Indian Current Affairs: 21.11.2008

Finance & Economy

Government to ease borrowing norms for infrastructure companies in international markets

At present the government has prescribed a cap of 300 basis points (bps) over Libor (the rate at which banks borrow from each other in the London inter-bank market) for a loan to be repaid in three to five years and 500 bps above Libor for loans of five years and above. Now, companies can raise up to $500 million overseas for spending abroad or within India without seeking RBI's approval.
The government is contemplating easing these norms with a view to help the infrastructure companies raise debt abroad.
On October 22, RBI had allowed Indian corporates to borrow up to $500 million in a financial year for rupee expenditure or foreign currency expenditure. Minimum average maturity period of seven years for ECBs of more than $100 million for rupee capital expenditure by borrowers in the infrastructure sector was also removed. Not only this, the government has substantially revised overall cap on overseas borrowing cap in the current fiscal to $35 billion from $22 billion in 2007- 08, which will give flexibility to domestic corporates to raise debt abroad.
Overall external commercial borrowings (ECBs) in the first half of the current fiscal (April-September, 2008) stood at $10.96 billion, which is lower than $15.62 billion raised in the same period in the previous fiscal. According to the preliminary data, the ECB raised in October amounted to $1 billion, as against $3.6 billion in October, 2007.

Used as we are, to high rates of inflation in the best of times and the worst, it comes as a surprise that the US should see deflation (i.e., prolonged declines in prices) as a problem. But then why does it feel so?
Deflation hurts the economy by making debts harder to pay off and lenders more reluctant to extend credit. Japan is the only major economy to have suffered the phenomenon in modern times.

All papers are saying that the US is in recession and that at least till Q3 2009, it will remain in recession. How do people make such assertions?

They basically look at what is called the leading indicators index. The index points to the direction of the economy over the next three to six months.
This index fell in October for the third time in four months as stocks and consumer confidence plunged, signalling a deepening recession.

The Basel Committee, a forum that coordinates banking supervision among central banks, announced plans on Wednesday to strengthen capital buffers and limit leverage to address the lessons of the financial crisis. The committee is headed by Dutch Central Bank Governor Nout Wellink.
The committee plans to issue concrete proposals for public consultation in early 2009.

The sensex tumbled to 8,451.01, a level last seen in November 2005. This in spite of good news that inflation has eased to 8.90%. Crude fell below the $50 per barrel mark.

Personalities

Who is the Director General of NCAER? National Council of Applied Economic Research.

Miriam “Zenzi” Makeba, was a voice against apartheid. She died on November 10th, aged 76.

I know most of you don't need any introduction to him. The ex-CEO of Vodafone.
Take a look at how he re-charges himself before embarking on something big. A worthy read. Inspiring.

Governance

The Union Cabinet approved uniform fitment of 30 percent of basic pay plus dearness allowance for profit making PSUs with effect from 1st January, 2007. While the pay revision will be implemented from January 2007, the new allowances would accrue to employees only after the decision is notified by individual units.
The pay raise follows the acceptance of the MJ Rao committee's recommendations.
BTW do you know how many Central PSUs are there in the country? How many employees are there working for these companies?

There are 247 CPSEs, of which 216 are in operation.
In all 16,14,000 are employed in these, of which 12,36,000 are unionised workmen who negotiate their wages directly with their respective companies.
It is for the remaining 1,20,000 non-unionised supervisory staff and 2,58,000 board level officers that these pay scales apply.

Science & Technology

Disruption Tolerant Networking (DTN), which is designed based on protocols developed 10 years ago jointly by NASA and Vint Cerf (presently a Vice President at Google and the co-designer of the TCP/IP protocol based on which the present Internet works) is going to be the future Internet -- possibly an inter-galactic or inter-planetary Internet.
Unlike TCP/IP on Earth, the DTN does not assume a continuous end-to-end connection. In its design, if a destination path cannot be found, the data packets are not discarded. Instead, each network node keeps the information as long as necessary until it can communicate safely with another node.

Neighbours

With Bangladesh continuing to deny India access to its landlocked North East through its Chittagong port, India was forced to look at alternatives. One that emerged is the Sittwe port in Myanmar, which can provide the link through Myanmar territory.
From Sittwe, the Kaladan River will be made navigable for 225 km, up to Kaletwa (Myanmar). From there, a 62-km highway will take the traffic to the India-Myanmar border in Mizoram. A road from the border will link the project to India's National Highway-54. The sea distance between Kolkata and Sittwe is about 540 km.
India is financing the entire $103 million project.

Sport

India beat England by 16 runs as per the Duckworth-Lewis method in the third cricket one-dayer to take a 3-0 lead in the seven-match series at Green Park stadium in Kanpur yesterday.
Chasing 241 to win, India were 198 for five in 40 overs when bad light stopped play and the hosts emerged winners on the basis of Duckworth-Lewis calculations.

Language lessons

Noun: Conjoining contradictory terms (as in 'deafening silence')
An example that I found in today's ET: As the slowdown gathers steam, the clamour from various sectors of the economy for bailouts is gathering momentum.

Indian Current Affairs