Indian Current Affairs: 10.12.2008

Politics & the Nation

This, coupled with Lakhvi's arrest and Pakistan's reported willingness to have him interrogated by India, are only appearing to be time gaining tactics. Pakistan knows for sure that India will not be satisfied with anything less than handing over of the 20 terrorists that it wants.
But, it is an issue I suspect, not entirely in the hands of the Pakistani civilian government. It is their Army which has all the levers of veto in such matters.
We will keep watching the drama from the sidelines.

Finance & Economy

SEBI is reportedly working on regulating rating agencies.
The idea behind this move appears to be to bring in greater accountability for their actions and disclosure of rating methodologies.
Regulations for credit-rating agencies had been framed by SEBI many years ago. However, with ratings now spanning many products such as bank loans, commercial paper and security receipts issued by asset reconstruction companies, RBI wants oversight on rating agencies to be strengthened.

What is the issue about companies deciding to reset the conversion price of their FCCBs?

News reports are saying that many companies are resetting the conversion price of their FCCBs (Foreign Currency Convertible Bonds) after negotiating with the investors. Let us understand the basics about this.
When FCCBs were first issued by Indian companies nearly five years ago, it was a product greeted with much enthusiasm. It offered issuers cheap capital to nourish their rapidly expanding businesses while at the same time, providing investors a hedged route to participate in the India growth story.
Both issuers and the investors thought that it was a win-win situation. The issuers felt that they would not have to repay the loans, as it would get converted into equity while investors hoped they could cash-in on conversion at a tidy profit.
The growth story played out on excepted lines for some time, but has had a rather abrupt end. The sharp fall in the market has led to a situation where FCCB-issuing companies would have to either redeem the bonds, or reset the conversion price, after negotiating with the investors. Many have opted for the latter.
Reworking of FCCB conversion price, which is done after talks with the investors, will reduce the issuers' burden during redemption. FCCB holders are being offered additional shares in the companies to make up for losses they might suffer.

A Ponzi scheme is a fraudulent investment operation that involves promising or paying abnormally high returns ("profits") to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business. It is named after Charles Ponzi.
It is feared that many FMPs (Fixed Maturity Plans) of Indian mutual fund houses have reportedly turned into such ponzi schemes in view of the heavy redemption pressures they have been facing in the current downturn.

I have explained to you on 03.12.2008 that you need to get used to the new phrase "quantitative easing" in the coming months, if not years.

Take a look at what appeared in today's ET here. A read of this will reinforce the understanding of the concept.

International

If you are asked to state what are the steps that the Asia Pacific countries can take to tide over the present global financial crisis, following are some measures that could be stated. Excerpted from an article in today's ET op-ed by UNESCAP's Executive Secretary Noeleen Heyzer:

First, the Asia-Pacific region must play a leading role in the discussions on reforming the global financial architecture.
Second, we should cooperate in the formulation of effective and coordinated macroeconomic policies at the regional level to reduce economic vulnerability.
Third, a regional contingency plan needs to be established to respond quickly to liquidity and capitalisation problems of domestic banks.
Fourth, consideration should be given to a regional trade financing facility to address concerns that recession in developed countries will significantly restrict trade as trade credit has dried up.
Fifth, governments must take action to institute or to improve on the delivery of cash transfer programmes and other social protection mechanisms that promote gender equity, and are targeted to those who need it most.

Papers are reporting that the WTO has decided to seek members' views on the sectoral row. What is it about?
In the discussions on non-agriculture market access (Nama) or industrial goods, a sectoral initiative was launched during the Doha round, where it was decided that members would eliminate duties on selected sectors. The areas selected include automobile & components and chemicals, which India wants to protect from indiscriminate liberalisation.
While the draft text does say that members should be allowed to participate in the sectoral talks in "good faith without pre-judging the outcome" of the talks (words which India has been asking for), it also mentions that sectorals should be part of the single undertaking of the multilateral agreement being negotiated in the on-going Doha round.
This makes the subject of whether sectorals should be compulsory or voluntary, open to interpretation. That is the issue.

Personalities

You might remember him as the ex-CEO of Vodafone. Right? His name is now doing rounds for the post of CEO of Yahoo!
Will Yahoo!'s fortunes turn for the better with this? Let's wait and see.

She is a 25 year old woman without arms. She became the first one in the world to fly a plane using only her feet.
She is a psychology graduate from Tucson, Arizona, who trained for three years instead of the usual six months to fly a specially adapted light aircraft.
What else do we need for inspiration?

He is the Chief of Sri Lankan Army. He is in the eye of a storm between India and Sri Lanka for his description of senior Tamilnadu leaders sympathetic to the 'Tamil cause' as political jokers.
This has raised the hackles of the TN political fraternity and the Government of India.

Sport

London's politicos have started the effort. They would like to see the T20 version included in the Olympics in 2012. But such an inclusion is a long drawn process.
First, international cricketing bodies have to line up and agree, and then the IOC will have to be convinced.
Campaigners say the ICC (International Cricket Council) is inclined to support the move. The format for the 2012 Olympics was reportedly frozen in 2005.
Cricket was last played as an Olympic game in 1900, in Paris, in a game between England and France.

Indian Current Affairs