• An interesting case on credit card interest rates pending before Supreme Court
    • The National Consumer Disputes Redressal Commission, gave an order recently (July 7, 2008) restraining Citibank from charging an interest rate of over 30% a year to credit card holders who fail to make full payment on the due date. Citibank approached the Supreme Court challenging this order.
    • The US-based bank pointed out that the RBI in its circular of July 23, 2008 had said that banks prescribe their respective ceiling rate of interest in respect of small-value personal loans and this would apply to credit card dues as well. RBI had clearly stated that banks were free to determine rates of interest on non-priority sector personal loans without reference to the Benchmark Prime Lending Rate (BPLR) and regardless of the size of loan.
    • Credit card interest rates are usually very high, hovering well above 36% on an annualized basis. That’s why I have never been using credit cards as credit cards; but as charge cards. That is I will never keep any amount outstanding. I will pay off the entire amount shown as outstanding on any given month. Once you get into the trap of paying the minimum amount due shown in a credit card bill, you are in for bondage almost like forever. So be cautious. And let us hope the Supreme Court will drive some sense into this madness of too high rates.
  • Centre’s head-in-the-sand approach to terror law
    • It is well known that Maharashtra has an act which is popularly known as the MCOCA. It gives the state government some teeth to fight terrorism. But when Gujarat framed a similar law called GCOCA and sent it to the Centre for Presidential assent, the Ministry of Home Affairs has been sitting on it for the last four years.
    • The stand taken by the Centre is that laws which are similar to POTA are no good and that in spite of their being on the statute book, they did not deter the occurrence of terrorist activities. I can’t agree more with the Gujarat CM Mr. Modi, when he counters this argument by saying that just because there is Section 302 of IPC (which prescribes death penalty for murder) on the statute book murders have not stopped taking place.
    • You have the whole field of debate open for you boys. Go shoot out your opinions in the shout-box.
  • Kosi floods in Bihar; failure of Indian diplomacy?
    • The Kosi river burst a dam in neighbouring Nepal earlier this month and surged into Bihar, swamping village after village as authorities failed to evacuate millions on time.
    • Surging waters have swamped 1,00,000 hectares of farmlands, destroying wheat and paddy crops worth millions of rupees.
    • The death toll so far – 85 and still counting.
    • Take a look at this highly informative piece that is penned by NK Singh. I like him for the details he gives. Some excerpts from his piece for those of you who want to keep it for record:
    • The Kosi is a tributary of the Ganges and travels through the upper mountainous regions in Nepal before meeting the plains of Bihar and merging with the Ganges several hundred km downstream. The meandering path that it takes bringing floods along has earned it the sobriquet ‘River of Sorrow’ comparable to the Huang Ho, also known as Yellow River, of China.
    • The first credible attempt to tame the river began in 1956 with an eastern and western embankment of 105 and 106 km, respectively, of which about 32 km of the eastern embankment is located in Nepal. The embankments were completed in 1959. A barrage at Birpur to regulate water flow was completed in 1964.
    • The Indo-Nepalese agreement signed between the two countries which facilitated this project brought benefits to both India and Nepal. The Nepalese side however continued to question the adequacy of benefits received from the project. Nepal had all along wanted a barrage system upstream of the present which in their perception would have yielded more optimum returns.
  • Language lesson: sobriquet
    • A familiar name for a person (often a shortened version of a person's given name)
  • Pax Americana and Pax Britannica; an explanation
    • I am sure many a political science student would have been flummoxed by these two terms at the first sight. If I remember it right; they are still there somewhere in the International Relations paper. Know what they mean? Look at this excellent explanation ferreted out from the web for you:
    • The term "pax" is Latin for peace. Historians for centuries have referred to "Pax Romana" to describe the period of relative peace and prosperity when the Roman Empire dominated Europe and the Middle East. The unified control by a single power prevented lots of smaller fights between countries or small independent powers which would have fought had they not been under Roman Control. It contrasts with the chaos and barbarism that existed before and after the Empire.
    • In the 19th Century, many began referring to "Pax Britannica" to justify British Colonialism bringing peace and civilization to many areas of the world.
    • Today some people have altered the term yet again to "Pax Americana" to say that the US domination of the world can force a relative peace in many areas of the world by exerting its strength.
    • It is with this background that you should read today’s op-ed piece that appeared in ET. It discusses how the American hegemony has been taking a severe beating in this 21st century.
  • FTA with ASEAN
    • It is the fourth regional trade agreement after the FTA with Sri Lanka, Thailand and the Comprehensive Economic Cooperation Agreement with Singapore.
    • The deal will give a fillip to bilateral trade, which is currently only $35 billion, less than a fifth of that between China. This is expected to go up to $50 billion by 2010 and once talks for trade in services and investment are also concluded by end 2009, it is bound to increase even further.
  • One of the paradoxes of India’s tag as a poor nation
    • In a country of more than a billion, the industry is facing shortage of skilled workers while over 700 million live on less than $2 a day!


