entrepreneurial spirit of the Indian farmer, what would they be? Compare your notes with the following given by Rajrishi Singhal in today’s ET? He compares the Indian farmer’s spirit to a marathon. A very good read.

1. Underbanking leading to an embrace by the money lender.

2. Facing the unscrupulous local shops selling seeds and fertilizers.

3. The wait for the rains in view of the inadequacy of irrigation facilities.

4. Braving the local mandi middleman to dispose of his produce.

  • SMiShing & Vishing
    • SMS phishing or SMiShing misleads the user to visit a website.
    • ‘Vishing’ directs the user to call on a number, for instance the customer care number of a telecom service provider, which instead is routed to a hacker.
  • The case for improving agriculture yields
    • India’s average rice yield today is 2.9 tonnes per hectare. By comparison, China’s average rice yield, at 6.3 tonnes per hectare, is more than double that of India. South Korea has achieved an even higher rice yield, i.e., 6.8 tonnes per hectare.
    • India has 170 million hectares under foodgrain cultivation, producing 220 million tonnes of foodgrains in a year. China has only 60% of this arable land area. But it is able to harvest twice the quantity of foodgrains that India produces.
    • About 60% of our farmers own only 0.4 hectares of land each. Another 20% of farmers hold an average of 1.4 hectares each. Therefore 80% of our farmers are small and marginal farmers.
    • In the light of the above reported facts, what can you suggest as measures to improve agriculture yields? I leave it to you to wrack your brains and come up with solutions. While doing so, you may find it worthwhile to look at this table that appeared in today’s ET. If you would share your thoughts on the shout box or through mail, that would be nice.
  • Look at where India’s carbon emissions would be by 2017
  • Karun Chandok
    • He became the only Indian to have the Indian national anthem played on a Formula 1 weekend. The first time was at Spa in 2007. Now by winning the GP2 Series for a second time, in Hockenheim, Germany, on Sunday.

19.07.2008

  • Revenues are fine but profits are a worry
    • So reads a head line in today’s ET. By reading the revenue and profit performance of just 120 companies that declared their quarterly results early, can a prediction about the performance of the economy be made?
    • The paper claims that though the sample is small when compared with the thousands of listed companies, the initial trend does have a degree of reliability because a comparison of the results of these companies with the aggregate results for India Inc for the last few quarters shows a matching behaviour.
    • Let’s hope the initial pointers of the trends are confirmed eventually.
  • A change for the better in relations between Iran and the US?
    • Washington and Tehran have no diplomatic relations since 1980.
    • While the US accuses Iran of secretly trying to manufacture nuclear bombs – a feeling that appears to be shared largely by the western powers – Iran vehemently says that the nuclear programme is about creating just electricity.
    • In the wake of the US announcement that it is willing to hold talks with Iran in Geneva on the subject and Iran’s prompt welcome of the move, all of a sudden the diplomatic heat between the two countries has showed signs of cooling. The US on its part has also said that it is ready to restore diplomatic relations with Iran. Both these are positive developments worth watching in the days and months to come.
    • Stay glued.
  • IP telephony and TRAI’s consultation process: BPO & ISP segments want unrestricted domestic IP telephony
    • TRAI’s consultation process on Internet telephony has kicked off a hornet’s nest in the domestic BPO industry. After ISPs, it’s the Indian BPO industry which is demanding unrestricted domestic IP telephony. Companies say that by restricting interconnection and sharing of infrastructure between domestic and international BPOs, the industry is becoming less competitive, especially the small domestic BPOs. Software and unified communication companies are also backing the BPOs in their demand as they will be able to provide IP based services like chat and mail on domestic IP calling.
    • What are the implications? More cheaper domestic calls – perhaps even free calls. That’s the way the market would be headed if unrestricted domestic IP telephony is allowed.
    • Very interesting; let’s wait and watch how TRAI decides.
  • Developing countries’ reservations on WTO talks on agriculture
    • The WTO released a draft text of agreement on agriculture for comments before the mini-ministerial meeting scheduled to be held in Geneva on July 21st.
    • The developing countries – especially the G-33 group of countries – have given a thumbs down to the draft text. What are their reservations?
      • G-33 said the number of goods to be exempt from tariff cuts was much lower at 6%. The group wants at least 8% products to be outside the ambit of tariff cuts.
      • It is also against the concept of an average cut in tariffs of special products. (Confused about the phrase ‘special products’? Our noting on 13th May 2008 clarifies them to you.)
      • Besides, it said the price and volume triggers to set off the SSM are inadequate. (If you are unclear about SSMs – Special Safeguard Mechanisms – please refer to our 13th June, 2008 noting on the subject.
  • Even the draft text on services is raising serious concerns among countries.
  • Language lessons: to mind one’s P’s and Q’s
    • ‘Evidently, now heads of state not only have to mind their Ps and Qs but also their peas and quotas.” So reads a sentence in today’s editorial.
    • Minding one’s P’s and Q’s means - to pay close attention to small details.
  • What is sustainable development?
    • Sustainability first appeared on the world agenda when the UN applied the term and later founded the Commission on Sustainable Development. Initially, the UN defined sustainable development as development that “meets the needs of the present generation without compromising the ability of future generations to meet their own needs.” More recently, practitioners have expanded this definition to encompass environmental, economic, and socio-political aspects.
    • The UN also promulgated an important term related to sustainability: the Triple Bottom Line (TBL) — or People, Planet, Profit. The TBL conceptually expands the traditional financial framework to encompass rigorous reporting on the organisation’s performance on sustainability issues such as the carbon footprint, hiring practices, and dozens of other metrics.
  • Farmer suicides – myth and reality
    • This is a very good article that appeared in today’s ET. It discusses quite a few important statistics about suicides in India and the world – especially in the context of farm suicides. Worth a read. Don’t miss it.
  • An institute for tailors
    • The Apparel Export Promotion Council has decided to set up an institute for imparting advanced training to master tailors and educating them on modern apparel business management. It is expected to come up as a centre of excellence to create a pool of highly skilled and design conscious tailor and cutters of garments.

