Politics & the Nation
  • An excellent editorial comment on Modi in the context of the Supreme Court ordered probe by SIT into the responsibility of Mr. Modi for the post-Godhra carnage
    • It is hardly a secret that, despite the current effort to deviate from his foundational vitriolic rhetoric, Modi retains an almost subliminal appeal for communal polarisation. 
Finance & Economy
  • Don't bank on an early recovery; warns IMF
    • Even as we were gleefully noting yesterday about PMI, LEI, CLI and a couple of other developemnts that were pointing to an early recovery -- at least in India -- the IMF and the RBI are pouring cold water over our hopes.
    • The IMF expects the global economy to contract by 1.3% in 2009. Recovery will happen in 2010 but it will decidedly be sluggish — growth will be only 1.9%, way below the 4.5-5% growth we saw in 2004-07. The RBI projects growth of just 6% for the Indian economy in 2009-10 which would be lower than the 6.5-7% growth estimate for 2008-09. 
  • Will the world see another Great Depression?
    • Giving us the above bits and pieces of information, TT Ram Mohan discusses this question in his op-ed piece in ET today.  Looks like he prefers to not take a definitive stance on the issue.  His take on the question:
    • There are striking similarities. As in the Great Depression, the present crisis is centred in the US and its effects have been felt by the rest of the world. Both crises have been marked by rapid credit expansion and high leverage. So also by funding problems at banks. 
    • But there are also reassuring differences. One is that policymakers have learnt how to respond and how to coordinate their responses. Secondly, global economic conditions before the Depression were much weaker. Germany was already in recession and prices in several countries, including the US, were already falling. So, with further slowing of economic activity, deflation set in quickly. 
    • In contrast, the global economy boomed for four years before the present crisis and inflation was above target until mid-2008. Moreover, the world was on the gold standard during the Depression. Under the gold standard, currency can be issued only in relation to the gold available in the country, so this limited the scope for monetary expansion during the Depression. 
    • The world is today far more integrated financially than at the time of the Depression and this is a huge negative. American banks and investors have pulled out funds from elsewhere, including emerging markets, partly because they are strapped for funds and partly because the American market seems safer in troubled times. 
  • India could make up to $100 bn in carbon trading
    • This estimate is based on the fact that there are about 930 carbon credit projects already in the Indian carbon trade basket, while around 180 more such projects are likely to be added every year. 
    • India has already sold carbon credits worth $300 million. 
    • Companies in the developed economies buy carbon credits to offset their excess emissions. Carbon credits are issued to companies in the developing countries by an international authority for reducing emissions. 
  • Satyam's ADS money goes missing
    • All of us were first astonished at the revelations made by Satyam.  Some of the charges levelled against the company looked incredulous at least for some time.  But now it appears as though the skeletons are tumbling out of the closet one by one -- slowly but steadily.
    • Read this report.  You will know the import of what we are saying.
  • Kingfisher's cheque to AAI for Rs. 77 crore bounces!
    • It's an event that makes every one of us sit up take notice.  If such a thing is happening in respect of Kingfisher, what else is in store from the rest of the players in the aviation industry? 
    • The Indian aviation industry is faced with mounting losses due to falling passenger traffic and excess capacity. With revenue from sold seats dropping significantly in the past many months, Indian carriers are expected to post a combined loss of $2 billion this year. The hardest hit are bigger carries such as Air India, Kingfisher and Jet Airways. 
    • Kingfisher Airlines along with its low-fare subsidiary, Kingfisher Red is one of the largest debtors with AAI after national carrier Air India and Jet Airways. The airline industry together owes more than Rs 1,000 crore to AAI, which is the largest airport service provider.
  • Titbits about some of the past pandemics
    • 1992, Mad cow disease; 
    • 2003, Sars; 
    • 2006, Bird flu; 
    • 2009 Swine flu.
    • The 1918-19 ‘Spanish flu’ pandemic killed an estimated 50 million people worldwide.
Language lessons
  • starry-eyed: Ajdective
    • Unrealistically or naively optimistic
    • eg: "a starry-eyed reformer"; "starry-eyed idealism"


Politics & the Nation
  • CBI takes Bofors accused Ottavio Quattrocchi off the wanted list
    • In the light of the above development, it's time we take a look at the timeline of the Bofors investigation since 2004.  Look at this graphic.
    • The other cases where CBI's image took a beating as an independent investigating agency:
      • The decision to withhold sanction to prosecute former Union minister Satish Sharma. 
      • The non-filing of an appeal in the DA case pending against former Jharkhand chief minister Shibu Soren, who’s key ally of Congress. 
      • The decision to change the public prosecutor in the corruption case pending against railway minister Lalu Prasad, establishment of special bench of the ITAT, refusal to file an appeal and putting roadblocks in the Bihar government’s attempts to file the appeal in the DA case. 
      • The flip-flop on cases relating to Uttar Pradesh chief minister Mayawati. The CBI first tried get her off the hook in the Taj Corridor case, but later activated the DA case when she withdrew her party’s support to the UPA. 
      • A similar change in its attitude was visible in the DA case pending against Samajwadi Party chief Mulayam Singh Yadav and his family members. It took a hostile stance when the SP-Congress relations were bitter, but changed tack after Mr Mulayam Singh Yadav started backing the Manmohan Singh government. 
      • The closure report filed in the case relating to former Union minister Jagdish Tytler’s alleged involvement in the 1984 anti-Sikh riots. 
Finance & Economy
  • Good news on economy front
    • Look at the opening sentences of today's lead story:
    • GROWTH ahoy! A raft of lead indicators, investments that refuse to flag, rejuvenated hiring, sprightly freight movement at major ports and robust data from key manufacturing segments indicate that the downturn has bottomed out and that the economy is poised to regain its vigour. 
    • Nomura’s Composite Leading Index (CLI), UBS’ Lead Economic Indicator (LEI) and ABN Amro’s Purchasing Managers’ Index (PMI) all point to a pick-up in growth soon. And CMIE’s capex database, which tracks investments by companies, shows no big slowdown in this space. 
    • A lead indicator is a composite of a variety of indices that track activity in vital economic sectors. 
    • The LEI is a composite indicator of variables like government bond yields, M1 money supply, currency risk premium, foreign exchange reserves and stock market gains. 
    • Nomura’s composite leading index (CLI) is used to identify the turning points in the growth rate cycle.