  • Life insurance term cover becomes cheaper
    • The cost of life insurance has come down by up to 40%, with Insurance Regulatory and Development Authority (IRDA) reducing the capital that insurance companies need to sell term policies. For the second time since the liberalisation of the insurance industry in 2000, there has been a dramatic reduction in term insurance rates, making life protection a great deal cheaper.
    • Term policies are purely life covers as against endowment policies, which have a sizeable savings component. While the premium for endowment policies will also soften, the benefit will be more apparent on term covers.
  • Kalpana Morparia moves to JP Morgan
    • Kalpana Morparia, regarded in the Indian financial sector as one of the public faces of ICICI Bank and a trouble-shooter for the group, has quit. She will now head financial services major JP Morgan’s operations in India.
  • Inflation slows down
    • Annual inflation declined marginally to 12.40% for the week ended August 16, 2008, from 12.63% a week ago.
    • The decline in inflation is largely on account of the drop in global crude prices and marginal easing of prices of essentials such as fruits, vegetables, eggs, meat and fish.
  • More border troubles for India?
    • Intelligence agencies believe that with the political changeover in Pakistan, the terrorist outfits may now be “more free” than they were under Gen Pervez Musharraf, given his tough stand on terror. Also, with the turmoil in J&K giving the jehadi outfits an opportunity to play on the secessionist tendencies, terrorists have started converging at the launching pads across the international border for infiltration with renewed vigour.
  • Powerful women of the world
    • Indian women prominently figuring in this list compiled by Forbes magazine include:
      • Indra Nooyi, the Pepsico chief at 3rd position.
      • Sonia Gandhi at 21st place.
      • Mayawati at 59th place.
      • Kiran Mazumdar Shaw of Biocon at 99th place.
    • The first position has gone to the German Chancellor for the third straight year, Ms. Angela Merkel.
    • Sheila C. Bair, the chairman of the Federal Deposit Insurance Corp., is at No. 2.
  • What is Cobra?
    • It is the elite anti-naxal force that is being set up in the country.
    • It will be a 10,000-strong CRPF command.
    • Cobra is the acronym for Combat Battalion for Resolute Action (Cobra).
  • Indo-ASEAN FTA finally concluded
    • Negotiations on ASEAN-India free trade agreement (FTA) — which will result in elimination of tariffs on 80% of the commodities traded between the two sides by 2015 — were formally concluded on Thursday. Economic ministers from India and the 10 ASEAN countries have decided to target implementation of tariff reduction commitments from January 1, 2009.
    • The FTA is expected to boost bilateral trade between India and ASEAN to $50 billion by 2010 from the present level of $35 billion.
    • It took six long years for the two sides to conclude the negotiations as the talks tripped several times over issues such as rules of origin (ROO) and market opening by India for five sensitive agricultural products including palm oil, tea, coffee and pepper.
    • Under the pact, India and ASEAN will eliminate import duties on 71% products by December 31, 2012, and another 9% by 2015. Duties on 8-10% products that have been kept in the sensitive list will also be brought down to 5%.
    • India will keep 489 items in the negative list of products to be excluded from tariff reduction commitments.
  • LIC investment norms
    • Yesterday we were noting about this topic in our blog along with my comments thereon. Take a look at an excerpt from today’s ET editorial on the issue:
    • LIC, and indeed other traditional development finance institutions, must be given full freedom to decide how and when to sell their equity holdings in companies. So there is no case for having a special dispensation for LIC — that of being able to hold more than 10% of a company’s equity capital. Besides, there surely must be a level playing field between the private and public sector insurance players in this regard. Ideally, within broad norms, both must be left to their judgement on how much they might want to invest in a single company. Investment norm by fiat is best avoided.
  • Language lessons:
    • inure
      • Made tough by habitual exposure
      • Cause to accept or become hardened to; habituate
      • Usage example: The indifference of a state — cynically inured to the destruction floods wreak in Bihar with seasonal regularity — has, this time around, compounded an annual disaster into a catastrophe.
    • Eddy
      • A miniature whirlpool or whirlwind resulting when the current of a fluid doubles back on itself
    • Whopper
      • A gross untruth; a blatant lie
      • Something especially big or impressive of its kind
    • arcane
      • Requiring secret or mysterious knowledge
  • Move away wax models, gold statutes are here!
    • The British Museum unveiled a solid gold statue by British artist Marc Quinn titled Siren 2008 of supermodel Kate Moss. Quinn’s work is the largest gold statue since Ancient Egypt and will premiere at the British Museum as part of the exhibition ‘Statuephilia: Contemporary sculptors’ on October 4, 2008.
  • The US economy grows faster than anticipated
    • The US economy expanded at a faster pace than previously estimated in the second quarter, helped by surging exports and a smaller decline in inventories.
    • The 3.3% annualised increase in gross domestic product from April through June was higher than forecast and compares with an advance estimate of 1.9% issued last month, the commerce department said on Thursday in Washington.
    • It is perhaps too early to sing “happy days are here again.”


  • LIC’s investments in blue chip companies beyond the limits permitted by the IRDA may be allowed to stay
    • The finance ministry is reportedly considering a move to this effect.
    • Under the norms issued by IRDA, no insurance company can invest more than 10% of its total fund size, or 10% of the outstanding shares of the investee company — whichever is less — in any company. The regulator had given more freedom to private insurers in terms of investment, while aligning LIC’s privilege also with the industry, allowing the public sector life insurer to invest only 10% of its portfolio in a single company against 30% earlier.
    • However, LIC, the country’s largest insurer, has invested more than the prescribed limit in many companies.
    • Take a look at LIC’s investments in various companies in this graphic.
    • What are the pros and cons of this move by the finance ministry?
      • In times like these when the companies are seen as blue chip companies (meaning their share prices are giving tremendous market returns) LIC will be too happy. But during hard times when the share prices of these companies take a dive, there will be name-calling and a clamour for the heads, who allowed such relaxation, to roll.
  • Why is Orissa on the boil?
    • Orissa has been on the boil since the killing of Swami Laxmananand Saraswati, a member of the central advisory committee of the VHP, and four others on Saturday evening by suspected Maoist guerrillas at his Jalespata ashram in the district.
    • On Monday, the VHP called for a state-wide shutdown. Since then, 11 people have been killed in the state, 10 in Kandhamal alone.
    • Saraswati was leading a campaign against cow slaughter and religious conversion in the communally sensitive district — which with a population of around 600,000, including 150,000 Christians, has witnessed numerous clashes between Hindus and Christians in the past. Radical Hindu groups in the state blamed the Church for the crime and alleged that Christians killed Saraswati because he was opposing religious conversion.
  • Language lessons: compos sui — master of himself
    • Usage: A sportsman must be compos sui in order to become number one.
  • Tata’s Nano project at Singur: how do you characterize the conflict of interests involved?
    • In an excellent piece TK Arun writes about this. In the process we learn very good lessons on the industrial revolution. That portion of the article is so good, I thought it deserves an excerpt:
      • Transition from agrarian to industrial life around the world has entailed disruption, dislocation, loss and violence. Britain’s Enclosure movement, in which rich landowners took away land to rear sheep to feed a growing woollen industry, forced destitution on poor peasants who used to graze their cattle on the land enclosed and taken away. Those whose land or access to land was taken away became “doubly free” in Karl Marx’s language: they were freed from land, their means of production, and from all traditional obligations and bondage to the landlord. These ex-peasants had no choice but to exercise their freedom to sell their labour, in a completely novel form of earning a livelihood, as factory hands.
        In Europe, the industrial revolution took place when formal, leave alone functional, democracy did not exist. In land-extensive economies such as in north or south America or Australia, displacement of peasants was not a necessary condition for industrialisation. In thickly populated Asia, it’s just the opposite. In east and south-east Asia, including in China, such displacement of people from their traditional occupations could take place easily, the political climate being too authoritarian to permit effective protest. Things are different in India.
        Displaced Indian peasants have an additional degree of freedom: the right to organise protest and bring pressure on the state by any and every means available to a competitive polity. Both Mamata Banerjee and the Singur farmers are currently exercising this third degree of freedom. But it also administers the third degree to Bengal’s plans for industrialisation.
    • Hadn’t seen a better analysis lately.
  • On financial inclusion
    • Today’s articles that appeared on page 18 & 19 of the ET, Mumbai edition give adequate material on the subject of financial inclusion, for any first time reader also. Worth a read.
    • I found Naina Lal Kidwai’s ideas highly acceptable in this regard. Take a look at them here.
  • E-waste
    • About 50 mn tonnes of electronic waste or e-waste is generated every year, globally.
    • India produces about 3 lakh tonnes of e-waste every year. Of this, only about 5% of previous metal can be extracted.
  • Thorat committee
    • It made recommendations regarding structural and human resources changes in the RRBs to the National Bank for Agriculture and Rural Development (Nabard).
  • Performance evaluation of PSUs
    • Currently, the performance evaluation of PSUs is calculated on the Balanced Score Card that includes both financial and non-financial parameters having equal weight. The non-financial parameters are further divided into dynamic parameters (30%), enterprise-specific parameters (10%) and sector-specific parameters (10%).
    • Based on the composite scores, the government decides whether a company can be upgraded as a navratna, miniratna or schedule A or B company.
    • But what is the culture shift required for a PSU? Look at McKinsey’s prescription here.
  • Cricket
    • At last some good news. India wins the ODI series against Sri Lanka, after winning the fourth one dayer. Some saving grace, having lost the test series.
    • Bradman remembered: Australians marked the centenary of their greatest sporting hero, cricketer Don Bradman, by celebrating the fact his unbeaten record is still untouchable 60 years after he quit the sport. Bradman, who died in 2001 aged 92, played his last match in England in 1948 and retired with a yet-to-be topped Test batting average of 99.94.


