It's not only population that Census 2011 will gauge. Being described by government officials as possibly the biggest demographic exercise in the history of mankind — involving 25 lakh census officers and 11,631 metric tonnes of paper — the latest census will also measure the usage of mobile phones & computers, reach of internet & banking services as well as availability of potable water in Indian households.
However, the census will avoid going into parameters such as caste and subcaste.
Census 2011, which gets underway on April 1, will start with President Pratibha Patil becoming the first citizen to be enumerated at 10 am, followed by Vice-President Hamid Ansari, who will get listed at 11 am.
The census will have two phases. The first phase involving house-listing and housing Census will be conducted between April and July, with each state/UT getting 45 days to complete it. The second phase, involving population enumeration, will be conducted simultaneously all over the country from February 9 to 28 next year.
India has held Censuses uninterruptedly since 1872, every 10 years, through the freedom struggle, Partition, World Wars and natural calamities.
Bt Brinjal or no Bt Brinjal, what did the country lose in the process?
Take a look a this well written article by Arvind Panagariya. It argues that the process that led to its approval is held in abeyance in an undemocratic manner. Well worth a read. Take a look at it here.
What is the meat subsidy row about?
The dairy industry has submitted a memorandum to the government claiming that the subsidy helps slaughter houses, and as a result, impacts milk production. Owners of dairies apparently believe that the government incentive alone accounts for rising milk prices.
The dairy industry claims that subsidies for buffalo meat exporters is enticing farmers to get rid of their cattle earlier and driving down milk production.
All cow and buffalo meat exporters get a 30% subsidy on exports.
The dairy industry points out that the trend has resulted in India slipping down the league tables when it comes to milk yield. With an average milk yield of 917 kg per annum, India is now ranked 35th among 44 select countries. This despite being the world’s largest milk producer.
Finance & Economy
Bharti finally seals Zain deal for $10.7 bn
Bharti Airtel took a big step towards fulfilling its international ambitions with a deal on Tuesday to acquire most of the African assets of Kuwait’s Zain Telecom.
The $10.7-billion deal, including $1.7 billion of Zain’s debt, was signed in Amsterdam, the base of Zain’s African unit. With Zain Africa’s 42 million customers, Bharti Airtel will have 179 million subscribers, making it the world’s fifth-largest mobile phone operator.
Record payout of dividend by Hero Honda
Hero Honda declared its highest dividend yet on Tuesday, and held out the possibility of another payout next month, part of the company’s push to reward shareholders as it celebrates its silver jubilee this year.
The world’s largest two-wheeler maker by volumes will pay a 4,000% interim dividend of Rs 80 on each share of Rs 2 face value, which in percentage terms is the highest payout by an Indian company to date.
What is so significant about StanChart's announcement that it has filed a draft red herring prospectus for an issue of IDRs?
For one, this is the first issue of IDRs, the Indian counterpart of global depository receipts and American depository receipts, by an overseas company after guidelines were framed in 2004. For another, since these depository receipts represent equity shares of Standard Chartered — held by an overseas custodian based on which an Indian depository issues rupee-denominated receipts or IDRs to Indian investors — Indian IDR holders will, in effect, own equity shares of a foreign bank and also be able to trade in them as the receipts will be listed on our stock exchanges.
IDRs provide foreign companies a platform to directly raise capital in India but had not, for a variety of reasons, including somewhat restrictive regulations compared to American or global depository receipts, found favour with overseas companies so far.
What is a red herring prospectus?
A red herring prospectus is a document submitted by a company (issuer) who intends on having a public offering of securities (either stocks or bonds). Most frequently associated with an Initial Public Offering (IPO), this registration statement must be filed with the SEBI.
"Red-herring prospectus" means a prospectus, which does not have complete particulars on the price of the securities offered and quantum of securities offered.
No PAN? You could be facing a 20% TDS on your receipts from tomorrow!
The tax deducted at source, or TDS, on payments could be as high as 20% for those not quoting PAN against the regular rate of 2%-10%.
The Budget 2009-10 had made it mandatory for residents and non-residents to quote this number or face a higher rate of withholding tax. It comes into effect from Thursday, April 1.
Quoting of PAN will allow income tax authorities to establish an audit trail and catch tax evaders.
The tax base of the country is a mere 3.3 crore because of massive underreporting of incomes and large-scale exemptions.
But the total number of PANs issued in the country is in excess of 8 crore.
India denies market-economy tag to China as it refuses to share biz stats
India says it will be difficult to give a ‘market economy’ status to China as it has refused to provide information on key business aspects such as land laws, minimum wages and accounting systems.
A market economy status will mean that India will have to accept all economic data including on product prices supplied by China. This will make it difficult to fight anti-dumping cases against Chinese companies.
India is not obligated to recognise China as a market economy till 2016 as per the country’s accession agreement under the World Trade Organisation.
However, about 60 countries including Australia, South Korea, Brazil and the Asean countries have granted the recognition to China.
It has now been mounting pressure on India on the ground that its mechanisms were all transparent now.
One of the reasons India has been deferring giving China a market economy status is that it could increase dumping of cheap goods from the neighbouring country.
Right now India has the freedom to benchmark price of goods sold by Chinese companies in India against third countries exporting the same products.
CERN successfully collides atoms
The world’s largest atom smasher set a record for high-energy collisions on Tuesday by crashing proton beams into each other at three times more force than ever before. In a milestone in the $10-billion Large Hadron Collider’s ambitious bid to reveal details about theoretical particles and microforces, scientists at the European Organisation for Nuclear Research, or CERN, collided the beams and took measurements at a combined energy level of 7 trillion electron volts.
Following are some facts about the Big Bang and CERN’s particle smashing experiment:
The final tests involved pumping a single bunch of energy particles from the project’s accelerator into the 27-km beam pipe of the collider and steering them counterclockwise around it for about 3 km at close to speed of light.
The collider aims to simulate conditions milliseconds after the “Big Bang” which created the universe around 13.7 billion years ago.
Scientists were looking for, among other things, a particle that made life possible.
Recreating a “Big Bang,” which most scientists believe is the only explanation of an expanding universe, ought to show how stars and planets came together out of the primeval chaos that followed, the CERN team believes.