    • ABN Amro’s PMI is an indicator of the country’s manufacturing scene based on a survey of 500 companies.
    • The number of cars sold in March at 1,66,837 was 45% higher than the 1,15,334 sold in December 2008. Two-wheeler sales climbed 42% from 4,61,302 in December, to 6,54,017 in March. The index of industrial production has inched its way to positive territory, even as capital goods production registered a growth of 10% in February. 
    • Over 1,000 projects involving total investments of Rs 4,90,000 crore are on schedule and will be commissioned in 2009-10. Projects worth a record Rs 7,90,000 have been announced in the quarter ended March 2009 itself, suggesting that corporates have not pared investments to the extent expected. 
    • Isn't the picture getting brighter?
  • India's steel consumption trends point to economic recovery
    • CHANCES of the Indian economy recovering faster than its global peers from the current slowdown looked brighter with the World Steel Association (worldsteel) forecasting a 2% growth in the country’s steel consumption in 2009, making it the only major economy to post an increase in a year that will see global consumption of the metal fall by around 15%. 
    • India, which accounts for around 5% of the global steel consumption, will use 53.5 million tonnes of the metal in 2009. The global consumption of steel this year is expected to be around 1,019 million tonnes. 
    • The country’s per capital steel consumption is about 45 kg, compared with the global average of 200 kg. 
  • What is meant by the non-recourse nature of housing mortgage finance?
    • It means that if the borrower returns the house keys to the financier, that act is enough to discharge his liability of the loan taken for purchasing the mortgaged house.
  • Some basics about the concept of value-averaging in investments
    • In value averaging the investor is expected to adjust the amount to be invested in tandem with the direction of the market — up or down — to achieve a prescribed value of the fund. 
    • This can be illustrated with an example. First decide how much value should your mutual fund units be worth at the end of each month. If, for instance, you decide that you want Rs 1,000 added to your equity mutual fund each month, you will start with Rs 1,000. 
    • Let us assume that at the end of the first month you find that the value of this investment has fallen to Rs 900 due to a correction in the markets. 
    • In that case, in the next month you will invest Rs 1,100 to ensure that you have Rs 2,000 in your fund. By the end of the second month, say, you find that the value of these units have gone up to Rs 2,100, then in the third month you will invest Rs 900, taking the value of the units to Rs 3,000. 
  • Titbits about stress tests for banks
    • "Stress tests say Citi, BoA may need capital" reads one headline.  The same story provides answers to some interesting questions.  An excerpt:
    • What are stress tests? 
      • Tests by the Fed and Treasury to find if 19 top banks have enough capital cushion to survive a deterioration in the economy 
      • The tests are not a study of the solvency of banks; they find out which banks will not have capital to survive another storm. The results will be released on May 4 
    • What is rationale for the tests? 
      • Concerns over the strength of banks have been a roadblock to recovery. Stress tests are expected to clear the air 
    • What happens to banks which fail? 
      • They get six months to raise capital from private investors or by selling assets 
      • US has said it will not let any of these banks fail; if one of them fails to raise capital, the government will provide it
  • India to host a majority of the World Cup matches
    • India has managed to get the lion's share of 2011 world cup matches with 29 games coming their way and will host one semi-final and final while Mumbai gets relocated as the Central Secretariat of the ICC World Cup 2011.  The secretariat was earlier based in the Pakistani city of Lahore.
    • After the ICC ruled out Pakistan as a co-host, the schedule had to be re-drawn. 
    • Sri Lanka will host 12 matches in three venues, including a semifinal, while eight matches, and the opening ceremony, would take place in Bangladesh.
    • ICC CEO: Haroon Lorgat
    • Managing Director of the 2011 World Cup: Ratnakar Shetty, the Chief Administrative Officer of BCCI.
Language lessons
  • compunction: Noun
    • A feeling of deep regret (usually for some misdeed)
  • phalanx: Noun
    • Any closely ranked crowd of people; A body of troops in close array; Any of the bones of the fingers or toes
  • slithery: Adjective
    • Having a slippery surface or quality
    • eg: "slithery mud"; "slithery eels"
  • preposterous: Adjective
    • Incongruous; inviting ridicule
Obituary: Feroz Khan
  • Bollywood actor Feroz Khan is no more.  This obituary recounts his career well.


Politics & the Nation
  • Now Modi gets the boot from Supreme Court
    • A few days ago it was a minister in his cabinet.  Now it is his turn; it looks like.
    • The Supreme Court has taken cognizance of a complaint lodged by the wife of a Congress MP who was killed in the post Godhra riots and has asked the SIT - Special Investigation Team - to probe into the role of Mr. Modi.
    • Read the full report here.
  • Should English language be banned from India?
    • Remember the noting about a debate on banning or not banning English language in India?  Today TK Arun wrote a very good piece arguing that the squeezing of Indian languages into the binary slots of an artificial, mutually exclusive choice, is mistaken.  While explaining his point he dwelt on the oft wondered question: How come Indians alone obsess about English?
    • Colonial baggage is the short answer. But it is too short. A fuller explanation would take into account the highly unjust, unequal distribution of social power in traditional India and the linguistic codes that legitimised and sustained such inequity. 
    • The premium on English grew, for two reasons: the utility of English as the preferred world language and conflation of acceptable teaching standards with English as the medium of instruction. The latter is primarily a function of breakdown of the government school system. 
    • Take a look at the full story here.  Worth a read.
  • CAT goes online
    • ALMOST three lakh students seeking admission into IIMs in November this year will be able to appear for the Common Admission Test (CAT) online, as India’s premier management institutes seek to transform the over three-decadeold examination system and provide more flexibility to IIM aspirants by adopting an internet-based system. 
  • Some excellent editorial commentary on the Lankan Tamil issue
    • With the LTTE’s rout, the militarism of the Rajapaksa regime can transform into a triumphalism that denies — or at least seeks to skirt — the devolution issue. One needs to remember that ingrained Sinhala chauvinism has been an equal part of the problem. Only concerted international pressure, particularly from India, in a post-LTTE scenario can ensure that the issue of sharing of power remains at the top of the reconstruction plan. Colombo’s announcement, after some nudging by New Delhi, that it won’t use heavy weaponry in the NFZ is welcome. But large scale civilian casualties can still occur. Striving to prevent that, and maintaining the political primacy of the Tamil rights issue should now be the task for Tamil Nadu’s politicians. On current form, it seems they won’t be equal to it.
