Politics & the Nation
  • An excellent critique on the Right to Education Act
    • Wasn't it just a couple of days ago that we noted about the Right to Education? If you are asked to critique it, would your critique be this informative and balanced?
    • This is why editorials in newspapers -- especially the one's like ET -- are a must for all of us.
Finance & Economy
  • Foreign investment law in the works
    • The government is working on a proposal to introduce a new legislation on foreign investment, which aims to remove the distinction between various categories of overseas capital. The move would ensure stability in policy and help Indian firms attract long-term capital.
    • The new Foreign Direct Investment Act would seek to remove the distinction between various categories of overseas fund flows such as portfolio investment, venture capital, private equity and direct investment. Rules on external investment in Indian companies make a distinction between portfolio investment, in which an investor buys shares of a company from the secondary market, and foreign direct investment (FDI), in which the investor normally acquires a relatively larger holding directly.
    • The new legislation would remove all confusion and provide stability in terms of policy.
    • An expert committee on foreign institutional investment (FII) had recommended in 2004 that foreign portfolio flows into a company should be separated from foreign direct investment (FDI) flows for policy purposes. FDI is categorised as the type of investment which results in ownership of 10% or more in a company and is relatively more enduring.
    • In portfolio investment, investors can exit more freely, through the stock exchanges. The RBI has consistently been of the view that in the hierarchy of preferred capital flows, FDI ought to be at the top. The current policy is largely ad hoc. It is governed by several rules that are changed through socalled “Press Notes” issued from time to time by the Department of Industrial Policy and Promotion (DIPP) and FIPB.
    • It is interesting to note that the Press Notes issued by the DIPP appear to have no legal sanctity since changes to guidelines on foreign investment require changes to FEMA rules, which rarely gets done. Therefore, there is frequently considerable confusion regarding interpretation of policy on foreign investment between different government departments. This is what the proposed legislation seeks to address.
  • What are the reasons for Indian Railway's stellar performance during the last few years?
    • Indian Railways today is one of the world’s largest state-owned enterprises with around 1.4 million employees, over 63,000 km of network, running around 13,000 trains each day. (Remember the corrections about IR's size in our shoutbox? This is from today's op-ed piece on the subject.)
    • In 2001, an expert group on IR headed by Rakesh Mohan almost predicted the railways’ demise: “IR is today on the verge of a financial crisis. To put it bluntly, in 16 years’ time, the government of India will be saddled with an additional liability of Rs 61,000 crore. On a pure operating level, IR is in a terminal debt trap”. Seven years later, IR delivers Rs 24,000 crore of cash surplus.
    • The credit for this turnaround goes to the stewardship of Sudhir Kumar, who was deputed to IR as an officer on special duty.
    • Sudhir decided to milk IR’s assets harder and harder. Sudhir and his team were clear that at a conceptual level the three key drivers for them were “faster”, “heavier” and “longer” trains whereas at an emotional level the three key words are “innovation”, “compassion” and “partnerships”. Compassion is what is most notable in Sudhir’s strategy — compassion means that your strategy does not create any losers. Railway’s services are meant for everybody; you can’t earn profit at the cost of the common man. He actually reduced the pricing up to 18% for various categories of seats but he played the scale game and focused on building the freight volumes to reduce unit cost, reduced the turn around time of wagons from seven to five day, upgraded the existing infrastructure for higher operating efficiency.
  • Online credit card set to see a dip?
    • This is because only 20-30% of online credit card users have signed up for the second personal identification number (PIN).
    • RBI had asked banks to implement two factor authentication to ensure safe and secure online transactions from August 1.
    • Interestingly, the number of active, online credit cards users is estimated at 4-5 million, out of 30 million credit card customers in India. According to industry estimates, only 7-15% of a bank’s customer base sign up for net banking. Of these registered customers, 30-40% use net banking frequently.
    • According to a study conducted by RSA, major Indian banks lost funds worth Rs 36.5 crore on account of fraudulent transactions and 13,000 such cases were filed in India.
  • Is the US dollar set to lose its primacy?
    • 'No' says one of our favourite authors in today's ET op-ed. Though I would respect his views on the subject very well, I can't agree with him on this subject. I have held consistently that the dollar's demise is an eventuality that is bound to happen. Whether that time is 'NOW' or sometime in the future and if in future -- when that 'future' is going to be could be anybody's guess. Something like a couple of years is my guess.
    • Bets apart, majority of us in the meantime can get a feel of how he bases his views on the very same set of facts to come to a different conclusion than mine. Take a look.
Language lessons
  • accoutrement or accouterment: Noun
    • Clothing that is worn or carried, but not part of your main clothing
  • nouveau: Adjective
    • In accord with the most fashionable ideas or style
  • cat's-paw: Noun
    • A person used by another to gain an end; A hitch in the middle of rope that has two eyes into which tackle can be hooked
  • moggy: Noun
    • Cat (informal use in Britain)
  • cat's whiskers: Noun
    • Something that is outstanding
    • synonyms: bee's knees; cat's meow; cat's pyzamas

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