23.03.2010

Politics & the Nation

• 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.
• Take a look at this news story for more details.

Finance & Economy

• Billion dollar companies in India Inc
• 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.
• Key suggestions
• 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.

Technology

• 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.

Sport

• 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.

Language Lessons

• conflate: Verb
• 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 ...