31.03.2009

Politics & the Nation

• Pakistan bleeds in Lahore
• Terror struck Lahore for the second time in a month on Monday when heavily-armed gunmen stormed a police academy, killing at least 27 policemen in an eight-hour siege that ended with four terrorists being shot dead and six captured alive by security forces. The audacious attack comes barely a month after a similar assault on Sri Lankan cricketers in the city.
  
• As usual voices can be heard that Pakistan is getting a taste of its own medicine. But that I think would be scoring brownie points. Terrorism is terrorism; wherever it happens, whoever does it. It should be condemned in no uncertain terms. This is not the time to exhibit schadenfreude.
• Let us hope Pakistan will be able to pull itself out of this quagmire.
• CPSE top brass may get to see tremendous hike in their take home pays
• With the cabinet approval for CPSE pay revision on Monday, chiefs of profit making CPSEs may end up getting as much as Rs. 6.74 lakh as monthly pay.
• This has been made possible by not just allowing the inclusion of 50% dearness allowance (DA) in the basic salary for the purpose of fitment and pay fixation in the new scales; but also by the proviso that they can earn up to 200% as performance related pay. Now this may hold out reasonably well in comparison with private sector pays.

Finance & Economics

• Banks, the CVC and the CBI
• Should cases of companies' diversion of funds for purposes other than what are stated before their drawl, be referred to CBI and the CVC?
• This is one suggestion that appears to have come about in the banking circles of late, in view of the bad experience bankers had with the Satyam episode. An ET editorial today argues that this is at best an overreaction and that such probabilities should be left to be monitored by regulators like the RBI, the SEBI and the ministry of corporate affairs. Take a look at the editorial. Worth our attention.
• RIL's KG basin gas to improve the fortunes of power producers?
  
• As of February-end 2009, the country had an installed gas-based power generation capacity of 15,149 mw. While the gas requirement of this capacity is about 75 mmscmd — at 90% capacity utilisation, or plant load factor (PLF) — the actual gas supply is just half of the requirement. This has resulted in all gas based capacities in the country functioning at around 50% PLF.
  
• The empowered group of ministers on KG gas has decided that while power plants in Andhra Pradesh would be given gas at 70% PLF, others would get it at 60% PLF.
• Not just for power producers, let's take a look at the expert speak on how it affects the fortunes of the country:
• What does KG basin gas mean for the country in economic terms?
  
• In oil and gas equivalence terms, India’s import dependence is likely to fall from 60% to 45% (after also factoring in new crude from D-6 and Cairn Energy’s Barmer fields), and most important of all, India will be able to move from an oil economy to a gas one. In the year 2007, while the oilgas consumption ratio in the energy basket of the world was 60:40, in India it was 78:22. For India, the ratio is likely to shift towards gas (65:35) in the next 2 years.
  
• What does this gas production mean as far as import substitution is concerned?
  
• India is an energy deficit economy and needs energy for growth. The country is significantly dependent on import of energy in the form of crude oil, coal and LNG to meet its requirement. It is estimated that the transfer of wealth from India to the oil exporting nations amounted to $56 billion in 2007-08. In addition to this, the government incurred a subsidy of $18 billion on petroleum fuels, and another $1.8 billion on LPG usage in 2007-08. The subsidy bill on fertilisers, which was around $7 billion in 2007-08, is expected to touch $20 billion in FY 2009. Peak production of oil and gas from KG-D6 is expected to be 5,50,000 barrels of oil equivalent per day. At this level, the D6 oil and gas production will account for about 40% of India’s total oil and gas production. The peak 80 MMSCMD of gas production will eliminate a major portion of the current shortfall in gas availability in India. And the production of 5,50,000 boepd will save wealth transfer of $10 billion. The usage of gas as CNG will cut subsidy bill on transportation fuels. D6 gas usage in fertiliser production can reduce fertiliser subsidy.
  
• What does KG gas mean to India’s gas market? How much will it cover the demandsupply gap?
  
• There is a shortfall of over 100 mmscmd. The KG-D6 field is expected to have a peak production of 80 mmscmd, which means that a major portion of the current shortfall in gas availability can be met once KG-D6 production reaches its peak. Going by the current shortfall faced by the power and fertiliser projects and their connectivity to gas pipelines, it is estimated that around 30-35 mmscmd of KGD6 gas would go to the power sector and around 15-20 mmscmd would go the fertiliser sector. Supply of 35 mmscmd gas to the power sector would result in increase in generation by around 8,000 MW of power. Similarly, supply of 20 mmscmd gas to the fertiliser sector would deliver in increase in urea production of nearly 10 million tones per annum, which will result in total elimination of imports of urea in India. Supply of gas to the power and fertiliser sector will also result in lower dependence on imported LNG for these plants. For example, 1 MMSCMD of gas can save Rs 550 crore per annum in transportation fuel subsidies for diesel alone. The benefits for petrol would obviously be higher. Similarly, the efficiency of distributed power is more than 70% and usage of 1 MMSCMD for distributed power generation can save Rs 500 crore per annum.
• Do you find any discrepancies in the figures stated in any of the three answers above? Blame it on the experts. It all depends on how one looks at the broader picture.

• ATF prices set for an upward revision in April?
  
• Papers seem to have sensed this. Take look at these snippets:
  
• Move follows rise in crude prices, which touched $51/barrel on Monday
  
• Domestic airlines are likely to incur a combined loss of $1.5 billion this fiscal
  
• Indian Oil, HPCL and BPCL revise ATF rates twice a month based on the average international jet fuel rates in the preceding fortnight
  
• Prices had peaked to Rs 71,028.26 per kl in Delhi in August

Music

• Know what is balalaika?
• It is a three stringed Russian musical instrument. Take a look at it here.

Language lessons

• skittish: adjective
  
• Unpredictably excitable (especially of horses)
  
• effigy: noun
• A representation of a person (especially in the form of sculpture)
  

Obituary

• Maurice Jarre
• The musician who composed music for some all time great movies like Dr. Zhivago, Lawrence of Arabia and A Passage to India has passed away at the age of 84 on this past Sunday.
• His use of the balalaika for composing the theme in Dr. Zhivago is very well known. He won Oscars for his composition in all these three movies.

30.03.2009

Politics & the Nation

• Pension for all citizens; a dream set to become true?
  
• The New Pension Scheme, which has hitherto been applicable only for government employees since April 1, 2004, is set to be extended to all other organized and unorganized sectors from April 1, 2009.  
  
• With the clearing of the decks for this from the Election Commission, it is expected to have a smooth launch.
  
• However, experts are cautioning that the scheme may, after all, not be that successful because the incentive for a distributor to sell pension plans from an insurer is far higher than that offered under the NPS.
  
• Let us wait and see how this pans out in the near to mid term.
  
• This is one interview that is a must read for anyone trying to grasp the problem with inflation.
• It answers questions like:
  
• Why is that the common man is not feeling the benefit of a falling inflation?
  
