Politics & the Nation
  • On the effectiveness of affirmative actions
    • Any form of affirmative action must have two essential characteristics for it to be effective: one, it must not kill the incentive to excel among the beneficiaries, and two, it must not reinforce perceptions of inferiority.
    • When competition among the beneficiaries of reservation is intense, the incentive to excel is retained. However, outright reservations fail the second test and are, therefore, an imperfect tool of empowerment.
    • Yet, an imperfect design is better than no form of affirmative action at all.
Finance & Economy
  • Is everything OK with MFIs in India?
    • Take a look at this news report which says that some MFIs in Kolar in Karnataka have together lost about Rs. 60 crore on the back of a fatwa issued by the Anjuman Committee.
    • Though the RBI is in denial mode about the problem being systemic, the development does give some jitters.
  • What is the case for a rethink of the proposed base rate regime?
    • Here is an excellent article. Some excerpts:
    • The ostensible problems with BPLR are lack of transparency resulting in as much as two thirds of bank lending being at less than BPLR, its inability to function as an effective mechanism to transmit changes in monetary policy and its observed downward stickiness.
    • In essence, the proposed base-rate regime presents the average costing method as a superior alternative to the marginal costing method in pricing bank credit and the draft circular goes as far as prohibiting banks from lending below the base rate except for lending under the differential rate of interest (DRI) scheme, which accounts for less than 1% of bank lending.
    • The fact is that in most banks, the net interest income is less than the bank’s total expenses and it is only the other income comprising of commissions, fees, etc, earned by rendering non-lending services to clients that makes the banking system profitable.
  • Trends in civil aviation
    • Low cost airlines are finding new sources of revenue to keep flying costs low.
    • Ryanair, which is Europe’s largest lowcost airline, generates around 16% of its revenue from non-ticket sources. A rise in travel insurance, on-board sales and excess baggage charges largely contributed to the airline’s ancillary revenues.
    • As per an estimate, domestic low-cost carriers are generating only 5-6% revenue from their ancillary sources as against a global benchmark of 20%. The airlines are, however, targeting larger share from non-ticket sales by offering more paid services.
    • With budget airlines having low operating cost on account of one-type fleet, almost insignificant distribution cost, oneclass configuration and point-topoint connectivity they are able to keep tariff low.
  • What is plaguing the MFI industry?
    • Policy makers would like to believe that all is well with the MFI industry. But that appears not to be the case. Though very long, this article is a must read to get a grip of the situation. Take a look. Some excerpts worth our attention:
    • While repayment rates continue to be almost perfect, multiple borrowings are rising alarmingly, triggering concerns that some of these borrowers might be falling into a debt spiral as they borrow from one MFI to repay another. In the last year alone, there have been concerted actions by communities in Karnataka, Uttar Pradesh, Orissa and elsewhere to block repayments. There has been labour trouble in Nagpur, Warangal and Karimnagar and matters have reached a point where a handful of banks, notably ABN Amro, increasingly unsure about the quality of the loans, have capped their exposure to MFIs.
    • studies as saying that 25% of borrowers in Kolar had more than five loans, while three loans was the average for all borrowers. Take Karnataka, and the penetration of microfinance loans among poor households stands at 263%. In Andhra, the number is a staggering 823%.
  • What is the ideal debt to GDP ratio?
    • 90% is considered the threshold point after which debt begins to seriously drag down long-term growth.
    • At 180%, Japan has the world’s highest level of public debt as a share of GDP whereas in countries such as Greece and Italy, the ratio is around 120%. Public debt in the US will be at 90% of GDP by the end of this year.
    • Economists Kenneth Rogoff and Carmen Reinhart write in their paper ‘Growth in a time of debt’ that when government debt as share of the economy exceeds 90%, median growth rates fall by 1% and the mean levels of growth decline by an even more substantial 4%.
  • 82nd Academy Awards - Oscars
    • "Hurt Locker" by Kathryn Bigelow and "Avatar" by James Cameron vied with each other by securing 9 nominations each. But it was Hurt Locker that swept the Oscars this year. The fact that both the Directors used to be married to each other, only heightened the sense of a movie-like plot within the Oscars.
    • Hurt Locker won for: Best Picture, Best Director, film editing, sound editing, sound mixing and original screenplay. This is the first ever time that a woman Director won the Best Director award.
    • Avatar won three awards: art direction, cinematography and visual effects.
    • Best Actor: Jeff Bridges for his role in "Crazy Heart"
    • Best Actress: Sandra Bullock for her role in "The Blind Side." Incidentally she is perhaps the only actress who won the Razzies and also the Oscar -- all within a week! Hope you know that Razzies are given for worst performances.
    • Best supporting actress: Mo'Nique for “Precious: Based on the Novel ‘Push’ by Sapphire”
    • Best supporting actor: Christoph Waltz for "Inglourious Basterds."
  • Auction for new IPL teams bombs
    • The much-awaited auction of the two new Indian Premier League, or IPL, teams was washed out on Sunday after the governing council of the popular Twenty20 cricket tournament decided to change the bid documents.
    • Potential bidders were reportedly uncomfortable with one of the preconditions that required them to have a net worth of $1 billion. This condition will now be dropped.
    • Such a pre-condition was not there when the first tendering process began two years ago while selling the existing eight teams.
    • The two new teams will participate from the fourth season of IPL in 2011.
    • The franchises up for bids include Nagpur, Pune, Ahmedabad, Kanpur, Dharamshala, Indore, Cuttack, Gwalior and Visakhapatnam. The two cities attracting the highest bids will join the eight existing IPL teams.
    • IPL — a property of the Board of Control for Cricket in India (BCCI) — is a tournament in which teams represent cities. The franchise for a city is sold through an auction process, which has attracted attention from many companies and wealthy individuals in this cricket-crazy country.
    • IPL auction is not the only BCCI property to have found no takers in the recent past. In November last year, there were no takers for the logo on the jersey of the Indian cricket team. As a result, BCCI was forced to sign a three-month extension with Sahara, the current sponsor.
  • parlous: Adjective
    • Fraught with danger
    • eg: The parlous state of IR resources is a reality.
  • sedulous: Adjective
    • Marked by care and persistent effort
    • eg: IR is an invaluable institution built up sedulously over acentury and a half.
  • bailiwick: Noun
    • The area over which a bailiff has jurisdiction; A branch of knowledge
    • eg: Even while tending their bailiwick, ministers can still adhere to the essential task ahead and see the larger picture of the IR’s real needs.
  • passel: Noun
    • often followed by 'of') a large number or amount or extent
    • eg: A passel of companies in sectors as diverse as information technology and banking and financial services are bracing to give bonuses as they look to retain and woo key talent, buoyed by the prospect of promising days ahead.