11.07.2008

• Is it good for the government to intervene in a private corporate battle?
• “PM, govt top guns may broker Ambani peace deal - Truce Talk: South Block Has Already Broached The Issue With The Feuding Brothers.” So reads today’s headline in ET.
• Issues like these are the potential stuff for debates and interview questions. Is the government right in trying to intervene? My take is – the Reliance family is too big and important for the country to be ignored and the disputes between them have ramifications far beyond their family. Apart from being the biggest corporate group of the country, its business interests span sectors, some of which are ‘strategic’ by nature. So the country can ill afford to let the two brothers alone solve their problems. Though it may look interventionist, I fully support government’s moves to broker a truce between the two brothers. Both the brothers on their part also have to display required maturity and sagacity to settle the disputes between them amicably. It is in their interest and the interest of the country.
• Booker of the Booker
• Salman Rushdie won this prize for his “Midnight’s Children”.
• Kissa kursi ka?
• When it comes to power, even the Left’s politicos do not seem to be far behind in clinging on to power. Look at the predicament in which the Parliament Speaker finds himself in!
• Somnath Chatterjee’s continuation as Speaker became untenable after his name figured in the list of those withdrawing support to the government.
• It is absolutely true that the Speaker does not represent any political party in the discharge of his duties and functions. But, the question now is not about his impartial conduct, but the correctness of holding the post after his name figured in CPM’s list to the President.
• While friendly politicos like Amar Singh said there was no need for the resignation of Mr Chatterjee, rivals like Mamata Banerjee said Mr Chatterjee should immediately vacate the post. But his party bosses are learnt to be livid at his delay in putting in his papers. CPM general secretary Prakash Karat has already hinted that the party was keen on Mr Chatterjee joining the Left’s campaign against the government.
• Incidentally, know anything about “Kissa Kursi Ka”? Look at it here.
• Look at how the future healthcare scene might look like.
• It is here. Not just interesting to read; but very much possible.
• A new trojan prowling on the Internet
• If there is a message in your inbox titled “US attacks Iran — over 20,000 soldiers deployed” or something similar, beware. Don’t open it. A click to open the article may initiate the unknown trojan attack that would eat all data of your computer. The United State computer emergency response team (US-CERT) has found the malicious trojan that targets to capitalise on the conflict in the middle east. The attackers are using over two dozen different headlines, including the onslaught of third world war, to attract users and divert them to the malicious link, according to the US-CERT. Internet users have been advised not to be fooled by such articles and also secure there system through latest anti-virus software.
• What are referred to as the ‘outreach’ countries in the G8 summit context?
• India, China, Brazil, South Africa and Mexico
• The lacklustre performance of municipal bonds
• Though Fitch Ratings has given 10 municipalities the ‘investment’ grade, their performance in attracting debt has been far from satisfactory.
• It is now more than a decade since the first municipal bond or muni was issued by Ahmedabad.
• Only nine cities — Ahmedabad, Bengaluru, Hyderabad, Kanpur, Ludhiana, Madurai, Nagpur, Naskik, and Visakhapatnam — have issued munis to date.
• The amount raised is a measly Rs 73 lakh, less than 1% of the total Indian bond market, which itself is very small, compared with 10% in the US.
• Financial inclusion and microcredit
• Manoj Pant informs us his observations about achieving financial inclusion through this article. After a tour to the North East, this is what he has to offer:
• First, small farmers never default on their loans while the urban consumers often do. This seems contrary to what most of us are led to believe from popular writing. The logic, however, is disarmingly simple. If small farmers default they are unlikely to get further loans and hence timely repayment is their way of ensuring further loans. On the other hand, larger urban borrowers often default/as they can approach other banks, etc., for loans.
• Second, farmers tend to use loans for purposes like setting up tailoring establishments, setting up piggeries, horticulture, etc. In other words, to diversify into non-agricultural professions. Their loans are mainly for working capital and hence their need to ensure creditworthiness for future loans. This also underlines the fact that farming is not very profitable for those with small holdings and they seem to be ready to move to other rural-based professions.
• Finally, about collateral. The use of guarantee of the farmer’s community while doing some background work to confirm the purpose for which loans are being taken, has proved very effective.
• The bottom line? The solution seems to lie not in the expansion of traditional banking to rural areas but using more innovative channels to take loans to the farmers. Small farmers do not typically default on loans unless encouraged by politicians to do so. It is not in their economic interest to do so. In addition, traditional structures (like the village communities in the North East) should be tapped for solving the problem of lack of collateral. Identifying such structures seems to be the way to go.
• Energizing agriculture sector
• I am sure you would have heard that agriculture has the potential to become the engine for future growth in the economy, but only if the right cards are played now. But what are these ‘right cards’? Can you identify? Look at the following from an excellent article that appeared today:
• Over 60% of the country’s population is today dependent on agriculture, which contributes to only 20% of GDP. As a result of so many people depending on agriculture for income, land holdings are exceedingly fragmented, leading to falling crop productivity. According to official statistics, close to 60% of all land holdings in the country are marginal holdings (where land ownership is less than 1 hectare). Consequently, the average size of operational holdings is not even half a hectare, or about 1 acre. Average foodgrain yields, therefore, have been almost stagnant.
• Diversion of crop land into non-agricultural use is growing and could be another cause for worry in the long run. New ways should be found of converting non-agricultural land into agricultural land (without actually reducing the forest cover) and employing technology to increase the productivity of these tracts. Antiquated legislation regulating sale and purchase of agricultural land also needs to be updated, with adequate safeguards, to allow for consolidation of farmland.
• A solution for improving the income and the yields would be to introduce contract farming in a big way. This allows a large corporate to tie up with a large number of farmers with contiguous plots. Both win: while the farmer does not lose his homestead and is assured of an income at the end of the harvest, the corporate is ensured a steady supply of output, which takes some of the uncertainties out of his supply chain.
• Finally, the government has no choice but to rise above petty vote-bank politics and take a hard look at all the handouts (such as loan waivers or cheap credit) and the subsidy structure. According to the World Development Report, 2008, 75% of India’s agricultural budget is spent on such private goods, instead of investing in public goods (such as rural roads, or increasing outlays for agricultural R&D).