28.02.2009

Politics & the Nation

• The BDR mutiny in Bangladesh
• A mass grave of 66 bodies was discovered by the Bangladesh Army.
• The mutiny reportedly started on Wednesday over pay rise issue with BDR officers and troops expressing their unhappiness with the pay and service conditions given to them.  People manning the top posts in BDR (which are manned by Bangladesh Army officers) have been targeted by the BDR troops and took them hostage.  Then they were slain over two days of the hostage drama. Even as Sheikh Hasina Wajed, the Prime Minister announced amnesty and ordered the BDR troops to go back to barracks, many of the troops have left the barracks in civil clothes after the scene of the hostage area was surrounded by the Army with tanks.
• A shocked Hasina had to say that Amnesty will not be extended to those who have taken part in the killing of the Army officers.  A committee is appointed to go into the issue and submit a report in 7 days.
• It is not normal, at least in the Asian subcontinent, to see uniformed services rising in revolt like this.  If troops that are highly trained in various combat situations go berserk like this, it will not be so easy to put them down.  At least much damage would be witnessed, as happened presently, before the mutiny can be quelled.
• PIL on right to property
• The government through Constitution (44th Amendment) Act, 1978 had abolished the right to property from part III of the constitution (which deals with the Fundamental Rights) and made it as a mere legal right. 
  
• This has been challenged in a PIL before the Supreme Court.  The Supreme Court is reported to have issue notice to the central government asking it it to explain why this cannot be restored as a fundamental right.
  
• It assumes lot of significance in the context of governments' frequent use of their power of eminent domain for acquiring private property for purported public use.
  
• The petitioners argue that the common law principle of eminent domain is to be utilised for public utilities, highways, rail roads and other measures furthering infrastructure and public works. They contend that over the last decade, this power has been exercised even for propagation of private industry, private housing, private cooperative societies, private recreational projects, private residential development and even golf courses, most of which cater to private and vested interests.
  
• It will be interesting to watch the course this case takes in the coming months/years.

Finance & Economics

• GDP growth slows to 5.3% in Q3
• The growth recorded in the first two quarters at 7.9% and 7.6% respectively has further slowed down to 5.3% in Q3.
• Now it is for sure that there will be more calls for further rate reductions and fiscal measures.  But who is to bell the cat?  The model code of conduct for the general elections will kick off the moment the EC announces the election schedule.
• Take a look at this figure to note the quarter-wise growth recorded in various segments of the economy.
• What is Treasury stock?  Why should we bother with it now?
  
• Papers are agog with the RIL RPL merger.  One interesting thing about this merger issue is the fate of treasury stock - RPL shares owned by RIL.  Treasury stock holders do not have voting rights nor do they receive dividend. 
  
• RIL owns 70.3% of RPL, by virtue of it being the holding company.  So, when the merger happens, how should RIL be compensated for the shares held by it?  How can it compensate itself from itself?
  
• There are quite a few options floating around.  One is that RIL can cancel the shares held by it in RPL. This would prevent huge equity dilution.  The other is that these treasury stocks can be transferred to a trust.
  

Science & Technology

• New fish species discovered
• A brightly-coloured fish which bounces along the seabed has been spotted by scuba divers off the island of Ambon in Indonesia.  The fish was dubbed "psychedelica" for its psychedelic white and blue concentric stripes on a peach background radiating out from its aqua-coloured eyes.
  
• It is a form of frogfish that was reportedly spotted some 20 years ago but the discovery back then was stated to be gathering dust because of some wrong labelling.
  

Language lessons

• frisson: Noun
• An almost pleasurable sensation of fright
  
• eg: Besides murder mystery tours and theme events to produce frissons of macabre delight...

27.02.2009

Politics & the Nation

• Central government employees get DA bonus!
  
• In a move that took even the employees by surprise, the Central government has announced the release of two instalments of DA at one go.  Usually the DA instalments have been in increments of 3% for every six months.  But this time the government announced a hike of 6% taking the DA payable to 22%.
  
• The decision will benefit half a crore employees and 38-lakh pensioners and will put Rs 6,020 crore in the hands of government staff and pensioners over the next 14 months, spurring consumer spending. 
  
• Starting this January, employees and pensioners will get DA as per the new rate for 14 months till the end of the next fiscal. 
  
• Should we note that it also enhances the electoral prospects of the UPA constituents?  It's a no-brainer.
  
• Curtains down on 14th Lok Sabha
• After an acrimonious five-year tenure, the curtains came down on the 14th Lok Sabha on Thursday amid a show of warmth between ruling and Opposition benches with Prime Minister Manmohan Singh praising Opposition leader LK Advani. 
• Mr Singh lavished fulsome praise on Speaker Somnath Chatterjee, whom he described as a ‘role model’. The office of Lok Sabha Speaker has been “truly elevated and dignified” by Mr Chatterjee, he said admitting “we strained your patience and at times, even your conscience.”
  
• It heartens me no end to see some warmth still left in our leaders.  What a praise for the Speaker!  Our PM richly deserves the goodwill such feelings generate.  

Finance & Economics

• Will the excise duty reduction revive demand?
  
• Though it should be remembered that the December 7 and February 24 decisions mean a cumulative reduction in the duty incidence of the peak rate of Cenvat by a hefty 43%; from 14% to 8% (or from 14.42% to 8.24% to be precise), it is still debatable whether the reduction by itself would perk up demand; as there are several other contributing factors for demand recession. 
  
• Second, in the demand recession situation the industry is likely to pass on the benefit of duty reduction to the consumers. Thus, it is quite likely that the trend of demand recession would be arrested to some extent. It might take some time. It is unlikely, though, that it would boost demand because there are several other factors also that have led to demand recession. 
  

International

• Record budget deficit in US
  
• In the current fiscal year, begun under former president George W Bush, the new budget projects a deficit of $1.750 trillion. That amounts to 12.3% of United States’ gross domestic product, the biggest since World War II. 
  
• President Barack Obama has unveiled a $3.606 trillion spending plan for next year that will boost taxes on the wealthy and curtail medicare to make way for a $634 billion down payment on universal healthcare. 
  
• In addition to sending Congress his budget for 2010, Obama on Thursday proposed a series of changes that will push spending to $3.94 trillion in the current year.
  
• US defence budget is about $663.7 bn.
  
• Take a look at the budget highlights here.
  
• The employment scene in the US is deteriorating fast.  Employers cut a net total of nearly 600,000 jobs in January, the highest monthly tally since 1974, sending the unemployment rate to 7.6%. 
  
• BTW do you know US's fiscal year?  October 1st to September 30th.

