08.12.2008

Politics & the Nation

• Pakistan under pressure to act against LeT
• There appears to be some real pressure being built up on Pakistan to act against LeT and other so called 'non-state actors' inside its borders. What brings this pressure is the attitude of the President-elect in the US and that of John McCain. Condoleezza Rice has, while saying that Pakistan has to act against the non-state actors and cooperate with India in bringing the perpetrators of the Mumbai attacks to book, also emphasized that India should not do something hastily that will complicate matters. What that means is that it should not resort to either 'surgical' strikes or declare a full-scale war against Pakistan. Given this situation what is best for India? Look at five of the suggestions aired in TOI today:
  
• 1 Squeeze Pakistan's funds: Make IMF bailout conditional on Pakistan taking visible and verifiable action against terror groups and entities. Clamp down on hawala funds
  
• 2 Treat Pak as 'unfriendly state': Take economic, military steps to address Pak hostility and erode terrorist infrastructure
  
• 3 Prepare for long-term covert operations to decapitate Pak's terror infrastructure from the Indian, Afghan and Iranian ends.
  
• 4 Keep peace process on but rejig drastically. Start by dismantling the farce of the joint anti-terror mechanism
  
• 5 Build strong border defences: Not 'irrelevant' borders, go for 'impregnable' borders with Pakistan, Bangladesh
• My feeling is that India can do this only when it has US and Israel firmly on its side. It needs Israeli cooperation / knowledge of launching surgical strikes within a foreign territory. It needs to be on the right side of the US and not make it a 'tired' friend. We should be conscious that US has its full sympathies with India now. We should convert that into some kind of empathy, before we do anything that can possibly precipitate matters.
  

Finance & Economy

• Government dares and comes out with a Rs. 30K crore ($6 bn) stimulus package.
  
• The government's fiscal package has Rs 20,000 crore in additional expenditure, an across-the-board 4% excise duty cut amounting to Rs 8,700 crore and benefits worth Rs 2,000 crore for exporters.
• The three major rate slabs of central excise duty — of 14%, 12% and 8% — will now stand at 10%, 8% and 4%.
  
• In addition, the government hopes to precipitate infrastructure projects worth Rs 100,000 crore through faster clearances of public-private partnership projects.
  
• The government will also take steps to ensure that already budgeted expenditure of Rs 300,000 crore will actually be spent over the next four months of the current fiscal to end-March 2009.
  
• And this has raised hopes that there will be another equally big one that will be announced sometime in January.
• Take a look at this graphic.
  
• When some of you asked me why is that the Indian government not announcing any stimulus package, I answered by way of my question "where is the fiscal space for the government?"
• But now you see that where there is a will, there is a way. When governments are prepared to give a go bye to the fiscal deficit figures and treat them no longer as paramount, this is what we will get.
• While I surely welcome the package, I feel this is one that is laying down some foundations for fiscal profligacy; the negative results of which will be felt in the next couple of years. I am especially concerned about the collateral-free lending announced for the SME sector. It is in times like these and measures like these that will do more harm than good in the long run. They lay the foundations for some kind of competitive populism which political parties will find it hard to roll back when the going gets tough. But let us hope that not much of collateral damage is wreaked by this measure.
• One more thing that defies logic is this: why is that the government has not able to give a push to harmonizing VAT rates on petro products. In times like these, it should be easy for it push for such reform.
• Why are air travel agents on a war path with the Indian carriers?
• Most airlines did away with the 5% commission on November 1, forcing agents to shift to a fixed-transaction fee for every ticket purchased. However, the fixed transaction fee, which was in the range of Rs 350 to Rs 2,500 a ticket depending on the class and routes, had also been discontinued from December.
• The agents account for 85% of tickets sold in India. The remaining 15% are sold directly by the carriers. There are around one crore travel agents in India.
• They have reportedly stopped selling Jet Airways tickets. And they are threatening to stop selling Kingfisher's tickets from December 15.
• "Bernanke may determine our economic recovery more than Mr. Subbarao. Comment."
  
• If you are ever asked such a question, you can't have a better answer than today's ET editorial piece. An excellent explanation. A must read.
  
• The editorial argues that the so called decoupling is nothing but a myth. And that fear is the factor which drives real economies either up or down.
  
• Those of you with an interest for understanding global financial flows and macro-economic perspective, cannot afford to miss this piece from Ashwani Windlass.
• He shows us how India can tap the current situation to its advantage with all the strengths that it has come to possess over time.
• One thing that really puts a smile on our faces while reading the piece is that, what has really been taunted as a 'conservative' attitude, is now getting praised. I am referring to the current account convertibility. Not having it, is now seen as a virtue. The article is not for faint-hearts.

International

• The scourge of piracy
• The approximately $250 billion Indian merchandise trade that passes through the Suez canal every year is concerned about piracy. The affected include companies across the entire trade chain — exporters, importers, ship owners, crew manning agencies to port operators. Cost escalation on account of delays, detours, rise in insurance premiums on cargo and crew augur ill for the India's foreign trade at a time when it is already slowing down due to global economic contraction.
• Currently, India has about 180 shipping companies with about 880 vessels.
• The Indian shipping industry's piracy related losses are currently at $420,000 per month.
  

Society

• With so many expats returning and set to return home, we should be prepared for some kind of shake up
• Read this story and you will understand what I am saying.
• Many of our bright young minds which have gone abroad for greener pastures now find that India offers more greener pastures than the West. Add to that the kind of social security our Indian family system offers, what you get is a safe haven in troubled times.
• I think this will make the job market more competitive now. At the same time it will also bring with it the kind of international exposure that has so far been not too prominent in our employee profile.

Environment

• I am sure you would have heard of the word "e-waste" sometime.
• But what exactly is it? Is it really a problem? If it is one, how do you tackle it?
• This piece is an excellent primer on this subject. A good read.

Sport

• Golf: Jeev Milkha Sing overcomes personal tragedy to clinch the Nippon Series Cup
• Days after losing his first child, who was delivered stillborn by his wife Kudrat in a Tokyo hospital, Jeev displayed tremendous inner strength to win the Golf Nippon Series JT Cup in Tokyo and pocket $323,154 on Sunday.