01.07.2008

• The first signs of worry on the BoP front?
• BoP: Balance of Payments. Today’s lead story highlights that crude prices are taking a toll on our current account deficit figures. Are these the first signs of a bleak future on the BoP front?
• After eight years, the country recorded a deficit in its fourth quarter current account in the country’s balance of payments. The current account deficit was $1,041 million during the quarter ended March 2008 compared with a surplus of $2,563 million in the same period of last year. The current account deficit for the entire year amounted to $17.4 billion or 1.5% of GDP. Last year it was $9.77 bn. The year ended with the highest ever remittances as reflected in private transfers at $40.78 billion as against $27.94 billion last year. Despite such huge private inflows, the current account saw deficit because of spiralling crude prices.
• The current account in the balance of payments measures the net position of a country’s exports and imports of goods and services. A deficit implies that imports far outpace exports and a reversal of the trend of a surplus for long has been attributed mainly to the surge in oil prices. An economy’s current account deficit is also a measure of how much external savings it succeeds in absorbing, to enhance investment over the level permitted by domestic savings.
• What is to be blamed for the poor response to our oil exploration bids in NELP VII?
• Look at this graphic which shows the poor response that NELP VII got. NELP – New Exploration and Licensing Policy.
• The DGH (Director General of Hydrocarbons) VK Sibal, blamed lack of clarity on policy related issues like extending tax holiday to gas producing companies, for the poor show.
• The bidding round (launched on December 13, 2007) was originally scheduled to be closed on April 11. The deadline was first extended to April 25, later it was changed to May 16 and finally to June 30. The government offered 57 oil & gas blocks under NELP-VII. This included 19 deepwater blocks, 29 are onland blocks and nine blocks are in shallow water.
• In previous six rounds, the government awarded 162 blocks. So far, the largest commitment of $3.32 billion investment was received in under NELP-VI where 52 blocks was awarded. Under NELP rounds, 49 oil and gas discoveries have already been made in Cambay onland, North-East Coast and Krishna Godavari deepwater areas, accreting over 600 million tonne of reserves.
• Why are the truckers’ demands?
• Hope you know that the AIMTC – All India Motor Transport Congress – has declared a nationwide indefinite strike from tomorrow. What are their demands?
• Exempting sub-contractors from service tax
• Adhering in letter and spirit to the 2004 agreement
• Removal of ad valorem taxes levied on diesel
• Scrapping tolls on old highways where costs have been recovered etc.
• Book
• “Sea of Poppies” by Amitav Ghosh. An acclaimed fiction in recent times. This is part one of a trilogy. Worth knowing something about this. Look at what I found on the web about this.
• At the heart of this vibrant saga is a vast ship, the Ibis. Its destiny is a tumultuous voyage across the Indian Ocean; its purpose, to fight China's vicious nineteenth-century Opium Wars. As for the crew, they are a motley array of sailors and stowaways, coolies and convicts.
• In a time of colonial upheaval, fate has thrown together a diverse cast of Indians and Westerners, from a bankrupt raja to a widowed tribeswoman, from a mulatto American freedman to a free-spirited French orphan. As their old family ties are washed away, they, like their historical counterparts, come to view themselves as jahaj-bhais, or ship-brothers. An unlikely dynasty is born, which will span continents, races, and generations.
• The vast sweep of this historical adventure spans the lush poppy fields of the Ganges, the rolling high seas, the exotic backstreets of China. But it is the panorama of characters, whose diaspora encapsulates the vexed colonial history of the East itself, that makes Sea of Poppies so breathtakingly alive - a masterpiece from one of the world's finest novelists.
• What are the reasons for stagnation in our agriculture?
• According to a recent study commissioned by RBI, a host of structural factors including fragmentation of land holdings, stagnant public investment and slowing of irrigation expansion since 1991 have in general led to poorer production conditions in Indian agriculture.
• Farm fragmentation, arising out of demographic pressures, is an obvious one. From 39.1% in 1960-61, the share of marginal land holdings (less than 1 hectare) in all operational land holdings has increased to 69.8%. This has largely to do with the structure of the economy; the percentage of economically active population engaged in agriculture has declined only marginally over the reform years, from 64% in 1990 to 57.8% in 2004.
• Poor capital formation in agriculture has also contributed to low output growth in agriculture as the lack of investment has made productivity improvement difficult to obtain. Interestingly, gross capital formation stagnated in early reform years even in absolute terms. It picked up in 2000 only to stagnate at a higher level. In relative terms, it actually fell from 1.92% of GDP (at 1993-94 prices) to 1.37% in 1999-2000 and from 2.2% in 1999-2000 (at 1999-2000 prices) to 1.9% in 2005-06.
• The stagnation has largely to do with almost moribund public investment. Since much of the investment requirement in the case of agriculture is what would normally be in the nature of public good, this stagnant public sector capital formation has serious implications. The expansion of irrigation is one evident result of the declining capital formation in agriculture.
• The study flags the shrinking public support for expanding the knowledge base for agriculture. From a high of 0.54% of total revenue spending in 1990-91, the public spending on research and extension has fallen to 0.45% by 2005-06.
• Lakshmi Mittal on Goldman Sachs board
• The world steel tycoon based in England, had joined the investment banking behemoth as an independent director. He is the second Indian to grace the board; the first being Rajat Gupta of McKinsey.
• Goldman chairman and CEO is Lloyd C Blankfein. Founded in 1869, Goldman Sachs is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high net worth individuals.
• EURO 2008
• The champs are Spain after beating Germany in the finals 1-0. They won it after a long gap of 44 years.
• Xavi Hernandez, Spain’s midfielder is chosen as the player of the tournament.
• Tyson Gay did 100 meters in 9.68 seconds; but it is still not world record. Why?
• Because it was helped by a 4.1m/sec tailwind that surpassed a 9.69 run by Obadele Thompson of Barbados in 1996 that had a 5m/sec breeze boost. It is not legal for world record considerations because of the wind.