  • Swine flu outbreak 
    • Mexico, the US, Canada and now Spain have reported cases of swine flu.
    • Swine influenza (also swine flu) refers to influenza caused by any virus of the family Orthomyxoviridae, that is endemic to pig (swine) populations.  
    • In humans, the symptoms of swine flu are similar to those of influenza and of influenza-like illness in general.
    • The new strain of swine flu virus called H1N1 has killed 103 people in Mexico. 
    • Look at this Wikipedia graphic for swine flu symptoms.
    • A timeline of events in this outbreak.
    • Indian drug makers are ready to pitch in with the generic version of the antiviral Tamiflu as the world looks for quick, affordable options to counter the infection.
    • The World Bank estimated in 2008 that a flu pandemic could cost $3 trillion and result in a nearly 5% drop in world gross domestic product, damaging prospects of recovery in a world economy deep in financial crisis. 
    • The SARS outbreak, which disrupted travel, trade and the workplace in 2003, cost the Asia Pacific region an estimated $40 billion. It lasted six months and killed 775 of the 8,000 people it infected in 25 countries. 
  • AD syringes to shore up healthcare in the country
    • THE country’s healthcare delivery system is set to get a safety shot, with a government mandate on the use of auto-disable syringes (AD) coming into effect in end-April. A legislation signed late last year requires all central government hospitals under CGHS to use only auto-disable (AD) syringes to avoid the spread of disease. 
    • AD syringes are designed for a single use, with a lock that prevents reuse and eliminates unauthorised packaging or even resale.
  • Creutzfeldt-Jakob Disease is better known as the human variant of BSE - Bovine spongiform encephalopathy - or ‘Mad Cow disease’
Finance & Economy
  • This graphic gives an excellent primer on LLPs
    • You might remember that we have noted about Limited Liability Partnerships some time back in our blog.  
  • Why are fiscal stimulus packages a headache for Central banks?
    • Higher deficit financing tends to have an inflationary impact on the economy. Moreover, a reversal of tax sops could derail the pace of growth in the real sector. Unwinding of fiscal policy, therefore, needs to be handled carefully as the economy gradually gets back on track. 


Politics & the Nation
  • IT companies to hire more foreigners abroad
    • What prompted this move?
    • One is the fact of growing protectionist winds abroad.
    • The other is that despite having substantial overseas revenues, Indian IT companies have no more than 5% non-Indians among their workforce; save TCS which is stated to be having around 9%.
    • In spite of their resolve to stave off protectionist winds, Indian companies may not succeed too well in hiring local talent because there simply is no availablity of local talent.  This can be gauzed from the fact that even IBM, which is a true blue multinational, has more than 80,000 Indians on its workforce in India.
  • ICICI Bank fights 'foreign' tag
    • In a very interesting development India's largest private sector bank is reportedly fighting to remain classified as an "Indian" bank.
    • The issue came to the fore because of Press Note 2 of 2009 issued on February 13.  It redefined foreign ownership of Indian companies.  According to this, a company incorporated in India has to satisfy two conditions to be classified as Indian-owned: beneficial foreign ownership by all forms of investment must be less than 50% and Indian shareholders must have the right to appoint a majority of its board members.  Accordingly, a company that has more than 50% of such foreign investment would be considered foreign-owned, even if Indians have the right to nominate a majority of board members and thus have control. 
    • ‘Foreign investments’ include the whole spectrum — direct investment, portfolio or foreign institutional investments, investment by a non-resident Indian, depository receipts (global [GDRs] and American [ADRs]), foreign currency convertible bonds and preference shares. 
    • As on March 31 2009, foreign institutional investors had a 35.47% share in ICICI Bank and 27.12% shares were held by the custodian, against which depository receipts have been issued. Since both these count towards foreign investment in the new policy, the total foreign holding in the bank would be 62.59%, as per the data on National Stock Exchange. 
    • If classified as foreign-owned, the bank's downstream investments will also be counted as FDI, barring it from investing in sectors that have caps, such as banking itself. 
    • It is not just ICICI Bank, reportedly there are six others including HDFC Bank, Development Credit Bank and ING Vysya Bank that face a similar predicament.
  • Government keen on raising data encryption standards
    • The government is reportedly seeking help from telecom companies, software makers and internet service providers (ISPs) to frame regulations and raise encryption levels, a measure of data security. 
    • Encryption means converting data and emails into codes that travel through the network and later get reassembled into the original form. 
    • The government seeks to raise encryption levels from the present 40 bits to 128 bits, before eventually moving to 256 bits, which is the standard in Europe and the US. A higher encryption level will ensure more secure financial transactions on personal computers and cell phones. It is also vital for protection from hackers. 
    • Most western countries do not allow financial transactions on the internet through computers and mobile handsets, if the encryption level is less than 128 bits. 
    • The issue of encryption came to the fore last year when the communications ministry threatened to ban Canada’s RIM, maker of BlackBerry handsets that are popular with corporates and professionals, as data transferred on these devices used the 256-bit advanced encryption standard.  India's security agencies lacked the technological capabilities to monitor data transfers on the Internet when encryption levels were higher than 40 bits.  But now, they have reportedly enhanced their capabilities and hence the move to increase the encryption standards.
    • In addition to this even RBI's stand that 128 bit encryption should be the norm employed by banks to protect sensitive and confidential information, seems to have pushed the government into taking this move.
  • Should English be banned?
    • In the wake of Mulayam's reported stance against English, this issue came to the fore again.  Two intellectuals give their opinion on the issue.  What a contrast it makes!  A leading Hindi writer defends English while a Professor of English bats for Hindi.
    • Some excerpts:
      • Against the ban:  There might have been reasons before Independence for politicians to support Hindi as a common unifying language in a multi-linguistic and multi-cultural subcontinent to consolidate their struggle against the British. English, then, would have logically been perceived as the language of colonial rulers. But now, the situation has entirely changed. Hindi is now the language of sarkar, bazar and sanchar(government, market and media) and it has been monopolised by the dominant caste and religious group. Official Hindi has become a vehicle of obscurantism, communalism, blind nationalism and, to top it all, casteism. English, in post-colonial India, has become a language of modernity and empowerment. Poor and low caste people and minorities know that Hindi will make them naukar and English will escort them to the seat of the master. If you ask me to give a slogan now, it would be angrezi laao, desh bachao.
