Indian Current Affairs: 09.06.2009

Politics & the Nation

This is a revealing article. A must read for every one of you. It says what we have known all along. Having known it for so long, it is quite possible that we forget what we have learnt along the way. Hence recommended as a must read. An excerpt worth our immediate attention:
According to the CAG report, the implementation of the SSA has been atrocious. There is almost no monitoring. Over 75,000 primary schools around the country have just one teacher and close to 7,000 schools no teacher at all. Many states have diverted SSA funds to sectors and schemes not covered by the SSA. The CAG found that 11 states diverted Rs 999 million to other sectors.

Finance & Economy

If it was the Left which played spoilsport for reform in this sector during the previous government's tenure, that role appears to be now being played by DMK and Trinamool. TMC appears to be unhappy with some portfolio / work allocations. DMK can be expected to keep sulking for the short shrift it received during cabinet formation. Both these parties reportedly made their opposition for oil price reform known. The Congress appears to have blinked now!! Therefore, we may not see much of a headway in oil sector reform after all.
Mandarins in government reportedly told pressmen that the price deregulation exercise “has lost its significance.” Whatever that means is left to your guess. Reforms in oil pricing are crucial because crude oil prices for domestic consumption have crossed the tolerance threshold of $65 per barrel set by the political leadership.
Look at this graphic which gives details about oil subsidy over the years.

In the context of increasing security threats to the country from various quarters, the issue of allowing foreign investments has drawn close scrutiny from concerned quarters during the last couple of years.
It is for this that the proposed National Security Exception Act would most likely be scrutinied in days / months to come.
Do you know that is modelled on the Exon-Florio Act, a US legislation first introduced in 1998?

Read more about the issues such a legislation raises and what should the country do about it here.

THE Reserve Bank of India may standardise the way banks calculate their prime lending rates (PLR) — the benchmark to fix the floating components of loans — and bar them from lending below their respective PLRs as it looks to bring more transparency into the whole process. A decision on this can be expected by the end of July.
The fact that more than 80% of current lending is sub-PLR, makes a mockery of the PLR. Post- the RBI decision, interest rates on loans benchmarked to PLRs will move down, unless the loan agreement has specified a floor rate.
Net interest margin — the ratio between net interest income and average total assets — of nine small public sector banks is already below 3% while banks like Central Bank of India and Oriental Bank of Commerce have margin of less than 2.5%. By repricing deposits and stopping lending below PLR, banks are expecting to maintain net interest margin and offset lower earnings on loans benchmarked to it.

It increases transaction costs. STT is responsible for more than 50% of the total transaction cost in the Indian stock market. For instance, a trade worth Rs 1 lakh, in which the investor takes delivery of the share, would attract about Rs 400 by way of various levies, including Rs 200 in STT. While Rs 200 would be paid by the seller, another Rs 200 would be paid by the buyer.
Apart from STT, stock market transactions attract stamp duty, transaction charges levied by stock exchanges, and a turnover tax accruing to Sebi. The brokerage fees and stamp duty are also subject to 10% service tax and education cess. Put together, the brokerage and taxes mean bearing Rs 600 per lakh in transaction costs.
It is a regressive tax on turnover and hence artificially subdues turnovers in the stock markets.
It is not levied anywhere in the world.
The government had collected Rs 5,408 crore as STT in 2008-09.
If revnue mobilization is the idea, the government should look at capital gains tax rather than such taxes on turnovers.

Personality: Sheetal Mafatlal

BUSINESSWOMAN Sheetal Mafatlal and the wife of industrialist Atulya Mafatlal, was on Monday remanded in judicial custody till June 12 after she was arrested for allegedly trying to evade duty by not declaring Rs 51 lakh worth of jewellery.
Ms Mafatlal, a prominent socialite and the president of Mafatlal Luxury who was arrested at the airport on Sunday on her return from London.
She had reportedly not declared goods and walked through the green channel.

Obituary: Rajeev Motwani

This India-born computer scientist and Stanford University professor has died in a freak accident by drowning in a swimming pool in his own backyard.
Mr Motwani’s biggest contribution to the Silicon valley was perhaps the mentoring of Google founders Sergey Brin and Larry Page.
Mr Motwani who was born in Jammu, graduated in computer science from the Indian Institute of Technology (IIT), Kanpur in 1983, before doing his PhD from the University of California, Berkeley in 1988.

Language lessons

Indian Current Affairs