Its essential feature is the emergence of the universe from a tiny speck about the size of a coin but in a state of extremely high temperature and density.
Wait in hiding to attack; Put in a dangerous, disadvantageous, or difficult position
eg: Twice, political sensitivities scuppered its attempts to merge with South Africa’s MTN, the largest mobile phone company in Africa.
Someone acting as an informer or decoy for the police
eg: Greece is just a canary in the coal mine. (Nouriel Roubini described Greece thus. What he means by this is that there are actually some other countries which are equally or more badly placed than Greece at present.)
The government has revived the National Advisory Council (NAC) with Ms Sonia Gandhi as its chairperson. The council, which played a seminal role in the policies of UPA-I, is expected to set the priorities for the Manmohan Singh government.
You might remember that the National Advisory Council was operational till the end of UPA-I tenure, but it had lost all its clout after Ms Sonia Gandhi resigned as chairperson in the wake of the ‘office of profit’ controversy in 2006. Although the government subsequently removed the chairperson’s post from the office of profit list, the Opposition’s charge of “dual authority” prompted Ms Gandhi to stay away from the panel.
The revival means that the Congress party will have more say in setting the direction for the Government.
On religion based reservations
Why are they bad? Take a look at this write up from Arif Mohammad Khan, a former Union minister who resigned as minister from Rajiv Gandhi’s council of ministers in 1987 after the government moved a bill in Parliament to overturn the Supreme Court verdict in the Shah Bano case.
Finance & Economy
All share sales before float to be promoter stake
The government wants to now classify all equity placements before a public offer to any investor, including private equity firms, or employees as promoter equity. This implies that Indian companies will have to offer more shares in a public offering to investors, in keeping with changes in rules proposed by the government to boost public holding in listed firms and liquidity.
This will form part of the new rules under which all listed companies will have to consistently maintain a public holding of at least 25%.
The plan envisages companies, which do not have a public holding of less than 25%, attaining that mark by diluting their holdings annually by 5% or so over the next few years.
The key change, which has now been proposed compared to the earlier norms, is that equity placements to institutional investors will not be counted as part of public holding. A move that will force companies going public to offer more shares or dilute their equity to fulfil the new norms. Although promoters may baulk at the move, it is expected to widen the number of stocks on offer and help check manipulation of shares in companies with low public float.
The proposal to increase the minimum public holding in listed companies was first mooted in early 2008. The finance ministry had even put out a discussion paper seeking stakeholder views. It could not be implemented because of the turmoil caused by the global financial crisis. With the market regaining stability, the UPA government has again revived the idea and now hopes to implement the proposal sometime next fiscal.
Finance minister Pranab Mukherjee outlined the proposal in his Budget speech in July 2009. Companies, already listed on the stock exchanges, will get between 3-5 years to comply with the minimum 25% listing requirement.
A look at the financial regulation laws in India
Today we have the Insurance Regulatory and Development Authority (Irda) Act of 1999, Securities and Exchange Board of India (Sebi) Act of 1992, Securities Contracts (Regulation) Act of 1956 (SCRA), Forward Contracts (Regulation) Act of 1952 (FCRA), and the Reserve Bank of India (RBI) Act of 1934. Add to that the Companies Bill and the still-born Pension Bill and we have a cornucopia of laws on financial regulations.
On managing monetary and fiscal policies
This is one article that you can hardly miss reading. Wanted to know how or why gold standard failed? What were its limitations and so on?
Ever wondered how Ben Bernanke earned the epithet of "Helicopter Ben"?
Did you ever suspect that there could be tools other than interest rates to manage money supply?
For all such things you will find very good answers and explanations in this beautiful article by Alok Sheel.
Tatas and Birlas may not see their banking ambitions fulfilled
The government has reportedly told the Reserve Bank of India (RBI) that the norms for approval of new banking licences could be based mainly on the existing policy framework for ownership of private banks, smothering the hopes of large local business houses keen on promoting and running banks.
Finance minister Pranab Mukherjee announced in this year’s Budget that RBI was considering granting additional banking licences to private sector players and non-banking finance companies, if they fulfilled certain norms.
The government had reportedly told the RBI that the existing rules on new licences for private banks could continue to apply.
The Indian central bank’s ownership norms place a premium on diversified ownership in local private banks. They specify that the shareholding by an individual or group of related entities has to be capped at 10%, making it difficult for large industrial houses to own majority stakes in banks.
The norms do provide for a higher shareholding by promoters when new licences are issued for private banks, but on the condition that the holding would be reduced to 10% over a timeframe which is supposed to be three years.
BTW do you know that there are 170 banks with about 81,000 branches in India?
The last time RBI issued licences to over half-adozen entities was over 15 years ago. Subsequently, two more banks, YES Bank and Kotak Bank, were allowed. The last new bank was by way of a legislative change, enabling an old development finance institution, IDBI, to convert itself into a bank. From the last lot — the most successful were the ones promoted by institutions such as HDFC Bank and UTI Bank, later christened as Axis Bank.
The government now appears to be veering around to the view that consolidation and extension of financial services could run in parallel.
Interesting snippets on solar power scene
Solar Thermal Federation of India (STFI), is the newly-formed industry body for solar power.
It feels India is likely to miss the official target of having in place 20 million square metres of collector area by 2022. It adds that 18.7 million sq m would be a more realistic target.
Nationally the installed-capacity of collectors is already 3.5 million sq m.
China has smartly overtaken the US in sheer investment in the renewable energy sector. China's latest estimate of investment in green technology is $34.5 billion, twice that of the US.
Two of the important measures suggested for promoting solar power in India:
Specifically, we need to boost demand for solar power so as to increase energy supply, improve efficiency and cut down costs with economies of scale.
Bank finance for solar power products could be brought under priority sector lending.
What are the reasons for the lack of investor interest in profit making PSUs?
Why are retail investors wary of putting their hard earned money in these companies?
There are primarily three:
One, the equity option in PSUs is largely dependent on the government's policies in that particular sector. This more so in areas where the PSU companies enjoy a near monopoly and the government flip-flops on its policies raising huge uncertainties over returns on equity investments.
