Politics & the Nation
  • Dharavi is no longer Asia's biggest slum
    • The credit appears to have been taken over by Karachi's Orangi Township. This is according to the human development report for Mumbai, compiled with the help of UNDP and released by the Brihanmumbai Municipal Corporation.
    • Mexico City’s Neza-Chalco-Itza Barrio has four times as many people as Dharavi, it said.
    • Dharavi is spread across 175 hectares.
Finance & Economy
  • Nokia to push email service even on mid-end handsets
    • NOKIA, the world’s largest mobile phone vendor, is planning to commercialise its push email service — Nokia Messaging — in India by December.
    • The move has already raked up high-decibel interest in the domestic telecom market, as Nokia gears up to topple Canadian smartphone maker Research In M o t i o n ’s (RIM) dominance in push email with Black-Berry services.
    • Nokia’s push email service is now available on more than 20 Nokia smartphones which run on the Symbain S60 platform. This includes the E Series handsets, 5800 XpressMusic, N97 and N86, among others. However, the company has plans to enable Nokia Messaging even on the mid-end handsets which run on the S40 operating system.
  • UMPPs to find fuel on their own
    • Coal linkage policy for Ultra Mega Power Projects (UMPPs) is under revision. They are likely to be asked to find their own sources of coal i.e., through imports. The government is not likely to give them any assurance of coal supplies from domestic sources as they have to be preserved for small and medium plants. Some interesting facts/developments in this regard:
    • An ultra mega project requires 15-16 MT coal per annum. In contrast, a standalone power project doesn’t need even 10 MT a year.
    • The country has coal reserves of about 250 billion tonnes, sufficient to meet only a few decades of requirements at current levels of consumption.
    • Power ministry fears if several UMPPs are allowed to be based on domestic coal, providing the fuel to even existing power plants may become difficult.
    • Policymakers feel small and medium plants would not be economical if they were to rely on imported coal. But large plants can manage.
    • Four UMPPs have been awarded so far, two based on local coal and two on imported coal.
  • After the financial metldwon, the global economy and its financial under-pinning have changed in fundamental ways. As far as India is concerned, what are these changes? Explain.
    • First, and foremost, the crisis has brought us down to earth. The irrational exuberance that saw the sensex zoom past the 21,000 mark (intra-day) and had starryeyed observers see double-digit GDP growth as the new Sardar rate of growth has been replaced by a welcome sobriety.
    • From the highs of 9% GDP growth we are now down to 6% or thereabouts. And though there is no doubt growth will improve in tandem with global recovery, there is now much greater realisation that if high growth is to be sustained, we need to do more. Trickle-down will not work. We will have to pay more attention to long-neglected areas like infrastructure, physical and social, agriculture, governance and so on.
    • Second, it has brought home the importance of fiscal discipline. Good times are meant for governments to build nest eggs so that they have the fiscal space needed to embark on counter-cyclical policies in bad times. In a crunch when private spending dries up, governments have to step into the breach. This means governments like Chile (which saved the equivalent of 12% of GDP in a special fund during the boom) are on a much stronger wicket than India where the government used higher tax revenues in good years to boost (wasteful) spending. Hopefully, we’ve learned our lesson; even if is the hard way.
    • Third, while the dominance of fiscal policy over monetary policy will continue (and is, perhaps, inevitable in an elected democracy that has so many poor people), the moral authority of the Reserve Bank of India (RBI) has been strengthened. There is a subtle shift in the tide of opinion, at least among the cognoscenti, away from government towards the RBI.
    • After all, even its worst enemies will find it hard to fault a central bank under whose watch not a single bank has collapsed (contrast this with the US where close to 100 banks have gone under). So unlike in the past, when the finance ministry was seen as reform-oriented and the RBI as the spoiler, there is empathy for the latter’s concerns.
    • Fourth, asset-price inflation and macro-prudential supervision (jargon for monitoring the health of the financial system), long regarded as infra-dig in the esoteric world of central banking, have acquired a new respectability. Inflation targeting, especially targeting of commodity price inflation, however measured, is clearly out. Like many ideas in economics — the Tobin tax being the latest example — it might make a comeback. But for now, multi-tasking central banks with multiple objectives in the mould of the RBI have become the favoured model.
    • Fifth, while exports will continue to be encouraged, some of the lustre attached to the export-driven growth model of the Asian tigers and China has faded. If the 1997-98 crises had cast doubt on the invincibility of the export-driven model of growth, the present crisis has shown up its shortcomings more tellingly. As global markets capsised and export demand in western markets shrank, China’s excessive dependence on exports became a liability rather than an asset while our large domestic market turned out to be our trump card.
    • The last, and no less important, change as far as India is concerned is in the international arena. To the extent the crisis has focused minds everywhere on global imbalances and related reform of multi-lateral institutions, the G20, with India a key member of the grouping, has at last found its place in the sun. Long-pending issues that had been discussed only desultorily in the past have acquired a new prominence and urgency.
  • See how ephemeral can reputations be!
    • Now peans are being sung for the Fed chief Ben Bernanke. It was as little as three years ago that he was lampooned as "Helicopter Ben", because he was a chief advocate of ‘easy money’ in the Greenspan led Fed. He is reported to have been in favour of even throwing cash from helicopters to boost spending.
    • That was then. Now economists are giving him credit for acting with speed in containing the financial contagion.
    • How long will this last? Ans: Till the next sign of trouble.
  • 5 more US banks shut shop
    • Five more US banks shut down on September 4, pushing the total failures to a whopping 89 entities so far this year.The count of collapses is more than three-fold that of 2008, when 25 banks went out of business in wake of the raging financial meltdown. Bank failures are mounting even as the economy is showing tentative signs of recovery slowly.
  • What did the Delhi meet of WTO members achieve?
    • In the context of comments that it did not achieve anything or that it only showcased the entrenched divergences in opinion or that it has failed to narrow down the differences, it would be interesting to look at the support it has got.
    • The Delhi meet was never intended to discuss, let alone resolve, specific issues. It was meant to energise a round of trade talks that had gone in to a limbo and at one stage looked dangerously close to staying that way. The Delhi meet has changed all that. It rekindled interest in the multilateral process at a time when protectionist tendencies are on the rise and free trade agreements are proliferating by the day.
Language Lessons
  • spiel
    • Noun: Plausible glib talk (especially useful to a salesperson)
    • Verb: Replay (as a melody); Speak at great length (about something)
    • eg: Yet all Obama’s spin doctors have done is to cleverly adopt the same principle that makes advertisers pitch their buying spiel to kids (in the hope that they will persuade their parents to buy the product) just when their boss has hit the first set of Capitol Hill’s famed speedbreakers, if indeed that is the motive.
  • dodo: Noun
    • Someone whose style is out of fashion; Extinct heavy flightless bird of Mauritius related to pigeons
    • eg: ...that the days of physical formats and high pricing are as dead as the dodo.