27.04.2009

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.
  

Debate

• 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. 
  

Sports

• 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