      • In defence of the ban:  English in India is not the same thing to everybody. For about one per cent of the population English is a triumphant and invidious badge of privilege and distinction. For the next 10% holding well paid jobs in the professions, it is a necessary ancillary skill painfully and imperfectly acquired. For the next 50% of “Hindi-medium types”, it is a fig-leaf with which to hide that sense of inferiority and shame which we have afflicted them with. And for the bottom 40% of us who are still wholly illiterate, it might as well be the language spoken on Mars.  Angrezi Hatao is in effect the same slogan as Garibi Hatao. It will inevitably lead to a more just distribution of resources, opportunities and wealth. And that is precisely why all Angreziwallahs are hysterically against such a move. 
Finance & Economy
  • An excerpt from today's op-ed article that explains global supply chains very well:
    • Trading is now a competition between complicated global supply chains that produce and supply goods made with parts and labour sourced from many countries. Everything from shoes to Barbie dolls to laptops and cars use inputs sourced in different countries, assembled elsewhere and sold in completely different markets. These highly efficient supply chains provided better quality and lower priced goods and services to consumers. 
    • The success of these supply chains depends upon lowering of trade costs including policy barriers — tariff and non-tariff, transportation costs, regulatory costs and communication costs. In fact, theoretical models predict that there is a threshold level of costs below which trade flows gain momentum and above which there is not enough incentive for global supply chains to thrive. It was this “vertical specialisation” that was responsible for the exponential growth in trade. Spread of supply chains across the world also resulted in the simultaneous growth of incomes of countries around the world. Any disruption of these supply chains would, therefore, be disastrous — creating a “domino effect” impacting incomes and employment across several economies. By the same logic, measures that help in the rejuvenation of existing chains could stimulate the much needed global demand. In these times of slumping demand, it is therefore, imperative that their cost advantage be maintained. 
    • Given the global nature of these supply chains, the effects of even small hikes in tariffs will get amplified in their impact on trade. In addition, higher tariffs affect domestic producers who use imported inputs. Dismantling existing supply chains and replacing them with local supply chains will be a long and painful process. The combined effect of all these may set in motion a vicious spiral of increasing costs and dropping demands. This could result in the 9% trade decline in 2009, predicted by the WTO, accentuating the dip in GDP growth. 
  • Some major sporting events scheduled to be held in India
    • 2010: The Commonwealth Games and the hockey World Cup
    • 2011: Cricket World Cup. 
  • GMR may buy Liverpool
    • Read this report.  India's billionaires have taken a fancy to owning sports clubs.  Interesting.
Language lessons
  • invidious: adjective
    • Containing or implying a slight or showing prejudice
  • fig-leaf: Noun
    • A covering consisting of anything intended to conceal something regarded as shameful


Not much to note from papers today.  The few that are worth our attention:

Finance & Economy
  • Spectrum allocation issue
    • India could move to an internationally-accepted auction-based system for issuing additional radio spectrum to existing mobile operators, abandoning a controversial practice of allocating the scarce national resource based on companies’ subscriber numbers. 
    • A committee set up by the government last year to resolve the vexed issue of additional spectrum allocation is coming around to a consensus view that an auction-based system has much greater merit than the present practice.  Currently, operators using the dominant GSM technology get 6.2 MHz of spectrum each while those using the rival CDMA standard get 5 MHz per player. GSM operators can have a maximum of 15 Mhz spectrum, while for CDMA players the limit is 7.5 Mhz. 
    • India is the only country that allocates spectrum based on subscriber numbers, and the practice has led to charges that several Indian mobile operators inflate subscriber numbers to corner the resource. 
    • This report gives an excellent briefing on the tortuous course the spectrum allocation issue has taken since 2007.  Take a look. 
  • Banks to be mandated to throw open the accounts of its account holders to auditors
    • Banking and market regulators are considering a proposal authorising auditors to directly verify financial information of their clients with banks where they hold accounts. 
    • Currently, rules of the Institute of Chartered Accounts of India require auditors to physically verify the cash and bank balances of companies they audit, and not merely rely on statements provided by the company secretary or the chief financial officer. However, banks are currently under no legal obligation to share such information with auditors. 
    • This move comes in the wake of the Satyam scandal wherein the firm allegedly supplied incorrect information to its auditors about available cash balances by forging the letterhead of one of its banks.
  • Convention on Protection of the World Cultural Heritage
    • This UN convention was signed in 1972.  The convention recognizes about 850 sites all over the world as World Heritage sites and protects them.
    • Director General of UNESCO: Koichiro Matsuura
Language lessons
  • felicity: Noun
    • Pleasing and appropriate manner or style (especially manner or style of expression); State of well-being characterized by emotions ranging from contentment to intense joy
    • eg: ...southern India has a happy felicity of actually producing real agendas in the form of people associated with the film world. 


Politics & the Nation
  • Some very good commentary on the state of distribution reform in electricity sector in our country
  • Mulayam the neo-Luddite?
    • Mulayam's reported stance against computerization makes us ponder over his electoral fate.  An excerpt from an article by Arvind Panagariya:
    • In the early 19th century, great Luddites, so named after the fictive Ned Ludd, fought against the Industrial Revolution that introduced wide-framed automated looms. Protesting the job losses, the Luddites destroyed many of these looms and even clashed with the British Army. But unappreciative, British government subjected them to a mass trial, eventually executing some of them. With the ITrevolution unleashing the computer, history may now be poised to repeat itself. 
    • The Mulayamites have declared war against the computer. Will the electorate reward them? Or will it give them the same treatment the British government gave the Luddites in the early 19th century? 
  • Accounting professionals now have a new appellate forum
    • The Government has established a tribunal before which professional accountants -- CAs, Company Secretaries and Cost Accountants -- can go in appeal against the disciplinary orders passed by their respective regulatory bodies viz., the ICAI, ICWAI, etc.
    • So far, they had to approach the High Courts concerned for justice.  Now they can have their cases heard by professionals who have regulatory experience and can deliver speedy decisions.  An appeal against the decision of the appellate authority will be admissible in the Supreme Court. 
    • The nine-member tribunal has been set up under the Institute of Chartered Accountants of India (ICAI) Act, and is being chaired by Andhra Pradesh High Court Justice CY Somayajulu. 
Finance & Economy
  • IOC poised to record its first loss in 50 years
    • India's largest company by sales volume could be reporting a loss of Rs. 233 crores in the FY 2008-09 on the back of under-realizations estimated to be about Rs. 7,497 crores.
