Indian Current Affairs: 02.12.2009

Politics & the Nation

The Indian Army’s image took a big hit because of the revelations that a section of its top brass was involved in a massive scam involving the transfer of 71 acres of cantonment land at Sukna in Darjeeling to a real estate developer.
The Court of Inquiry (CoI) into the Darjeeling land scam case has laid bare the nexus between a Siliguri-based real estate developer and one of the seniormost generals in the Army, who came together draft a dubious Memorandum of Understanding (MoU) to clinch the land deal.
The CoI has established through phone records that the real estate developer Dilip Agarwal, who inked the MoU to obtain No Objection Certificates from the Army for 71 acres near the 33 Corps HQ in Sukna Cantonment, was in constant touch with Lt Gen Avadhesh Prakash, Military Secretary (MS) at Army HQ, while the deal was being sealed.

Finance & Economy

Vodafone, Hindustan Unilever, Bharti Airtel, Nokia and PepsiCo are India’s ‘Most Admired Marketers’, best in the marketing class of India Inc 2009. The top-flight marketing companies are India Inc’s most admired, thanks to marketing and strategy innovation, million-dollar ad budgets and some of the finest marketing executives in the business.
In deciding on the most admired marketers, IMRB surveyed 550 senior marketing and advertising executives across Mumbai, Delhi, Kolkata, Chennai, Bangalore and Hyderabad on five parameters — innovation, quick response, 360-degree media spread, visibility and effective usage of brand ambassadors.

Know the full name of Macaulay? That famous Britisher who codified Indian laws in 1860?

Thomas Babington Macaulay.
He is usually blamed for building a system that created slaves of the Britishers and clerks.
But it is the very same foundation that is laid by Macaulay that is proving to be a cash cow for the legal profession in India. Know about the LPO industry? The Legal Process Outsourcing industry?
The scope of LPO work includes reviewing and drafting legal contracts, reviewing claims, discovery procedures that complement litigation processes, and monitoring compliance by clients.
Legal costs run into $100 million per annum on an average for the Fortune 500 companies. In case of companies in sectors such as technology and pharmaceuticals that deal with intellectual property, these can be as much as $200 million. Outsourcing to Indian companies can reduce these costs by more than half, say experts.
The familiarity of the English legal systems gives an advantage to Indian companies in as much that they just don’t perform the clerical function given to them, but also end up doing more than what they are just paid for.

Today's ET editorial comments about the CII recommendation on corporate governance. Take look:
...it signals the right aspiration, even if it mostly regurgitates past recommendations for the most part. The taskforce comprises some venerable names in corporate governance, many who serve as independent directors on boards of the bluest-of-blue chip companies. So if they find little original to say, it shows the soundness of past work on the subject. And focuses attention on the eco-system that prevents the flowering of insight into a harvest of public good.

The Reserve Bank of India has laid down strict rules on the use of currency derivatives. In April 2007, the central bank issued guidelines stipulating that banks should sell derivatives only to investors who “understand the nature of the risks.’’
But during the market boom many companies were looking to boost profits and bought derivative contracts which initially helped them and banks charged fees on those transactions. Those bets went sour when the markets turned.
RBI has said that the total mark-to-market (MTM) losses due to currency movements was about Rs 31,719 crore for 22 banks, including foreign, and Indian companies at the end of 2008. The actual losses based on contracts which matured last year for 11 banks was Rs 755.45 crore.
The remaining MTM losses on the books of Indian firms may rise or fall and will be known when the contracts mature. The unrealised dues from the customers is primarily due to their failing to meet or disputing their obligations under the contracts.
The total notional principal amount outstanding in respect of derivative contracts including forward foreign exchange contracts was $1.6 trillion as on March 31, 2007 which grew to $ 2.4 trillion as on December 31, 2008.
Now the RBI has reportedly committed itself to punishing the banks and/or corporates if they have found to have violated any FEMA rules in these currency derivatives transactions.

International

Take a look at this piece that appeared in today's ET. The gist of the article is that it is the lenders who should be prepared to accept some losses. It does give us a peek into how the Gulf economies function.
BTW do you remember what we noted about Sukuk bonds way back on 22.11.2007? A full two years before we are shaken out of our slumber about them in today's article. We have noted then that the Sukuk bonds issued by the Gulf economies are not compliant with Islamic law. Islam doesn't permit usury or even earning interest on money that is lent. So the Gulf countries invented a contorted way of issuing bonds, which may appear to be Islam compliant; but in fact is not.

Language Lessons

A mild state of nausea; The trait of being excessively fastidious and easily shocked
eg: The defence services’ squeamishness about taking this step is strange considering Indian paramilitary forces already deploy them — all-women police contingents, for instance, have been sent for peacekeeping duties in foreign war zones — and Indian soldiers have been facing women fighters as part of their counterinsurgency missions ever since the Sri Lanka operations.

Decrease gradually or bit by bit
eg: In India, policymakers did not appear too concerned about the impact of Dubai’s troubles on the economy and the benchmark Sensex of the Bombay Stock Exchange pared early losses to close 1.2% lower.

A reply that has no relevance to what preceded it; A reply that has no relevance to what preceded it
eg: That is why a list of Outrageous CEOs compiled by Forbes naming former Satyam promoter Ramalinga Raju rather than Virgin boss Richard Branson would seem a non sequitur for some.

Indian Current Affairs