• Is what we are facing currently, deflation?
• West Bengal and bio-villages
  
• The West Bengal government, in its efforts to spread organic cultivation, has resolved to set up one bio-village in each of the 341 blocks in the state in the next two years. The objective behind setting up bio-villages is to create role models for adaptation to organic farming. Already 75 bio-villages have been set up across the state up to 2007-08 since its launch in 2004-05. There was plan to set up another 64 biovillages in 2008-09. 
  
• In these villages, work is in progress to train farmers on the proper use of bio/botanical pesticides and use of microbes and parasites to wage a biological warfare against prevalent pests and plant diseases. 
  

Finance & Economy

• RIL (Reliance Industries Limited) set to commence natural gas production from KG (Krishna Godavari) basin
  
• Natural gas production is set to commence from the D6 block of the KG basin.  This is expected to add about $2 bn for the topline of RIL.  The field is expected to reach a peak production of 80 mmscmd by the end of 2009. 
  
• Gas from this field could substitute around 7% of oil consumption in 2009-10 and about 10-11% over the next three fiscals. 
  
• RIL is planning to invest an estimated $8.8 billion in the KG exploration block, and of this, it has spent $5.5 billion in developing the block and beginning production. 
  
• The current demand for gas in India is estimated be to nearly 190 million standard cubic metres per day (mmscmd), against a supply of 80 mmscmd, resulting in a shortfall of over 110 mmscmd.
  
• What are CCPs?  Why are they in the news?  Also did you hear of 'arbitrage money'?
  
• CCP stands for cumulative convertible preference shares.  These are the instruments that were issued by Indian companies, mostly unlisted, to foreign private equity players and hedge funds, circa 2006-07 for their fund infusion.  Typically these had a tenure of 3 years, offered a fixed interest, and at the end of three years, could either be redeemed to pay back investors or could be converted into shares, which could be sold once the company got listed.
  
• Now that the three year period is nearing completion, many of the Indian companies neither have the money to pay these overseas investors nor the will to enter the dormant IPO market.  
  
• Estimates put that close to $5 bn out of about $15 bn of CCPs are mautring this year.
  
• Why did CCPs not figure in the calculus of firms after 2007?
  
• After June 2007, the rules were tightened to ensure that CCPs get compulsorily converted into shares, failing which they were classified as debt. This was done to stop the unbridled flow of overseas arbitrage money — where foreign funds borrowed abroad to invest in India — that was fuelling asset bubbles in markets like properties. But soon, Indian companies, starved of domestic institutional finance, found a way out to beat the rule. 
  
• The fresh investments that were structured after June 2007 gave a put option to the foreign investors who could exercise it to sell the securities back to the promoter after three years. Here, the onus was on the ‘promoter’ to buy back the security since the company (post-June 2007) had to convert these into shares. This new instrument, tagged with a put option, was used till late 2007 and even early 2008 to bring in foreign investment.
  
• Arbitrage money:
  
• This is money that is borrowed abroad to invest in India; or another country for that matter.
  
• Exports contribution to our GDP.
  
• It is about 18%.
  
• An estimate of the money that is stashed away by Indians in Swiss banks & people of the world in tax havens
  
• In the range of $500 billion (Rs 25,00,000 crore) to $1400 billion (Rs 70,00,000 crore)
  
• A study by the Boston Consulting Group estimated that $7.3 trillion is stashed in offshore banking centres by people either taking advantage of low taxes or simply evading notice of tax authorities back home. 
• Curbing havens is one of the issues facing the Group of 20 summit on the world economic crisis, which gathers rich and leading developing countries in London on April 2.

• What is Disintermediation?  Can you give two examples of this phenomenon that have the potential to alter our lives forever?
• Disintermediation simply meant savers taking their hard-earned savings directly to those who needed it most — that is, companies setting up projects — instead of lending it to intermediaries (such as banks), which then eventually lent it to the companies. The word was used repeatedly in the perspective of developing the Indian capital markets.  What disintermediation simply meant was cutting out the middleman from — or delayering — a company’s supply chain or distribution networks.  Here is an excerpt from an article that appeared in ET today that offers a perfect answer for the second leg of the question:
  
• One is the Apple iPod/iTunes.  Reams have already been written about Apple’s iTunes and how this business model has changed the music industry. Apple realised early on that the internet would modify the music distribution business forever. That model — which has the sale of hardware layered on the software promise — has now become the defining template for music distribution. It peeled off many layers — such as, the music stores and the distributors, all of whom meant additional costs for the ultimate customer. But, there are further changes coming, which drive the disintermediation process further and promise to even do away with the need to buy hardware to access the software. A new service called “Spotify” allows users to hear songs of their choice from a virtual jukebox, all free, provided they agree to listen to 20 seconds of ads between 30 minutes of uninterrupted music. The songs can only be heard, not downloaded, reducing the piracy threat for music companies. The promise becomes attractive, given the easier access to the internet today, especially through mobile phones. It not only does away with the need to carry an iPod around or manage shelf-space overflowing with CDs, but it also has music labels signing on to offer their music. The service is still developing, but it has already created a buzz. 
  
• The second example is “Kindle”, an e-book reader launched by Amazon, which is now in its second version. It would be instructive to remember that Gutenberg’s invention freed ordinary people from the tyranny of priests and godmen, when he made available printed copies of the holy texts and scriptures at affordable prices. That was disintermediation 101. With Kindle-2 comes the second phase. With the help of the net, readers can download books, magazines and newspapers on their e-reader, which can then be read at leisure. Most importantly, if Amazon becomes a publisher also (which is not too distant a likelihood), the Kindle would have eliminated — in one stroke — the whole middle kingdom of agent, publisher, distributor and book shops. Sure, the Kindle-2 still has a long distance to travel — readers are unlikely to give up the printed, paper version completely in favour of a Kindle (at least, not yet), or eschew the option of browsing in a bookshop. But, the field has been set and a game is certainly afoot. 

International

• The ensuing G20 summit at London on April 2.
  
• Leaders from the world’s 20 biggest economies meet in the British capital on Thursday to discuss how better regulation, help for international trade and extra spending could help pull the world out of the worst recession since the 1930s. 
  

Language lessons

• catatonia: Noun
  
• Extreme tonus; muscular rigidity; a common symptom in catatonic schizophrenia
  
• A form of schizophrenia characterized by a tendency to remain in a fixed stuporous state for long periods; the catatonia may give way to short periods of extreme excitement
  
• eg: People seem to be emerging from their catatonic state through the winter, and actually beginning to go back to economic activity, with the accent on activity.

