30.11.2009

Politics & the Nation

• The case for agreeing to emission cuts
• Is there a case for India to accept emission cuts? If you read this editorial piece, you would agree that there is. Hawkish postures do little to enhance our credibility.
• Certain related facts/statistics that are worth our attention:
• India ranks just one rank below the US — sixth in the world pecking order — in greenhouse gas emissions, yet its per-head carbon emission is a mere tenth that of a US citizen.
• India may be the world’s sixth-biggest greenhouse gas producer, but it has a perhead emission of just 2 tonnes of carbon dioxide — 66th in the world — whereas US is the fifth in the world with a per-head emission of 20 tonnes of carbon dioxide-equivalent. This is precisely 10 times that of India, which is expected to have the same caps on emissions as developed countries like the US. This is totally against the principle of ‘differentiated responsibility’.
• What are the implications of the Chinese move to voluntarily reduce its carbon intensity days ahead of the summit in Denmark?
• One, it will be difficult for developed countries like the US and Obama’s Congress to oppose commitments to reduce greenhouse gases. China and India have often been cited as examples of countries that are unwilling to play their part in addressing these global concerns.
• Second, China has made it clear that it would go ahead with reductions in carbon intensity only on its own terms as per the requirements of its economic needs. This will come as a major boost to India as it echoes New Delhi’s stated position on carbon emissions.
• Kaiga incident
• We have missed on this one in the last couple of days.
• About 50 workers in the Kaiga Nuclear Power Plant have had increased levels of radiation in them suddenly.
• THE Atomic Energy Commission (AEC) on Sunday confirmed that radioactive tritium was deliberately put in a water cooler at the high-security Kaiga Nuclear Power Plant, in Karnataka, exposing the workers to increased level of radiation.
• Minister for science and technology Prithviraj Chavan confirmed that the Kaiga incident was an act of sabotage and added that the Centre will order a probe into what looks like an insider job.
• “The Kaiga incident is an act by a disgruntled employee. He mixed a small unit of tritium (radioactive isotope of hydrogen, D20), in a water cooler. All those who drank water from the particular cooler showed a high level of radiation effects,” he told reporters.
• Reportedly tritium is not poisonous and its presence in the body would come down on its own.
• But the incident does raise serious concerns over the safety and security of our nuclear scientists to threats of internal sabotage. A small time disgruntled employee is all what it takes to mow down scores of highly qualified people working in a classified zone in the country!

Finance & Economy

• An excellent lowdown on Dubai crisis that appeared in today's ET
• Take a look at it here.
• Recommendations on audit firms by CII
• NO single corporate client or group should account for more than a tenth of the total revenues of any audit firm and its associates, a committee on corporate governance set up by industry body Confederation of Indian Industry (CII) has recommended to the government.
• The 10% limit suggested by the committee will include earnings of the audit firms’ subsidiaries, associates or affiliated entities. This is aimed at checking over dependence on one particular client for business, which could accentuate the conflict of interest already inherent in the audit business.
• How exactly foreign and domestic audit firms came to work together?
• Foreign audit firms are not allowed to do statutory audit in India, so firms such as Price WaterhouseCoopers (PwC), KPMG, Ernst & Young (E&Y) have entered into informal tie-ups with domestic accounting firms while they themselves provide non-audit services to the company.
• Non-audit services which typically comprise of services like advisory, corporate finance and tax are catered to by these MNC consultants, while audit (assurance in accounting jargon) is conducted by the local audit firms that are network firms of the MNC.
• In India, SR Batliboi does this work for E&Y, AF Ferguson and CC Choksi for Deloitte, BSR & Co for KPMG and PriceWaterhouse and Lovelock & Lewes for PwC.
• GDP growth figure brings lot of cheer
• Gross domestic product (GDP) expanded by a surprisingly strong 7.9% during the July-September second quarter, its fastest pace in a year and a half. The growth was driven largely by a pickup in manufacturing, increased government expenditure, robust investments and modest growth in farm output despite the drought.
• The economy had expanded 6.1% in the first quarter. The growth in the first half of the year is now a respectable 7% as against 7.8% during the same period a year ago. In the fiscal year ended March 2009, the economy grew 6.7%, its weakest in six years and way below rates of 9% or more in the previous three years.
• What are the key drivers for recording this growth? What are the implications of this good growth in GDP? For answers to such questions take a look at this graphic. Though more or less a repeat, we would strongly suggest that you should look at this graphic too.
• Take a look at one of the measures for winding up the economic stimulus in India:
• In late October, RBI began its exit from an expansionary monetary policy by withdrawing some liquidity support measures and restoring the proportion of deposits that banks should invest in government bonds to 25% from 24%.
• Then what could be next?
• Liquidity mop-up is what the mavens predict.
• Bankers feel that the cushion of surplus cash with banks may prompt the central bank to prioritise liquidity management over rate hikes. A reflection of surplus liquidity in the system is the amount of funds banks park with Reserve Bank of India, which is over Rs 1 lakh crore.
• But our Chief Statistician, Pronab Sen feels that the government/RBI should wait out till January / February for unwinding the stimulus. Becuase by that time the third quarter performance of the economy would be known.
• Do you see any constraints for the economic growth in the coming quarters? Short answer is: there are concerns about waning effect of the Six Pay Commission arrear payment and mining. Look at this ET editorial; you will understand what we are trying to note.

Language lessons

• doggone
• Verb: Wish harm upon; invoke evil upon
• Adjective: Expletives used informally as intensifiers
• Xanadu: Noun
• An idyllic, beautiful place (usually imagined)
• eg: Livelihoods might have been lost, but the moot point is whether such a colonial Xanadu was ever workable in the first place.
• mendacious: Adjective
• Intentionally untrue; Given to lying
• eg: "mendacious child"; "mendacious statement"

• outre: Adjective
• Conspicuously or grossly unconventional or unusual