  • India takes the Imperial route to oil security
    • ONGC Videsh (OVL), the foreign investment arm of the country’s largest exploration company, ONGC, on Tuesday put in a formal bid to acquire UK-based oil firm Imperial Energy at 1,250 pence per share.
    • Imperial Energy, with assets in the Russian Federation and CIS countries, is valued at $2.58 billion at the bid price. In the financial year ended December 31, 2007, Imperial’s production was 833,799 bbl. The company has approximately 920 million boe (barrel oil equivalent) of independently estimated proven and probable hydrocarbon reserves and approximately 3.4 billion boe of independently estimated proven plus probable plus possible hydrocarbon reserves.
    • While the management that holds a 6.3% stake in the company has already given a binding irrevocable commitment to sell its stake at the bid price, there is a further commitment (although not irrevocable) by Baillie Gifford & Co which holds 9.2% stake to sell out. With commitments of over 15% already in the bag, ONGC will approach other institutional stakeholders once regulatory approvals come in. The company will be given 28 days to make the open offer after the regulatory approvals come in.
    • The deal is expected to close in 45 days. The offer by OVL lapses on December 31, 2008.
    • Is it a matter of time before we also get worried over our overseas assets and oil security and talk like the USA about defending our energy security?
  • Language lessons: pummelled
    • Look at this sentence:
    • Domestic airlines, pummelled by surging crude oil prices in the past two years, are planning to hike fares for the seventh time this year.
    • Meaning of pummelled here: Struck, usually with the fist
  • Festive season brings air fare hikes for all of us
    • With ATF (Aviation turbine fuel) prices ruling very high, from about Rs. 21,000 a kilolitre back in 2004 to about Rs. 71,000 airlines have now decided that they can’t help but raise the fares. Intense competition among them for grabbing market share has forced them not to price their sales economically. The result is that this year they are expected to lose about $1.5 bn.
    • ATF costs comprise of about 35 to 40% of an airline’s operational costs typically in India.
  • J&K’s SASB land transfer issue
    • With the whole agitation boiling down to as one between separatists versus nationalists, the Centre decided to display some resolve on its part and decided to adopt a different strategy to tackle the agitation. While a four-member committee constituted by J&K governor has kicked off talks with SAYSS on resolving the land row, security forces have been asked to the handle secessionist protests with an iron hand.
    • Farooq Abdullah government had in 2000 enacted “the J&K Shrine Board Act’’ to provide basic facilities to pilgrims and managing the religious shrine. Since the state government had refused to allocate any land to run the functions of the shrine board effectively, a writ petition was filed in the J&K high court. In its ruling delivered on April 15, 2005, a single-judge bench upheld the decision to transfer land to the shrine board.
    • It is consequent to this that the J&K government had allotted 800 kanals of land to the shrine board. Now this is what is at the centre of the whole agitation. The separatists as well as the opposition parties in J&K now demand that this land transfer be annulled. The nationalists and people in Jammu want the land transfer to be gone ahead with. A clear divide between Jammu and Kashmir is thus visible.
  • Linearity of growth
    • This phrase describes the state of affairs in which our IT companies find themselves in today. Their revenue growth is a function of employee head count. The more the number of employees, the bigger is a company’s revenue. This is a big concern given the already large numbers of employees.
    • Infosys’s acquisition of British consulting firm Axon is an attempt by it to beat this linearity of growth - by diversifying into higher-end services such as consulting, package implementation, systems integration and products.
  • Here is a very good editorial piece on what is going on in Orissa.
    • Strongly recommended. You should have such analysis in your repertoire to write meaningful essays on subjects like these when called for.
  • Quotable quote on politics
    • “Politics is not the art of the possible. It consists in choosing between the disastrous and the unpalatable,” quipped the late economist John Galbraith some four decades ago in his memoir titled Ambassador’s Journal!
  • A reasonably good debate on banning SIMI
    • Read this. Though I am not in full agreement with both the authors, it does serve our purpose in so far as your ability to articulate your own view point gets enhanced.
    • At the end of reading this debate, I am only left wondering about why should there be such a strict separation of powers between judiciary and executive. Remember the Sylvester Stallone starrer that came a decade or so ago? The roles of executive and judiciary are combined to a large extent in that movie. Though I won’t subscribe to that world view, I think there should be some sort of coordination between the judiciary and the executive to ensure that the executive speeds up its investigation processes and the judiciary disposes of the cases at a meaningful pace. Otherwise the spectre of delayed justice stays as the order of the day and law-breakers can get away with impunity by committing any crime; being fully aware and confident that by the time they are brought to justice they will perhaps be not alive anyway.
  • Isn’t Virgin Mobile an MVNO in India?
    • We were noting that Virgin Mobile’s entry into India heralds the entry of MVNOs (Mobile Virtual Network Operator) in India, sometime back; right?
    • Wrong say DoT, Tata Tele and Virgin Mobile.
    • An MVNO would involve purchase of minutes from facility-based mobile network, freedom to prescribe tariff, customer ownership and separate licence. But the Tata-Virgin JV did not involve any of these factors, and hence is not an MVNO.
  • One third of the world’s poor are in India
    • Read this piece. It quotes the World Bank reports and gives a sobering picture.