Sport

• Cricket T20 at New Zealand
• Is India losing the winning streak?
• If the performance of the team thus far is any indication, it will appear so.  Having lost the first T20 match, the Indians Kiwis opted for fielding first in today's T20 match and have restricted Indians to 149 for 6.
• Black caps are to start their batting.  Let's hope India will be able to restrict them and win this match. 

26.02.2009

Politics & the Nation

• Worrisome neighbours
• The developments in Pakistan, Bangladesh and Sri Lanka are not giving any comfort to the strategic analysts in the country.
• The agreement between the Pakistan government and the TTP in Swat valley, now reportedly extended to another area - Bajaur, is giving an impression that the march of Taliban southwards into the heartland of Pakistan is progressing by each passing day.  The mutiny in Bangladesh by their paramilitary BDR (Bangladesh Rifles) which prompted its army to come out in strength to quell the rebellion is also a cause for concern.  India had to order a strengthening of its borders with the country.  Sri Lanka's annihilation of LTTE is giving rise to lot of protests in Tamil Nadu in spite of the understanding in the political space that the Lankan Tamils -- especially the civilians -- would be supported, is failing to quell the Tamil anger.
• Chargesheet filed in the Mumbai terror attack case
• Three months after the terror attacks that claimed over 160 lives, Mumbai Police filed the chargesheet in the case naming a total of 47 accused including the lone surviving terrorist Ajmal Amir Kasab. 
  
• Of these, three have been arrested, nine are dead, while the other 35 are still wanted. The Mumbai Police would soon issue red-alert notices against those who are still absconding. Some 200 witness statements are part of the chargesheet. 
  
• The chargesheet, which runs into more than 11,000 pages and names 2,202 witnesses, has named Pakistani nationals Zaki-ur Rehman Lakhvi and Zarar Shah as the main conspirators behind the attacks. 
  
• Kasab and the other accused have been booked, among others, under the Indian Penal Code, Unlawful Activities Prevention Act, Explosives Act, Explosive Substances Act, Passport Act, Foreigners Act, Customs Act and Arms Act. The sections charge the accused of waging war against the country, conspiring and collecting arms to wage a war against the country, damage to property, murder, attempt to murder, abduction, forgery, possessing explosives and causing explosions. 
  

Finance & Economics

• Heard of a 'market disruption clause'?
• This is a clause that is there in most of the overseas borrowing agreements.  International banks usually keep this clause in the loan agreements as an insurance against their rising borrowing costs.  When they find the going tough and feel that they need to charge more from their customers, they resort to a rise in interest rates on the loans given out by them.
• Now international banks are reportedly invoking this clause to charge more interest from Indian corporates.  This is the fallout from the tightening liquidity conditions globally.
• How are hydroelectric power plants more beneficial?
  
• The smaller hydroelectric plants would avoid the negative externalities of large dam projects, have far shorter gestation periods and, more important, would call for little or no rehabilitation of the project affected. 
  
• The medium hydel projects, however, would aid flood control, boost pisciculture and provide environmentally benign energy at very low marginal cost. 
  
• Hydro plants are about 95% efficient at converting the kinetic energy of the moving water into power. 
  
• Hydro-power stations have an inherent ability for instantaneous starting, stopping, and load variation, and so help in improving power system reliability. They are the best choice for meeting peak demand. 
  
• The generation cost is not just inflation-proof but actually reduces with time. 
  

International

• US banking crisis
  
• Total losses on loans made by US financial firms and the fall in the market value of the assets they hold (things like mortgage-backed securities) are estimated to peak at about $3.6 trillion.  Estimates say that US banks and broker dealers are exposed to about half of this figure, or $1.8 trillion; the rest is borne by other financial institutions in the US and abroad. 
  
• In the face of such losses, the capital backing the banks’ assets was only $1.4 trillion.
  
• So, where does this leave the US banks?  What measures could be taken to recapitalize them?
  
• There are four basic approaches to cleaning up a banking system that is facing a systemic crisis: 
  
• recapitalization of the banks, together with a purchase of their toxic assets by a government “bad bank”; 
  
• recapitalization, together with government guarantees – after a first loss by the banks – of the toxic assets; 
  
• private purchase of toxic assets with a government guarantee (the current US government plan); and 
  
• outright nationalization (or call it  “government receivership” if you don’t like the dirty N-word) of insolvent banks and their resale to the private sector after being cleaned.
  
• Experts in the Mecca of capitalism are now veering round to the view that it is the last approach that is likely to set the US banking sector in order.  
  

25.02.2009

Politics & the Nation

• Supreme Court judgment on negative voting right
• Yesterday we noted about Supreme Court's judgment on the subject.  You can read the full text of the judgment by following these steps:
• Go to http://www.judis.nic.in/supremecourt/chejudis.asp
• Click on Case No. on the left menu.
  
• Give Case Type as "Writ Petition (Civil)"
• Give Case No. as 161 of 2004
• It will display the judgment as a single row table.
• Click on the word "Judgement" in the last column of this table to read the judgment.

Finance & Economics

• Stimulus package 3 from government!
• Within a fortnight after unveiling a budget that was bereft of any grand schemes, the Finance Minister announced a Rs. 30,000 cr package to fire up the economy.  The proposals largely include cuts in service tax, excise duty and countervailing duty on imports.  It is expected that this will be followed by interest rate cuts soon.
• Excise duty and service tax have been reduced by 2% each across the board, bringing them to 8% and 10% respectively.
• A recap of the stimulus packages
  
• Stimulus package I: Dec 7, 2008 
  
• Across-the-board 4% excise duty cut 
  
• Rs 20,000 crore in additional expenditure 
  
• Benefits worth Rs 2,000 cr for textiles, handloom, handicraft, gems & jewellery, leather & marine food 
  
• IIFCL to raise tax-free bonds worth Rs 10,000 crore 
  
• Stimulus package II: JAN 2, 2009 
  
• State governments allowed to borrow another Rs 30,000 cr 
  
• Interest ceiling on ECB removed 
  
• FII investment cap for domestic corporate debt hiked to $15 b 
  
• SPV created to lend Rs 25,000 cr to NBFCs 
  
• Refinance facility of Rs 4,000 cr for NHB 
  
• IIFCL allowed to raise another Rs 30,000 cr via tax-free bonds
  
• Stimulus package III: FEB 24, 2009 
  
• General rate of central excise duty cut to 8% from 10% 
  
• 4% excise duty cuts to be extended into next fiscal 
  
• Service tax decreased to 10% from 12% 
  
• Customs exemption on naphtha import extended 
  
• Ceiling for 2009-10 fiscal deficit for states raised 
  
• A look at the air travel agent business in India
• There are about 50,000 travel agents in the country. 
  
• Typically, travel agents and online portals account for more than 85% of airlines' ticket sales, while the remaining 15% are sold directly by the carriers. 
  
