The National Advisory Council (NAC), led by Sonia Gandhi, will get down to business this week itself with the Congress leadership finalising a list of 10 members. While four members of the previous NAC—Aruna Roy, Jean Dreze, NC Saxena and AK Shiva Kumar—will be back in the panel’s new avatar, there are six additions. These include MS Swaminathan, V Krishnamurthy, Narendra Jadhav, Mirai Chatterjee, Farah Naqvi and Harsh Mander.
The decision to revive the NAC came in the backdrop of signs of unease within the Congress over a drift in the implementation of social sector schemes and a demand for political oversight over the important vote-mopping programmes. Party leaders were of the view that the organisation should take charge of shaping legislations aimed at guaranteeing food security and health schemes.
The previous NAC, formed in 2004, had steered through the government’s flagship schemes such as the NREGA and the RTI. But the panel lost its clout after Ms Gandhi quit the post of chairperson in March 2006 following the office of profit controversy.
The composition of the new NAC suggests the advisory panel will play an interventionist role.
India rejects Pak’s water allegations
India rejected Pakistan’s charge that it was being deprived of its share of common waters. On the eve of the bilateral talks on water here, New Delhi asserted that it has never deprived Pakistan of its share of water, not even during wars and had no intention to do so ever.
The water resources minister’s statement comes in the backdrop of Pakistan’s threat to move the World Bank for arbitration over Kishenganga power project in Jammu and Kashmir, which it alleges violates the 1960 Indus Water Treaty as water would be diverted. Pakistan is said to have appointed two arbitrators to contest its case, though it is yet to formally approach the World Bank.
Pakistan is also objecting to construction of two other hydel power projects —Uri-II and Chutak —in Jammu and Kashmir. These issues are expected to come up for discussion during the meeting of Indus Water Commissioners here on today.
The 240 mw Uri-II hydel power project is being constructed on Jhelum river in Kashmir Valley. The 44 mw Chutak project is being constructed in Kargil district of Jammu and Kashmir’s Ladakh province and would harness the hydropower potential of Suru river.
Pakistan claims that the construction of the Chutak project would block 35,000-feet per acre water. India maintains that there is no violation of the treaty and is expected to demonstrate this at the meeting.
Under the Indus Water Treaty, Pakistan has exclusive right over three of the common rivers — Indus, Jhelum and Chenab — while India has exclusive right over Sutlej, Ravi and Beas.
Finance & Economy
Anil teams up with CBS for small-screen debut
Anil Ambani’s Reliance Media World will form an equal joint venture with iconic American media company CBS Corporation to launch a potentially disruptive network of television channels under the brand BIG CBS. The companies have reportedly reached an agreement on the JV and an announcement is expected to be made this week.
There is no restriction on foreign investment in TV channels, except in news. Reliance Media World is a Mumbai-listed company belonging to the Anil Dhirubhai Ambani Group (ADAG).
The joint venture will start operations from January next year and will launch a slew of channels, starting with those featuring syndicated content from CBS, which owns several hit shows such as NCIS, The Young and the Restless, CSI and America’s Top Model, as well as sitcoms such as Two and a Half Men. The JV will eventually enter the Hindi general entertainment space, which corners most of the television ad revenues. The company will launch movie channels as well as regional entertainment channels, but won’t enter the news space.
Reliance Media World operates FM station BIG 92.7.
A definition and a few examples of 'frugal innovation'
Frugal innovation is a whole new management philosophy, which integrates specific needs of the bottom of the pyramid markets as a starting point and works backward to develop appropriate solutions which may be significantly different from existing solutions designed to address needs of upmarket segments. We Indians are natural leaders in frugal innovations, with our ‘jugaad system’ of developing make-shift but workable solutions from limited resources.
GE MAC 400, a hand-held ECG device, Mahindra Geo, a low-cost fuel-efficient minitruck, Godrej Chottukool, battery powered refrigerator and Tata Swachh, water purifier, are examples.
Some stats about financial inclusion
Despite having amongst the world’s largest network of about 79,000 banking outlets, we still have just 15 crore saving bank accounts for a population of 118 crore.
What explains the high volatility in the rupee?
Take a look at this graphic which explains the issue very succinctly. Worth a read.
Who is the Census Commissioner of India?
He is the news because he is reportedly trying to make the Census data available much sooner than what it used to be earlier. The results of the 1991 census were available eight years after the survey while the release of the 2001 census data began only in 2006. He is reportedly trying to make a whole range of decision support system tools available along with the data this time.
How old is a sovereign default?
The first recorded sovereign defaults occurred in the fourth century BC in Greece. A group of city-states defaulted on loans from the Delos Temple.
Devoid of intelligence
eg: ...In that context, reports that the film Rajneeti has been vetted by the thought police of the Congress party — lest the foreign-looking protagonist and some dialogues of the film lead audiences to draw unkind parallels to some people and events — seems utterly fatuous.
Maoists once again unleashed their bloody campaign against innocent civilians, derailing a passenger train in West Bengal early on Friday that killed at least 71 people and injured 150. They struck even as the hapless passengers slept, stealthily ensuring that the Howrah-Kurla Gyaneshwari Express passed over an undone track. The ferocity of the impact, being blamed on missing fish-plates, ensured not only the derailment of 13 coaches but also a subsequent collision with a goods train, thus maximising casualty.