    • However, it is expecting a net profit of Rs 5,452 crore even after a projected Rs. 5,419 crore under-realizations, according to its budget estimates for the year ending March 31, 2010
    • It is a fortune 500 company that posted revenues of $62 bn during 2007-08 and has a market share of 49%.
    • Its GRM for 2008-09 is at $4.34 a barrel; while that of $9.02 in 2007-08 was the highest ever for it.  In 2009-10 it is expected a GRM of $4.88 a barrel.
  • Companies may get to pay in stock abroad
    • The government is examining a proposal to allow companies to use equity shares instead of cash for important payments abroad, including technology transfer, import of capital goods and interest on foreign debt. 
    • The government also plans to allow Indian companies to enter into share-swap deals with foreign firms for mergers and acquisitions, as it looks to help cash-strapped companies expand their businesses and liberalise foreign direct investment (FDI) norms.
    • If cleared, the proposal would allow companies to issue shares against import of capital goods, components, kits, spare parts, technology transfer, interest on external commercial borrowings (ECBs) and commission brokerage. 
    • This form of cashless transactions would go a long way in addressing a severe liquidity crunch that has forced several companies to curtail their expansion plans. 
  • Why did the RBI keep investing in US treasuries, even in these troubled times?
    • Read this report.  It makes an interesting reading in view of the consistent view held in this blog that US dollar's days of glory are going to be over soon.
    • Looks like this is not a view shared by the RBI.  Bets apart, it's time for some facts:
    • India has increased exposure to US bonds -- especially the treasury bonds -- by over 70% to $34.6 bn from its September 2008 figure of $20.3 bn.  This is the period when the global financial crisis unraveled and there were huge fluctuations in various currencies.  But the dollar held its ground against most currencies. Apparently this is the reason why central banks from Asian countries kept preferring US t-bonds over any other instrument to park their reserves.  It is the safety aspect; rather than the return aspect that has ensured this.  The returns from US t-bonds during this period have in fact have gone to historic lows of 1% or even less.
    • Take a look at the various countries' exposure to US t-bonds during this period.  
  • Fallin TRPs give IPL some jitters
    • The latest ratings update from TAM Peoplemeter, which advertisers and media buyers closely follow to plan their television spends, reiterates lower ratings compared to Season I. Though TAM states that over 12 million viewers tuned in to IPL over the weekend, almost the same as last year, TRPs have dipped. Across all-India cable and satellite homes of four-years-plus audiences, ratings of the two matches on the opening day were 5.1 and 5.2, compared with the 7.2 rating of Season I’s first match between Kolkata Knight Riders and Royal Challengers. 
    • TAM had, earlier in the week, reported that the first match posted TRPs of 5.5 across the top six metros in cable and satellite four year-plus households. Last year, day one of IPL across the same sample size had opened to a huge rating of 8.2. 
Language lessons
  • atelier: Noun
    • A studio especially for an artist or designer
  • stiletto: Noun
    • A very high narrow heel on women's shoes
  • fictive: adjective
    • Adopted in order to deceive; Capable of imaginative creation
    • eg: "fictive sympathy"; "fictive talent"


Finance & Economics
  • RBI tinkers with repo and reverse repo rates to induce credit expansion
    • The RBI has reduced the repo and reverse repo rates by 25 basis points each, to 4.75% and 3.25%, respectively. Repo is the rate at which RBI lends to banks while reverse repo is the rate at which banks park their surplus money with the central bank. 
    • With banks placing over Rs 1 lakh crore with RBI everyday — the amount of surplus money in the system — a lower return under reverse repo may prompt banks to park less money with the central bank. This measure is expected to make banks lend a slice of the surplus to corporates, individuals and small businesses, to revive a sagging economy. 
    • Look at this figure; it gives you the repo and reverse repo rates since March 31, 2004.
  • Forex reserve management
    • We have deliberated sometime back in our blog as to how are our forex reserves managed.  Where are they invested; how and who is in charge and things like that.  We knew that it is obviously the RBI but the reality is that it is a committee comprising the finance secretary, chief economic advisor and RBI's offices that does this.  This is stated by RBI governor Mr. Subba Rao in an interview.
  • Royalty and Trademark fee limits to be hiked?
    • At present there are ceilings on the royalty or trademark licence fees that can be charged by foreign companies from Indian companies.  In respect of royalties the ceiling is 2% of the revenues generated while in case of trademark licence fee it is 1%.  If any foreign company wants to charge more than these ceilings it has take the prior approval of the FIPB (Foreign Investment Promotion Board).
    • Now  the government is reportedly examining a proposal to allow foreign hospitality and technology companies to charge up to 5% of domestic sales as royalty or trademark fee from Indian companies for the use of their brand, trademark or technology. 
    • The move follows demand from several foreign companies, particularly hospitality majors like Hilton International, Four Seasons Hotels & Resorts and Hyatt Hotels & Resorts. 
  • Telecom additions and density figures
    • India's telcos created a global record by adding 15.64 million new mobile users in March beating its earlier record of signing up 15 million new customers set earlier in January 09. The number of phone connections in the country -- mobile and landline -- has crossed 429 million as of March-end, according to figures released by TRAI. 
    • The robust growth has also helped push the country’s tele-density to 37%. This means, there are 37 phone connections for every 100 people in India. 
    • Total broadband subscribers base has reached 6.22 million by the end of March 2009.
  • An excellent piece from Swaminathan Anklesaria Aiyar
    • He is very good at explaining complex issues in very simple terms.  This is a judgment which, we are sure all of you will agree, if you read this story.
    • An excerpt: It is now clear that the toxic assets—securities and loans with impaired values — of US banks are $2-2.8 trillion, while tangible assets are only $1 trillion. Technically, the financial sector is comprehensively bust.
  • IMF speak on global financial crisis
    • Worldwide losses tied to rotten loans and securitized assets may reach $4.1 trillion by the end of 2010 as the recession and credit crisis exact a higher toll on financial institutions. 
    • Banks will shoulder about 61% of the writedowns, with insurers, pension funds and other nonbanks assuming the rest.
    • US financial institutions will see a loss of $2.7 trillion, an increase from the earlier estimates of $2.2 trillion in January and $1.4 trillion in October. 