18.07.2008

  • On scrapping Press Note 1
    • Remember anything about Press Note 1? Look at why the government is thinking of scrapping it. It is here.
  • Supreme Court to charge more from corporates as court fees?
    • At present, the Supreme Court earns slightly over Rs. 1 crore as court fees. Reportedly there are over 18,000 corporate cases pending before it.
    • A parliamentary standing committee is understood have proposed a multiple rise in court fees for corporates. The government seems to be happy with the proposal. The panel’s recommendations have further stressed setting up a separate bench in the apex court that would exclusively look after corporate matters. The panel’s recommendations require the dual sanction of the government as well as the highest judiciary, and subsequent amendments to the Supreme Court rules.
    • If this were to be gone ahead with the apex court could generate anywhere between Rs 1,000 crore and Rs 10,000 crore as revenue.
    • Have any take on this proposal? Express your opinion in the shout box.
  • Illegal immigrant network in Britain
    • “A network of people which allegedly provides illegal immigrants of Indian origin, mostly Punjabis, forged or stolen identity papers and helps them secure a job in Britain has been exposed in an undercover BBC investigation”, so starts a report in today’s ET.
    • The prescribed minimum wage in Britain is £5.5 per hour. In London it is £7.45 per hour. But the illegal immigrants work for as little as £2 per hour.
    • They are all illegal alright. But aren’t the people who employ them also culpable?
  • India slowly becoming a hub for small cars?
    • Car makers in markets like Latin America and Europe have reportedly ramped up sourcing orders of small cars from Indian companies, as surging fuel costs and recessionary trends take a toll on existing makes.
    • Nissan plans to buy 50,000 A-Star compact cars from its rival Maruti Suzuki and export to markets in Europe. It is also learnt that Tata Motors is talking to dealers to launch its Nano, the ultra low-cost car, in the western markets. Car makers prefer sourcing cars from India since operations are wholly owned compared to China, enabling low-cost production of components.
    • Korean car maker Hyundai exports 40% of its small car production, primarily i10 and Santro, which sells as Atos in 97 countries across the world.
  • Television penetration figures
    • The DTH (Direct to Home) market has currently about 6 million households as customers across the country. The cable & satellite households’ universe in contrast is of the order of 80 million.
    • See the potential?
  • E F Schumacher
    • He attacked nuclear power and the use of chemicals in agriculture while calling for an intermediate technology appropriate to the needs of end-users, in his book “Small is Beautiful: Economics as if People Mattered.” It was published in 1973.
    • Now do you know who coined the phrase appropriate technology?
  • Colonel Drake
    • He established the first commercial oil well in Oil City, Pennsylvania in 1860s.
  • Why are crude prices headed north?
    • The stable oil prices for nearly two decades (1984-2003) led to sharp reduction in oil exploration and rapid increase in demand due to complete disregard for energy conservation initiatives as evidenced by the gas guzzling SUVs on American roads and high imports of Russian gas in Europe.
    • The subsidised low oil prices in most of the developing world including China, India, Indonesia, etc., resulted in inefficient use of energy.
    • The geopolitical factors like the Iraq war, tensions with Iran and more assertive attitude of Russia have also added to the risk and oil price increase in the last few years.
    • Though many pundits bite the dust while predicting future levels of stock markets, commodity prices etc., I dare to venture out and predict; because I am no pundit. My take is that the oil prices will head south soon – in the next 6 months to one year time frame. My prediction is based on the conviction that commodity prices are cyclical in nature. Much more than the demand pressures, the current oil price boom is driven by speculation. Once the money involved in speculation in commodity markets starts chasing stocks or other financial investments, once the impact of the subprime crisis blows over fully, it is a matter of time before the commodity markets – including that of oil – head south.
  • A look at the costs of oil production
    • On the low side the cost of production of oil in Saudi Arabia is around $4 per barrel and on the high side it is around $40 per barrel in smaller, depleted oil wells.
    • At $70 per barrel large additional supplies of oil from Tar Sands, Shale Oil and secondary recovery of oil become possible.
  • Inflation – responsibility of the government
    • Writing about inflation Madan Sabnavis, the Chief Economist at NCDEX explains very well as to how the government is responsible for more than 50% of the inflation. Here he was referring to government in general; not any particular party or the present or previous governments. The article is worth a read. Do so here.
  • Who is the head of China’s central bank?
    • Zhoi Xiaochuan is the Governor of The People’s Bank of China.
  • Fashion capitals of the world
    • The Big Five are - New York, Rome, Paris, Milan, and London. Bombay slipped from 18th position to 22nd and New Delhi made it to the top 25 with an entry at 24th place.
    • The ranking was based upon GLM’s (Global Language Monitor) predictive quantities index — an algorithm that tracks words and phrases in print and electronic media, on the internet and throughout the blogosphere.