28.03.2009

Politics & the Nation

• I just can't help falling in love with the third editorials that appear in ET!!
• They may look like they are taking life easy; but there is some continuing strand of argument or position that they take on various aspects of life that concerns us all in general.  In addition, this is one ET piece that consistently did its best to improve our vocabulary.  I suspect the hand of some seasoned littérateur behind it.
• Today it picks up on how Obama's public face should be.  Though it won't be of direct help to you in facing exams, I am sure it teaches you something about adding stuff to your observations/feelings.  These are skills that you would very badly need in things like GD and Interviews.  Can't get anything meaningful out of it?  Don't blame it; blame it on me for my judgment. :(

Finance & Economy

• An excerpt from today ET editorial on pharma R&D spends the world over:
  
• The pharma industry, globally, is far more research-intensive, for example, with R&D spends often exceeding 15% of turnover. In sharp contrast, in chemicals, the standard practice is to set aside no more than 1%.
  
• Titbit about intra-regional trade
  
• Intra-regional trade among developing countries accounts for only 37% of exports in our region compared to Nafta at 51% and the EU at 68%. As a result, the survey calls for more intra-regional and investment linkages so that domestic markets are strengthened to provide a secondary buffer to global market fluctuations. 
• You have heard of the impossible trinity in our blogs.  But did we ever come across the 'triple crises'?
  
• AFAIK, we have not heard of it.  It refers to food security, fuel security and the threat to environment.
  
• Take a look at this report to understand the nuances of price fluctuations in wheat
• Higher production means lower prices; right?  That is conventional wisdom.  But can it be the only reason?  If you read it, you will understand a couple of other factors that are responsible for the price increases as well as decreases.
• Gold production figures: national and global
  
• While India remains a small player globally, gold production in 2008-09 is likely to remain stuck at a shade below 12 tonnes, which the country produced in 2007-08. 
  
• Globally too, gold production has been on a marginal but steady decline in the last two years. From a high of 3,575 tonnes in 2006, production decreased to 3,488 tonnes in 2007, sliding further in 2008. 
  

International

• Obama lowers temperatures on outsourcing jobs?
• If you read this report, this surely is the feeling one will be left with.  Worth a read to stay tuned with the developments as they shape up.
• It is good that Obama is slowly realizing the inevitability of outsourcing.  Not all jobs can be pinned down to their geographies.  This is a reality that everybody has to live with.

Time Pass???

• We were not prepared for the kind of response that this "Time Pass" content evoked in our blog.
  
• One of our readers was quite quick to point out that yesterday's ad was very old... of 2005 vintage.  He pointed us to another site which contained some interesting videos.  It is called flixxy.com.  Those of you who have time, do check it out.
  
• Here is a video that shows a car running on air!!

Sport

• Cricket: II Test with New Zealand
• New Zealand 1st innings: 619 for 9 declared India 1st innings: 305 all out India 2nd innings: 47 for 1 (Virender Sehwag 22, Gautam Gambhir 14 not out, Rahul Dravid 11 not out; Jeetan Patel 1/14).
  

Language lessons

• bully pulpit: Noun
  
• A public office of sufficiently high rank that it provides the holder with an opportunity to speak out and be listened to on any matter
  
• eg: "the American presidency is a bully pulpit"
  
• hector: verb
• Be bossy towards

26.03.2009

Politics & the Nation

• In defence of Nano
• Today's ET editorial makes a strong plea against the argument that Nano roll out will be clogging the already congested roads.  Worth a read.  Read it here.

Finance & Economics

• Ever heard of terms like "junior subordinated debt" or "senior subordinated debt"?
  
• Take a look at this news extract, if you haven't:
  
• "Bethesda, MD -- American Capital Strategies, Ltd. today announced that it has agreed to invest $10 million in the form of senior subordinated debt with detachable warrants in A.H. Harris & Sons, Inc., the largest distributor and rental center of concrete-related construction supplies in New England. At closing, $5 million of the commitment will be drawn down. A.H. Harris intends to use the proceeds of American Capital's investment to finance future acquisitions in order to further expand its leadership in its core markets and enter new markets."
  
• So, what is "senior subordinated debt" here?
  
• It's debt - borrowed money that is being lent to them. It has a liquidation preference (if the company fails and the assets are sold, the money gets distributed to creditors and shareholders in order of liquidation preference, with shareholders last) that is senior to other subordinated debt, but junior (gets paid after) most other creditors. The "detachable warrants" represent the opportunity to buy common stock for some period in the future at a fixed price - basically a play on the company if things go well and added to the debt as a "sweetener". That they are detachable means they can be sold away from the debt, which may occur in the event they do become valuable but the debtholder doesn't want to exercise them.
  
• Basically, American Capital is lending Harris $10 million on the belief that they will do well given that it is to be used for expansion. AC will only make money (and not lose money) if Harris is successful.
  
• NACAS recommends suspension of AS 11 norms for a 2 year period.
• The National Advisory Committee on Accounting Standards (Nacas), which is the final word on accounting policies followed by the Indian industry, has favoured suspending for two years a key rule that requires firms to mark-to-market foreign exchange assets and liabilities.  This decision comes as a victory for corporate India, as it sits down to draw yearly financial results.
  
• The demand to suspend this rule, known in accounting circles as AS-11, was made by the Confederation of Indian Industry (CII) on grounds that it could severely distort the earnings of many companies. It was contended that this accounting standard, designed to address normal conditions, should be suspended for the time being, as the present market conditions were not normal. 
  
• Nacas chairman is YH Malegam.
  
• But ICAI has objected to this proposed step
  
• The country's accounting regulator, the Institute of Chartered Accountants of India (ICAI), said it continued to maintain its opposition to suspend implementing AS-11. “We believe that an accounting standard should not be changed because of any change in circumstances. We are not interested in going for any changes in the regulation because we want consistency and prudence,” said ICAI president Uttam Prakash Agarwal.  ICAI further said that with India’s accounting norms set to converge with the International Financial Reporting Standards (IFRS) by April 2011, the decision to suspend AS-11 will not be a prudent step.
  
• Is there another accounting scandal brewing?  This time in state government bond deals?
• If you read this report, this is what you will surely be left to wonder.  Too detailed to make any short notes of it.  Good one.  Lets us understand the intricacies of market manipulation.
• Do read it here.
• GAIL split into two companies
  
• GAIL India, the country’s flagship natural gas company, will spin off its marketing business into a separate firm from April 1 to comply with the policy guidelines outlined by the petroleum regulator. 
  
• Gail India will remain a gas transmission company and will construct cross-country pipelines to transport gas, while Gail Gas (GGL) will carry out marketing business. GGL will be listed on the domestic bourses soon. 
  
• Ever experienced the difference between seeing the brighter side of things and being pessimistic?
  
• Avid readers of the Economist might admit that they are influenced by its pessimistic outlook on the current state of the global economy.
  