Science & Technology
  • Astrosat
    • India's Astronomy satellite, ASTROSAT, which would facilitate study of a range of astrophysical objects, is likely to be launched in mid-2010, scientists from Tata Institute of Fundamental Research (TIFR) say.
    • ASTROSAT project is a collaborative effort of a number of reserch institutions, including the Mumbai-based TIFR.
    • The Astrosat will be in an equatorial orbit with inclination of about 8 degrees or less. Two star trackers and gyros will be used for the pointing control of the satellite.
    • Orbiting at 600 km above the earth's surface, the ASTROSAT satellite costing about Rs 200 crore, will have a lifespan of at least five years.
    • Astrosat will carry five instruments to observe exotic objects such as black holes, neutron stars, and active galaxies at a number of different wavelengths simultaneously, from the visible and ultraviolet band to energetic x-rays.
    • Once it begins orbiting in the sky, it is capable of gathering 420 gigabits of data every day.
  • Some findings from studies on cervical cancer
    • Despite the claim that cervical cancer is preventable, WHO estimates that each year over 1.30 lakh Indian women are diagnosed with it and over 74,000 lose their lives due to it.
    • This makes cervical cancer the leading cause of cancer-related deaths in India and represents approximately one-fourth of the world's total cervical cancer cases and mortality.
    • The human papillomavirus, also called HPV, was a common pathogen predominantly affecting women. Approximately 80 per cent of women get one or more types of virus by the age of 50.
    • HPV DNA testing is the most effective way to reduce incidence of cervical cancer compared to either Pap (cytology) testing or visual inspection with ascetic acid (VIA).
    • WHO estimates that only about five per cent of women in the developing world have been screened for the cervical disease in the previous five years compared to 40-50 per cent in the developed world.
Language lessons
  • leery: Adjective
    • Openly distrustful and unwilling to confide


Politics & the Nation
  • Attention grabbing headlines 
    • HDFC Chairman Deepak Parekh to call it a day on December 31.
    • Shikha Sharma is the new CEO of Axis Bank; PJ Nayak quits as CEO in a huff.
    • TCS announces 1:1 bonus.
    • Oracle acquires Sun Microsystems in a $7.4 bn deal that is expected to put lot of pressure on IBM.
Finance & Economics
  • Snippets of info about credit and debit cards
    • According to the RBI, the number of outstanding credit cards was 2.55 crore in February 2009, down from 2.83 crore at the end of April 2008. In the same period that credit cards numbers declined, as many as 2.37 crore debit cards were issued.
  • Sugar production figures
    • In the current sugar year, October 2008-September 2009, production is estimated to drop a massive 40% to 15 million tonnes against a domestic consumption of nearly 23 million tonnes. 
    • Factories in many states have stopped crushing barely seven months into the season for want of sugarcane; in response, local prices went up to nearly Rs 30 a kg before the government threatened intervention and allowed duty-free imports of both refined and raw sugar.
  • How many foreign banks are there in India?  How may branches are there for the private commercial banks in India?
    • As per RBI data, there are 280 branches of foreign banks and 8,265 branches of private commercial banks. 
  • On debt recovery tribunals (DRTs)
    • These are the institutional mechanism set up by the government for recovery of loans given by banks to borrowers.  There are 29 DRTs and five Debt Recovery Appellate Tribunals across the country, with the number of cases deciding the formation of a tribunal.  Most cities have one DRT, while Mumbai and Delhi have three tribunals each. Chennai and Kolkata have two DRTs each. 
    • Typically, recoveries valued below Rs 10 lakh are sent to civil courts, while those above Rs 10 lakh can be referred to the DRTs. The BIFR sees cases pertaining to the medium to large scale companies. DRTs account for only about 10-15% of the total number of recovery cases remaining with the Board for Industrial and Financial Reconstruction (BIFR). 
    • Each DRT is presided over by a presiding officer with two recovery officers. The presiding officer is typically a judge of the rank of district and sessions judge. The presiding officer is the sole judicial authority to hear and pass any judicial order. The recovery officer’s work is allocated by the presiding officer. Though a recovery officer need not be a judicial officer, the orders passed by a recovery officer are judicial in nature, and are appealable before the presiding officer of the tribunal. The DRTs are fully empowered to pass comprehensive orders like the civil courts. The tribunals can hear cross suits, counter claims and allow set-offs.
    • A receiver attaches the property after all negotiations with the defaulting unit fails. 
    • The DRTs are governed by provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, popularly called as the RDB Act. After the enactment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act (SARFAESI Act) borrowers could become first applicants before the DRTs. Earlier only lenders could be applicants. 
Science & Technology
  • India has its own eye-in-the-sky now
    • India on Monday launched its first ‘spy’ satellite using the PSLV C-12 rocket. It is an all-weather satellite (RISAT 2 - Radar Imaging Satellite) capable of sending detailed pictures of objects as small as cars even in the dark.   It can see through clouds even in the night and is built on almost the same specs as Israel’s spy satellite Tecsar.  
    • RISAT-2 will help tackle infiltration and terror activities.
    • India is now the sixth country after Japan, Canada, Germany, Israel and the US to have such a satellite.
    • Isro was developing its own indigenous radar imaging satellite, the RISAT-1, for Earth observation to help predict floods, cyclones and landslides. 
    • The other payload, the Anusat, which has been under development for the last six years, will help in document-sharing between colleges and universities and make online transfer of question papers among colleges feasible. 
  • The transition to sustainability
    • Jeffrey D Sachs is one of the celebrated writers that we follow keenly in our blog.  His pet subject is sustainable development.  After a long time we take a look at a piece penned by him on the subject.
    • In the present troubled times, are the stimulus plans announced (mostly in the developed world for the developed world) enough to pull the world out of recession?  What should be done to bring the world out of the present messy conditions that it finds itself in?  Take a look at his take:
    • It's naive to think that the stimulus packages announced in one part of the world will pull the world out of the present recession.  What will be needed is an overhaul of the world economy towards sustainability. 
    • An essential policy that developed and developing countries should pursue in overcoming the crisis is to build infrastructure suitable for the twentyfirst century.  This includes an efficient electricity grid fed by renewable energy; fibre and wireless networks that carry telephony and broadband Internet; water, irrigation, and sewerage systems that efficiently use and recycle fresh water; urban and inter-city public transit systems; safer highways; and networks of protected natural areas that conserve biodiversity and the habitats of threatened species.