• Most airlines stopped paying 5% commission from November last year forcing agents to shift to a fixed-transaction fee on every ticket purchased. From December, however, the fixed-transaction fee, which was in the range of Rs 350-2,500 a ticket, was also discontinued. Later, all domestic carriers agreed to pay 3% commission to travel agents from December. But foreign airlines have not been paying anything to travel agents. 
• Lessons in housing mortgage loans
  
• Why is the US housing market beset with so many problems while elsewhere it doesn't appear to be in such a big mess?
  
• The answer lies in what is called non-recourse mortgages.  Before we understand what is a non-recourse mortgage, let us see its opposite the full-recourse mortgage.
  
• In most countries, a mortgage is secured by the value of the home plus a personal guarantee of the home owner. So, if he defaults on mortgage payments, the lender can go after his salary or other assets. This is called a full recourse loan, and encourages home owners to do their best to repay loans. European countries have full recourse mortgages — the lenders can go after all assets — and so have far lower default and foreclosure rates. 
  
• But the US has non-recourse mortgages, secured only by the house. The lender cannot go after other assets of the borrower. If the market price of a house sinks below the mortgage outstanding, the owner can simply walk out and mail the house keys to the lender, with no further liability. This “jingle mail” loophole encourages wilful default. 
  

Technology

• Gmail suffers a DDOS attack
• Yesterday gmail was unavailable from about 2 PM till evening, by which time Google is reported to have solved the problem.
• The gmail servers crashed because of a DDOS attack.  DDOS: Distributed Denial of Service
• It is believed that somebody that was able to gain control of thousands of machines (PCs) make these machines access gmail at the same time.  Unable to service so many requests at one moment, the gmail servers crashed.

Language lessons

• pip-squeak
• Noun: Someone who is small and insignificant
• chimera
• Noun: A grotesque product of the imagination; (Greek mythology) fire-breathing female monster with a lion's head and a goat's body and a serpent's tail; daughter of Typhon
• auteur
• Noun: A filmmaker who has a personal style and keeps creative control over his or her works

24.02.2009

Politics & the Nation

• Negative voting: The manna from heaven that India has all along been waiting for!
  
• Today's news report in ET about the referral to a larger bench of the Supreme Court for deciding the issue of Election Commission's power to devise a mechanism for enabling voters to exercise the right of negative voting in elections, is like a manna from heaven for all those who are in favour of electoral reform in the country.
  
• A two-judge bench, comprising Justice BN Agrawal and Justice GS Singhvi, on Monday said the decision of the Constitution bench in Kuldip Nayar Vs Union of India case tends to create a doubt whether the right of voter to exercise his choice for the candidate is a necessary concomitant of the voter’s freedom of expression guaranteed under Article 19(1)(a) of the Constitution. They said this issue needed a clear exposition of law by a larger bench.
  
• The right to elect, fundamental though it is to democracy, is neither a fundamental right nor a common law right, but pure and simple, a statutory right, it had said. 
  
• A couple of earlier judgments of the Supreme Court gave an expansive meaning to the term ‘expression’ used in Article 19(1)(a) by declaring that in the democratic set up of our country the elector's right to have complete information about the candidates and then express his choice for a particular person, are necessary concomitant of the freedom of expression guaranteed under Article 19(1)(a) of the constitution, bench said. 
  
• This is too important an issue and too important a news report to ignore.  Please read it in full.  In fact we should all read the judgment itself.  It is not available as yet on the Supreme Court's web site.  In case I forget, please do remind me through our shoutbox, I will give a link to it as soon as it is made available on the Supreme Court web site.
  
• We have often heard about local solutions for local problems being more appropriate.
  
• This article that appeared in today's ET elaborates the concept with special reference to Railways.  Some of the comments made in the article are worth our attention; as they hold discovered wisdom.
  
• The problem with the western template is that it poses the objective of profitability and of meeting a certain minimum social obligations as being in conflict with each other. Of course, this long-held belief is fast changing in societies like the United States where we are seeing unprecedented socialisation of capital. For instance, a million home owners not being able to pay off their loans and getting a reprieve from banks is a classic example of socialisation of capital. The IMF, World Bank or its intellectual progenies among the Indian elite would have scoffed at a similar loan amnesty scheme in India or other developing economies.
  
• The government must resist the temptation of parachuting global consultants to deal with tricky domestic problems. The world is going through an unprecedented crisis and all conventional wisdom is being stood on its head. Indeed, this is the time to evolve our own thinking process that is rooted in our own cultural context. There is no better time to do this than now. 
  

Finance & Economics

• What is the incidence of indirect tax in India?
  
• According to Vijay Kelkar, if you add various local taxes to VAT at the central and state level, the incidence of indirect tax today is close to 30%. 
  
• The best fiscal stimulus that can be delivered is by reducing the total incidence of indirect tax from 30% to a single GST rate of, say, 17%. 
  
• The 17% GST can be shared in the ratio of 4:4:2 between the Centre, states and the local civic bodies. According to Kelkar the economic value of this GST reform could be $500 billion and has an employment potential of 4-5 million. 
  

International

• Some comments on the ill-effects of protectionism; excerpted from an op-ed article in ET today:
  
• If past is any guide, it may delay recovery as happened in 1930, when in the midst of the Great Depression, the US government passed the Smoot-Howley Act that imposed high import duties on approximately 3,000 foreign goods. In response, European countries retaliated by imposing equally high tariff duties on goods manufactured in the US. The result was a deepening of the recession in both the US and Europe. 
  
• Protectionism will increase cost of production and result in an inefficient allocation of resources. In the short run, it will increase demand for goods manufactured by local producers. It will also trigger retaliations from trading nations. On balance, while some domestic producers will benefit from higher tariffs, others will lose on account of retaliatory actions by importing countries. 
  
• In the long run, protectionist policies will reduce global competitiveness of local manufacturers. It will protect inefficient industries that cannot compete internationally, but efficient and competent industries would be on the losing end. Steel manufacturers, for instance, may benefit from the ‘Buy American’ clause, but high-tech companies like Microsoft, Intel, Apple, General Electric and Boeing may suffer if in retaliation China, India, and America’s other trading partners impose tariffs on goods produced by these companies. 
  

Oscars

• With Slumdog garnering our full attention yesterday, I apologize for our failure to note about the remaining great heroes of this year's Oscars.
  
• Hugh Jackman of the X-Men fame was the host of the awards.  The Oscars' presenter is considered a very prestigeous assignment nowadays.
  
• Sean Penn took home his second best actor Oscar, winning for his portrayal of slain San Francisco politician and gay rights activist Harvey Milk in "Milk."
  
• Kate Winslet won best actress for playing a Nazi concentration camp guard in the "The Reader."
  