• But look at TK Arun's take on the present economic situation in the country!  An excerpt:
  
• Fresh telephone connections numbered 15 million in January and 13 million in February. Non-oil, non-gold imports are positive, even when overall imports show a decline. Within this lot, project imports are growing strong. In the latest numbers for the index of industrial production, capital goods showed a growth of 15%, even as the overall index showed a marginal decline. Cement and steel prices are firming up. Inventories are down in a number of sectors including auto, calling for stepped up production. Consumer durable makers like LG and Samsung report robust — 29% and 30% — increase in sales in January and February. Rural demand is strong and fast moving consumer goods companies see no slackening of demand. 
  
• The forthcoming elections will pump in several thousand crore rupees worth of demand for assorted goods and services, ranging from cars and jeeps and planes and helicopter rides to advertising, printing, audio equipment, catering and liquor. Once the elections are over and an elected government assumes office, it will revive the fiscal stimulus work that the outgoing government left off. 
  
• That's some real optimism; ain't it?
  

Time Pass??  Not really

• World's costliest ad ever!!
• Even as I am writing today's post, I received this video clipping from a friend of mine.
  
  
• Reportedly this is the world's costliest ad ever made and was the winner of this year's best Ad of the world.  It took 606 takes and re-takes to make this commercial and the total cost was $ 6.2 million for this 90 second commercial.
• Need I say that one could probably make a movie for that kind of money?
  
• Everything is real with no graphics used and still achieved the precision it highlights. The team that made this commercial won many awards.
  
• Let us all thank my friend Mr. Venkat Kambala for bringing this to our notice.

25.03.2009

Politics & the Nation

• It is time that a majority of our blog readers should be very happy.
• Take a look at this news report which appeared about Civil Service exam gaining popularity.  You will understand the reasons to be happy.
• Comparisons between competitive exams may be odious; but we can't help but notice the point that there are 465 applicants for every job — three times more than the rush to join the Indian Institutes of Management (IIMs), with 150 students taking the Common Admission Test (CAT) for each IIM seat.
  
• This is not to throw cold water on IIM aspirants in anyway; many of who are our blog readers too.  In fact there are many who do both.
• One of my friends often quips "IIMs are the IAS of the corporate sector, while the IAS are the IIMs of the government sector."

Finance & Economy

• BCCI faces some taxing times
• With its decision to hold IPL v2 in South Africa, it should now be prepared to pay tax on the income generated by it outside India.
• Take a look at this graphic which explains the issue.
• After a long time we are noticing SSA Aiyar again.
• This time he takes on the GDP growth figures of the government and comes up with the finding that India's growth is not as rosy as the government statisticians would want us believe.  But that neither is the growth so bad when compared with other countries in the present turbulent times.
• A good piece.  Take a look at it here.
  
• In the process, we also take a slight diversion into what is known as the X12 methodology.  It is a statistical method for making seasonal adjustments to the data.  Take a look at this methodology in this Bank of England paper.  Especially look at the first two pages to understand the concept.
• A bit about strategic commodity reserves
  
• Commodity strategic reserves (CSRs) is a term used to describe reserves of a commodity or item, held back from normal use by governments, organisations or businesses in pursuance of a particular strategy or to cope with an unexpected event. Because of economic and security dimension of oil, the term is more commonly used to describe the strategic petroleum reserves (SPRs) maintained by 26 members of the International Energy Agency (IEA), of which the US has the largest. Among the non-IEA countries, China has been aggressively increasing its SPRs lately. India has also started building SPRs of about 37.4 million barrels of crude oil, enough for two weeks of consumption, under the government controlled agency the Indian Strategic Petroleum Reserves Ltd. 

Science & Technology

• Electric bulb technologies and their phasing out
  
• This week, the European Commission formally adopted new regulations that will phase out incandescent bulbs in Europe by 2012. America will do so by 2014. Some countries, such as Australia, Brazil and Switzerland, have got rid of them already. 
  
• Incandescent bulbs are inefficient, because only about 5% of the energy they use is turned into light and the rest is wasted as heat. A typical bulb also has to be replaced every 1,000 hours or so.
  
• In contrast CFLs (Compact Fluorescent Lights) use up to 75% less power and last ten times longer.  Fluorescent lights use electricity to excite mercury vapour. This produces ultraviolet light that causes a phosphor coating inside the bulb to glow. The lights can flicker, which could set off epileptic fits, and badly made ones might leak ultraviolet radiation, and may thus pose a cancer risk. There are also concerns about the disposal of the toxic mercury.
  
• The third and more modern variety is the LED bulb.  An LED is made from two layers of semiconductor, an “n-type” with an excess of negatively charged electrons, and a positive “p-type” which has an abundance of “holes” where electrons should be but aren’t. When a current is applied across the sandwich, the electrons and holes team up at the junction of the two materials and release energy in the form of light. The colour depends on the properties of the semiconductor, and these can be tuned to produce light that is similar to natural daylight but with virtually no ultraviolet or heat.  They promise energy savings of up to 80% and a working life of 45,000 hours.  These are prohibitively costly though -- about $56 per bulb.
  
• LOHAFEX
  
• It is the Indo-German Iron Fertilization Experiment in ocean near Antarctica.  The experiment involved adding 4 tonnes of iron into an eddy in the ocean to stimulate the growth of planktonic algae which could suck up carbon dioxide from the atmosphere and thus help check global warming.
  
• But the experiment threw some surprises and proved to the scientists that while the plankton did grow, small crustacean zooplankton soon ate them all up.
  
• It did serve to show that ocean fertilization was unlikely to be a method for trapping carbon dioxide in future.

Language lessons

• hogwash: Noun
• (informal) nonsense; ludicrously false statements
  
• cachet: Noun
• An indication of approved or superior status
  
• A warrant formerly issued by a French king who could warrant imprisonment or death in a signed letter under his seal
  
• A seal on a letter
  
• bilge
• Noun: Where the sides of the vessel curve in to form the bottom; water accumulated in the bilge of a ship
• Verb: cause to leak; take in water at the bilge
• mien: Noun
• Dignified manner or conduct

24.03.2009

Politics & the Nation

• India's road network
• India’s 3.2 million km road network is the second largest in the world.  Of this only 2% constitutes the famed Golden Quadrilateral highways.  
• US has built about 46,000 miles in 12 years and China, 30,000 miles in half the time!
• The total completion rate of the National Highways Development Programme stands at 28% overall or 9,165 km out of the proposed 31,755 km.
  
• BTW do you know that the cost of building NHAI stretches has gone up from Rs 4-5 crore a kilometre to Rs 10 crore a kilometre?
• Know anything about the "Prisoner's dilemma" in game theory?
• This is one the most common examples cited to explain game theory.   Suppose the police arrest two people who have committed armed robbery together. But there is not enough evidence to book them. However, there is enough evidence to send them away for auto theft for two years. The chief inspector makes the following offer to each prisoner separately. 
• If one prisoner confesses to the robbery, he goes scot free but the other prisoner gets ten years. 
  
• If both confess, they get five years each. 
  
• If neither confesses, then each gets only two years just for auto theft. This is also seen as optimal solution and least damaging for both. 
  