  • Infosys buys UK’s Axon for Rs 3,300 crore
    • Infosys acquired UK based Axon Group, a SAP consulting services company listed on London Stock Exchange, for about $753 million (407.1 million pounds) in an all-cash deal
    • Infosys has offered 6 pounds per share, which is a 33.1% premium on Axon’s six month average stock price and almost 19.4% over the closing price on Friday
    • Axon, with around 2,000 employees, provides consultancy services to MNCs with SAP as their strategic enterprise platform. Axon’s revenues of £204.5 million in fiscal 2007 with a net profit of £20 million
    • Rationale for the deal: The SAP practice is a growing business segment for Infosys, accounting for 24% of its revenue with a CAGR of 65% over the last three years. This deal gives them a foothold in the lucrative US and European markets
    • Infosys deal is said to be the biggest overseas buyout by the Indian IT sector. The biggest acquisition till now was the Wipro’s acquisition of Infocrossing for $600 million last year
  • Tata set 2-week deadline for Singur
    • Tata Motors may pull the plug on Singur if the situation does not improve within the next fortnight
    • The Singur plant is a readymade construction, which can be moved. The expected loss is estimated to be Rs 100-200 crore on account of expenses incurred in laying the foundation, besides the inevitable delay in full-scale production of the Nano.
    • Nano’s launch may not get affected by the agitation in Singur, because the first batch of around 4,000-5,000 cars is reportedly ready at Tata Motors’ Pantnagar and Pune plant
    • Nano project is getting offers from a number of state governments, including Maharashtra, Orissa, Andhra Pradesh and Uttaranchal
  • 3G spectrum auction for CDMA players too
    • The Telecom Commission under the Department of Telecom has modified its policy on allocation of spectrum for third generation (3G) mobile communications using the CDMA platform. Auction will be for radio frequencies in the 800 MHz band
    • The Base price for 3G frequencies in the 800 MHz will be Rs 40 crore for metros and category A circles, Rs 20 crore for category B circles and Rs 7.5 crore for category C circles
    • This implies that CDMA players such as RCOM, Tata Teleservices, Shyam, BSNL and MTNL as well as new players who want to enter India on the CDMA platform now stand a chance
    • The earlier policy had decided to allot 3G spectrum in the 800 MHz band to the CDMA player with the highest subscriber base, without taking resort to auction as mandated for GSM players
    • I think this is a fair move because the earlier policy was designed specifically to benefit Reliance Communications (RCOM) with its higher subscriber base
  • 9.22 m Mobile wireless users added in July; Highest ever
    • In July, mobile operators, GSM and CDMA together, added 9.22 million subscribers, Highest ever additions in Mobile subscription in a single month
    • Bharti Airtel topped with 2.69 million new subscribers during the month while Reliance Communication got 1.5 million new CDMA subscribers. GSM operators own 218.9 million subscribers while CDMA players have nearly 77 million users.
    • In the wire line segment, the subscriber base has decreased further to 38.76 million as subscribers prefer to take a mobile connection.
  • Other news
    • The five-month old coalition government in Pakistan collapsed on Monday when Nawaz Sharif announced that members of his minority party, the PML-N, would leave the fractious alliance, citing broken promises by Asif Ali Zardari, the leader of the majority Pakistan Peoples Party. It is expected that PPP would be able to cobble together a new coalition with smaller parties.
    • VHP bandh turns violent in Orissa with burned churches, Christian prayer halls and church-run orphanage in various parts of Orissa. The bandh was called to protest killing of Swami Laxmanananda Saraswati and four of his disciples
    • The toll in the ongoing violence in Srinagar since Sunday is gone to six as curfew remained clamped for the third consecutive day in the Kashmir valley
    • Jharkhand Governor Syed Sibtey Razi on Monday invited the Jharkhand Mukti Morcha (JMM) supremo Shibu Soren to form the government and asked him to seek vote of confidence by September 1st.
    • The government of India has accused China’s largest telecom player Huawei of serious legal and financial violations, including tax frauds, in India. The labour ministry has charged Huawei with employing a large number of Chinese workers in the country without proper work permits, beyond the permissible limits.

NOTE: Today’s notes is contributed by my friend Yusuf Kaydawala.


