Indian Current Affairs: 25.06.2009

Politics & the Nation

QUOTE: Air India is estimated to have lost about Rs 5,000 crore in 2008-09 and has a working capital overdraft of Rs 15,000 crore. As per a ministry official, fuel and manpower cost of Air India is about 60% of its total cost as against 45% in case of private airlines.
The company last week deferred the June salary of its 31,000 staff and asked its top managers to forego July salary. The airline employee unions have threatened to not cooperate with the management if salaries are not paid on time.
“If the employees go on strike they would hasten their own demise,” Mr Patel warned. UNQUOTE.
What a sea-change in attitudes! Things which were unthinkable or unimaginable are being uttered! The global financial crisis, the Satyam episode etc., appear to have tilted the mood in favour of government holding its firm ground when threatened with strikes and pen-downs.

Finance & Economy

The government is likely to spell out that Indian Depository Receipts (IDR) would be treated on par with listed securities in the country, a move that will clear the air on the taxation of this instrument which is yet to takeoff since its launch in 2004.
This would mean that IDRs would be subject to the securities transaction tax (STT) but would be exempt from long-term capital gains tax.
IDRs are derivative instruments like global depository receipts (GDRs) and American depository receipts (ADRs) that have shares as the underlying asset. Indian companies raise capital overseas through ADRs and GDRs. The IDRs would allow foreign companies to raise capital in India. Like any other depository receipts, IDRs are negotiable financial instruments, issued by a local depository against the shares of the foreign company’s publiclytraded securities held by it.

Before you go proffering for your take on this question, it is important you realize that one should have a special ability to look at the big picture before drawing any conclusions.
Today's article from one of our favourite columnists is one such piece that displays that ability of looking at the big picture. A must read. Do so here.

Finally, the meteorological department has changed its mind on the rains and it says that this year’s south-west monsoon would be below normal for the country as a whole — the first time in four years — and not normal as forecast earlier. The silver lining is that there is little chance of a drought, with rains in July-August expected to make up for the initial deficit in the North West, the main grain-growing regions of Punjab and Haryana.

But the delay in monsoons has reportedly taken a toll on pepper and cardamom production already.

In many ways, Indian Railways, with an exclusive budget of over Rs 37,000 crore, is an economy in itself. Every day, its 18,000 trains carry 18 million people — nearly the entire population of Sri Lanka — across the length and breadth of the world’s seventh largest country by geographical area.

Don't write this off as one more complicated financial news item that is beyond our comprehension. It is a very significant move being made by the RBI.
In all forex forward contracts the CCIL (Clearing Corporation of India Limited) acts as guarantor for two days before the expiry of a contract. But now the RBI is reportedly toying with the idea of mandating the CCIL to act as guarantor for any deal for the entire period of the deal.
How is this significant?

Banks currently have to set aside a slice of their capital on account of the gross exposure to currency forwards. The capital that has to be earmarked for the purpose depends on the tenor of the forward contract and possible mark-to-market gains or losses, a figure that could vary from bank to bank.
Once CCIL stands as gurantor to a deal, there is virtually no default risk. Hence the market participants need not set aside huge capital. That frees up capital for other lending purposes.
As per RBI data, 72 banks are members for forex settlement operations and the outstanding amount for forex forwards is more than $500 billion. The market has a daily turnover of $15-20 billion.

Astronomy

That's the day when we will be experiencing the longest solar eclipse of the 21st century. It will be a total eclipse of the Sun with a magnitude of 1.080 and will not be surpassed in duration until June 13, 2132.
It will last for up to 6 minutes and 39 seconds, with the maximum eclipse occurring in the ocean at 02:35:21 UTC about 100 km south of the Bonin Islands, southeast of Japan.

Archaeology

Archaeologists in Cyprus have found what they believe are some of the world’s oldest water wells, dating from the Stone Age 10,500 years ago and containing the skeleton of a young woman. The wells, unearthed by an excavator at a building site close to the western coastal town of Paphos, adds to another five previously excavated in the region by a team from the University of Edin-burgh.

Indian Current Affairs