Two, shareholders of such government companies have to live with uncertainty over their returns as the government continues with its non transparent ad hoc subsidy policies.
Finally, issues of corporate governance is yet another factor. It is not just about filling company boards with the mandatory number of independent directors. In several cases, there have been instances where these candidates are nominated (albeit unofficially) by ministers of the administrative ministries. PSU bosses owe their jobs to the government's recruitment process where often merit is a casualty.
French auction still finds favour for IPOs
Disinvestment department is keen to take the French auction route for the initial public offers (IPOs) of public sector companies despite the method failing to get the desired result in follow-on public offers.
In French auction, investors are asked to bid for shares above a certain floor price. Bidders are allotted shares starting from the maximum price bid till the offer is exhausted.
In the traditional book-building, investors have to bid within a price band and the final price is decided after all the bids are in. Every one is offered shares at this price.
Recess appointments and why they are in the news...
Recess appointments, refer to the appointments made by the US President when the Congress is not in session. These have been used by both parties -- Democrats and Republicans -- to evade potentially difficult Senate confirmations required for senior federal posts.
Obama has reportedly made about 15 of them recently, thus bringing them into debate.
It is significant to note that Obama’s Democrats lost their 60-seat super majority in the Senate in January, denying them the votes needed to overcome procedural delays by Republicans.
A variety show with topical sketches and songs and dancing and comedians
eg: ...though their only contact with ABBA's oeuvre is via Mamma Mia, the Bollywoodesque musical revue starring Meryl Streep and Pierce Brosnan.
The total output of a writer or artist (or a substantial part of it)
Flattery intended to persuade; Loud and confused and empty talk
Supreme Court heralds 4% reservation for Muslim backwards
The demand for religious quota in jobs and admissions gained legitimacy on Thursday when the Supreme Court leaned in favour of an Andhra Pradesh (AP) law providing 4% quota to 14 “backward groups” within the Muslim community. The court, which passed an interim order, referred the adjudication of constitutional validity of the AP law to a Constitution Bench.
The SC interim order, passed by a bench comprising Chief Justice KG Balakrishnan and justices JM Panchal and BS Chauhan, may now open the floodgates to extending the benefits of reservation to Muslims and Dalit Christians in other states. The lack of judicial sanction has so far been cited by the Centre to stonewall demands for religion-based quota, which was recommended by the Ranganath Mishra panel.
The AP move was earlier turned down by the state’s high court for violating the Constitution. In a majority judgment of 5:2, the high court had struck down the law arguing that it was “unsustainable” and violative of articles 14, 15(1) and 16(2) of the Constitution. While Article 14 pertains to the right to equality, Article 15 prohibits discrimination on the basis of race, religion and caste while Article 16 is about equality of opportunity in matters of employment.
The only categories now kept outside the quota ambit are Syeds, Pathans, Arabs and Iranis, but they account for less than 10% of Muslim population in the state. Muslims constitute 9.2% of AP’s 77 million population.
The apex court bench was in agreement with the argument put forth by Attorney General (AG) GE Vahanvati and former AG K Parasaran that quota benefits are extended to socially and educationally backward communities on the basis of their profession and not religion.
It would be social discrimination of the worst kind if on the one hand reservation was given to similarly situated groups within the Hindu community, but denied to those in the Muslim community, they argued. The Bench was in agreement with their position that it was not fair to exclude Muslim barber or washerman community from the quota list when the similarly placed Hindu groups were being provided with benefits of reservation.
An excellent editorial comment on fire safety
In the context of the Park Street fire that recently killed many, this editorial comment assumes significance:
It (fire safety measures) must start with a cultural shift, from the primordial fatalism of a population whose fortunes depended, in the main, on the whims of the rain gods, to the mental make-up of the modern man who takes much larger responsibility for shaping his own destiny. Planning is the next step, and enforcement. Town planning, to prevent fires spreading or starting, traffic (including parking) management and discipline to ensure ready access to the site of a fire accident, building codes which have passive safety built into their DNA and are meant to be enforced rather than serve as a means of extortion from builders who flout the codes, standards for fire-proofing, resisting or delaying materials, mandatory and systematic dispersal of such material inside new construction, training of the occupants of large building blocks to behave responsibly in times of fire emergency — the list of things that can and need to be done goes on. Fire safety is a fairly well developed discipline, what is lacking is the will to import its insights into how we build modern India.
Supreme Court to have a woman judge shortly
The Supreme Court will very soon have a woman judge, after more than three years.
The Supreme Court collegium, headed by Chief Justice K.G. Balakrishnan, has recommended the elevation of Chief Justice of the Jharkhand High Court Gyan Sudha Misra as a Supreme Court judge.
Justice Misra will be the fourth woman judge of the Supreme Court, after Fatima Beevi, Sujata Manohar, and Ruma Paul, who retired in June 2006.
The collegium has also recommended the elevation of Madras High Court Chief Justice H.L. Gokhale as a Supreme Court judge.
Finance & Economy
ATMs to offer more services
Many banks are now working to make the dumb ATMs smarter and banking simpler. The smart terminals, they expect, will combine the convenience of ATMs with the versatility of bank branches.
In their improved avatar, the machines will allow customers to pay taxes and bills, buy or sell products such as mutual funds, book air tickets and swiftly get cheques cleared, bankers say.
Around villages near Coimbatore in Tamil Nadu, HDFC Bank is piloting a ‘bank on wheels’, taking the ATM to people. PNB is doing trials on a micro-deposit module to help people access banking services with amounts as low as Rs 10. And YES Bank is starting pilot programmes on video phone banking starting April.
From about 20,000 two years ago, the number of ATMs increased to 45,000 in 2009 and is poised to cross 100,000 by 2013, according to RBR, a London-based retail banking research group.
Tier-I capital may exclude hybrid instruments
Quasi-equity instruments, such as perpetual bonds, may be ineligible to meet Reserve Bank of India (RBI) guidelines on capital requirement in future. RBI’s future regulation will be in line with its peers globally to focus more on shareholders capital and retained profits.