  • Rural India shows more appetite for goods
    • Data for the January-July 2008 period shows that growth has been higher in rural markets across each of the categories by value and volume. The growth is being attributed to factors like higher prices of farm produce and farm loan write-offs, resulting in consumers upgrading to branded products.
    • Firms are addressing the increased demand by introducing SKUs (pack sizes) only for rural pockets, beefing up their distribution footprint and tailoring promotional and ad strategies specific to rural consumers — an example being upping the celebrity connect.
    • Look at this graphic to know the trends.
  • The travails of the non-life insurance companies
    • It is a very good story that tells how the non-life insurance companies are feeling the heat. Take a look.
    • For those of you that don’t have the patience to read it: know that over 70% of the revenues for non-life insurance companies come from motor and health insurance — both segments where there is very little left after paying out claims.
    • The gradual introduction of free pricing has shrunk the once-dominant and once profitable fire insurance business to less than 15% of the overall portfolio.
  • Political round-up
    • Mehbooba Mufti of the PDP says that India should decide whether it wants to restore the land to the SASB (Shri Amarnath Shrine Board) or it wants to retain Kashmir.
    • Shibu Soren gets ready to occupy the CM’s gaddi in Jharkhand.
    • Third front to come up in two weeks; with Mayawati in the lead role.
  • Mobile internet penetration across the world
    • Look at this graphic.
    • There is a huge opportunity waiting for Indian telecom companies (telcos) to tap into this market. As mobiles are much cheaper than PCs, it makes sense to make internet on mobile very affordable and generate revenues.
  • Olympic performance shows that the not so rich and poor nations are bridging the gap when it comes to getting medals
    • The low- and middle-income nations are catching up with the rich countries at Olympics over the last two decades, with their gold haul moving from 38% of the total at Barcelona (1992) to more than 46% at Beijing. Also, the performance of the not-so-rich nations is consistently improving over the different editions of the Games.
    • Look at this graphic.
  • Olympics conclude
    • After speeches from Liu Qi, president of the Beijing Organising Committee, and International Olympic Committee president Jacques Rogge, the Beijing Games were officially declared to be over.
    • The Olympic flag was handed to London mayor Boris Johnson, with organisers briefly showcasing the 2012 Games.
    • British singer Leona Lewis (top) and musician Jimmy Page performed at the closing ceremony of the Beijing Olympics at the Bird’s Nest Stadium. They combined for a rendition of "Whole Lotta Love".
    • The last gold medal of this Olympiad was won by France's men claiming gold in the final of the handball.
    • Read this piece on the best moments of this Olympics.
    • Take a look at the final medal tally in this version.
  • Interconnection issue among telcos solved amicably
    • Following the resolution of the interconnect issue between GSM operators and Reliance Communications (RCOM), all telcos have now signed an agreement to resolve all other pending issues related to linking their networks.
    • The agreement was signed in the presence of telecom regulator Trai over the weekend. The agreement envisages that telcos mutually settle all other interconnect requests (outside the recent controversy) by October 15. It also envisages that telcos settle pending payments for existing interconnect agreements within the next seven days.
    • Besides, all operators have also agreed to renew all interconnect agreements that have expired.
    • More importantly, operators have also agreed that in case of similar disputes in their future they will adhere by Trai’s decisions on the issue.
    • I believe this is a very good step and is in the larger interests of the country. TRAI should be commended for resolving the dispute amicably.
  • Freedom summit: It is about zero regulatory regime in global aviation.
    • Civil aviation authorities from across the globe are meeting in Istanbul in October to discuss the modalities of a zero regulatory regime.
    • Some of the key areas to be discussed during this ‘freedom summit’ are liberalising the norms for foreign direct investment (FDI), simplifying cross-border consolidation in the sector and doing away with bilateral aviation service agreements.
    • The meeting to be held under the banner of International Air transportation Association (IATA) is expected to stress on free market access for airlines and simpler rules for change on ownership.
  • An excellent piece on foreign investments
    • In today’s ET in the class room column. Read it here.
    • We have noted time and again about FDI, FII etc. This is a very good piece which serves a recap of what we noted earlier.
  • A good debate on ‘treaty shopping’ and ‘round-tripping’
    • Read this. It is only a few days ago that we noted these two concepts. This piece will give a deeper insight into the issues.


  • Tata threatens to pull out of Singur
    • The Trinamool chief, Ms. Mamata Banerjee has been demanding that Tatas should return 400 acres of land given to them by the West Bengal government. She announced an indefinite stir in Singur from August 24.
    • It is in this context that Mr. Ratan Tata announced that, Tatas will not be loathe to moving out of Singur for the sake of their employees’ safety.
    • This has made everybody sit up take notice. If Tata carries out his threat, that would be the saddest day for West Bengal and puts paid to the industrial future of the state.
  • Language lesson: puts paid
    • to terminate; to cancel (plans or expectations); to stop something once and for all
  • Milk-run & just-in-time concepts
    • Tata’s plant at Singur is based on two crucial concepts in manufacturing — the Japanese “just-in-time” concept and the internationally-accepted “milk-run” concept. Both these concepts underline that suppliers should remain attached (physically or logistically) to the mother plant, to keep the price of the final product under control.
    • If Tatas’ threat is carried out, it will have a negative impact on the cost of Nano.
  • NSG meet update: Indo US nuclear deal
    • The Nuclear Suppliers Group (NSG) countries insisted on bringing the waiver document in conformity with the Hyde Act. With this, the Vienna session ended inconclusively on Friday. The NSG will reconvene once again on September 4 for another two-day session.
  • Online video advertising makes a good start
    • Online video advertising is slowly eating into the television marketing budget as generic and TV content goes online and the new medium benefits from its inherent advantages of RoI (Return on Investment) measurability, customisation and interactivity.
    • Experts are of the view that with about 15-million broadband users, timespends are substantially moving in favour of the internet.
    • With broadband prices becoming dirt cheap even in India, over the next three years, this medium is positioned to become around 10% of the TV market, opine experts.
    • Online video advertising, currently estimated at Rs 60 crore, makes up for less than 1% of the annual TV ad spending of about Rs 7,000 crore.
  • Now it is time for a coal regulator
    • The government is set to decontrol pricing of coal, including coal from captive mines. Prime minister has approved the draft of the Coal Regulatory Authority Bill that entrusts responsibility of coal pricing to the regulator.
    • The Bill holds the regulator responsible for determining “the price of coal, including coal from captive mines.” The Bill is expected to be introduced in the coming session of Parliament.
    • The proposed regulatory authority will put in place a reasonable and transparent coal pricing mechanism and promote competition in the sector. It will also determine transfer pricing in respect of captive coal and lignite mines. Currently, most coal reserves are owned by the central government. It also operates and regulates the sector.
    • Look at the important position that coal occupies in our energy mix.
  • Difference between headline inflation and core inflation
    • We have been reading about ‘headline inflation’ and ‘core inflation’ time and again. What is the difference between them?
    • Headline inflation is a measure of the total inflation within an economy and is affected by areas of the market which may experience sudden inflationary spikes such as food or energy. As a result, headline inflation may not present an accurate picture of the current state of the economy.
    • This differs from core inflation which excludes factors, such as food and energy costs. Actually factors which are subject to high volatility. These may differ from country to country.
  • Some excellent commentary on how secularism should operate in the country
    • Indian secularism should not be envisaged as a project of assimilation of minority groups into a majoritarian entity. Extremism has thrived on the perception of a communally charged polity excluding and even targeting smaller groups.
  • Olympic motto
    • “Citius, Altius, Fortius” (“Faster, Higher, Stronger”).
    • India’s sports management by contrast is derisively referred to as “slower, lower, weaker.”
  • On sovereign wealth funds
    • We have time and again noted in our blogs about the need for a sovereign wealth fund for our country.
    • Need a strong argument in favour of one for our country at this juncture? Read this article that appeared in today’s op-ed.
  • Indian cities rank low in urban competitiveness
    • An international team of researchers has just released a Global Urban Competitiveness Report, which takes stock of 500 cities around the world. New York has been found to be the most competitive city in the world, followed, in that order, by London, Tokyo, Paris and Washington, DC. No Indian city features in any of the seven corresponding top 20 lists, with a solitary exception: Mumbai comes in at number 15 on industrial structure.
    • The cities of the world have been ranked according to seven parameters of competitiveness, such as enterprise competitiveness, industrial structure, human resources, business environment, living environment etc.
  • Olympics
    • Vijender Kumar loses to Cuba’s Emilio Correa Bayeaux in the men’s middleweight (75 kg) semifinal. Thus he sttles for a bronze.
    • Bryan Clay claimed the title of ‘The World’s Best All Around Athlete’ when he won the decathlon title.


