23.02.2010

Politics & the Nation

• Special IG of Eastern Frontier Rifles, Benoy Chakraborty suspended
  
• You would surely have seen the masked interview that this officer has given on some TV channels.
• The interview was given in the context of the EFR losing 24 of its men in a Maoist attack in Silda.
• The officer had expressed his anguish over “ill treatment” meted out to his force. He was particularly critical of West Midnapore Superintendent of Police Manoj Verma for not providing proper infrastructure and said the decision to locate the Silda camp in a crowded area was “unprofessional”.
• According to the Centre’s assessment, the West Bengal police had totally disregarded the standard operating procedures prescribed by the Centre for minimising casualty in counter-Naxal operations.
• As per these norms, the camps of security forces must be protected by a barbed fire fencing and armed guards should be posted outside, either on a watchtower or behind a cover of sandbags. Also, the SOPs require all camps to set up communication lines not only between the guards posted outside and the inmates but also between the camp and the force headquarters to help seek reinforcements. Other norms stipulate easy access to arms and posting of a senior officer to command the forces within the camp. None of these norms were followed in the EFR’s Silda camp.
• Koda probe: top official transferred
  
• The man who unmasked the Madhu Koda scam has been unceremoniously transferred to another section, but the final word on the reason behind the controversial move may not see the light of the day anytime soon. Maybe, never.
• The telling ambiguity has forced a section within the Income-Tax department to conclude that the abrupt transfer of the director of investigation (Income-Tax) Ujjwal Choudhary was effected to slow down the pace of the probe into the multi-core Koda laundering scam. If probed deeply, the scam would have gone beyond the Jharkhand leader to unearth a long list of prominent names, ranging from politicians, underworld dons and hawala traders.
• Judicial fate of reservation for Muslims
  
• On why the AP government's bid to provide reservation for Muslims failed:
• The AP court has struck down the state’s attempt second time. In 2004, YSR has provided for 5% reservation for Muslims. It was struck down as it crossed the limit of 50% reservation. This time, it has been struck down, as the state government has not followed the constitutional provisions for identifying the SEBCs within the Muslim community.
  

Finance & Economy

• It is fiscal consolidation time
  
• But what is fiscal consolidation? Why is it good? What should India do? These are the kind of questions for which you will find answers in this ET in the Classroom column. A must read for everyone who wants to understand this macroeconomic concept. Take a look.
• A good graphic about budget presentation
  
• Take a look at this graphic. It gives a very good insight into how the budget is presented and the various steps involved in its preparation and presentation.
• Companies oppose RBI's proposed ban on zero cost structures
  
• This is a very good and informative news story
• In the derivatives market, where companies with large foreign exchange exposures used the tools to cover their currency risks, the favourite was the zero-cost structure — an inexpensive, attractive, but often complex derivative that sold like hot cakes. RBI thinks that zero-cost structures, with their leveraged nature have been the root cause of the problem plaguing the market.
• But some of the biggest users of currency derivatives like Infosys, Wipro and Essar have told RBI that a blanket ban on zero-cost derivatives would take away the flexibility in managing the risks arising out of fluctuations in exchange rates.
• How do these zero cost structures operate?
• Take an exporter who expects to receive a payment of $10 million from its overseas buyer six months later. It can go for a plain vanilla forward contract with a bank which gives the exporter the choice to sell the dollar — it would receive — at 45 a dollar when the present market rate could be, say 43.50. But if the exporter does a zero-cost deal, the bank may offer a rate as high as 48, which allows him to earn Rs 3 more on every dollar he would earn.
• Under a typical zero-cost deal, the exporter buys one put option, which gives it the ‘right’ to sell dollar at 48 to the bank; at the same time, it sells one call option — here, the exporter is ‘obliged’ to sell the dollar at 48 to the bank. Suppose, six months later, when the exporter receives the payment, the dollar is traded at 46. At this point, the exporter exercises the put option to sell dollar at 48, thus earning Rs 2 (per every dollar) more than the market rate.
• What if the dollar touches 50 in the open market? Here, the market rate is more attractive than the pre-agreed rate the exporter has entered with the bank. But the exporter has no choice. The bank to whom it’s obliged to pay — as per the call option — will not miss the opportunity. It will make the exporter sell the dollar at 48 — a transaction where the exporter gets Rs 2 less than the open market rate for every dollar earned.
• RIL's production record at KG-D6
  
• Reportedly RIL is producing about 60 MMSCMD of natural gas from this oil field. This is 20 MMSCMD shorter from the eventual capacity at which it is expected to produce natural gas. Look at this story for some of the benefits that accrued to the country because of this production.
• Poor response to REC issue baffles government
  
• Rural Electrification Corporation's public offering has reportedly received tepid response from investors -- especially retail investors. By yesterday evening only 60% of the issue has reportedly been subscribed. Majority of the bids have reportedly come in at Rs. 204 against the floor price of Rs. 203.
• In spite of the government making some amends following the poor response received for the NTPC's FPO sometime earlier, REC's issue appears headed for faring no better.
• The disinvestment department's hopes of raising about Rs. 24,000 crore from PSU stake sales this fiscal, therefore, also appear headed for a dash. Even if the REC issue scrapes through, it would have raised only around Rs. 14,500 core so far.
• Banks may have to pay dearly for poor customer service
  
• Banks with poor customer service standards may have to set aside more capital, according to a Reserve Bank of India (RBI) report. The regulator has also reportedly asked banks not to discriminate in lending rates between old and new customers, if they fall in the same risk category.
• The move to charge higher capital would be in line with the ultimate aim of regulation, to move towards an outcome-based approach where customer outcomes can be quantitatively measured and regulatory response be formulated accordingly.
• One interesting statistic while on the issue banking is the credit card user base. Reportedly the user base of credit cards rose during 2008-09 — from 137.2 million to 170 million, up 24%.

Environment

• A spirited defense of the climate science
  
• You would have been perturbed by the recent news reports about how the IPCC was coming out with false alarms over 'disappearing' Himalayan glaciers. For many of us, the lesser mortals, the issues involved are too technical to be comprehended easily, let alone give a judgment on them. But now one of the most influential of the thinkers on the planet -- Jeffrey D Sachs -- has come out in strong defense of the climate scientists. Worth a read. Take a look.

Sport

• Look where IPL is headed
  
• Take a look at this story. Studies are confirming that IPL brand value is increasing by leaps and bounds. For the next few years it is expected to behave in the same way. A phenomenon that can't be ignored for the present.
• Some facts and figures about how IPL originated.

Language Lessons

• appellation: Noun
• Identifying word or words by which someone or something is called and classified or distinguished from others
  
• bamboozle: Verb
• Conceal one's true motives from especially by elaborately feigning good intentions so as to gain an end
  
• eg: "He bamboozled his professors into thinking that he knew the subject well"
• shenanigan: Noun
• Reckless or malicious behaviour that causes discomfort or annoyance in others; The use of tricks to deceive someone (usually to extract money from them)
  
• eg: There are numerous other examples of similar shenanigans by Working Group II.
• animus: Noun
• A feeling of ill will arousing active hostility