17.07.2008

  • How can you buttress the argument that the NDA’s and Left’s objections to the nuclear deal are merely technical?
    • They have been harping on the point that assured nuclear fuel supply in perpetuity gets a mention only in the preamble and not the operative part of the safeguards pact.
    • The Vienna Convention on the Law of Treaties does not differentiate between the preamble and the operative part of such agreements. So it doesn’t make a big difference whether the assurance is in preamble or in the operative portion of the agreement.
  • Fannie Mae and Freddie Mac
    • Wasn’t it just a couple of days ago that they became part of our lingo? Let’s know more about them. They are hogging the headlines for the wrong reasons. Read the piece about them in Discover It here.
  • Lessons from Rwanda
    • Want to know how community courts have made a world of difference to the carriage of justice in a country which witnessed mass genocides? Is there something for us to learn from that experience? In a very good article explaining about the conflict between Hutus and Tutsis, Prabhu Ghate ponders over the constraints that we face in learning from Rwanda.
    • For a hundred days in 1994, the Hutu government of Rwanda orchestrated one of the most comprehensive genocides ever perpetrated. It handed out machetes and called on every Hutu to do his duty as a citizen. The minority Tutsis, about 15% of the population, as well as a large number of moderate Hutus, were wiped out or fled. Out of a population of about 10 million, about eight lakh persons died, many of them women and children who were massacred in churches where they had sought refuge. The international community stood by and let it happen. It was left to an invading army of Tutsi refugees from Uganda, led by Paul Kagame, to restore order.
    • How did Paul Kagame restore order and bring about reconciliation between the two sections? The ID cards issued to the people simply show that they are Rwandans; not whether they are Hutus or Tutsis. Secondly, a national government was formed that included moderate Hutus. And finally community courts played the decisive role. For such a small country of 10 mn population, there are now about 170,000 judges in 10,000-odd locations around the country. All of the judges were trained and the justice system emphasised reconciliation rather than mere punishment.
    • About 120,000 were in detention, and they were placing a huge strain on the prison, prosecutorial and judicial system. After much discussion, in 2001, Rwanda decided to rope in the assistance of the traditional community-based courts headed by village elders. At the lowest level, these courts require the participation of the entire village community, which is expected to arrive at the truth through an interactive process in which anyone can participate. Rwanda’s Gacaca (or “grass”) root courts constitute a unique innovation in dealing with the aftermaths of genocide and have attracted considerable interest.
  • International liabilities and assets of banks in India
  • Substantial progress in the fight against HIV infection
    • Don’t be misled by the heading. We are far, far away from the day when people can take medication to get treated for AIDS with certainty.
    • When HIV infects human body, two regions are identifiable. One is the changeable region and the other is the constant region. HIV’s strength lies in its ability to fool the body into making abundant antibodies to the changeable regions of HIV but not to its cellular attachment site. HIV needs at least one region that must remain constant to attach to cells. Immunologists call such regions super-antigens. Because of its clever behaviour, no HIV preventive vaccine that stimulates production of protective antibodies is available.
    • Now it is reported that a University of Texas team led by Indian American Sudhir Paul has pinpointed the Achilles heel in the protective mechanism of HIV. The weak spot is hidden in the HIV envelope protein gp120. This protein is essential for HIV attachment to host cells, which initiate infection and eventually lead to AIDS. The Achilles heel, a tiny stretch of amino acids numbered 421-433 on gp120, is now under study as a target for therapeutic intervention.
    • First reported in the early 1980s, HIV has spread across developing countries, infecting some 33 million people by 2007 according to a WHO report.
  • Profession tax hike
    • Profession tax is levied by state governments or local bodies on professions, trades, callings and employments. The power to levy the tax flows from the Article 276 of the constitution that also puts a cap on the amount of tax.
    • Acceding to a long pending demand of the state governments, the Centre has decided to raise the ceiling on profession tax from Rs 2,500 to Rs 7,500 per annum.
    • The Centre will now amend the Article 276 of the Constitution to raise the limit.