In India, commercial banks are required to maintain a capital adequacy ratio of 9%. In other words, for every Rs 100 that they lend out of deposits, banks need to have Rs 9 of capital. Of this, Rs 6 has to be in the form of core capital while Rs 3 can be subordinated debt, such as preference shares. Core capital is largely equity and retained profits, but some time back RBI had allowed hybrid instruments, such as perpetual bonds, to comprise 15% of a bank’s core capital.
Bankers say that hybrid capital accounts for less than 10% of the total Tier-I capital of banks in India.
In place of getting a meagre $250 to $500, Indians can today draw as much as $200,000 in foreign currency to go abroad.
Universe expansion is 'speeding up'
Astronomers have claimed that the expansion of the universe is accelerating, after studying thousands of galaxies using the Hubble Space Telescope.
In its research, an international team has analysed nearly 446,000 galaxies to map the matter distribution and the expansion history of the universe, proving again that Albert Einstein’s theory of relativity is indeed correct.
And the astronomers clearly found that the universe was indeed growing faster and faster with time, as predicted by Einstein.
Einstein’s theory of general relativity predicts that space and time is a soft geometrical structure of which the shape and evolution are entirely determined by the matter within it.
According to the astronomers, the universe is composed of dark matter and normal matter with third constituent called “dark energy”, which over the past two billion years has been the force behind the accelerated expansion of the universe.
In a method similar to taking an X-ray of the body to reveal the underlying skeleton, the technique, known as weak gravitational lensing, allowed the astronomers to see how the light from distant galaxies is bent and distorted by the dark matter as it travels towards earth.
They then mapped the dark matter structures, which make up 80 per cent of the universe.
A disorder of eating seen among young women who go on eating binges and then feel guilt and depression and self-condemnation; Pathologically insatiable hunger (especially when caused by brain lesions)
A condition in which eating healthy becomes an unhealthy obsession.
In India, it is estimated that majority of the corporate boards do not have a woman independent director and only 5% of directors are women. Out of these women directors, only the large companies have professional independent directors and majority of women directors are from the promoter families. In China also around 5% of board seats are with women, but most of them are professional women. In the US roughly 15% of the board members of the Fortune 500 companies are women as reported by Nicola Clark in her recent article in the New York Times. In the EU nearly 10% of the board members are women.
How does it help to have women directors on corporate boards?
Having woman directors, it is believed, will improve board's effectiveness and quality of its decisions. It will help the boards become more sensitive to issues faced by women employees including unequal opportunities, working conditions, safety and sexual harassment. Boards will be able to take advantage of additional opportunities due to better customer insights and intuitions of women directors. It will reduce the risk of the enterprise by having different points of view at the board level. Because of women's greater association with children, schools, healthcare, and community issues, it is likely that corporate social responsibility performance will improve. The basic proposition is that the diversity achieved by having more women directors is in the longterm interest of any company, its employees and customers and creates superior shareholder value.
Another petition to recover black money stashed abroad filed in Supreme Court
You might remember that noted lawyer Ram Jethmalani had filed a similar petition earlier. The same is pending before the Supreme Court.
Now another petition is filed by some prominent personalities. They include -- former Mumbai Police commissioner Julio F Rebeiro, former chief election commissioner JM Lyngdoh, former CAG VK Shungu, former air chief marshall S Krishnaswamy, former Planning Commission secretary NC Saxena, former University Grants Commission chairman Hari Gautam, among others.
The issue has taken centre-stage in political circles, with NDA working chairman LK Advani demanding that the government come out with a white paper enumerating its efforts to bring back money illegally stashed abroad by Indian citizens.
The petitioners say that over $1.45 trillion belonging to Indians has been lying unreported in Swiss banks alone.
Finance & Economy
Unitech under ED lens for money laundering
The Enforcement Directorate (ED) has registered a case under the Prevention of Money Laundering Act (PMLA) against real estate major Unitech.
The case stems from an investigation by the Central Bureau of Investigation (CBI) into the award of 2G licences in 2008 by the Department of Telecom (DoT). Unitech was one of the companies to get the licences under a controversial process followed by DoT.
The investigation may or may not result in a chargesheet against the firm, but it once again highlights the controversial nature of business dealings in the telecom industry.
ED’s move springs from a CBI investigation into DoT’s process for awarding licences to companies for launching telecom operations. DoT awarded 2G licences to nine companies, including Unitech, in January 2008. The process was controversial from the very beginning, as DoT advanced the cut-off date for submitting applications suddenly and then incorporated a first-come-first-serve clause in the letter of intent which some winners got to know in advance.
A few months later, two companies, Swan and Unitech, sold a substantial stake in their operations to foreign companies for an astronomical sum. This generated a lot of heat and dust, as the companies were yet to launch services and the sale happened at valuations much higher than the amount paid to DoT for the licences.
In its FIR filed in November last year, the CBI has alleged that the government has lost Rs 7,105 crore by way of higher licence fees in just these two transactions. The licences were also sold at a very nominal rate based on prices fixed in 2001 without any competitive bidding, the agency said in the FIR.
The FIR also said that a large number of applications from competent and established telecom operators were not considered by the DoT based on an arbitrary decision to advance the cut off date for submission of 2G applications.
Bharti on the verge of acquiring Zain telecom's Africa assets
Bharti Airtel stood on the cusp of transforming itself into an emerging-market multinational after the board of Kuwait’s Zain Telecom on Wednesday approved the sale of most of its African assets to India’s largest mobile phone company.
The $10.7-billion deal for Zain’s operations in 15 countries will give Bharti a firm foothold in the relatively untapped African market and take it past China Unicom, Sweden’s TeliaSonera, and Germany’s TMobile as the world’s seventh-largest mobile phone company by subscribers.
The Bharti-Zain combine will have revenues of $13 billion and earnings before interest, taxes, depreciation and amortisation of around $5 billion.
The acquisition is the second largest by an Indian company, after the $12-billion takeover of Corus by Tata Steel in 2007.
Two previous attempts by Bharti to enter Africa by acquiring MTN failed in full glare of the media, after months of tortuous negotiations.
The deal, which includes $1.7 billion of Zain’s debt, values each customer at $252. When Bharti was negotiating to buy MTN, each user of the South African mobile phone firm was valued at $349.
Bharti will be inheriting an operation that made a net loss of $112 million in the nine months to September 2009.
