17.06.2009

Politics & the Nation

• Govt may join battle on KG gas to defend policy
• Remember our noting about the subject yesterday?
• With its natural gas policy having been thrown out of gear by the Mumbai High Court, the Government is likely to step in and do something about it. What could this 'do something' be?
• It can possibly implead itself in an appeal before the Supreme Court. Or it can step in and bring the two brothers to the negotiating table. If everything fails, it can even do a nationalization act though that would be viewed very negatively by the world.
• In view of the huge stakes involved for the Government -- reportedly about $9 bn as profit petroleum is at stake -- the Government naturally can't be expected to remain a mute spectator.
• Look at this graphic which gives details of the proposed gas utilization policy for the KG basin.

Finance & Economy

• CFC regulations to be brought in this year's budget?
• If news reports are anything to go by, this is about to happen.
• You might remember that the US and a few other advanced countries have brought in legislations to tax income earned by their corporates abroad in tax free jurisdictions. This is a problem which India has been facing for long; but had to keep quiet for various reasons. Now that there are global moves against such tax avoidance practices, it is time India also joins the bandwagon.
• CFC stands for 'controlled foreign company' here.
• Cross-border M&A deals were brought under the capital gains tax net last year, after the government woke up to the possibility of a tax revenue goldmine when British mobile giant Vodafone bought a controlling stake in India’s Hutchison Essar for nearly $11 billion.
• The present move, if it materializes, will be a logical follow up on the above move.
• Is there a case for de-nationalizing coal mining?
• We say 'de-nationalizing' because coal mining in India is largely in the hands of Coal India Limited, tbe public sector behemoth. Barring the provision for captive mining for cement, steel and power producers all the mining is done under the aegis of CIL. What's wrong with it? What constraints is the country facing because of this? What possible alternatives can you offer for overcoming these constraints?
• To know answers for questions like these, today's ET editorial piece is a must read. Recommend a read.
• Why is extending NREGA to urban areas a bad idea?
• Writing about what the FM should be concentrating on the ensuing budget, SSA Aiyar gives a very good analysis that answers the above question:
• Congress analysts think the National Rural Employment Guarantee Act (NREGA) helped win them the election, and so want to extend employment guarantees to urban areas. The analogy is mistaken. Rural areas have labour shortage at sowing and harvest time, but slack employment in between. So supplementary employment schemes in the lean season make sense. Many rural assets can be built mainly with labour — land levelling, bunding, water harvesting, even rural homes. So, labour-intensive works in rural areas can produce durable assets.
• But not in urban areas.
• First, city wages are frequently higher than the minimum wage, so urban projects can get stranded by fragmented or zero labour demand.
• Second, urban work is not seasonal, and it is neither desirable nor feasible for government programmes to provide roundthe-year work.
• Finally, urban assets cannot be created through labour-intensive means — even a simple wall entails only 35-40% labour cost, the rest being material cost.
• So, for the urban poor, Mukherjee should focus on expanding infrastructure, and removing hindrances faced by self-employed folk like hawkers and cycle-rickshaw operators.

Global warming

• Let's stop being scared silly of global warming; writes Bjorn Lomborg
• He is one good writer on global warming whose writings we excerpt quite often. Writing about the captioned subject, he says that exaggeration on the warning front wears out public willingness to tackle global warming. An excerpt:
• If the planet is doomed, people wonder, why do anything? A record 54% of US voters now believe the news media make global warming appear worse than it really is. A majority of people now believes — incorrectly — that global warming is not even caused by humans. In the UK, 40% believe that global warming is exaggerated and 60% doubt that it is man-made.

Language lessons

• gird (up) your loins: idiomatic expression
• to prepare yourself mentally to do something difficult
• This phrase comes from the Bible, where girding up your loins meant to tie up long, loose clothes so that they were more practical when you were working or travelling.