16.03.2009

Politics & the Nation
  • The clout of the regional parties
    • Over the years, both the number of seats as well as the percentage of votes garnered by regional parties have gone up dramatically. From just 55 seats (10%) out of a total of 537 in 1991-92, regional parties now have 174 seats (32%) in a house of 543. More tellingly, the percentage of votes polled, a more accurate indicator of their reach in our somewhat flawed first-past-the-post system of measuring electoral success, has gone up in step to 32.86% in the last Lok Sabha elections in 2004. 
  • What is the connect between NREGA and cropping pattern in the country?
    • Can there be a link first of all?  If you have the patience, read this story and you will understand it.  The sum and substance of this report is that paucity of labour is forcing farmers in UP to shift away from sugarcane to rice and wheat cultivation.
    • We have also noted a couple of times earlier in our blogs that NREGA has made the life of the farmer tough -- in getting reasonably priced labour.  This report which highlights the findings from Swiss banking major Credi Suisse points to the same trend.  Worth a read.  
Finance & Economics
  • Credit card usage trends in the country see a change
    • Credit card usage has gone down substantially, even as banks are not seen falling over each other to offer credit cards.
    • At least 22 lakh cards have gone out of circulation since April 2008, either because of cancellation or nonrenewal. Credit card spends dipped by 5.3% between April and December in FY09, as compared with a 25.9% increase in the corresponding period last fiscal, according to RBI data. 
    • The number of operational credit cards has gone down by 7.6% from 2.83 crore in April 2008 to 2.61 crore in December 2008. The same period last year saw banks add 27 lakh new cards — a growth of 11.6%. 
    • Bad debts in the cards segment are said to have risen to 10% in the current fiscal from around 6-7% in the previous fiscal, according to industry estimates. Interestingly, a foreign bank and a private sector bank are said to have a delinquency ratio of over 15%. 
  • ICAI defers decision on relaxation of AS 11
    • The Institute of Chartered Accountants of India has deferred a decision on relaxing Accounting Standard 11 (AS11) which requires corporates to report exchange rate related profit or losses on forward exchange contracts in their accounts. As the rupee has depreciated sharply against the dollar, many corporates are faced with mark-to-market (MTM) losses and have sought relaxation of the rule. 
    • Remember the noting done on this subject earlier?  On 9th March, to be precise.
  • CST reduction put off again
    • Blame the elections and the fall in revenues of states for this.
    • Due to the slowing economy, revenue collected by states grew by just 12% in the first nine months of the current financial year, compared with 24% in the same period last year. That prompted some states to ask the Centre, through the aegis of the empowered committee on CST phase-out, to continue with the 2% rate this financial year and postpone the mandatory 1% reduction. 
    • A reduction of 1% in CST would lead to a revenue loss of Rs 6,000 crore for states, and it has to be compensated by the Centre. The Centre is already giving Rs 12,000 crore to them as compensation for the 2% reduction in CST. 
    • Under the plan earlier agreed between the Centre and states, CST had to be reduced by 1% every year, beginning 2007, and eliminated by April 1, 2010, when a common goods and service tax rolls out. CST, which does not provide for input credit, is inconsistent with the general sales tax (GST) regime.
International
  • An excellent graphic that outlines the outcome of the recent G20 summit in London
  • Why is Switzerland, the world's banker?
    • Reports say that foreign private investors hold up to 2 trillion Swiss francs ($1.7 trillion) in Swiss banks, twice as much as previously thought.
    • Further it is estimated that 2.9 trillion francs were managed ‘offshore’ in Switzerland by Swiss banks, out of a total 5.2 trillion francs including money from Switzerland that they manage.
    • If the efforts of the world governments to pry open the banking secrecy laws in Switzerland, we should perhaps be witnessing any or all of the following:
      • A small in dip in corruption levels globally.
      • Increased consumption patterns globally.
      • Banking and financial institutions from little known countries and principalities of the caribbean, the mediterranean and city states, giving stiff competition to Swiss banks.
Environment
  • Some stats and questions about renewable energy sources
    • Every environmentalist of repute condemns coal as the big polluter and suggests that solar and wind power is the way to go.
    • But, only about 0.5% of the world’s energy comes from these renewable sources. Even with optimistic assumptions, the International Energy Agency estimates that their share will rise to just 2.8% by 2030. 
    • The reason for thier slow growth is that we don’t know how to store the energy from these sources: when the wind doesn’t blow and the sun doesn’t shine, what powers your computer or the hospital’s operating room?