  • Delhi High Court bars top lawyers for criminal contempt
    • The HC barred two high-profile lawyers—former Congress MP R K Anand and ace criminal lawyer I U Khan—from appearing before it and its subordinate courts for four months for committing “criminal contempt’’ in the BMW hit-and-run case. It has also ordered that they be stripped of their position as ‘senior advocate.’
    • Both Anand and Khan were shown in the sting conducted by NDTV on May 30 last year, as colluding to influence Kulkarni in the BMW hit-and-run case. A day later, the court took suo motu cognisance of the sting operation showing Anand, in collusion with Khan, allegedly offering money to Kulkarni to depose in favour of Sanjeev Nanda, the accused in the case.
    • Public memory as they say is short. Refresh your memory about the BMW case and also a bit about the controversial background of the Nanda family here.
  • We are all mute spectators to what is going on in J&K.
    • Even the political parties appear to have nothing to offer in terms of solutions. It is at times like these we wonder whether or not we should hold on to Kashmir. A sentence in today’s TOI op-ed by K. Subramanyam sums up any nation state’s challenge in times like these:
      • When Parliament is adjourned without transacting any business for the day or the use of excessive force becomes necessary to disperse unruly crowds in the streets resorting to violence, destruction of public property and casualties, those who engineer the disruptions know full well what the results will be. In fact, they desire those results. The silent majority and the governing authorities in both these cases do not have the moral fibre to assert their will and enforce the rule of law. This is the challenge before the Indian republic whether in Parliament or in Kashmir.
  • Language lessons: magpie
    • Long-tailed black-and-white crow that utters a raucous chattering call
    • Someone who collects things that have been discarded by others
    • An obnoxious and foolish and loquacious talker
  • Air India awaits yet another bail out package
    • Air India has incurred a Rs 2,144-crore loss during 2007-08, mostly on account of rising aviation turbine fuel prices and other operational costs. The government is said to be working out a Rs 2,300-crore bailout package for the airline, which includes Rs 1,300 crore as equity and Rs 1,000 crore as a soft loan.
    • Industry forecasts point to a combined loss of Rs 9,900 crore for Indian carriers this year.
    • Incidentally do you know that Air India was established in 1932?
  • Some noteworthy commentary on the need for state sponsorship of sport
    • Made in the context of India’s accidental win of Olympic medals.
    • What has happened is that a couple of members of the backbone of this country, the hardworking lower and middle classes, have by dint of sheer physical grit broken through. The photograph of a delighted, yet incredulous Sushil Kumar, who won the bronze in the 66 kg Men’s Freestyle wrestling event, says it all. This individual determination and skill hardly means a national effort has paid off.
  • Inflation at a 20 year high
    • Costlier food items, such as fruit, vegetables and milk, pushed the wholesale price-based inflation to 12.63% for the week ended August 9, from 12.44% in the previous week. The inflation stood at 4.24% in the corresponding week of the previous year.
    • Economists feel inflation could go up to 13.5% before it starts to come down.


India finally showing its metal:

· India is on its way to 3 medals with its best ever Olympics performance

· Sushil Kumar from Delhi won a bronze medal in 66 kg wrestling event

· Vijender Singh is assured of a bronze in 75 kg boxing category and has entered semi-finals in his category. Vijender’s next match is against Cuba’s Emilio Correa Bayeaux, a two-time pan-American champion

· It is good to know that these medal winners are going to make some money. Cricket is not the only sport that will get money now. Other sports too are coming of age.

· Look at the current medal count of various countries

NSG set to decide on the India-specific waivers

· The Nuclear Suppliers Group (NSG) will begin discussions on India-specific waivers at Vienna from today. India wants a waiver that is no different from the draft made by the US

· Foreign Secretary Shiv Shankar Menon held a series of meetings on Wednesday with diplomats from member countries to press for the speedy adoption of the draft proposal without any changes

· NSG was a club that was formed in 1975 in response to India’s nuclear tests in 1974 as a way of preventing other countries from using dual use technology for military purposes

· Please read this article because it discusses specific issues raised by various countries to the agreement and why they will/won’t object in the meeting.

· The world’s most severely ‘brahminical’ cartel, the Nuclear Suppliers Group: Brahminical here comes from the word Brahmin which signifies elitist tendencies.