• Heath Ledger was posthumously awarded the best supporting actor Oscar for his role as the Joker in the "Dark Knight."  Ledger died Jan. 22, 2008, following an accidental drug overdose in his New York apartment.  Ledger, who was 28 when he died, joins 1976 best-actor winner Peter Finch of "Network" as the only other performer to win an Oscar after his death.
  
• Penelope Cruz won the best supporting actress award for "Vicky Christina Barcelona," and "Wall-E," the morality tale cleverly disguised as romance about robots, won for best animated feature.
  
• The following is the complete list of Academy Award winners
  
• Motion Picture: "Slumdog Millionaire."
  
• Actor: Sean Penn, "Milk."
  
• Actress: Kate Winslet, "The Reader."
  
• Supporting Actor: Heath Ledger, "The Dark Knight."
  
• Supporting Actress: Penelope Cruz, "Vicky Cristina Barcelona."
  
• Director: Danny Boyle, "Slumdog Millionaire."
  
• Foreign Film: "Departures," Japan.
  
• Adapted Screenplay: Simon Beaufoy, "Slumdog Millionaire."
  
• Original Screenplay: Dustin Lance Black, "Milk."
  
• Animated Feature Film: "Wall-E."
  
• Art Direction: "The Curious Case of Benjamin Button."
  
• Cinematography: "Slumdog Millionaire."
  
• Sound Mixing: "Slumdog Millionaire."
  
• Sound Editing: "The Dark Knight."
  
• Original Score: "Slumdog Millionaire," A.R. Rahman.
  
• Original Song: "Jai Ho" from "Slumdog Millionaire," A.R. Rahman and Gulzar.
  
• Costume: "The Duchess."
  
• Documentary Feature: "Man on Wire."
  
• Documentary (short subject): "Smile Pinki."
  
• Film Editing: "Slumdog Millionaire."
  
• Makeup: "The Curious Case of Benjamin Button."
  
• Animated Short Film: "La Maison en Petits Cubes."
  
• Live Action Short Film: "Spielzeugland (Toyland)."
  
• Visual Effects: "The Curious Case of Benjamin Button."
  

Society

• Ever heard of the 'Golden Pound Principle'?
  
• This is a principle which is to be ideally followed by NGOs and other charitable organizations.  Followers of this principle ensure that every single donated pound is spent on charitable projects. All operating costs, such as staff salaries, are covered by corporate sponsors or interest which is earned while money raised is waiting to be spent (granted) to charitable projects.
  

Language lessons:

• doggone: 
• Verb: Wish harm upon; invoke evil upon
  
• Adjective: Expletives used informally as intensifiers
• eg: Slums can become skyscrapers but, doggone it, some things never change fast enough. 
• chutzpah: Noun
• unbelievable gall; insolence; audacity
  
• joie de vivre: Noun
• A keen enjoyment of living
  

23.02.2009

Politics & the Nation

• India's show at Oscars.  Looks like this is the best ever year for India at the Oscars.
• At the time of posting the Oscars show is live on TV.  Even as I keep switching between screens, we can't help but rejoice the fact that Slumdog has notched up eight Oscars.
  
• Till the other day you would not have recognized these names: Freida Pinto and Dev Patel.  Now I know, almost all of you know who they are.  The lead actors in Slumdog.
  
• AR Rehman got two of the awards for Best Music and Best original song.  AR Rehman is only the third Indian to receive an Oscar, the others being Bhanu Athaiya and Satyajit Ray. Athaiya won an academy award in the best costume design category for the 1982 film Gandhi and Ray was awarded an academy honorary award for his contribution to world cinema in 1992. 
  
• Two other Indians who were nominated for Oscars for this film are: Gulzar and Resul Pookutty. Gulzar is nominated alongside Rahman in the best song category for Jai Ho and Resul Pookutty is nominated in the sound editing category.
  
• Two Indian-themed documentaries are also up for the Oscars this year. The Final Inch by American documentary makers Irene Taylor Brodsky and Tom Grant is about health workers travelling throughout Uttar Pradesh, urging parents to vaccinate their children against polio. 
  
• The second, Smile Pinki made by American filmmaker Megan Mylan is a heart-warming tale of a poor village girl called Pinki whose cleft lip made her a social outcast until she meets a social worker who changes her life.  
  
• Mehboob Khan’s Mother India (1957) and Mira Nair’s Salaam Bombay (1988) which were India’s official entries to the Oscars made it to the nominations in the same category but no Indian film has gone all the way. Deepa Mehta’s Water was Canada’s official entry for the foreign language category in 2006 but again it only made it to the nominations. Vidhu Vinod Chopra also did the country proud when his documentary An Encounter with Faces was nominated in the documentary short subject category in 1979. 
  
• Noting about Oscars, can we also not recollect something about Razzies?
  
• They are a spoof for Oscars.  Giving awards away to the year's worst performing films.
• They are founded by John Wilson.
• Were India and Pakistan close to reaching an agreement on Kashmir?
• If newspaper reports are to be believed, this was so.
• In the period between 2004 and 2007 both the countries have reported to have exchanged lot of non-papers on the issue and have almost finalized the deal.  The deal consisted of creating an autonomous region for Kashmir that allowed people from both sides of the LoC to move around freely and conduct commerce and trade.  Reportedly this was sold by Musharaff successfully among the top brass of the Pak army.  But the deal fell through with the fall in the stock of Mr. Musharaff.
• BTW how would you define a non-paper?
• It is diplomatic jargon for a negotiated text that bears no names or signatures and can serve as a deniable but detailed basis for a deal.

Debate

• In the wake of the Satyam scam, do the MNC audit firms need to be banned from India?
  
• In a very relevant debate on the issue, two experts speak their mind.  Some excerpts:
  
• The ICAI can only punish individuals and there is no way the conduct of erring firms can be subjected to any regulatory mechanism. Parliament needs to empower the ICAI, and through the Companies Act set up a speedy and practical mechanism to regulate and control the unscrupulous activities of MAFs and grant a level playing field to Indian CAs. 
  
• A ban on accounting firms may neither be practical nor prudent, if equal reciprocity is granted under Most Favoured Nation Treatment principle of the WTO. The safeguard lies in users and society who have to make multinational accounting firms redundant if they do not mend their ways.
  
• Two important aspects of regulating the audit firms revolve around the availability of choice and accountability.  Audit choice can be increased by: reducing barriers to entry (for example many institutional investors demand a Big Four auditor at the time of investment); changing the perception of corporates that the Big Four are the only audit firms that can service them; and looking at changes at the regulatory level such as joint audit, which has worked very well in France for the last many years. 
  