• So what should the prisoners opt for?  This is the dilemma.
• We did take a look at the gist of a couple of manifestos of political parties in recent times; didn't we?
  
• What should a manifesto contain?  Shlould it contain promises, and more promises?  Or something else?  
  
• Today's ET piece on the subject is worth a read.  Very well written.  Excellent.  Some excerpts:
  
• One could argue that there is nothing wrong with populist promises so long as they benefit the poorer sections of society.  Perhaps, that is the case. However, the point here is not about the promises themselves as much as it is about the lack of policies in manifestos. Ideally, manifestos should be more of documents of proposed governance rather than a compendium of promises. If parties are really serious about benefiting the populace then they would do well to spell out not just the outcome (a TV in every household is just an outcome) but more importantly the policy (In the case of the free TV example the underlying policy, one supposes, might read as the need to provide entertainment to the masses) which determined this outcome. The difference between policy and outcomes is an important one because policy is an indicator of the dominant thinking prevalent whereas outcomes can only be judged once the dominant thinking is given the chance to govern. To focus on outcomes rather than policy is to put the cart before the horse. 
  
• A good policy document has to also demonstrate why a particular policy has found favour. For example, the party promising free TV sets rather than free schooling would also (assuming that it is serious about serving the populace) explain why entertainment is more important in its policy framework than say, education. 
  

Finance & Economy

• What explains the plunge in sugar prices?
• For the first time in India, wholesale sugar prices have dipped below the industry’s cost of production at a time when the output is far below domestic consumption, 155 lakh tonnes versus 220 lakh tonnes in 2008-09. Plus, the early estimate for the 2009-10 sugar season is only 200 lakh tonnes.  Given these realities, sugar prices should raise; know?  But why are they falling?
  
• Seek the answers in elections.  How did the government manipulate to keep the sugar prices low?  
• Government's policy of duty-free imports of sugar and limits on how much of sugar a mill can hold, depressed the prices. 
  
• Why can't the government place bonds directly (aka private placement) with the RBI to raise resources?
• Because the country has adopted the FRBM Act.  Doing such private placement now, will need an amendment to the Act.
• Some lessons in futures trading.
• What is contango?
• It is the premium that a far month contract quotes to the front month because traders are willing to store/hold the commodity for a better price in the future.
  
• Who are momentum traders?
• Those who buy and sell a commodity at predetermined levels.
  

International

• An excellent graphic that explains the latest US administration plan of detoxifying banks' bad assets.  Take a look.

Language lessons

• teeter: Verb
  
• Move unsteadily, with a rocking motion

23.03.2009

Politics & the Nation

• IPL v2 to get played in a country other than India!!
  
• Finally the denouement.  BCCI had been forced to host IPL version 2 outside the country.
  
• While we can surely understand the government's priorities in providing security cover for the elections, the way the issue appears to have been handled at all levels, perhpas, is to be blamed.  It is not known clearly whether anybody has given a thought to the beating that India's image takes in the international sporting scene because of this decision.  While it is a foregone conclusion that elections should get top priority in so far as providing security is concerned, the powers that be ought to have considered the economic consequences that flow out of IPL moving out of India.
  
• The first season of IPL had provided employment opportunities to a large number of people at various venues. It had also contributed close to Rs 100 crore to the exchequer. 
  
• Political parties, elections and the internet
  
• It is proving to be a heady combination.
  
• Considering that 54% of the voters in India, will be under 25 years of age, internet will be an ideal medium, say political parties.
  
• Of the 714 million people eligible to vote, about 350 million are expected to cast their ballot if the turnout remains the same as five years ago. 
  
• In the world’s second largest democracy, the United States, there were only 131 million registered voters in the presidential election last year but most households have access to the internet, compared to just 40 million users in India. 

Finance & Economics

• Know the size of the cola market in India?
• It is about Rs. 7,500 crore per annum.
• What essentially are the constituents in a cola drink?
• Put simply it is the carbonation, sugar and the concentrate.
  
• It is carbonation that gives a cola its fizz.
• Pepsi is reported to have followed Thums Up formulation of a stronger fizz -- at least in one market in the country viz., Andhra Pradesh.  Consumers in AP are fond of Thums Up’s strong carbonation taste since it goes well with the local spicy cuisine. 
• Gold: Is it another bubble waiting to burst?
  
• Today's ET op-ed article is worth a read.  Some excerpts, diversions and snippets worth our attention:
  
• It’s reckoned that the stockpile of gold in India now is more than the 8,000 tonnes stashed away in the US treasury’s vaults in Fort Knox. Unlike the US, where the government owns most of the gold, India’s government owns a measly 300-odd tonnes. The rest is in private hands: bridal jewellery in Godrej almirahs or bank lockers. And little of this hoard comes up for sale. 
  
• What makes us believe that there is speculation going on in gold?
  
• Reports hint that gold exchange traded funds (ETFs), pieces of paper whose value is linked to gold prices, are still pulling subscribers, even as gold imports are coming down to zero, singalling that Indians hoarding gold are not doing so. Why are people buying paper gold when they can’t afford the real thing for their daughters’ marriages? Because speculators are buying the paper, when folks that really need gold can’t afford to.
  
• Those of you who have badgered me with questions relating to gold standard will find this article really helpful in understanding it.
  

International

• US announces its plans to spend $1 trillion to buy toxic assets of banks
  
• In the wake of the uproar over the millions of dollars in bonuses for employees at troubled insurance giant AIG the prospects for getting more bailout money from Congress appear very dim. The new plan would rely on the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) to supplement the government’s $700-billion bailout fund. 
  
• The plan will have three major parts: A public-private partnership to back private investors’ purchases of bad assets. The $700-billion bailout fund would provide the backing. The government would match private investors dollar for dollar and share any profits equally. 
  
• Secondly, it would expand a recent Fed programme that provides loan for investors to buy securities backed by consumer debt. It’s an effort to make it easier for people to get auto, student and credit card loans. The term asset-backed securities loan facility (TALF) programme is getting up to $100 billion from the bailout fund; that money then is being leveraged to support up to $1 trillion in Fed loans. Under Geithner’s plan for the toxic assets, part of that $1 trillion would now go to support purchases of banks’ troubled assets. 
  
• And lastly, using the FDIC, which guarantees bank deposits, to purchase toxic assets. The agency would create special investment partnerships and then lend them money to buy up troubled assets. 
  
• If you had been a consistent reader of this blog, you would have by now noticed that I have been a strong proponent of the dollar's demise
• In the medium to long term; to be precise.  Just as the Gold Standard has given way to the greenback in the early 1970's, I expect some other currency or basket of currencies taking center-stage in the post-crisis scenario.  While my take on the subject can be tested in due course of time, the persistent rise of the dollar may pose some troubling questions (not to me; though).
• So what explains this rise of the dollar?  Let's take an expert's view on the subject here.