Mutual fund houses to sell insurance cover

· The next round of reforms for the MF industry is expected to feature an approval from SEBI for fund houses to offer insurance cover to investors for a fee

· This will enable MFs to compete with unit-linked insurance plans (Ulips), the hottest selling products offered by life insurers. The current regulations bar fund houses from collecting any premium from investors

· Only two fund houses, Reliance Mutual Fund and Birla Sunlife Mutual Fund, offer systematic investment plan (SIP) products with an insurance cover now. In these cases, the insurance premium is being paid by the two fund houses

· Why are MFs so interested in this: because distributors, such as banks are allowed to charge high commissions on Ulips. Thus they have an incentive to market Ulips to investors as against plain vanilla equity MFs

· Look at the graphic to know about Mutual fund industry and Ulips

Centre seeking to continue the ban on SIMI

· The Centre on Wednesday filed a fresh affidavit in the Supreme Court seeking to continue the ban on the organization

· Earlier, the Special Tribunal, set up under the Unlawful Activities (Prevention) Act quashed the Centre’s February 7 notification banning the Students Islamic Movement of India. The supreme court on August 6 stayed the order

· The Centre is of the opinion that if the unlawful activities of SIMI are not curbed and controlled immediately, it will take the opportunity to continue its subversive activities and reorganise its activities/members to disrupt the secular fabric of the country by polluting the minds of the people by creating communal disharmony, propagate antinational sentiments, escalate secessionism by supporting militancy

Language lesson: What is difference between Center and Centre

· There is no difference. The British spell it "centre" and the Americans spell it "center"

· Many words are spelt with an "er" in American English eg fibre, sombre, and theatre

Madrid aircrash kills 153

· A Spanish airliner MD-82 bound for the Canary Islands swerved off the runway while departing from Madrid’s Barajas airport on Wednesday and caught fire

· A Spanish government minister says the death toll has risen to 153. The airline Spanair says 172 people were on the plane out of which 19 people survived

· Investigators ruled out foul play and consider the crash an accident.

NOTE: Today’s post is contributed by one of our regular readers. He is not a Civils aspirant. He is Mr. Yusuf Kaydawala from Bombay. I convey my thanks to him on your behalf.


  • Boy, TRAI is one hell of a regulator
    • Never allows the Telcos sleep peacefully. That’s the way it is supposed to be. Always keeps them on their toes.
    • Wasn’t it just yesterday that we noted the directive about IP telephony? Today it has come up with another first. CAC in a different version.
    • Wait a minute. Remember about CAC? Carrier Access Code. If CAC is implemented, the users will have freedom to choose a long distance carrier of their choice for every call they make. But the CAC regime did not find favour with Telcos when TRAI sought to introduce it sometime back; and it had to back down because even the DoT also went with the operators.
    • But TRAI has now come with a proposal to allow users to choose long distance carriers in a different way. Through prepaid virtual calling cards. What this envisages is that a user having virtual calling card from an operator of her choice can punch in a code and route her call through her preferred network.
    • Notice the difference between the two regimes? Very interesting.
    • All the best TRAI. Though the move is expected to hit the bottomlines of many a telco, it sure is one good measure of competition.
  • Caps on stock exchange holding being hiked
    • The government is considering a proposal to increase the cap that exists on stock exchange holdings by a single entity – whether local or foreign.
    • But why is it needed in the first place? Look at this graphic; you will understand.
  • Measures to contain round-tripping and treaty-shopping
    • Remember these phrases? The first one is about routing of domestic funds overseas to bring them back through tax havens like Mauritius. The second is about channelling of investments through countries like Mauritius with which India has double taxation avoidance treaties to evade capital gains tax.
    • Having seen that during the previous year, the country has attracted Rs 60,817 crore FDI (i.e., 61% of the total FDI inflows into the country) from tax havens like Mauritius, Singapore and Cyprus, the government has stepped up scrutiny of foreign direct investment (FDI) proposals.
    • The country is concerned that FDI inflows from these tax havens is on the rise even as FDI from mature economies either stagnated or declined.
    • Taking advantage of tax treaties for investments in India may not be a cause for worry for the government. But, round tripping of funds can often lead to practices of money laundering and breach of FDI sectoral caps, experts opine.
  • Why do we get the feeling that politics is sickening?
    • Read this story about JMM’s ambitions for the CM’s gaddi in Jharkhand and you will understand why. Not that you don’t know it; but just in case you need to refresh your memory and/or reflect on the issue for a while so that you can formulate your opinions for future use. Shouldn’t a party at least have a modicum of majority or at least be the single largest party to aspire for power?
  • Who is the chief of Intelligence Bureau?
    • PC Haldar
  • Indo-US nuclear deal: New Zealand plays spoilsport
    • New Zealand refused to accept the deal on the grounds that India is not a signatory to the Nuclear Non-Proliferation Treaty. Since decisions in the NSG are taken by consensus, New Zealand’s stance could jeopardise India’s hopes for a waiver which would allow it to engage in civilian nuclear trade despite its refusal to sign NPT.
    • The country’s premier Ms. Hellen Clark further said that it is working with other like countries on the issue.
    • Among the issues that are of concern to New Zealand is the impact of granting an exemption to India on NPT. Wellington will seek to weigh the impact of weakening the NPT with the advantages of greater control on India’s nuclear industry. At the NSG meeting, New Zealand is expected to raise the possibility of building into the exemption conditions that would result in the termination of the waiver agreement, on the lines of the Hyde Act, should India test a nuclear device. It is likely to raise the possibility of introducing confidence and transparency-building measures in the exemption agreement.
    • Wellington is also concerned on what would happen if the safeguards agreement with the International Atomic Energy Agency were to be terminated. The other area of concern that New Zealand is likely to raise is on how to prevent transfer of sensitive technology such as enrichment and reprocessing. Though Wellington is of the view that there are some benefits in the agreement, it would like to know whether India would sign the “Additional Protocol” of the IAEA, which would give the agency greater powers of inspection.
  • NATO secretary-general?
    • Jaap de Hoop Scheffer
  • Language lessons: gravy train
    • Income obtained with a minimum of effort
    • Eg. The newly introduced Competition Act might be their ticket to the gravy train.
  • Status of the Competition Act
    • First passed by Parliament in 2002, then amended in 2007 after going through a parliamentary standing committee on finance, it is yet to be notified.
    • BTW you can find an excellent commentary on the loopholes in the act in today’s article by Rajrishi Singhal here. This can be your answer for an essay question on the subject.
  • Take a look at how sprinters have performed over the years from 1912 onwards:
  • I am sure many of you know 50 Cent, the rapper; don’t you?
    • He is one of my favourites too. Know his earnings last year? A cool $150 mn. His real name is Curtis Jackson.
    • Want to know my other favourites? Click on the Jukebox link on the left menu bar and enjoy the music.


