Indian Current Affairs: 14.12.2009

Politics & the Nation

As many as 50 members of Rajya Sabha have signed a petition seeking his impeachment. It is likely to be submitted to the chairman of the House Mohammad Hamid Ansari this week.
The signatures of at least 50 Rajya Sabha members or 100 Lok Sabha members is the first step in initiating an impeachment procedure, a power which only Parliament wields for removing a judge. A committee is then set up for further consideration of the petition, as it has been done in the case of Justice Soumitra Sen of the Calcutta High Court. As many as 58 Rajya Sabha MPs had signed a petition in February this year seeking his impeachment.
A resolution of impeachment would require the support of twothirds of the members present and voting in each House of Parliament. Once it is adopted, the President has to order the judge’s removal.
The main allegations against him are about acquiring disproportionate wealth and playing a key role in helping the Reddy brothers in “illegal mining”.

This is a very good editorial on malnutrition that afflicts our country. Recommend a strong read. Some stats:
Almost half (48%) of children under the age of five are stunted, or too short for their age, and 43% are underweight, according to the National Family Health Survey of 2005-06 (NFHS-3).
In some states, use of anganwadi services (where present) were an abysmal 12% (Delhi), and in the best case scenario, 66% (Orissa and Chhattisgarh). Overall, only 33% of the children under six received any service from the anganwadi centres.

Finance & Economy

The Reserve Bank of India, it’s learnt, will come out with a new rule for such investment companies that are largely outside the regulator’s radar. The central bank’s concern stems from the disproportionately high fund-raising by these companies with shallow capital base.
Under current regulations, corporate investment firms holding strategic stakes of various group companies are not required to toe the stringent norms that finance companies like leasing and hirepurchase and loan companies have to follow. Today, these companies, whose 90% or more assets comprise group companies’ shares, get automatic exemptions from the prudential norms. But in future, investment firms that have overleveraged themselves may not be eligible for such regulatory exemptions.

One instance of overleveraging is when a holding or investment company pledges the shares of a group company to borrow from a bank or a non-banking finance company and, then, invests the money to fund another group entity. In the second stage, the shares of the newlycapitalised entity is pledged for fresh borrowings that would fund yet another company. The holding company can do this as long as it pays interest on the loans and maintains margins with the lenders.

And what it meant for India Inc., the auditing profession, the promoters, the stock holders and customers. Look at this well-written piece.

International

All of you know that Dubai is in a deep debt crisis. Dubai World, a government owned company, rocked global markets on Nov. 25 when it asked creditors for a standstill on $26 billion in debt mainly linked to its two property firms, Nakheel and Limitless World.
Abu Dhabi, the largest member of the United Arab Emirates and with most of the oil resources, had long been seen as a white knight for its heavily leveraged neighbour, Dubai.
True to this observation, it had announced a $10 bn bailout for Dubai just today to last its troubled flagship company until the end of April.
What are the implications for India?
Being one of the largest trading partners of Dubai, India’s trade of some $20 billion per annum, including re-exports, could be at considerable risk if the uncertainty over the economic future of Dubai is not quickly resolved. In addition, the likely reduced level of economic activity is certain to lead to unemployment and repatriation of at least some of the half a million NRIs employed in the country, thus putting to risk about a tenth or more of the annual $50 billion worth of workers’ remittances to India. Moreover, at least $1 billion worth of investments of Indian companies in several business ventures in Dubai, especially in the real estate sector, would need to be marked down if the crisis remains unresolved for long.

What should be the focus of senior negotiators who meet in the middle of December to draw a roadmap for concluding the Doha Round in 2010?

In a riveting article TS Vishwanath identifies the following 5 broad points. For details on each, please read this op-ed article by him in today's ET.
First, it would be important for all member-countries to bring on the table some achievable targets.
Second, there is a need to focus on areas that have so far been relegated to the background.
Third, it is important to ensure that while trimming the agenda, there is enough on the plate for everyone and it doesn’t end up becoming a lopsided deal that does not pass muster.
Fourth, there must be a conscious effort to steer clear of topics that do not fall within the ambit of trade negotiations such as climate change.
Finally, for the WTO to remain relevant, it has to remain membership-driven.

Obituary

This Nobel Prizewinning economist and author of the best-selling economics textbook in history, died on Sunday at his home in Belmont, Massachusetts. He was 94.
Samuelson was a dominating figure in the economics profession in the US from the late 1930s through the 1960s. His textbook 'Economics' introduced generations of undergraduates to the subject, while his 'Foundations of Economic Analysis' moved economics a long way from the literary exercise it once was to the scientific and mathematical discipline it has become.
He was the first American to receive the Nobel Prize in economics, winning it in 1970 for “raising the level of analysis in economic science”.
Samuelson began teaching at MIT in 1940 and became a full professor six years later. Three of his graduate students, Lawrence Klein, George Akerloff, and Joseph Stiglitz, went on to win Nobel Prizes.

Language Lessons

To increase the costs, risks, or considerations involved in taking an action or reaching a conclusion
eg: Even as the Opposition has upped the ante and organised the required numbers in the Lok Sabha for moving a motion for the impeachment of Karnataka High Court chief justice PD Dinakaran, Congress is persisting with a diplomatic silence.

A commercial principle that without a warranty the buyer takes upon himself the risk of quality
eg: Caveat emptor is the rule whether in the matter of loans or credit cards, stock market investment or buying an insurance or pension product. If a borrower does not understand a product, she should not get into it. Period.

Payment or reward (as for service rendered); The act of compensating for service or loss or injury
eg: ...Yes, if the seller has not been transparent and slaps additional charges, whether for prepayment or resetting interest rates, the borrower has a genuine grouse and can demand recompense.

[Brit] A walk around a territory (a parish or manor or forest etc.) in order to officially assert and record its boundaries; A leisurely walk (usually in some public place)
eg: ...But also renewed apprehensions on the frequency of the presidential perambulations with a large entourage.

Indian Current Affairs