Language lessons

• bauble: Noun
• Cheap showy jewellery or ornament on clothing
  
• whoosh: Verb
• Move with a sibilant sound (sibilant: A consonant characterized by a hissing sound (like s or sh))
  
• eg: He whooshed the doors open

21.03.2009

Politics & the Nation

• Congress Party's manifesto
• Take a look at this graphic which gives a gist of the manifesto.  Very well written.
• With the competition for designing a symbol for our Rupee on progress, it would be interesting to know a bit about other currencies' symbols; isn't it?
  
• Let's look at the story about dollar symbol: The origin of the two lines in the dollar is not clear, but one theory takes it back to the ‘thaler’ issued by the Holy Roman Emperor Charles V. His global empire included Spain, large chunks of the rest of Europe and must of South America, and the lines represented the Pillars of Hercules, the two mountains on either side of the Straits of Gibraltar at the empire’s heart. A S-shaped scroll in between them, with a slogan, became the dollar sign. 

Finance & Economy

• Inflation touches record lows!!
• Inflation has fallen to 0.44% for the week ended March 7, 2009.
• Deflation is defined as a sustained decrease in the general price of goods and services. 
  
• Disinflation: a continued fall in the inflation rate.
• An explanation as to why deflation is a bigger evil than inflation: (excerpted from today's ET editorial)
• Just as high inflation reduces the real value of money and has negative welfare implications apart from affecting investment decisions adversely, deflation, though it might seem to increase the real value of money, is just as avoidable from the larger economy perspective. Most economists agree that between inflation and deflation the latter is the worse evil. The effects of modest, long-term inflation are less damaging than deflation. This is because when prices are falling, consumers tend to delay their purchases in the hope they will be able to buy later at still lower prices. This reduces overall demand and economic activity. Deflation also raises real wages at a time when falling demand is gnawing at companies’ profits, resulting in layoffs and rising unemployment.
  
• SEBI falls in love with complex derivatives
• Even as the West is reeling under the aftermath of the destruction wreaked by complex derivatives, our own SEBI appears confident enough of allowing some complex derivatives.  Some of the things that it is looking at introducing include: 
• Over-the-counter (OTC) products, exchange-traded derivatives products and exchange-traded third-party products.
  
• In this context, some exposure to some terminology would be interesting:
  
• What are OTC products?
  
• OTC products are derivatives contracts that are traded directly between two parties, without going through a stock exchange or any other intermediary. 
  
• The segments where OTC market is allowed at present:
  
• In interest rate, currency and commodities derivatives. However, there is no such market in equities, and any transaction of this nature is not legally enforceable.
  
• What are structured products?
  
• Those tailored to suit the buyer’s requirements — purely for institutions, banks and insurance companies.  They offer greater freedom for domestic mutual funds to lend shares, permission for hedge funds to participate in the options market. 
  
• An example of a structured product would be a contract that offers the holder returns based on the movement of the Nifty, and a pre-decided combination of stocks. 
  
• Remember anything about the gold deposit scheme?
  
• Banks -- especially the SBI -- are reportedly relaunching the gold deposit scheme in view of the tremendous upward movement seen in gold prices of late.
  
• During the investment tenure, the deposited gold will earn an interest, which is currently tagged as 1% (3 years), 1.25% (4 years) and 1.5% (5 years). 
  
• The investment shall be locked-in for one year. Premature withdrawal, after the lock-in period but before the maturity, shall attract a penal interest of 0.5% if withdrawn within 3 years and 0.25% thereafter. 
  
• However, unlike the regular deposits, interest here is calculated in grams and not in rupees. Thus, an investment of 500 grams of gold for three years shall earn 5 grams of gold as interest per annum, compounded annually. 
  

Society

• A factor that explains the rise of multiplexes:
  
• The increasing use of cars and need for space to park the vehicles. Typically, a parking lot for 100 cars occupies 30,000 sq ft, while a 500-seat theatre occupies only about 4,000 sq ft. Achieving 40% occupancy in a 500-seater is not possible today. Only a multiplex which can survive on low occupancy and capacity by charging high rates. 

Sport

• India wins the first test at Hamilton
  
• India beat New Zealand by 10 wickets in the first cricket Test to take a 1-0 lead in the three-match series. 
  
• New Zealand were all out for 279 in their second innings on the fourth day of the match as Indian spinner Harbhajan Singh returned a brilliant six-wicket haul. India chased down the requires 39 runs in 5.2 overs. 
  
• First innings: New Zealand:279 India:520 
  
• Second innings: New Zealand: 279 India: 39

19.03.2009

Politics & the Nation

• What do you call this?
  
• An ET front page report says that the UP government has asked Gurdeep Singh aka Ponty Chadha to manage liquor business on its behalf -- the first of its kind of arrangement in the country.
  
• What this means is that he will decide what stock to buy, how much and at what price, from domestic as well as multinational spirits companies.  The Chadha group will buy wholesale stock at a discount from the firms and sell to the trade at a margin.
  
• The Chadha group directly and indirectly influences the liquor trade in Punjab, Chandigarh, Haryana and Uttar Pradesh and has operations in Rajasthan, Uttarakhand and Chhattisgarh. 
  
• Sales of Indian Made Foreign Liquor in Uttar Pradesh are estimated at over six million cases and the volume of country spirits sold is pegged at nearly 2.5 times that number. With over 3,200 vends, the state is expected to earn around Rs 4,600 crore in excise receipts in the fiscal ending March 2009. 

• Auditors to have a bigger say than at present
  
• Companies will have to restate financial statements to accommodate auditors’ objections to any figure in their annual accounts.  If they don't do so, they would be barred from paying dividends or raising funds.
  
• This will be the scenario if the ICAI's recommendations to the government are accepted.  If the proposal is accepted, accounts will become more transparent, and the auditor will be taken far more seriously than at present by companies. 
  
• At present, an auditor’s scepticism about any portion of the accounts presented by a company is tagged along with the annual report and an investor has to work hard to correlate every auditor qualification with the number or numbers under challenge. 

Finance & Economics

• The case for independent third party ATM operators
  
• In the wake of the ICICI Bank's decision of hiving off its ATM operations into a separate entity -- possibly for an eventual sale to third parties -- let's look at some reasoning put forth by today's ET editorial on third party operators:
  
• Third-party operators would be able to rationalise the network, moving the less used machines to other areas. While the savings so obtained would help reduce ATM usage fees for banks, the bigger gain would be a leg up for financial inclusion. Independent ATM operator whose business is to install and manage the machines would be more interested in their spread than banks who may increasingly see them as noncore in the charge-free regime.
  
• You might recall our recent notings that from April 2009 all banks would have to allow charge free cash withdrawals from the ATM of any bank.  This is a mandate from RBI.
  
• An excellent quote from today's op-ed article
• The business of business is only business, said Milton Friedman the Nobel Laureate in economics from Chicago, with the corollary that government has no business to be in business. 
  
• Are there any flaws in using shareholder value as a measure of a company's performance?
  