· Musharraf bids adieu

    • He announced his stepping down in an internationally televised address.
    • But questions arose about whether Mr Musharraf would remain in the country or go to some safe haven abroad —Saudi Arabia or Turkey.
    • There was also speculation whether he was being given immunity by the coalition for his actions.
    • Some experts are labelling the evolving situation in Pakistan as the emergence of a political vacuum. Why does that feeling come? The civilian establishment in that country is seen as not having any control over its military and especially the ISI. There is a growing realisation that the Indian government is in discussion with people who don’t have control over the ground situation. With the departure of Musharraf, any semblance of the President (ostensibly civilian hitherto) or the PM having control over the army and its dirty tricks department, the ISI, is far fetched.
    • Now that Mush is gone, the old rivals – PPP and the Nawaz Shariff can be at each other’s throats again – leaving the army and its ISI as powerful as ever in that country.

· Flooded with calls from your credit card company offering you unsolicited deals?

    • It could be that they are trying to protect their money. It is an interesting story worth a read.
    • As credit card usage and outstandings are soaring year after year, banks are trying to convert their credit card outstandings into personal loans with lesser interest rates to ensure that defaults are kept at a minimum.
    • For the year May 2007 to May 2008, amounts settled through credit cards stood at about Rs. 60,000 crores. About a fifth of this amount was rolled over. That is 12,000 crores. This is what is making the banks go week in their knees.

· TRAI heralds yet another telephony revolution

    • It has removed all restrictions on internet telephony in the country, allowing internet service providers (ISPs) to terminate internet telephony calls on phones, including mobile phones.
    • Till now, a call from a computer could legally be made only to another computer within the country and not to a phone. The policy regime allowed domestic users to make international calls to a phone from their computer.
    • One may wonder that with a PC penetration of just 3.6% in the country, will it make any big difference. But my feeling is that this move will help increase the PC penetration.
    • Not sure about how this internet telephony operates? Look at this graphic.
  • About IDR market – Indian Depositary Receipts
    • Hope you know that IDRs are like GDRs and ADRs. Holders of these IDRs are entitled to shares of the issuing company.
    • IDR norms were first introduced in 2004 and then considerably relaxed in 2006 when the pre-issue paid-up capital was reduced to $50 million.
    • Having seen that the IDR market has not taken off the way it was envisaged, SEBI and RBI are recommending to the Government that FIIs be allowed to invest in IDRs. FIIs were barred from investing in IDRs since Foreign Exchange Management Act (Fema) specifies that IDRs are to be purchased only by persons resident in India.
  • Reaching drugs to the poor
    • The government plans to launch special drug stores that will sell generic medicines as part of its efforts to provide affordable medicines to poorer sections of the society.
    • The plan envisages using the PPP model to sell generic medicines at half the price of branded drugs.
    • Chemist associations to play major role in managing and promoting these shops.
    • Govt plans to start pilot project covering 15 states in first phase of the programme.
    • Rs 3 lakh/ per shop would be provided to build the infrastructure on govt land.
    • Good idea; know? Any comments?
  • US plans for Fanny Mae and Freddie Mac
    • The US government after all, may have to pick up the tab of recapitalizing these two housing behemoths.
    • After accounting for deferred tax assets and generous asset marks, Fannie and Freddie each may have a negative $50 billion in asset value, and little prospect of digging themselves out of the hole.
    • Fannie and Freddie “are being jawboned” by the Treasury Department and their new regulator, the Federal Housing Finance Agency (FHFA), to raise more equity. But the two are not likely to succeed in their efforts. That leaves the US government to pick up the tab.
  • Language lessons: BTW what is ‘jawboned’?
    • It means talking idly or casually and in a friendly way
  • Want some sanguine commentary on the state of Indian polity?
    • This is one piece that neatly explains the rise of regional political parties on the national political firmament. One excerpt from this is worth our note:
    • It is apparent that established national parties have not been able to provide a political agency for those outside the market framework to articulate their social and economic aspirations. For decades after Independence, Indian people accepted the modern development vision articulated by leaders like Nehru and to some extent Indira Gandhi. But it appears the mainstream political parties are somewhat losing their touch in grabbing the attention of the wider masses.
    • The question that begs an answer is - whether regional satraps will be able to provide political agency and allow articulation of social and economic aspirations of all those that they say they are championing. When they fail to do so, an electoral vacuum gets created and awaits the arrival another messiah.
  • Oil speculation
    • Though crude prices have since come down from their peaks, they are still a cause for worry. This piece offers an excellent analysis of the recently witnessed oil price fluctuations globally. Worth a read.
    • The author cautions, very meritoriously:
      • With prices falling, the imperative to act inevitably tends to recede. That is the nature of the behavioural response to crisis and why a bad status quo can persist. But leaving the system unchanged will maintain the global economy’s vulnerability to future bouts of speculation that we cannot afford. Just consider how the current bout has raised global inflation, lowered incomes of the poor, weakened the dollar, deepened the US trade deficit, aggravated global financial instability, and increased the likelihood of a global recession. That is an indictment that merits an urgent policy action.
    • Can’t agree with him more. But are the global policy apparatchiks listening?
  • A very good debate on the present J&K agitation
  • Dr. Rangarajan is going away to Rajya Sabha as an MP.
    • Economist Suresh Tendulkar, who is currently a member of the Council, is taking over as the new chairman of the Economic Advisory Council to the Primer Minister.
    • An interview with the intellectual cannot be missed by us. Look at it here.
  • Olympics
    • Yelena Isinbayeva.
      • Should I say the sport she belongs to? Pole vaulting would have her name permanently etched in its memory for a long, long time to come.
      • Having an assured gold with a 4.85 meters jump; she goes on to clear 5.05 meters! I would like to see many of you soar like that in your competitive exams.
    • Incidentally do you remember Sergey Bubka?
      • He is the current pole vault record holder for men. He cleared 6.14 meters; way back in 1994.
    • Indian boxing challenge ends
      • Akhil Kumar lost to Veaceslav Gojan in the bantamweight (54kg) quarterfinals.
    • The less said the better about our unofficial national sport – cricket. Hope you would have noted the disappointing performance of our squad in Srilanka.