Update on Internet users
According to Trai data, India had only about 8 million broadband users, compared with 546 million mobile users at January end.
Could you ever imagine that somebody will break into a jail?
But that's what precisely a prisoner on parole tried to do and got 15 years for it! Interesting. Read about it here.
Bite or chew on with the teeth; Become ground down or deteriorate; Cause lingering anxiety, torment, etc.
eg: The Indian IT industry has survived the global financial slowdown, but gnawing competition and increasingly stingy customers are haunting the $50-billion segment that is padding up for the annual earnings season beginning April.
A protective covering of rotting vegetable matter spread to reduce evaporation and soil erosion
eg: Precisely because they have escalated matters to the level of an internal security threat, there is hope that this will lead the polity to address the gaping deficit of democracy and development in large swathes of rural India, in whose mulch of misery and oppression the seeds of Maoism germinate.
Remember the summons issued by the SIT probing the 2002 Gujarat riots, to Narendra Modi and the latter's non-appearance before it? ET was closing its comment in an editorial with this observation: Integrity of the legal system and its immunity to subversion by those in power are of the essence for a polity that styles itself a democracy.
The editorial is worth a read. Read it without fail.
Finance & Economy
Cairn raises Rajasthan oil estimates
Cairn Energy said it now estimates oil reserves at its Barmer fields in the northern state to be as much as 4 billion barrels of oil equivalent.
“Discovered resource base increased from 3.7 billion BOE to 4 billion BOE in-place,” said a Cairn statement. “Prospective resource base is now estimated at 2.5 billion BOE in-place.”
Discovered resources comprise total deliverable petroleum quantities from the start of production to the ceasing of production in a field. Prospective resources are those quantities of petroleum estimated that can be potentially produced.
In-place reserves in the field are 2.2-2.3 billion barrels, which is approved by the government and based on the field development works being undertaken by the contractor.
The case for R&D in ensuring long lasting economic growth
Research has shown that since the 1950s, the bulk of growth over the long term is not so much due to increase in factor inputs like capital and labour as technological change, efficiency improvements and productivity gains. Given our weak science, technology and innovation indicators, to assume world-leading growth for decades would verily belie the empirical evidence of umpteen studies — that growth is essentially about technological progress.
Larger, richer economies, which have experienced growth over the long-term, do allocate up to 3% of their gross domestic product for R&D — sometimes even more. In contrast in India such allocation is barely 1% of the GDP and is unlikely to change for the better in a jiffy. Hence the presumption that world-beating, long-term growth is around the corner may be a little premature.
In India, post-secondary education is availed by just about 10% of the target population. Abroad, in the mature economies, it is over 50%.
On the urgent need for a clearly defined technology policy:
The new growth theories suggest that economies with higher levels of educational attainments (read: human capital) provide greater incentives for innovation and, by implication, lead to higher rates of growth. The point is that we need to improve the quality of our growth momentum with proactive policy, and not be content with growth brought about largely by addition of factor inputs. Such growth would be at high costs, and likely to make the economy increasingly uncompetitive, and sooner rather than later. Hence, the need for a clearly-defined technology policy, to boost our long-term growth prospects. The move in the Budget to provide 200% weighted tax deduction for R&D expenditure is certainly a step in the right direction.
Viability gap funding to be extended to education, health
The government will soon provide a framework for viability gap funding for creation of physical infrastructure in health and education space though public-private partnership (PPP).
The viability gap funding or VGF is a capital subsidy provided by the government to make competitively bid projects financially viable for private investors.
Under VGF, the central government meets up to 20% of capital cost of a project being implemented in the PPP mode by a central ministry, state government, statutory entity or a local body. The state government, sponsoring ministry or the project authority can pitch in with another 20% of the project cost to make the projects even more attractive for the investors.
VGF will be typically relevant for health and education projects where economic returns are high but financial returns may be difficult to come for the investors. The government will also look at different mechanisms such as annuity for these sectors in line with their specific funding requirement.
The VGF allows the government to leverage its resources and start more projects than it would have managed if they were implemented through private funding.
The VGF for each project is determined through bidding, with the project going to the bidder seeking least assistance.
Google shut its mainland Chinese-language portal and began rerouting searches to its Hong Kong-based site, unleashing a blast of ire from Beijing and prompting concerns over its future business in China.
Google’s decision comes amid heightened tensions between Beijing and Washington over a range of issues, from internet freedom to the yuan exchange rate, economic sanctions on Iran and US weapons sales to Taiwan.
Ordinary (Chinese) internet users won’t be much affected, because the only difference they’ll see is that the burden of censorship has shifted from Google to the government.
Google’s business may take a hit. Advertising may fall, and (Chinese) companies that have invested in joining up with Google innovations and content will be hurt.
While Google is the world’s top search engine, it held only an estimated 30% share of China’s search market in 2009, compared with home-grown rival Baidu’s 60%. Google’s decision on Monday, therefore, won’t have an immediate impact on earnings, analysts say.
Live-in relationships not a crime, observes SC
The Supreme Court on Tuesday observed that the live-in relationships between the adult couples cannot be treated as an offence.
The apex court said there was no law which prohibits live-in relationship or pre-marital sex. The Court passed the observation while reserving its judgement on a special leave petition filed by noted South Indian actress Khusboo. She had approached the apex court seeking quashing of about 22 criminal cases filed against her after she allegedly endorsed pre-marital sex in interviews to various magazines in 2005.
While hearing the case, the judges grilled the counsel for some of the complainants in the case and repeatedly stressed that the perceived immoral activities cannot be branded as offence. The argument of the counsel was that her comments allegedly endorsing premarital sex would adversely affect the minds of young people leading to decay in moral values and ethos of the country.
Obituary: Kanu Sanyal
The legendary Naxalite leader committed suicide at his party office in Hatighisha near Naxalbari on Tuesday afternoon. Pushing 80, severely paralytic and nearly blind after a cerebral stroke last year, Sanyal was the last of the three legendary founder movers of the peasants’ revolution of north Bengal in the late 60s, that became infamously known throughout India as the Naxalbari movement.
Charu Majumdar and Jangal Santhal, the other two pioneering stalwarts of the movement had died long back. Sanyal lived, but lived in acute depression.