    • It is time for a concerted global effort to bring the backlog of infrastructure investment projects on line.  It is the increased funding for sustainable infrastructure in poor countries that would provide a powerful boost to richworld economies.
    • Unless the developed world sets its sights on helping poor countries finance the transition to sustainable technologies, the world will have to brace for a longer period of recession.
Language lessons
  • gnaw at: verb
    • Become ground down or deteriorate
  • polemic:
    • Adjective: Of or involving dispute or controversy
    • Noun: A writer who argues in opposition to others (especially in theology);  A controversy (especially over a belief or dogma)
  • nary: adjective
    • (used with singular count nouns) colloquial for 'not a' or 'not one' or 'never a'
    • eg: ...with nary a thought for the inevitable hangover.


Politics & the Nation
  • Read the statements attributed to Mr. Karunanidhi and draw your own conclusions.
    • Read this story in full and digest what you can.
    • When newspapers are full of stories like this, what is there for us to take note of, and stay informed?  That's why we keep groping for notings which are worth our attention from the "Politics" columns.
  • The "Order of Leopold" issue
    • Sonia Gandhi has reportedly "declared her allegiance" to the Belgian monarch by accepting the title of "Order of Leopold" in 2006.  There is a petition on this pending before the Election Commission of India seeking her election to the Parliament to be declared null and void.  
    • The Election Commission has reportedly decided on this issue recently.  It is reported that this issue was decided by a 2:1 majority that the petition be dismissed.  What is noteworthy is that it is only the retiring CEC Mr. Gopalaswami who appears to have been on a minority on this issue too.
    • You might remember that his earlier recommendation to oust Mr. Navin Chawla the incoming CEC, was negatived by the Government.
Finance & Economy
  • Why do Indian companies put up with inspections by US FDA?
    • "After Ranbaxy,FDA finds gaps at Cipla"  so reads a headline today.
    • Why should Indian companies put up with inspections by US Food and Drug Administration?
    • Because these companies' manufacturing facilities in India manufacture drugs which are meant for sale in the US also.  Does India have such a counter-inspection mechanism?  No.
    • US FDA inspection team is reported to have found 9 deviations -- stated to be minor - in Cipla's manufacturing plant at Bangalore.
    • In September last year, FDA had banned 30 Ranbaxy drugs, which are manufactured at two of its plants in India. 
    • A month later, the regulator issued a warning letter to Caraco Pharmaceutical, Sun Pharma’s American subsidiary, and has also halted approval of new drug applications from its Detroit facility. 
    • In November, the agency found 15 manufacturing deficiencies at Lupin’s plant in Madhya Pradesh. 
    • Indian drug manufacturers see that this is one of the efforts of the US drug business lobby to use their FDA to beat the increasing exports of low-cost quality drugs from India.
  • What is the issue abut banks' demanding collaterals for OTC derivative contracts?
    • Banks sold billions of dollars worth currency and interest rate derivatives to corporates like unsecured personal loans. When the bets backfired and hostile corporates refused to pay up, all banks could do was move court.  Currently, India Inc’s markto-market losses are estimated at a few billion dollars.  Stamp duties held back corporates from providing collaterals, causing banks to remain unsecured creditors on derivative exposures. 
    • Therefore now, Banks are insisting on collaterals such as stocks, properties and even personal guarantees from corporates for derivative deals with them.  This could help banks lower the risk on their derivative books.  There is also a possibility that RBI may grant banks some capital relief.  Corporates would also think about the downsides before signing on a derivative contract.  Banks are asking for 100% collateral from medium- and small-sized firms and even from bigger ones that have suffered a decline in profitability.  In the long run, enabling clearing houses to play a bigger role in OTC derivatives can help further streamline the market. 
  • Who is the Chairman of the Board for Reconstruction of Public Sector Enterprises (BRPSE)
    • Nitish Sengupta
Language lessons
  • germane: Adjective
    • Relevant and appropriate
  • gobbledygook: Noun
    • Incomprehensible or pompous jargon of specialists
  • mealy-mouthed: Adjective
    • Hesitant to state facts or opinions simply and directly as from e.g. timidity or hypocrisy
    • eg: ...the bank is notoriously mealy-mouthed in explaining what it does in simple language intelligible to both financial markets and the public.


  • Excerpts from a Pentagon report as reported in today's TOI
    • Pakistan is likely to disintegrate into fiefdoms controlled by Islamist warlords and terrorists.  Pakistan’s fragmentation into warlord-run fiefdoms that host Al Qaida and other terrorist groups would have grave implications for the security of its nuclear arsenal; for the US-led effort to pacify Afghanistan; and for the security of India, the nearby oil-rich Persian Gulf and Central Asia, the United States and its allies. 
    • Pakistan has 173 million people and 100 nuclear weapons, an army which is bigger than the American army, and the headquarters of Al Qaida sitting in two-thirds of the country which the government does not control.
Finance & Economy
  • Is colour having anything to do with presenting corporate image?  Should companies be bothered about colour while presenting their corporate image?
    • Psychologically, colours trigger how people feel and perceive. And sometimes, they even manipulate people to buy. By using a particular colour in its communication, a company projects its maxim. Again, ads in colour are read up to 45% more often than the same ads in black-and-white. It’s also proven that precise use of colour can improve comprehension by 70%. Over half of the Sensex companies predominantly use blue as their corporate colours. 
    • In general, blue exudes emotions such as trust and security and goes by the never-get-us-wrong true blue moniker. Blue also implies fiscal prudence.  Let us take a look at what the other prominent colours are associated with:
    • Red: is known to activate the pituitary gland, which increases heart rate causing one to breathe rapidly. This response makes red energetic, provocative and attention grabbing. 
    • Yellow: Research suggests that the eye sees bright yellow before any other colour, which makes them important for point-of-purchase displays. 
    • Orange: exudes vitality, which works wonders in healthcare.
    • Brown: is earthy and symbolises durability and stability. Brown also tends to hide dirt, which makes it suitable for some trucking and industrial firms. 
    • Black: is serious, bold and powerful.
  • D&O liability insurance
    • It stands for Directors & Officers liability insurance.  It typically covers top executives from being held personally liable in the event of misleading financial statements and mismanagement of funds. It also guards companies in case of litigation payments made on behalf of its directors or officers.
    • At present less than 10% of the companies listed on BSE sensex have this cover in place.