• There is a definite need for greater accountability of audit firms. All of the Big Four are networks operating as independent units in each of the countries they operate in. This implies that if some mishap occurs in one country, such as Satyam in India, the global operation cannot be held responsible, accountable and liable. On the one hand, these firms advocate that they use their international systems, techniques and experience and on the other hand, they tend to localise accountability. 
  

Finance & Economics

• Rising credit card defaults make banks invade the savings bank account of customers
• It is reported that these defaults have risen by over 2% in 2008 taking the gross default rates to 10 to 12% of the turnover.
• It is estimated that the average monthly credit card spend by consumers in India is around Rs 4,000. 
• There are currently 25 million credit cards in the country, but only 40% of these are actively used. 
  
• Ever heard of NCLT?
• The National Company Law Tribunal (NCLT) that was to subsume the Company Law Board, the Board for Industrial and Financial Reconstruction, as well as jurisdiction of high courts over mergers and acquisitions is yet to be formed. A case challenging the constitution of the NCLT filed in the Madras High Court early 2003 is now before the Supreme Court.
  
• ONGC stikes oil in KG basin?
  
• It is reported that the discovery took place in the block KG-DWN-98/2. ONGC is now accessing the reserves. It will inform the upstream regulator directorate general of hydrocarbons (DGH) after the assessment of the reserve. An announcement on this is expected in a month or so.
  
• ONGC roped in Statoil of Norway and Petrobras of Brazil as equity partners in the KG-DWN-98/2. Statoil and Cairn India hold 10% each in the block. Petrobras holds 15% while ONGC holds the remaining stake. 
  
• Move over navaratnas; it is time for mahanavaratnas
  
• The department of public enterprises (DPE) has reportedly decided to wait for a year before bestowing higher functional and financial autonomy to nine top performers among 18 navratna companies by carving out a new category of mahanavratnas. 
  
• The Planning Commission had recommended mahanavratna status to Bhel, Bharat Petroleum, Hindustan Aeronautics, Hindustan Petroleum, Indian Oil, NMDC, Power Grid Corporation, REC and SAIL. 
  
• Mahanavratna status would have given these companies freedom to make investments up to 50% of their net worth—the sum of its equity capital and reserves—while the investment cap on a single project would have gone up to 25% of their net worth. The tag will also have given them greater functional autonomy for forming joint ventures. 
  

International

• Expanded Chiang Mai
  
• Japan, China, South Korea and 10 Southeast Asian nations agreed to form a $120-billion pool of foreign-exchange reserves that can be used by countries to defend their currencies amid the deepening global recession. The amount is 50% more than the $80 billion proposed last May, and an expansion of the current arrangement called the Chiang Mai Initiative that allows only bilateral currency swaps. The nations’ finance ministers and government officials jointly announced the decision at a meeting in Phuket, Thailand. 
  
• Read more about this in this report.  Important.  You shouldn't miss it.

Language Lessons:

• coda: Noun
  
• The closing section of a musical composition
  
• eg: "Jai Ho." These words are a bouncy coda to Slumdog Millionaire...

21.02.2009

Politics & the Nation

• Record additions in mobile telephone connections
  
• About 15.26 mn additional subscribers were added in January in the country.  
  
• With this, the total number of telephone connections in India crossed the 400 million mark at the end of January, reaching 400.05 million compared to 384.79 million at the end of December. 
  
• In the process, overall tele-density was pushed up to 34.5% from 33.2% in December.
  
• Judge Soumitra Sen of Calcuatta HC facing impeachment
  
• Fifty-eight Rajya Sabha MPs have sought the removal of Calcutta HC judge Soumitra Sen. 
  
• It is only the second time that an impeachment motion against a judge has been brought to Parliament. In 1991, an impeachment motion was initiated against Supreme Court judge V Ramaswamy for misuse of office as the judge of the Punjab and Haryana HC. But it was defeated as ruling Congress MPs voted against the motion brought by opposition MPs. 
  
• Unlike in the case of Justice Ramaswamy this time the proceedings have been initiated in the Rajya Sabha. This means that the move would remain valid even after the Lok Sabha elections.
  
• The provisions of constitution relating to removal of judges: Article 217 (removal of an HC judge); Article 124 (removal of an SC judge) 
• Former Union Minister Sukh Ram convicted by CBI court
  
• In the disproprtionate assets case in which he was accused of amassing Rs. 4.25 crore the trial court has convicted him, 13 years after the charges were first levelled.  Look at the timeline:
  
• Aug 16, 1996: CBI recovers Rs 2.45 crore from Sukh Ram’s Delhi residence at 12, Safdarjung Lane and Rs 1.16 crore from his Mandi home in HP 
• Aug 27, 1996: FIR filed under the Prevention of Corruption Act 
  
• Sep 18, 1996: Sukh Ram arrested by CBI, gets bail a month later 
  
• Jun 9, 1997: Trial court frames corruption charges 
  
• Nov 6, 2004: Former PM Narasimha Rao records his testimony 
  
• Feb 20, 2009: Court convicts Sukh Ram. 
  
• Sentencing due on Feb 24
  

Finance & Economics

• Government mulling diesel price reduction?
  
• This is what is being contemplated if newspaper reports are to be believed.
  
• The government slashed pump price of petrol by Rs 5 a litre, diesel by Rs 2 a litre and cooking gas by Rs 25 per 14.2 kg cylinder on January 28. Last December, prices of petrol and diesel were reduced by Rs 5 a litre and Rs 2 a litre respectively. The latest proposal, which is still in discussion stages, involves cutting the price of diesel by Rs 2-3 a litre. 
  
• Reportedly the profit margin for refiners on diesel now stands at Rs 4.45 a litre, giving the government enough cushion to cut prices. 
  
• Currently, OMCs are losing Rs 11.25 on the sale of PDS kerosene (sold through fair price shops) and Rs 74.53 on every cylinder of cooking gas. But the margin is positive on petrol (by 0.03 a litre) and diesel.
  
• Reported job losses causing lot of unease
• A sample survey conducted by Labour Bureau reportedly pointed out that about 5 lakh jobs were lost in the country during September-December 2008.
• This has prompted the stand-in Finance Minister Mr. Pranab Mukherjee to state that jobs should be protected at all costs; even at the cost of paying less salary.
• While that is the most sensible suggestion that should be pursued in the current difficult times, it will no doubt be less palatable for some.
• FDI in aviation set for some rejig?
  
• The aviation scene in the country is making the government do a rethink on the FDI policy relating to the sector.  All the airlines are bleeding and the sector could likely suffer a combined loss of Rs 10,000 crore in the current fiscal.
  
• Most Indian carriers are already sitting on a significant debt and raising additional resources may not be easy in the prevailing conditions.
  