With Charu Majumdar and Jangal Santhal, Sanyal had initiated the Naxalbari movement that later ran amok. Discords galore surfaced and while Sanyal, in his later years, disapproved of Majumdar’s strategy of armed struggle, there are some even now in CPI(ML) who never thought Sanyal was in the same class as Majumdar was in being a “true communist”. But for that matter, Sanyal wasn’t ever too great a votary of excessive bloodshed and he always thought the present Maoist movement was utter rubbish.
Born in Kurseong in 1931, Sanyal joined the Communist Part of India (CPI) in 1950 and became a whole-timer. He worked mainly among the tea workers in Matigara and Naxalbari. He went to China in 1967 for three months to meet Mao Zedong. This inspired him to announce the formation of the original CPI(ML) in 1969 at a public meeting in Kolkata that coincided with Lenin’s birthday.
He spent many years between 1970 and 1977 behind bars. After his release in 1977, he started living permanently at Hatighisa and formed Organising Committee of Communist Revolutionaries (OCCR). In 1985, he became the leader of Communist Organisation of India (Marxist-Leninist), a conglomeration of six Marxist Leninist factions. He formed the New CPI(ML) in 2003 and was general secretary of the organisation.
Supreme Court halts mining activities of the Reddy brothers
In a blow to mining magnates and Karnataka’s controversial Reddy brothers, the Supreme Court on Monday suspended mining activity on all the three iron ore mines operated by their Obalapuram Mining Company — Bellary Iron Ore Pvt Ltd, YM & Sons and Anatapur Mining — in Andhra Pradesh. The court, which ordered fresh survey to assess whether the Bellary brothers have encroached upon forest land, has asked the Survey of India to file its interim report by April 9.
Remember Satyendra Dubey?
He is the whistleblower who had exposed corruption in the Golden Quadrilateral project in Bihar and paid very dearly with his life for it. He was gunned down in the early hours of November 27, 2003, in front of the Circuit House in Gaya when he was going to his residence from the railway station.
Now the Special Court that tried the case convicted three people of murdering him. But his brother cries foul saying that the three are innocent and that the actual perpetrators are still on the lose.
Close to two dozen Indian companies joined the billion-dollar revenue club over the past two years, reflecting the strength of Asia’s third-largest economy that came out unscathed from the most severe global economic crisis since the Great Depression.
The number of companies in the billion-dollar club went up to 124 compared with 104 for the year ended March 2008.
Infrastructure and agriculture firms dominated the list of new entrants to the billion-dollar revenue club, as these sectors remained more-or-less unaffected by the economic downturn.
On IT companies hiring non-IT people
It is reported in papers that IT companies are hiring more non-IT people these days. What does this signify? What is the long term implication of this trend?
It signals an achievement, and a challenge. It indicates, on the one hand, that Indian information technology (IT) companies are finally moving away from their business model that depended on a linear relationship between the number of employees and revenues (more bodies, more dollars). They have successfully automated and commoditised some services, whose delivery does not call for engineering skills. This would release engineers to perform more technical tasks that would also lead to higher value realisation.
Look at the Planning Commissions' prescription for agri reforms
The country’s apex planning body has called for wide-ranging reforms in agriculture, while criticising the strategy employed by the government to increase farm output and tame soaring food prices.
The Planning Commission said the agriculture pricing system should be made more market-oriented by delinking support prices from procurement prices. It suggested measures such as abolition of levies and stocking limits, encouraging free movement of goods across the country and doing away with bans on exports and futures trading.
It pointed out that while the farm sector did well between 2005-06 and 2007-08 to grow at 4%, the performance in the past two years showed that the government’s strategy was not effective and more needed to be done on the supply side to maintain growth.
Growth in agriculture production dropped to 1.6% in 2008-09 and is estimated to post a decline of 0.2% in 2009-10 due to poor rains affecting kharif crops. The government has targetted 4% agriculture growth for the plan period. Agriculture and allied activities account for less than a fifth of India’s gross domestic product (GDP), but it provides livelihood to more than 60% of the country’s 1.2 billion people.
The Problems identified
Agriculture productivity has stagnated
The system is still full of controls, dissuading private sector investments in logistics and storage
MSP has become procurement price, discouraging farmers to diversify into high-value crops
Fertiliser subsidy is not giving desired results.
Delink support prices from procurement prices
Remove stock limits on agricultural commodities
Encourage free movement of goods across the country
Do away with bans on exports and futures trading Abolish levies on rice and sugarcane
Plan panel for a unified market
Why does inflation targeting acquire urgency in the present times?
Inflation targeting for the monetary policy acquires urgency because of three reasons — long transmission lags, establishing credibility, and negative real interest rates.
The lags between raising policy rates and activity tend to be long. During the previous rate-cutting cycle, policy rates took a long time to feed through to bank deposit and lending rates, and that too only partially; similarly on the way up, bank rates may take considerable time to react, and from rates to activity will take further time. Policy needs to be forward looking and cognisant of these lags.
Second is the issue of credibility of the central bank and importance of staying ahead of expectations. If market participants begin forming the view that the central bank is behind the curve, it would reduce the effectiveness of policy actions and call for larger rate moves than originally required.
Third, the yield curve is amongst the steepest it has ever been. Short-term real interest rates are negative, and one of the lowest among emerging markets. The short end needs to move up significantly to normalise policy.
On small savings schemes
Small savings schemes comprise of Public Provident Fund, the National Savings Certificate, Kisan Vikas Patra and post office savings schemes.
Deposits into these schemes are sent to the National Small Savings Fund (NSSF), much of which then goes to states through investment in special state government securities.
In 2008-09, investment in such securities had dropped to Rs 8,400 crore, bridging only 2.1% of the combined fiscal deficit of all the states.
The net inflow into small savings schemes is budgeted to increase to a five-year high of Rs 50,000 crore in 2010-11. Nearly Rs 45,000 crore of this will go to states, reducing their dependence on market borrowings. Loans from NSSF available at 9.5% for the States are much lower than the market rates. Reduced dependence on market borrowings is good otherwise also -- it will ensure that private investment is not crowded out.