• If you ever had any background in management or finance, you would surely have heard about this concept of shareholder value.  Jack Welch the former CEO of GE who was credited with being the proponent of the concept has recently criticised it in no small measure.  Let's look at a couple of reasons given by our own venerable TT Ram Mohan, Professor from IIMA:
  
• Using shareholder value as a measure of performance undoubtedly has its flaws. One, it rests on the premise that markets are efficient and that the share price accurately captures the long-run performance of a firm. The fact that there are booms and busts in the stock market shows that markets are not all that efficient.  We have seen the havoc that a focus on shareholder value can cause in the financial sector. In banks, results show up with enormous lags. Highly risky investments can produce high returns in the short-term but can destroy the firm over a longer period. Investment banks, whose share prices soared through 2006 and 2007, went bust a year later. 
• Secondly, managers are substantially rewarded by being paid bonuses in the form of stocks of companies they run. Where markets are not efficient, managers have every incentive to do things that push up stock prices in the short-run and cash out their holdings of their companies’ stocks. In other words, managers can take advantage of inefficiencies in the market — and at the expense of other stakeholders. 
  
• Snippets about interest rate spreads in banks
  
• A bank has to maintain a margin of 3% between its borrowing and lending rates to be in good health. 
  
• Of late banks appear to have instructed their branches to go slow on accepting bulk deposits of Rs. 5 crore and above.  This is because they are not able to find adequate avenues for deploying the funds for onward lending at reasonable rates (i.e., with a spread of more than 3%).
  
• So branches which are approached for depositing Rs. 5 cr or above, will have to obtain the prior approval of the banks' Alco (Asset Liability Committee) before accepting the deposit.
  
• What a change of scenario!  Banks saying No do deposits!
  
• India's diamond hub
  
• Surat’s Varaccha Road, which is home to nearly 10,000 diamond units can perhaps be considered the country's diamond hub.
  
• The recent economic slowdown has taken the shine off this Rs 50,000-crore diamond industry and resulted in no less than 4.2 lakh job losses. 
  
• So, how are they trying to beat the slowdown?
  
• By resorting to joint sourcing of rough diamonds, putting a stop to credit selling, localising assorting operations, keeping inventory low by cutting production, slashing brand-building expenses and bidding for small mines in South Africa to avoid dependence on major traders like De Beers. The primary goal is to save on costs — their best bet to see through what appears to be one of their toughest years, and prepare themselves for the road ahead.
  
• BTW do you know that the international retail market for polished diamonds is estimated at $52 billion?
  

Society

• Slimona, Obitone and Riobant
  
• These are antiobesity drugs that reportedly cause suicidal tendencies in consumers.
  
• Therefore, the government is reported to be considering banning these drugs.
  

Sport

• Cricket
  
• India trail NewZealand by 1 run on day 2 of the first test at Hamilton.  Indians bowled out the Kiwis for 279 on the first day.  Sachin and Yuvraj are at the crease with 70 and 8 runs each.
  

Language lessons

• pennant: Noun
• The award given to the champion
  
• A flag longer than it is wide (and often tapering)
  
• ditty: Noun
• A short simple song (or the words of a poem intended to be sung)
  
• pernickety: Adjective
• Characterized by excessive precision and attention to trivial details

18.03.2009

Politics & the Nation

• Is the current economic slowdown inducing better management-labour relations?
  
• Industrial disputes in the country such as labour strikes and management lockouts have halved in the January-November 2008 period compared with the same period in 2007, pointing towards better relations between the management and worker unions. Strikes were down 15% and the number of lockouts were down 80% during the period, as per provisional data collated by the Labour Bureau, making it the most peaceful year for industrial relations in the last four decades. 
  
• The number of industrial units affected by strikes has declined from 203 (January-November 2007) to 171 in the first 11 months of 2008. At the same time, the number of units that faced management lockouts dropped from 160 to just 30. The number of workers affected by lockouts has dropped, but those affected by strikes has almost doubled to 9.3 lakh. This could be explained by some larger organisations facing strike. 
  
• Industrial disputes in the country had peaked in 1970s with some calendar years reporting over 3,000 strikes and lockouts. Over time, the number of such disputes have come down, largely due to drop in disputes in manufacturing and the mining & quarrying sectors. The last time disputes had risen was in the mid-1990s (1996 and 1997) when the economy had seen high growth, which was followed by a slowdown in 1997-98.
  
• Some gyan about cinema collections and the dispute between movie distributors and multiplexes
  
• With a strength of approximately 850 screens in 225 properties and contributing over 65-70% of movie collections, multiplexes have come a long way from their entry about a decade ago.
  
• The opening week is critical to a movie’s total collection.  Till three years ago, the first week used to contribute 45% of the total box office revenue of a film. Today, with wider print releases, the share has moved up to a whopping 63%.  Multiplexes were giving 48% of that 45% to the distributors for the first week.  Now they are demanding 50% of what has moved up to 63%. 
• Ten years ago, the system was to give a fixed rent to the theatre owners, irrespective of the collection or the fate of film, which meant that the complete risk was with producers. Today, with revenue sharing, the risk is shared between producers and exhibitors.
  

 Finance & Economy

• India's ATM network & some snippets of info on payment processing business in India.
• India has about 35,000 ATMs in all, of various banks.  China has 1.3 lakh machines.
• Come April, banks will have to allow customers access to their accounts through any ATM in India. Non-customer transaction costs are likely to be netted by banks among themselves. 
  
• Reserve Bank of India (RBI) is planning to back ‘Indiapay’ — a network that aims to rival Visa and Mastercard.
  
• Recap of a few concepts/developments relating to Bernie Madoff -- for the new entrants into our blog.
• What is a Ponzi scheme? 
  
• A Ponzi scheme uses new investor money to pay old claims. The name derives from American swindler Charles Ponzi, who ran such a scheme till his arrest in 1920.  Ponzi schemes usually offer abnormally high short-term returns in order to entice new investors. 
  
• What did Bernard Madoff do? 
  
• Madoff solicited deposits, which were to be purportedly used for investments, but never invested anywhere When the game could not go on any longer, Madoff confessed the fraud to his sons, who handed him over to police. 
  
• Where is Madoff now? 
  
• After his guilty plea admitting multiple frauds, the court cancelled his bail and sent him to jail.
  

International

• As of now, America's attempts at reviving its economy and financial markets, through the various stimulus packages that it has dished out are seen as not delivering results.  In this context, what lessons has it provided for the countries across the world?
  
• Take a look at this article by Joseph Stiglitz, the 2001 Nobel laureate.  The entire article is a must read.  Hence I am not excerpting anything from it for you.  
  