• Therefore a policy rejig on FDI norms for the aviation sector looks possible.
  
• Current regulations don’t allow foreign carriers to hold equity, either directly or indirectly, in domestic airlines. India only allows foreign investors other than airlines to own up to 49% in an airline company.  Government may now bite the bullet and allow some relaxation here.
  

Language lessons:

• inured: adjective & verb
• adjective: Made tough by habitual exposure
• verb: Cause to accept or become hardened to; habituate
  
• eg: The vast majority of the Indian public, despite being inured to alltoo-frequent scenes of outrageous behaviour by our elected leaders in state legislatures...

20.02.2009

Politics & the Nation

• PE firms exit realty deals on ‘condition precedents’
  
• PRIVATE equity (PE) firms are learnt to be pulling out of real estate deals, citing condition precedents (CPs), which are part of a deal document. What are these CPs?
• CPs are conditions that are required to be satisfied post signing of a deal, without which the deal cannot close. Conditions include getting permission in a specified time period, timeline guarantees etc.
  
• The drug price control regime in India
  
• India controls prices of 74 bulk drugs — raw materials or intermediaries — which the government considers as essential in nature. Companies not complying with the ceiling shall be liable to deposit the overcharged amount along with interest.
  
• But usually companies get around this by adding a new ingredient and obtain a licence under Food and Supplement Act to increase the price of the drugs.
  

• What is social entrepreneurship?  Can you define it?
  
• It is about creating business models revolving around low-cost products and services to resolve social inequities.  The idea that goes with it is the realisation that social progress and profit aren't mutually exclusive.
• Sounds like gobbledegook?  Read this: When Muhammad Yunus, 2006 Nobel Peace Prize awardee and founder of Grameen Bank, was contacted by the Nobel Foundation for the customary winner interview, he remarked, “...poverty is an artificial creation. It doesn’t belong to human civilisation, and we can change that, we can make people come out of poverty (sic). The only thing we have to do is to redesign our institutions and policies.” 
  
• Hope it has clarified the idea to you.

Finance & Economics

• A silent revolution happening in our rural hinterland?  Proof that India is transiting from a 'developing' to 'developed' country status?
• The traditional view that India’s rural economy is largely agrarian is about to take a beating with a dramatic fall in the share of agriculture in rural GDP, the value of goods and services produced in rural areas. 
  
• According to an analysis done for ET, the combined share of industry and services in rural GDP has risen to 58.4% in the current fiscal from 48.6% in 1999-2000 on the back of strong growth in these sectors in the past five years while the share of agriculture slipped to 41.6%. The contribution of industry, the most robust of all rural sectors, to the rural economy is 30.2% in the current fiscal year while services account for 28.2%. 
  
• Economists read this shift away from agriculture as part of the broader country-level GDP trend - sign of a development of an economy — when contribution from industry and services grows relative to agriculture.
  
• BTW do you know what is defined as an urban area?  The current definition of an urban area, according to the 2001 census, includes all places with a municipality, corporation, cantonment board or a notified town area committee as well as all other places with a minimum population of 5,000, at least 75% of male working population engaged in non-agricultural activities and density of population of at least 400 persons per square kilometre. 
  
• Inflation at record lows
• INFLATION eased to a 13-month low of 3.92% for the week ended February 7 on the back of a sharp fall in the prices of edible oils and manufactured products. 
  
• Why are banks (globally) reluctant to lend?
  
• One possibility is that they worry about borrowers’ credit risk, though this would have to be extremely high to justify the complete cessation of long-term lending. 
  
• A second possibility is that banks worry about having enough resources to meet their own creditors’ demands if they lock up funds in long-term loans. But the many central bank lending facilities that have been opened around the world should assuage these concerns, especially for large and well-capitalised banks. 
  
• Thirdly, it could be the fear of being short of funds if investment opportunities get even better. Citicorp CEO Vikram Pandit said as much when he indicated that it was cheaper to buy loans on the market than to make them. And buying may get cheaper still! 
  
• What can be done to revive lending?
  
• Political exhortations to lend can have some, albeit limited, impact. Any voluntary resumption of lending will necessitate reducing both fears and potential opportunities.
  
• First, the authorities can offer to buy illiquid assets through auctions and house them in a government entity, much as was envisaged in America’s original Troubled Asset Relief Program. This can reverse a freeze in the market caused by distressed entities that are unwilling to sell at prevailing market prices. 
  
• A second approach is to have the government ensure the stability of significant parts of the financial system that hold illiquid assets by recapitalising regulated entities that have a realistic possibility of survival, and merging or closing those that do not. 
  
• Are the recommendations going over your head?  Read this.  Especially the last four paragraphs.  It will give you a  better understanding.  

International

• UBS runs foul of the US tax authorities and agrees to pay up a record $780 mn to settle the issue
• UBS, the largest Swiss bank, arrived at a landmark settlement with US tax authorities, admitting it “participated in a scheme to defraud the US”. UBS will pay $780 million to settle the investigation, but more critically, the beleaguered bank has also agreed to turn over the details of an estimated 300 to 400 US clients, and closed down its offshore business for Americans. 
  
• UBS has been under investigation, with many of its executives indicted over the past, from American prosecutors for a scheme that alleges it helped American citizens set up and conceal offshore accounts by falsifying, destroying and concealing required documents. The settlement came as the bank faced indictment for non-cooperation for resisting disclosures of client details. Of the $780 million that UBS will pay, $380 million is for profits from its cross-border business, and the rest unpaid taxes and penalties. 
  
• BTW one thing that is notable about Swiss banking laws is that it discriminates between tax fraud and tax evasion or avoidance — UBS was caught in a case of fraud; evasion or avoidance is not a criminal offense under Swiss law, and protected by secrecy. 
  
• You have heard of Bernard Madoff.  But Allen Stanford?
  
• This Texan billionaire is best known for sponsoring the $1 million West Indies Twenty20 last year.  He has now gone into hiding, even as US authorities are investigating him for defrauding investors and running a Bernard Madoff style ponzi scheme.
  
• The fallout of the spectacular collapse of the high-profile financier spread to the Caribbean and Latin America, as banks linked to his empire faced a run. And estimated $50 billion of assets is being looked for. 

Science & Technology

• The hardest natural substance
  
• We all know that diamonds are the hardest natural material.  But a rare natural substance, called lonsdaleite, which is made from carbon atoms just like diamond, has emerged as 58 per cent harder than the gemstone, reports say.
  
• Lonsdaleite is sometimes formed when meteorites containing graphite hit earth.