The yield on 10-year benchmark paper has gone up to nearly 8% in anticipation of interest rates firming up as the central government starts its Rs 3,45,000 crore net borrowings for 2010-11.
Heard of Bubbly?
This is the voice equivalent of Twitter. Launched by the San Francisco-based Bubble Motion for the first time in India (instead of its home base in North America), it allows users to connect to a network of friends, family or celebrities by sending voice messages lasting up to a minute to followers. But unlike Twitter, the updates are heard, not read.
Bubbly is phone agnostic and does not require any application to be downloaded. Users type *7* to send out a voice bubble and followers get notified through an SMS and type *2* to listen in. It is gaining popularity because it can be integrated into any operator's network by using existing voice circuits and SMS channels.
Unlike existing blogging services where literacy, language, access to the internet and messaging adeptness drive usage, Bubbly overcomes these barriers.
Although subscribers can post messages for free, followers pay to listen. Operators gain as users part with either airtime or 75 paise per message. Users have to additionally fork out a premium subscription fee of Rs 10 a month to follow celebrities so that networks don’t get bogged down by traffic.
Pune and Kochi join IPL 4
Pune and Kochi have won the race to host the two new Indian Premier League (IPL) teams from the next season with massive bids three times the highest bid in the first auction three years ago.
Sahara Adventure Sports of the Sahara Group won the Pune franchise with a record bid of $370 million, while a consortium called Rendezvous Sports Group, which has the blessings of minister of state for external affairs Shashi Tharoor, made Kochi a surprise IPL host with a $333-million bid.
The two winning bids, working out to Rs 3,235.5 crore at an exchange rate of Rs 46/US dollar, beat the Rs 2,840 crore that the eight teams fetched in the previous auction.
Under the bidding rules, the winners can pay the bid amount in 10 years, which is the duration of the contract. Also, with the cricket board sharing 80% of the television rights income (Rs 8,200 crore) in the first five years with team owners, the financial burden is relatively less for team owners.
The new teams are to still decides on the names for their teams.
The kind of stakes that the teams are attracting make them sure enough candidates for getting listed on stock exchanges in the country.
All the players playing in IPL from the first season will be available for fresh auctions for the next season, as their existing contracts are valid for only three years.
What does IPL mean for Indian sport? Take a look at this ET editorial for a perfect answer. Though it ends with a call for taxing its income, the first paragraph is lists out various spin-offs and the potential it holds. Worth a read.
Mix together different elements
eg: In the current system of subsidised food being distributed through a public distribution system, producer subsidy is conflated with consumption subsidy ...
In the context of India asking the US to start negotiations on a totalisation agreement, knowing a bit about this would be of help surely.
A totalisation agreement would allow Indian professionals working for a limited period in the foreign country not face social security taxation.
Totalisation agreements are needed because workers employed in another country could end up paying social security taxes in both his country and where he works.
According to estimates, India could save up to $1 billion that professionals on shortterm contracts contribute to social security annually in the US.
India has signed social security agreements with Belgium, France, Germany, Switzerland, Luxembourg and the Netherlands in the recent past. Similar agreements with other countries like Canada, South Korea, Czech Republic and USA are being pursued.
Finance & Economy
Why did some foreign telecos not participate in the 3G auction?
Uninor, a joint venture between Norway's Telenor and India's Unitech, first wants to see clarity emerge on the allotment of 2G spectrum before it takes the 3G plunge.
Allocations of 2G airwaves have been put on hold until the government comes up with a new allotment methodology. Before March 2009, when the allocations were stopped, telecom companies got spectrum based on their subscriber numbers.
Also staying away are overseas multinational telecom firms such as AT&T, Verizon, British Telecom, France Telecom, MTN, Orascom and Deutsche Telekom that are not present in India. They argue that the 3G policy is heavily loaded in favour of existing operators that offer services on 2G airwaves.
Another reason for shunning the 3G auction is that many countries have already started commercial deployments of 4G technologies such as long-term evolution and Telenor is evaluating whether it should leapfrog by skipping 3G.
Successful bidders for 3G spectrum will get 5 MHz of airwaves. While this is not enough for new players, it will be sufficient for existing ones to migrate to 3G.
3G services were originally scheduled to be launched in India in 2007, but have repeatedly been delayed amid troubles over freeing up spectrum and setting bid prices. First launched in Japan in May 2001, the services are available in over 90 countries.
The auction is scheduled to start on April 9.
The base price for pan-India 3G airwaves is Rs 3,500 crore. Three slots each will be auctioned in 17 telecom service areas and four in the remaining five. State-owned BSNL and MTNL have already been allotted 3G frequencies.
Banga & Nayak get set for new innings
Manvinder ‘Vindi’ Banga, president, global foods, home and personal care and member of the Unilever Executive (UEX), and former chairman of HUL in India, announced that he would quit the world’s second largest consumer goods company by sales at the end of May.
Mr Banga was a contender for the top job at Unilever, which, of course, eventually went to hard-driving Paul Polman, formerly from Procter & Gamble (P&G), a company with a very different culture. His exit was seen as inevitable once he was passed over by the Unilever board.
Meanwhile PJ Nayak, who transformed Axis Bank into India’s fourth largest by market capitalisation from an also ran bank in the course of a decade, has been hired as the chief executive of Morgan Stanley India to boost its fortunes amid intensifying competition from JPMorgan and Bank of America-Merrill Lynch.
Trends in gourmet food
At New Delhi’s Le Marche chain, you can buy Godiva chocolates that will set you back by Rs 4,300 for 235 gms.
At Mumbai’s Godrej Nature’s Basket chain, if you bought a kilo of Iberico ham, you will be billed Rs 9,000.
In Chennai, the capital of a state where political parties routinely come to power promising rice for Re 1 per kg, the Nuts ‘n’ Spices chain retails Darjeeling White Tea for Rs 15,000 a kg.
These were the things that could never even have been in one's dreams back in 1991. It was the liberalisation that was set in 1991 that has now made these possible.
Today let's learn a bit about our ports sector
The country has 12 major ports and about 200 minor ports. The 12 major ports are projected to handle about 1 bn tonnes by 2012 while the minor ports about 0.58 bn tonnes.