• Is it the silver lining in the clouds?
• Take a look at this graphic which reports about US housing starts in February having picked up by 22%, the highest since 1990 and the first rise since April 2008.
• Will this revive demand in America?  Is it the silver lining in the clouds?  Let's await some expertspeak on this statistic.
• My gut feeling is that with its financial system in such a huge mess, and with it so haplessly dependent on China for funding its deficits (China has more than a trillion dollars invested in US Treasury Bills), it may be quite some time before such good developments can gather a mass of their own and start impacting positively the rest of the sectors of the economy.  Let's keep a tab on this for some more time to come.

Language lessons

• contrite: adjective
  
• Feeling or expressing pain or sorrow for sins or offences

17.03.2009

Politics & the Nation

• Take a look at some of the important points from CPI(M)'s manifesto
  
• Reverse moves for full capital account convertibility 
  
• Re-impose strict controls on outflow and inflow of finance capital 
  
• Prohibit participatory notes used by FIIs 
  
• Halt dilution of govt equity in PSU banks 
  
• Scrap Banking Regulation (Amendment) Bill 
  
• Prevent takeover of Indian banks by foreign banks 
  
• Scrap proposed legislation to increase FDI cap in insurance sector 
  
• No privatisation of pension funds 
  
• No diversion of pension fund and PF to stock mkt
  
• A new central service -- Indian Corporate Law Service -- created
  
• The government has introduced a new central civil services cadre called the Indian Corporate Law Services (ICLS) to create an army of experts who would be involved in corporate law making and its enforcement in the country. This gives a new service option to those who qualify the toughest entrance test to get into government service. 
  
• The government would train the officers at the newly-set up Indian Institute of Corporate Affairs (IICA), a policy think tank, before placing them in various offices of the ministry of corporate affairs. 
  
• The recruits will be trained in subjects like management, law, accounting, business finance and economics before being deputed in various agencies under the ministry. 
  

Finance & Economy

• A look at the advance tax collection figures for the country
  
• India’s advance tax collection till March 15, the last date for the payout, stood at Rs 2.82 lakh crore. While this is way below the budgeted Rs 3.95 lakh crore for FY09, the income tax department hopes the figure would approximate the previous fiscal’s Rs 3.2 lakh crore by the fiscal end. 
  
• State Bank of India, the largest taxpayer in the country, registered a 41% growth in tax outgo at Rs 5,733 crore for the current fiscal. 
  
• The advance tax collected from Mumbai, which accounts for 35-40% of the countrywide tax collections, was nearly Rs 99,000 crore until March 15. 
  
• Why is that the disclosure of the list of counterparties to transactions with AIG kicking up such a storm?
  
• Take a look at this picture.  You will understand the reasons.
  
• To put it briefly: AIG received about $302.8 bn as bail-out money since September, 2008.  This is one institution that is considered as too big to fail by the American polity.  While giving the last tranche of $30 bn the Treasury Secretary Timothy Geithner is reported to have voiced concerns over where the bail-out money is being spent by AIG.  As a result of this, AIG had to publish the list of beneficiaries for about $105 bn of the bailout money it received.  The revelation of the list has raised a huge ruckus.  People are now questioning as to why the American tax payer should foot the bill for the losses incurred by other private firms and foreign firms.
• A look at India's advantages and challenges in drug R&D space (excerpted from today's ET debate)
  
• The first advantage that India offers is, of course, one of the cost. Clinical development costs account for up to two-thirds of the total money spent on new drug development. This cost has risen to hundreds of millions or even more in developed countries. Most multinationals find it cost-effective to outsource this specialised activity to contract research organisations (CROs) in a country like India, where they can get many more value additions. 
  
• Other than low cost, skilled manpower in trial and IT management, rich resource pool of clinicians trained in Good Clinical Practice (GCP), large pool of patients suffering from Diabetes, Cancer, Hypertension, Asthma, Tropical infections and degenerative diseases, high patient-doctor ratio, world class training in research and documentation etc. are most attractive features that Indian institutions offer. 
  
• There are several obstacles to achieve sustainable success in innovation-driven pharma R&D. Some of these are—unavailability of trained personnel (medicinal chemistry and various disciplines of biology, toxicology, clinical pharmacology etc.), a lack of academic institutions to train the large numbers of scientific professionals and an academic infrastructure that can lay the biological foundations for novel approaches to treat diseases. There are also people- related issues (high attrition rate and young professionals not understanding importance and need to stick with a team to achieve success, lack of required team work and top down management). Finally, a lack of adequate funds to support the high-risk opportunities by having more shots-on-goal. For this to happen, India needs to focus more on high-risk innovation while maintaining its core strength in the service and generic industry—not an easy balancing act! 

International

• El Salvador elects Leftist President
  
• Mauricio Funes of El Salvador's former Marxist rebel FMLN party has won the country's presidential election.  He is the first FMLN leader who has not been a combatant.  He defeated his conservative rival, the Arena party's Rodrigo Avila.
• FMLN (Farabundo Marti National Liberation Front) party was founded by Marxist guerrilla fighters from the civil war.  The conflict ended in a UN-sponsored peace accord in 1991, after the loss of some 70,000 lives over less than two decades.
  
• Israeli politics
• Israel has seen elections in February.  No political party won substantial seats in the 120 member Knesset to form government on its own.  Let's take a look at the political firmament:
  
• Likud: Led by Benjamin Netanyahu this party has been asked to form the government now.  But it still needs support from other political parties to form a stable government.
  
• Yisrael Beiteinu: Led by Avigdor Lieberman, this party supports Israeli settler movement and opposes exchanging land for peace with the Palestinians.
  
• Kadima: Led by Tzipi Livni, this was the party that was in power till the elections in February.  It supports the formation of a Palestinian state in the West Bank and Gaza.
  
• Labour: Led by Ehud Barak.
  
• There are a lot many other parties; all having single digit seats in the Knesset.  Israel mostly had coalition governments.  This time round, it is the Kadima party which has won the largest number of seats in the Knesset -- 28.  But it decided to stay in the opposition. 

Science & Technology

• Europe set to launch one of the most challenging space missions to date
  
• Strongly recommend a read of this BBC news report.  Worth it.
  
• Goce (Gravity Field and Steady-State Ocean Circulation Explorer) is a satellite to be launched from Russia (but it is a European Space Agency satellite) that will map minute variations in the pull of gravity experienced across the planet.
  
• The data from the satellite is expected to enhance our understanding of how the oceans move, and to frame a universal system to measure height anywhere on Earth.
  
• Hailed as a 'supermodel' satellite for its great looks, it is arrow shaped and sports fins to keep it stable as it flies through the wisps of air present at an altitude of just under 270 km.  Take a look at the craft here.
  
• Goce will be put into a sun-synchronous orbit, meaning the spacecraft will be kept in daylight for a sustained period of time. 
  
• Goce is the first of ESA's Earth Explorers, a series of spacecraft that will provide quick answers to key environmental questions.
  
• An interesting scientific fact worthy of note in this connection:
  
• The force of gravity is not uniform all across the earth.  It is less at the equator than it is at the poles.  It is because of this that we weigh more at the poles than at the equator.