Language lessons

• gobbledegook: noun
• Incomprehensible or pompous jargon of specialists
  
• sentient: adjective
• Endowed with feeling and unstructured consciousness; Consciously perceiving
  
• eg: the living knew themselves just sentient puppets on God's stage
• "sentient of the intolerable load"; "a boy so sentient of his surroundings"

18.02.2009

Politics & the Nation

• Pakistan signs an agreement with Taliban
  
• Pakistan is reported to have signed an agreement with Taliban (Tehreek e Taliban Pakistan - TTP), whereby sharia law will be established in the Malakand division (consisting of seven districts, including Swat Valley.)  This move will only embolden Taliban to expand its sphere of influence. 
  
• The Pakistani establishment’s agreement with the Taliban is the third such pact signed by Pakistani authorities with Maulana Sufi Mohammad, a radical cleric who began a violent campaign for the enforcement of Sharia in the region in the 1990s. The first agreement provided for the appointment of a Qazi, or an Islamic jurist, to assist a judge in deciding disputes in line with Islamic injunctions, though the jurist’s advice was non-binding. In the second pact signed in 1999, the advice of the jurist was made binding. 
  
• This ET editorial comment on the issue cannot be ignored by Political Science students.  Very good one.
• How should the Satyam scam be investigated?
• Today's ET editorial puts out a highly sensible proposal in this regard.  It is that the CBI, which is entrusted with the investigation of the case, should take inputs from SFIO and the SEBI in filing a comprehensive charge-sheet in the case.  Look at this excerpt for the reasoning offered:
• Investigations by Sebi and SFIO are to continue even as the CBI begins its own inquiry into the case. The CBI will presumably file the main chargesheet in the case relating to criminal conspiracy to defraud. The markets regulator Sebi must now actively assist the CBI in constructing a comprehensive chargesheet. This is essential as Sebi is also collecting evidence relating to insider trading, which is a criminal offence. The investigation of a criminal conspiracy to defraud clearly extends to Sebi’s domain too. Likewise, SFIO which is carrying out the investigation under Companies Act, 1956, should actively cooperate with the CBI. It would, therefore, make eminent sense if a comprehensive chargesheet is filed by CBI taking inputs from Sebi and other agencies looking at the criminal conspiracy. That alone can ensure the guilty are properly punished for their crimes.
  

Finance & Economics

• How does NPS operate?
• I am sure many of you know that New Pension Scheme (NPS) is applicable to all those who join the government service on or after January 1, 2004.  How is the corpus operated?
• This news report gives a clear picture.  
• Wheat production estimates
• The country’s wheat production in 2008-09 may cross last year’s record of 78.4 million tonnes if low temperature persists and there are brief spells of rains in the northern region during February-end. The amount of rainfall in February will be critical for the outcome of the season.
  
• Online, credit card frauds cost banks Rs. 42 crore
• Banks across the country reported a loss of over Rs 42 crore to internet/online banking and credit cards frauds during April-December last year with the maximum amount being fraudulently withdrawn using credit cards.

Medicine

• FMP - Forensic molecular photofitting
  
• Using a DNA sample to build up an identi-kit picture of a person's face by mapping genes that are linked to skin pigmentation and to groups of genes that control facial structure, is known as FMP.
  
• This is how the smallest amount of DNA found at the crime scene is going to reveal the face of the criminal. This goes far beyond doing an identity-proving genetic fingerprint, it means the person’s actual face will emerge after analysing a collection of genes.  
  
• Mark Shriver, a scientist from Pennsylvania State University claims that there is enough information in a DNA sample to build up an identi-kit picture of a person’s face. 
  
• The approach has already been used to help identify and convict a serial killer in Baton Rouge, Louisiana.
  
• Is stem cell therapy safe?
• The fad of storing one's foetal stem cells is on a rise in India recently.  But is stem cell therapy safe?  
• If you read this BBC report you would be in doubt.

International

• Japan's Finance Minister loses job over drunken appearance
• Japan's finance minister Shoichi Nakagawa was forced to resign after a row over his appearing at a G7 finance ministers’ press conference in Rome, apparently drunk. He has denied that he was drunk. 
  
• Sudan signs peace accord with Darfur rebels
• Sudan and Darfur's most active rebel group the Justice and Equality Movement have agreed to sign a declaration of good intentions.
  
• The deal is brokered by Qatari Prime Minister Sheikh Hamad bin Jassem al-Thani.
  
• You might be aware that Darfur is a Western region in Sudan.  Inhabited mostly by African natives, rebel groups from the region have been waging a war with the Sudanese government.  The government is run by Arabs.
  
• Since 2003 there has been an ongoing war in the country.  The Sudanese President is facing charges of genocide before the ICC.
  

Language lessons

• groggy: Adjective
• Stunned or confused and slow to react (as from blows or drunkenness or exhaustion)
• eg: groggy appearance or groggy performance

17.02.2009

Politics & the Nation

• Can India have a joint registration with Pakistan for Basmati rice under GI?
• The central government is not sure about it.
• India has so far 104 products registered under GI (Geographical Indication) including Darjeeling Tea and Kolhapuri Chappal in the past four years.
  
• The Parliament passed the APEDA (amendment) Bill 2008.  This empower APEDA (Agricultural and Processed Food Products Export Development Authority) to protect Basmati rice from patent infringements.
• Geographical Indications of a product refer to a country or to a place as being the country or place of origin of that product.
  

Finance & Economics

• Budget highlights and related facts and figures
  
• The budget on the whole proved to be a damp squib.  Citing propriety the stand-in Finance Minister Mr. Pranab Mukerjee did not announce any initiative worth our note.  This is largely seen as a tactical move so that the UPA Chairperson Sonia Gandhi can announce something big just before the election announcement.  Will she or won't she?
  
• The fiscal deficit, budgeted at 2.5% of GDP this year, will end up at 6%, to which should be added another 1.5% of GDP for off-Budget items like dues to oil and fertiliser companies. Throw in another 3.5% of GDP of state government deficits, and India will have a consolidated fiscal deficit of 11% in 2008-09, as high as in the crisis year of 1991. 
  
• What is particularly noteworthy is the more than four-fold increase in revenue deficit, up from 1% in budget estimates to 4.4% (Rs 2,41,273 crore) in the revised estimates.  
  
• Even with projected 7% GDP growth next year, the Budget projects tax revenue that will actually be lower — Rs 497,596 crore — than the sum originally expected in 2008-09 — Rs 507,150. This is on account of tax cuts in the stimulus packages to date, and expectations of weak corporate profits. 
  
• Mr Mukherjee announced a virtual doubling of outlay for his government’s flagship programme — the National Rural Employment Guarantee Scheme — from Rs 16,000 crore to Rs 30,100. This is largely because the scheme now covers all 597 districts. The urban renewal mission outlay has been almost doubled from Rs 6,866 crore to Rs 11,8432 crore. 
• Why is a high revenue deficit more worrisome than a fiscal deficit?
• Unlike a higher fiscal deficit that can augment the country’s repayment capacity, a higher revenue deficit means the government is borrowing to spend on current consumption. A revenue deficit adds to the debt burden without creating the wherewithal to repay the debt. This is the reason why fiscal economists warn against countries running high revenue deficits. 
  
