19.11.2009

Politics & the Nation

• What's the issue about sugar pricing that is set to rock the Parliament session this time?
• The Sugarcane (Control) Amendment Order, 2009 issed by the government has replaced the statutory minimum price (SMP) with a fair and remunerative price (F&RP), and made it imperative for state governments which have announced a state advisory price (SAP) for sugarcane to bear the burden caused by the difference between the F&RP and the SAP.
• The order is being seen by state governments and farmers' associations as being loaded in favour of the mill-owners, which will only have to pay the F&RP. The SAP has always been more that the SMP by up to 20-50%. The move has brought the cane-growers, especially in UP, on the warpath.
• Hoping to cash in on their anger, Opposition parties have made common cause with a section of the ruling alliance to corner the Manmohan Singh government in the two Houses of Parliament during the winter session. The entire Opposition bloc, as also parties such as SP, BSP and RJD, which extend outside support to the ruling alliance, have declared their plans of opposing the order, trashing it as being "anti-poor and anti-farmer".
• On the merits and demerits of curtailing the role of Competition Commission of India
• Look at this editorial on the subject. It gives a nuanced view of the role of the CCI and that of the sectoral regulators and explains why it would be a bad idea to prohibit the CCI from looking into certain sectors.

Finance & Economy

• Government to auction ECB entitlements?
• If news reports are to be believed this is set to happen sooner than we think.
• The government is reportedly finalising plans to auction corporate entitlements to borrow abroad, a pre-emptive move relaying the message that the country is determined not to allow unruly capital inflows to disrupt the incipient economic recovery.
• Inflows in the first few months of the current fiscal are close to the levels seen in 2007-08. Portfolio inflows have crossed $16 billion since January, as against $20 billion in the whole of 2007. Foreign direct investment between April and September this year was $17.74 billion while FDI in 2007-08 was $35.2 billion.
• Under current ECB rules, Indian companies can access foreign funds on a first-come-first-serve basis within an overall limit set by the government and RBI. Companies can borrow overseas at an average rate, including currency hedging costs, of around 9-10%, which is still lower than the cost here. There are no policy restrictions on the rate at which they can borrow.
• ECB approvals for April-September 2009 totaled $7.1 billion as against $10.2 billion in the year-ago period.
• Among the options that the finance ministry is considering for the ECB auction is splitting of the $32 billion overall limit for the current year into parcels for sectors such as infrastructure, power and manufacturing.
• Capital conundrum
• Take a look at this graphic which presents the challenges posed by increased capital inflows into the country. A good one.
• Excerpts of the excellent trends about Asia pointed out by Janmejaya Sinha in his op-ed piece in today's ET.
• By 2013, the EU, Asia and the US will be equal-sized economic blocks contributing roughly 25% of global GDP. In contrast, in 2000, EU formed 32%, the US 28% and Asia 20% of global GDP. By 2020, China, Japan and India will be with the US and Germany at the top five economies of the world. Together, the three Asian countries will form 27% of global GDP.
• Today, 5% of the world's consumers — or, the US population — provide $10 trillion of global consumption. All of Asia, with about 45% of the world's population, adds up to only $7 trillion. But by 2020, Asia will consume $21 trillion of global produce, 140% of the US at that time, which will be consuming $15 trillion.
• Asia's average age will rise from 29 to 32 in the next 10 years while it will go from 40 to 43 in Europe and 37 to 38 in the US.
• There have always been strong companies in Asia, even today, if you sort through billion-dollar-revenue companies globally and correct them for double holding of some groups, you find about 12,500 companies of which 3,500 are from Asia.
• If you look at trade patterns, over time the share of inter-Asian trade has risen from 31% in 1990 to 45% in 2008. This is a very large number already and will grow even further in the coming years.
• What should Asia as a collective do?
• There is a need for a new idea of Asia: one that is less jingoistic, with a better understanding of common purpose and with some statesmanship from the bigger countries. China, Japan and India will need to show a leadership that will have to at least acknowledge that their power might be frightening to their neighbours. A new paradigm will need to be evolved in how they deal with each other. A common vocabulary developed to discuss issues on which there is a large agreement and a rhetoric that is less threatening and more cooperative on issues on which there is less agreement. This is going to be a long journey given the national trade-offs between liberty and economic progress that have been made in different countries and which are now institutionalised.
• Governance code for unlisted companies too?
• The government is all set to introduce a governance code for unlisted companies on the lines of the one for listed firms to encourage more companies to register on the stock exchanges.
• Elaborate disclosures and compliance with governance code is seen as one big reason why many companies do not want to raise public funds and list on exchanges.
• The proposed Companies Bill, 2009, (now pending with the parliamentary standing committee), may see unlisted entities being asked to follow specific norms of governance, similar to market regulator Sebi’s code on corporate governance for listed companies,
• Data shared by the ministry showed that out of over 7 lakh companies in the country, only 6,000 are listed on the NSE and/or the BSE.

Environment

• What is India's contribution to ensure that Copenhagen summit on climate change succeeds?
• While acknowledging that India could be a big polluter considering its large population and growing economy, New Delhi has said that it would ensure that its per capita emissions will never exceed that of developed countries.
• India's per capita emissions are now around 1.2 tonnes of CO2 equivalent and are expected to be around 2 to 2.5 tonnes by 2020 and 3 to 3.5 tonnes by 2030. The per capita limit is an onerous limit that India has imposed on itself.
• Further it said it is willing to submit a national communication on climate change actions and their impact on emissions every two years. India has suggested that the national communication could be used as a basis for international consultations.
• India has also unveiled tough new air quality norms. It announced that industrial and residential areas will no more have two different standards and put in place uniform norms in a major move to combat air pollution.
• The revised guidelines have added five more hazardous chemicals in the list of the National Ambient Air Quality Standards for monitoring. They are ozone, arsenic, nickel, benzene and benzo(a)pyrene.
• While indicating that it was willing to be "part of a solution", New Delhi has reiterated that developed countries will have to take on binding targets.

International

• With news like this coming in, will you be working for Goldman Sachs and the like?
• This question may seem oddly timed for many of us, because working for such behemoths is a dream come true not just for lesser mortals (read... those from non-IIT and non-IIM backgrounds) but even for Gods (read... those from IITs and IIMs.) But a time may perhaps come when working for the big consultants may prove to be a liability!!

Language lessons

• snide: Adjective
• Expressive of contempt
• eg: But consider two facts to remove all snide laughter from a debate on Hindi’s future: one, ...
• dawdle: Verb
• Take one's time; proceed slowly; waste time; Hang (back) or fall (behind) in movement, progress, development, etc.
• eg: The government behaves as if third-generation (3G) telecom services are an indulgence for the public and a revenue source for itself. Why else would it dawdle on 3G licences the way it has been?
• desultory: Adjective
• Marked by lack of definite plan or regularity or purpose; jumping from one thing to another
• eg: In India, DD has a desultory plan to go digital by 2017...
• wino: Noun
• A chronic drinker