Indian Current Affairs: 13.02.2009

Politics & the Nation

It admitted that Pakistanis are involved in planning and executing it -- things which it denied so far. Many believe that this is due to the insurmountable pressure being built on it from the US, the UK and India's diplomatic efforts with the international community.
The government circles in India still believe that this is only going half way. The terrorism infrastructure in Pakistan is still not dismantled and Pakistan continues to be in denial mode as far as involvement of Pakistan's ISI is concerned. Nobody expects the Government of Pakistan to expressly admit that its government or government agencies are involved. But dismantling the terror infrastructure and dismantling the ISI or undertaking a thorough revamp or reform of its structure would have soothed the frayed nerves both in India and the world. With Obama talking tough on terrorism emanating from Pakistan, it looks like it is feeling the heat already.
While the international community should keep pressing ahead with the demand for dismantling the terror infrastructure, one thing that should not be lost sight of is this -- Pakistan should not be allowed to slip into total anarchy or become a non-state space a la a Somalia, parts of Afghanistan or something similar. That poses bigger problems than what the world can effectively handle.

It's not enough if you have interest of the business or shareholders in mind; you need blessings from the Church too!

In a rare instance of the Church interfering with business decisions, the Archdiocese of Thrissur has opposed the merger of Catholic Syrian Bank with Federal Bank.

Of India’s children 43% are malnourished today as they were 15 years ago, against the average of 26% in all developing countries, and higher even than the average of 35% in the least developed countries.

Finance & Economy

It announced that it will allow foreign investment well beyond the current sectoral limits. Henceforth, foreign investment coming into a holding company majority owned by Indians will not count as FDI when invested in a downstream subsidiary.
This will enable Indian promoters in sectors such as telecom, insurance, civil aviation, etc., to get more foreign investment into their companies without being constrained by current FDI limits. So, companies in these sectors can legitimately breach the FDI limits by getting foreign funds through separate holding companies.

Some 115 independent directors on the boards of more than 100 listed firms have quit in the past one month.
This is attributed largely to the Satyam scam. The Satyam episode tarnished the reputations of its six independent directors, and some of them have been forced to engage lawyers to fight possible litigation by investors, both in India and abroad.
It has also brought home the risk of reputational, and possibly even financial, damage to scores of luminaries across corporate India, forcing many to reassess the level of commitment to the companies on whose boards they sit.
Independent directors are seen as ‘outsiders’ who watch out for the interests of minority shareholders and question and advice managements.

Government's originally budgeted debt mobilization this year was to the extent of Rs 1,78,575 crore. Subsequently, the government presented two supplementary demands, raising gross market borrowing to Rs 2,52,154 crore, an increase of 41%. Now, it is planning to raise another Rs. 46,000 crore in the last month of the fiscal year.
This ET editorial is an excellent piece which gives us a portend of things to come in the wake of such huge debt mobilization.

Remember our notings about this issue in our blog over the years? I would draw your special attention to the criticism about restricting pass-through only for nine sectors.
Now ET is reporting that the government is considering extending pass-through status to all domestic venture capital funds. What this means is that tax will be levied at investor level but not at the venture capital fund/trust level. This is expected to give a boost to investment inflows.

Reasons for the economic slowdown in India, as excerpted from an article in ET today:

Companies are not able to increase their production because there are lesser orders. Orders will come only when there is buying capacity with people. Globally, buying capacity has declined because there has been shortage of funds.
This has had a cascading effect on the ability of businesses to not only produce and supply but also retain their workforce. The problems get further compounded for small and medium enterprises (SMEs) as, besides the credit crunch they are unable to realise payments from their foreign and Indian buyers. Money supply got further tightened and credit from banks fully dried up with interest rates going sky high. Over the last six months, every productive sector--real estate, consumer finance, automobiles, infrastructure and retail--was affected.
If you want to remember this figuratively, it can perhaps be represented as:

Less orders <- decline in buying capacity <- Shortage of funds <- Credit dried up

International

This year marks both the 200th anniversary of Darwin’s birth — on February 12, 1809 — and also the 150th anniversary of the publication of his magnum opus ‘The Origin of Species’.
If you read this piece on this subject, you will really wonder whether Darwin was more a merchant than a biologist.

Literature

'East of the Sun', a delightful novel set in India of 1920s by Welsh author Julia Gregson, has been adjudged the Romantic Novel of the Year 2009.
Gregson drew inspiration for the novel from her trips to India, when she interviewed people and visited orphanages. The novel tells the story of three girls who travel to India in the 1920s.

Language lesson

Indian Current Affairs