• Given that debt servicing (debt repayment plus interest payments) already accounts for almost 100% of revenue receipts, according to revised estimates for the current fiscal, the danger of a high revenue deficit going forward cannot be over-emphasised. 
  
• PN2 & PN3 of 2009
• I think for quite some time you will keep hearing about these Press Notes.  It was just yesterday that we noted about the change in rules regarding computing foreign investment in Indian companies.  The government's policy in this regard is announced through these two Press Notes.  Instead of bringing more clarity to the policy pronouncement, these Press Notes have reportedly created more confusion.
• Have a look at the gist of these notes here.  You can read the full Press Notes here: Press Note 2; Press Note 3.

International

• Japan's worsening economy
  
• The world's second largest economy shrank 3.3% in the fourth quarter bringing the annual of contraction to 12.7%, the worst ever performance for the country since 1974.
  
• Gross domestic product fell for a third straight quarter in the three months ended December 31.
  
• Exports plunged an unprecedented 13.9% from the third quarter. 
  
• Cambodian genocide trials begin
  
• This is the first ever trial over the deaths of an estimated 1.7 million people at the hands of the Khmer Rouge regime more than three decades ago.
  
• When the communist Khmer Rouge came to power in 1975 after five years of bitter civil war, many of their countrymen thought peace was at hand. But in their effort to remake society, they instituted a reign of terror that lasted nearly 4 years, until ended by an invasion by neighbouring Vietnam.
  

Environment

• India's dwindling Tiger population
  
• Tiger population has reportedly came down to 1400 in the country.
  
• The government has set up 37 tiger reserves, spread across 19 states in India. But the current level of protection is proving inadequate for the animals. Last year, the central government's National Tiger Conservation Authority estimated that only about 1,400 tigers roam the wilds in India nowdays, down from an estimated 15,000 just two decades ago.
  

Medicine

• Human trials of HIV microbicide
  
• Microbicides are substances intended to prevent the transmission of HIV and other Sexually Transmitted Infections when applied inside a woman's private parts. They come as gels, creams or a film. When applied to the private parts, microbicides inhibits the virus from entering the human body.
  
• Trials in the use of microbicides for preventing HIV were conducted in Zimbabwe, Zambia, Malawi and the US.
  
• The first successful trials were reported from Zimbabwe, offering a glimmer of hope in the effectiveness of use of microbicides for prevention of HIV.

16.02.2009

Politics & the Nation

• Israel is now the largest defence supplier for India
• In spite of the stiff opposition from the Left parties for over four years and a half, Israel has emerged as the largest defence equipment supplier, overtaking Russia.
• Israel is reported to have signed about $9 bn worth of defence deals during the past decade.

Finance & Economics

• LLPs set to be allowed w.e.f 01.04.2009
• Limited Liability Partnerships, is the format that will allow professionals, traders and even producers of goods to conduct their business without worrying about losing their personal assets due to lapses of other partners. 
  
• An LLP would be taxed for its income while the income of individual partners would be tax free; a benefit that is not available to companies. Companies pay tax on their profits and again pay dividend distribution tax when they distribute profits among shareholders. The LLP format protects partners from double taxation. 
  
• Modus operandi adopted by Satyam's promoters to divert funds from Satyam
  
• There are many methods in which a company's promoters can divert money from the company to their front companies.  Investigations have now reportedly revealed one method employed by Satyam's promoters which violated the Companies Act provisions in this regard.  It made intercorporate loans and investments much beyond the limits prescribed or in violation of the provisions of the Companies Act.
  
• Under the Companies Act, a firm needs shareholders’ approval to make any loan or investment, give a guarantee or provide security beyond 60% of its paidup capital and free reserves, or 100% of its free reserves, whichever is higher. 
  
• Change of rules regarding computing foreign investment in Indian companies makes compliant companies violators of FDI norms 
  
• The government announced new rules for calculating the FDI in a corporate entity.
• Now, FII holdings, ADRs/GDRs, NRI investment and foreign investment through foreign currency convertible bonds would all be included while calculating FDI levels of Indian companies. These instruments were not part of the FDI calculation till now. An announcement specifying the compliance period is expected within a week. The current proposal is to fix August 31 as the last date for compliance with the new FDI norms, and the final deadline would be finalised after inter-ministerial consultations. 
• This move by the government is attracting lot of criticism.  You can expect some heated debates on this in the weeks to come.
• "The problem is when policy becomes hostage to sectional interests, it produces sub-optimal results. Consequently, what appears rational at a micro level becomes irrational at the macro level.  Elaborate."  If you are asked to answer such a question, you can't have a better answer than this editorial comment coupled with this news report.
  
• A look at the NPA figures of our PSBs
• Though the NPA of all the PSU banks (as a group) have come down in percentage terms, there has been a marginal increase in absolute figures. Total gross NPA of public sector banks, in absolute terms, increased to Rs 42,962 crore as on December 31, 2008 against Rs 40,611 crore at the end of March 2008. Total net NPA of PSBs, in absolute terms, stood at Rs 18,486 crore as on December 31, 2008 against Rs 17,724 crore as on March 31 the same year. 
  
• Some more figures: this time on our consumer market and savings
• The country’s consumer market is projected to become the fifth largest by 2025, worth more than $1,500 billion. A McKinsey Global Institute study released in 2008 projected that the urban market in India is expected to grow by more than 60% and the rural by about 32%, which in my view could grow faster. Many other studies make equally optimistic forecasts. India’s total commerce, which was estimated at $2.3 trillion in 2007, is expected to triple by 2025, which would make the Indian market larger, in terms of purchasing power parity, than the current size of the UK market. 
  
• The domestic savings rate grew from an average of 21.5% between 1991 and 1994 to about 34.5% between 2005 and 2007, with the household sector contributing the bulk of the growth. The Centre for Monitoring the India Economy has estimated that the savings rate touched 36% in 2008-09 and will fall to 34% in 2009-10, a rate that is still among the highest, worldwide. 
  

Sport

• Tennis: Sania Mirza loses in Pattaya final
• She was beaten 7-5, 6-1 by Vera Zvonareva of Russia in the Pattaya Open on Sunday. 

Language lesson

• bandy: verb
• Discuss lightly; Toss or strike a ball back and forth; Exchange blows
  
• eg: These days the favourite cricket question being bandied around in the Indian media is...
  
• imprimatur: noun
• Formal and explicit approval