18.11.2009

Politics & the Nation

• On the Bangalore principles of judicial conduct
• In the context of a few Supreme Court judges recusing themselves from hearing the dispute between Reliance brothers, the principles governing the conduct of Judges have come into focus again. There are two such broad principles / statements adopted by the judiciary -- worldwide and also in India.
• The Bangalore principles of judicial conduct are the UN-sponsored judicial code formulated to establish standards for ethical conduct of judges. Adopted in 2002 by judges from across the world including Inida are based on a celebrated 19th century English judgement Dimes vs Proprietors of Grand Junction Canal, where a decision of Britain’s judge was set aside on discovery that the judge had substantial shareholding in the canal company. In this case, the court went beyond the principle, “No man could be a judge in his own cause,” and concluded that the said principle is not confined to a cause in which the judge is a party, but applies to a cause in which the judge has an interest.
• There is another set of principles adopted by Judges in India: the 1997 ‘Restatement of Judicial Values’ which are statements based on the Doctrine of Necessity. The said doctrine repositions law in relation to the state and society, providing for standards external to law to judge its adequacy.
• In this context, take a look at the pendency of court cases in India:
• As of June 2009, 52,000 cases are in the Supreme Court (24 judges and seven vacancies), almost 4,00,000 cases in high courts (652 judges and 234 vacancies) and a whopping over 2.5 million cases in subordinate courts (13,723 judges and 2,998 vacancies). The ratio of judges is as low as 12 per million, compared to 107 in the US, 75 in Canada and 51 in the UK.

Finance & Economy

• The power of South in the film industry
• Films made in the four southern languages—Tamil, Telugu, Kannada and Malayalam— accounted for more than three-fourths of the country’s total revenues from film content in 2008-09, generating more than Rs 1,700 crore.
• Out of the Rs 1,700-crore revenues in FY09, Rs 1,300 came from domestic theatrical collections. The region accounts for more than half the total operational screens in India.
• Also, more than 35% of the films produced and certified by the censor board never get released because the product may not be up to the mark or for lack of distributors interested in the same.
• RBI trains guns on structured debt
• So reads a report's heading. In this context the following Q&A on that is enlightening:
• What is structured debt?
• Debt that the lender has tailored specifically for the borrower. Structured debt often includes incentives and options for the borrower to do business with the lender. The most common among these structured debts was equity-linked debentures (ELDs)
• The most common among these structured debts was equitylinked debentures (ELDs), which were aggressively sold by securities arms of foreign and private banks and foreign NBFCs. A comparatively new debt instrument in the Indian financial market, ELDs came in two types: (a) principal protected, where the principal amount is fixed while the interest component is variable and linked to stock market movements; (b) the more risky variant is the nonprincipal protected instruments where the even the principal is linked to the market.
• How big is this market?
• Over Rs 15,000 crore of such structured debts are outstanding in the market.
• Why is RBI interested in regulating it?
• RBI may be uncomfortable with instruments that investors may not fully understand and end up losing money. RBI may also want to curb the back-to-back transactions that happen in offshore markets against these issuances.
• 'Safe harbour' rules.
• You might remember that the finance minister had announced in the budget that the Central Board of Direct Taxes (CBDT) would come with "safe harbour" rules which would reduce impact of judgmental errors in determining transfer price in international transactions.
• A recap of the concepts and progress in this regard:
• 'Safe harbour' and 'Trnasfer pricing' are closely interconnected.
• A 'safe harbour' would essentially mean circumstances in which the Indian revenue authorities shall accept the transfer pricing declared by the taxpayer. Transfer pricing provisions in general require income arising from an international transaction between two or more related organisations to be calculated at an arm's length price or at a price comparable to similar transactions between unrelated parties.
• Introduction of the safe harbour rules is expected to improve the foreign investment climate by providing clarity on tax liability and simplicity in tax administration.
• India had introduced transfer pricing norms in 2001 but complexity has resulted in an increase in litigation in such tax cases. Industry bodies such as CII, FICCI and Nasscom had in past asked the government to introduce safe harbour principles, advance pricing arrangements to provide certainty to already present MNCs and new investors.
• Provision of safe harbours for noncore services is common practice in some advanced countries like United States and Australia as well as some emerging economies like Brazil, Mexico, and in some form, even in China.

International

• Know about the Michelin guide?
• Michelin, the world’s largest tyremaker, has been publishing its restaurant and hotel guide since 1900. Distributed for free until 1920, the guide was originally meant for chauffeurs and included tips on using and repairing tyres. One star indicates a very good restaurant, two means excellent cuisine worthy of a detour, while three denotes exceptional cuisine.
• The Michelin Guide gave top billing to 11 restaurants in Tokyo, vaulting the Japanese Capital over Paris as the city with the most three-star eateries.
• Paris, home of the Michelin Guide, has 10 three-star restaurants. Tokyo has a total of 261 stars, more than any of the cities Michelin covers in 23 nations. New York has four three-star restaurants.

Language lessons

• factotum: Noun
• A servant employed to do a variety of jobs
• impudent: Adjective
• Marked by casual disrespect; Improperly forward or bold
• eg: He has a certain impudent charm as he actively seeks out debate.
• bedrock: Noun
• Principles from which other truths can be derived
• eg: An independent and impartial judiciary of undisputed integrity is akin to a bedrock institution ensuring compliance with democracy and the rule of law.
• umbrage: Noun
• A feeling of anger caused by being offended