    • In India, while it's compulsory for the mutual funds and insurance brokers to take liability covers, there is no such restriction on listed companies. At present, the premium for a D&O policy is as low as 0.5% of the total cover. 
    • Romania was the first country in the European Union (EU) to make D&O insurance compulsory for all corporations. 
    • Brazil requires foreign companies to compulsorily purchase a locally-issued D&O insurance policy to protect their local subsidiary's directors and officers from litigation. 
    • In the US, a survey revealed that 46% of those suing the directors were shareholders, 30% were from employees while customers and clients constituted 12%. 
  • Teledensity in our metros
    • Chennai: 111%; Mumbai: 90%; Delhi: 83% & Kolkata:67%.
  • Inflation at record lows
    • Annual inflation dropped to 0.18%—the lowest since annual records for inflation started in 1977-78—on account of a high base effect, or high index numbers in the corresponding week last year. 
  • What is credit information business?
    • Credit information companies inform banks whether a prospective borrower is creditworthy or not based on his past payment track record. 
    • At present in India only CIBIL is allowed to operate by the RBI to maintain credit histories of insurance and telecom customers.  But it is now reported that it has permitted three more companies to do that business: Equifax Credit Information Services, Experian Credit Information Company, and Highmark Credit Information Services. 
  • IPL
    • The first day's action saw Mumbai Indians beating Team Chennai by 19 runs.  And Royal Challengers beat Rajasthan Royals.
  • What is a prebituary? 
    • A prebituary is an obituary composed or published prior to a person’s death — it is a writeup of the lifetime achievements of famous personalities to mark their 65th birthdays. Most newspapers and media networks keep such obituaries of famous people ready. 
  • What is Burundanga? 
    • Burundanga is the other name of the drug Scopolamine, used for criminal activities like rape or robbery. The drug is passed on to the victim through business cards, pamphlets, etc. Even if the skin, through touch, absorbs just a very small quantity of the drug it has the desired effect. The drug is also administered through tablets added to drinks. This is known as the ‘dating drug’.


Politics & the Nation
  • Infosys Narayana Murthy turns Venture Capitalist
    • "TWENTY-EIGHT years after he started Infosys Technologies with Rs 10,000 borrowed from his wife, NR Narayana Murthy, whose personal fortune today is said to be worth around $1.8 billion, wants to start a venture fund to invest in new ideas that create value for society."  So starts today's lead story in ET.
    • With the kind of experience and money that he brings to the table, we can expect better days ahead for India's young entrepreneurs.
  • Public sector oil PSUs told to spend at least 2% on CSR activities
    • The government seems to have mandated that they should spend at least 2% of their net profits on Corporate Social Responsibility activities.  At present, PSU oil companies spend 0.5% to 0.75% on corporate social responsibility (CSR) activities, which is voluntary.
  • Should people who are too busy to receive our national awards be conferred the honours?
    • The absence of national cricket captain M S Dhoni and off-spinner Harbhajan Singh from the Padma Shri awards ceremony held at Rashtrapati Bhavan on April 14 is not getting that much serious attention that the issue deserves.  Should not such conferment be at least kept on hold till they come in person and receive it from the President?
    • We leave the floor open for a debate on this issue in our shoutbox.
Finance & Economy
  • IPL II expected to swing the fortunes of many a business in India in these troubled times
    • This version is expected to generate revenues of close to Rs 800 CR in 5 weeks flat.
    • Even before the first match — between Sachin Tendulkar’s Mumbai Indians and MS Dhoni’s Chennai Super Kings — Multi Screen Media (MSM, previously Sony Entertainment Television), which plans to rake in close to Rs 400 crore through the event, claims to have sold 85% of its advertising space. 
    • The franchisee teams put together are estimated to earn about Rs 250 crore from sponsorship deals. In addition, the travel-tourism and restaurant sectors stand to gain revenues of Rs 50 crore each. 
    • India’s Rs 300-crore restaurant and pub industry, struggling with sagging sales amid poor customer traffic, is hoping that IPL will bring it the much-needed respite. 
  • India's met sees 'near normal' monsoon this year
    • “Near normal” means the monsoon season rainfall is likely to be 96% of the long period average (LPA) with a model error of 5%, less or excess. The LPA rainfall over the country as a whole for the period 1941-1990 is 89 cm. The operational forecast issued by IMD for the 2008 seasonal rainfall over the country as a whole for the first and second stage forecasts were 99% and 100% of LPA, respectively. The actual rainfall was 98% of LPA. In effect, the overall rainfall forecast for the country this year will be lower than the forecast for last year. 
  • Internet spam and greenhouse gas emissions
    • An interesting excerpt from an ET editorial:
    • The bane of the internet age — spam — has been associated with irritation and wastage of time. Now a study by the climate change consultants ICF, has linked the two with the startling statistic that the energy used to transmit, and then detect and delete spam could power 2.4 million US homes. The Carbon Footprint of Spam study also contends that the 33 billion kilowatt hours of energy used in the spam detection process emits 17 million tonnes of carbon dioxide, or the same amount of greenhouse gases as 3.1 million passenger cars, burning 7.6 billion litres of petrol. Therefore, if every inbox has a filter, some 75% of the spam energy could be reduced — the equivalent of taking 2.3 million cars off the road. Each spam has a comparatively minuscule carbon footprint of 0.3 grams of carbon dioxide, which researchers aver, equals driving one metre. Further, they have calculated that on average, business users spend a total of 131 kg of carbon dioxide a year on emails. 
  • Pirate Bay people get one year jail term
    • Ever heard of this web site?  It is akin to LimeWire, Napster etc. in its service offering.  It is a peer to peer file sharing service that has lot of content and has dedicated following among geeks.
    • The men linked to The Pirate Bay — Peter Sunde, Gottfrid Svartholm Warg, Fredrik Neij and Carl Lundstrom — were charged early last year by a Swedish prosecutor with conspiracy to break copyright law and related offences. The Stockholm district court said in a statement the four were found guilty of breaching copyright laws.  It reportedly sentenced them to one year prison sentences and were asked to pay $3.58 mn in compensation.
    • The music industry is obviously joyous.  If you want to read the full news story do so here.
Language lessons
  • impervious: Adjective
    • Not admitting of passage or capable of being affected
    • eg: "a material impervious to water"; "someone impervious to argument"
  • detritus: Noun
    • The remains of something that has been destroyed or broken up
    • Loose material (stone fragments and silt etc) that is worn away from rocks