The sectoral regulator, Tariff Authority for Major Ports (TAMP), is mandated to rationalise the tariff structure and streamline the tariff setting system. Also, overall, its brief is to call for competitive pricing of port tariffs, and ‘to push performance of Indian ports to internationally competitive levels’.
What are the advantes and disadvantages of a cost-plus regulatory regime?
The cost-plus tariff regime incentivises investment and capacity-addition. But at the same time it could offer a perverse incentive for padding costs to artificially boost returns.
Therefore, economists look askance at cost plus regimes. Instead they plead for a focus on service quality, ship turnaround time and overall efficiency levels.
Here is a very good definition of fiscal stimulus
Fiscal stimulus in the Keynesian framework consists of extreme affirmative government action through the Budget to boost economic activity. Traditionally, this concept would refer to increasing fiscal deficits wherein the government spends, through high borrowings or printing of currency, to provide purchasing power to the people so that demand is sustained. Therefore, the pre-requisite of a fiscal stimulus is a high fiscal deficit. Such deficits are brought about by either higher expenditure or lower tax rates.
What are the objections of the leading opposition party to the bill?
These included limiting liability, transferring the liability from the supplier to the operator (in this case, the Nuclear Power Corporation of India, and the government, and, eventually, to the tax-payer), keeping the suppliers (the American companies) outside the jurisdiction of the Indian courts), and 10-year time-limit on the cases to be adjudicated by the claims commissions.
Finance & Economy
PepsiCo to stop sugared drink sales in schools globally
Pepsi has started planning how to pull its sugared soft drinks out of all schools in India, in line with its commitment to stop sales of the products from primary and secondary schools globally by 2012.
Pepsi’s ‘Get Active’ programme includes expanding physical education and promoting nutrition education, along with portfolio transformation towards more nutritious products.
Pepsi and rival Coca-Cola adopted guidelines to stop selling sugared beverages in US schools in 2006. Coca-Cola has said it won’t sell sugared drinks in primary schools worldwide unless asked.
Coca-Cola does not sell sugary drinks in primary schools in India and it also does not directly market carbonated drinks in schools, a company official said.
Sales of aerated soft drinks at schools in India account for less than 2% of the sales of the cola-makers.
There is a sharp pickup in the annual rate of inflation based on the wholesale price index from 8.56% in January to a 16-month high of 9.99% in February 2010.
There is growing evidence that inflation is no longer confined to primary articles and has spread to the two other main groups — fuel, power, light and lubricants and manufactured products.
While the index for food articles declined by 0.1% over the previous month, that for manufactured articles rose by 0.6% and the fuel group index rose by 1.5%.
What would be the impact of changes in capital grains taxation that would be brought in by the Direct Taxes Code?
India has been consistently the top recipient of worker remittances for almost a decade now. According to the World Bank figures, India received remittances worth $51.6 billion in 2008. But 2009 is expected to record a dip to $47 billion on account of a lagged response to a weak global economy.
This superlative performance is attributed to some structural factors. To know them, take a look at this piece.
What is bonus stripping?
In bonus stripping, investors buy shares of companies which have announced bonus issues, and subsequently, sell the original holding at a loss once the stock becomes ex-bonus. This loss can be adjusted against their capital gains on other holdings. The bonus shares are held for a period of twelve months to claim exemption from long-term capital gains tax.
Reading about Lincoln Cathedral in today's ET, we were confronted with the following question.
What is the difference between a chapel, a church, a cathedral, and a basilica?
And we found the following answer appealing:
A cathedral is the chief church of a diocese in which the bishop has his throne.
Basilica has both an architectural sense and a canonical sense. In the canonical sense, the term usually refers to major buildings. Major basilicas include St. Peter's, St. John Lateran, St. Mary Major, and St. Paul-without-the-Walls... one of the features of major basilicas is that they have a "holy door". The pope can declare a particular church as a basilica.
"Chapel" is a very broad term, and can apply to anything from a section of a much larger church or cathedral, to small buildings. The word itself is associated with the idea of relics, since it is drawn from the idea that St. Martin divided his cape (chapelle) in half and left half with a beggar.
"Church" is a word that covers pretty much everything given above... generally any building set aside "in perpetuity for the public exercise of Divine worship."
On our defence spending and procurement processes
National defence accounts for 13% of the central government expenditure and if military- and security-related components of other ministries or departments like the ministry of home affairs, department of atomic energy and department of space are taken into consideration, the larger national security considerations actually consume more than 20% of the total expenditure.
Is India spending too much on national defence? If global data are to be believed, the answer is ‘no’. Consider this: Indian defence expenditure accounts for less than 2% of the global military expenditure which stood at $1.46 trillion in 2009; its resources allocations are way behind its counterparts in the West while it is less than half of what China is spending (although Chinese military budget witnessed a mere 7.8% growth in 2010, pegged at $78 billion).
Indian defence expenditure accounts for less than 2% of its GDP but 13% of its total expenditure.
We all know (in fact have been witnessing) the tardy military procurement processes of our country. What will you suggest to improve the situation?
Many of us know that it is the institutional mechanisms that are largely responsible for delays in equipment procurement. First, institutional mechanisms on matters related to national defence are rigidly structured and operate in secrecy. This needs to change — incremental changes from within through reforms can address this problem.
Second, long-term military planning must be carefully crafted in order to make a fine balance between aspirations and reality. A look at the last five years acquisition scenario suggests that most of the weapons procured or in the pipeline are for replenishment purposes rather than force multiplication.
Third, while right sizing the armed forces in tune with modern times is desirable, the need to prune further the ‘revenue’ component, which still hovers around 60-62% of the defence expenditure, must be carefully worked out in order to achieve the objectives of nurturing a modern flexible fighting force. In every component, there is scope for pruning, whereby more funding could be allocated toward capital purchases. Even capital expenditure can bring in better value for money if import dependency is reduced through indigenisation processes.
Food & Wine
India made single malts
For those of you who taste for liquor, this story will be interesting. Finally Indian single malts have arrived on the scene. It is about a brand called Amrut.
Compound leaf of a fern or palm or cycad
Delicate and intricate ornamentation (usually in gold or silver or other fine twisted wire)