Though attacks on trains are not new for the Maoists, the central motive so far was to garner high publicity and cause large-scale public inconvenience than to inflict casualty. The attack appears to be part of a new lethal strategy of the Maoists to hit at infrastructure and connectivity, even at the cost of civilian lives. They did succeed to an extent on Friday: there is talk of suspending night train services through the Maoist-infested areas, spread over five states, and ensuring stricter compliance of the speed limits prescribed for trains negotiating these stretches.
The latest attack is also timed in the middle of the ongoing tactical counteroffensive launched by the Maoists on April 15, 2010. The Naxalites undertake this tactical counter-offensive over three months every year, basically to assert their nuisance value and dominance ahead of the lull that sets in during the monsoon. Ironically, most of the high-casualty Naxalites attacks have come during this offensive, including the recent killing of 35 civilians and SPOs in an attack on a passenger bus in Dantewada.
Finance & Economy
On why the RBI's intervention to boost liquidity is wrong
The RBI has announced special measures -- additional support up to 0.5% of banks’ net demand and time liabilities and waiver for not maintaining the mandatory 25% statutory liquidity ratio (SLR) -- to boost liquidity in the wake of the transient liquidity crunch that is expected to result out of the payments to be made by the successful 3G bidders and advance tax payments. Is such an intervention correct? ET gives its reasons as to why it is bad:
Intervention sends a wrong signal; it suggests the RBI is a soft touch and if there is a pressure on funds in future as well, there will be pressure on the central bank to come to the rescue. Easy availability of funds is also likely to make banks complacent about their asset-liability management and, more dangerously, encourage them to finance those who have won bids regardless of creditworthiness and commercial viability. The RBI’s intervention should be limited to situations where the imbalance between demand and supply is structural, not due to transient factors. Central banks need to look at the larger macro picture, not get carried away by temporary ups and downs.
He identifies vanishing companies, fraud, manipulation, IPO scam, source of funds, compensation from investor protection fund as the broad areas for SEBI's working. An interesting essay. A must read.
IOC posts robust results
India's largest fuel retailer IndianOil Corporation (IOC) has reported a 247% jump in its net profit at Rs 10,220 crore for 2009-10 despite absorbing Rs 3,159-crore revenue loss on account of selling cooking fuel below cost.
This performance comes on the back of better refinery margins and higher capacity utilisation.
The company’s total turnover (including excise duty) for 2009-10 was Rs 2,71,074 crore. The overall petroleum products consumption in the country grew at 3.4% during the year, IOC managed to notch up a growth of 4.6%, registering a sales volume of 63.7 million tonne.
The company’s revenue loss of Rs 7,548 crore for selling petrol and diesel below cost was fully compensated through an upstream discount as per a subsidy-sharing formula for 2009-10.
But the government did not fully compensate its revenue loss on account of selling cooking fuel. It received a compensation of Rs 15,172 crore for selling cooking gas and kerosene below cost which was Rs 3,159 crore less than the total loss.
IOC is losing Rs 105 crore in revenues everyday on selling fuel below cost. The under-recovery (revenue loss) on petrol is Rs 5.06 a litre, Rs 5.31 a litre on diesel, Rs 18.80 a litre on kerosene and Rs 254.37 per LPG cylinder.
Should our tax code have provisions empowering the tax man to override the provisions in a bilateral treaty?
When countries like US have it -- albeit putting them to use only sparingly -- what is wrong in our tax code having such a thing?
It is a highly debatable issue. Think about it.
Day 6 action from Roland Garros
Roger Federer and Rafael Nadal set the winning example. The elite pair led a sweep of the top five with Federer into the fourth round and Nadal one behind in the third.
Andy Murray overcame a third set lapse where he won just 10 points, to roll Marcos Baghdatis 6-2, 6-3, 0-6, 6-2. Fifth-seed Robin Soderling beat Spain’s Albert Montanes 6-4, 7-5, 2-6, 6-3.
Australian grinder Lleyton Hewitt put in a five-set performance to oust Denis Istomin of Uzbekistan 1-6, 6-3, 6-4, 2-6, 6-2 for a third round spot against Nadal.
On the women’s side, Serena and Venus Williams also followed the winning script, with Serena winning her second round match over Julia Georges 6-1, 6-1 and number two Venus reaching fourth round with a 6-3, 6-4 defeat of Dominika Cibulkova.
Elena Dementieva outlasted Canadian Aleksandra Wozniak 6-7 (2-7), 6-3, 6-4, while Maria Kirilenko upset defending champion Svetlana Kuznetsova 6-3, 2-6, 6-4.
Only partly in existence; imperfectly formed
eg: From close to Rs 50,000 crore on May 21, 2010, the concluding day of the 3G auction, the amount deposited through the reverse repo window had come down to about Rs 6,000 crore by May 26, suggesting some incipient pressure on liquidity.
Verb: walk emphatically
Noun: A strip of pleated material used as a decoration or a trim; The act of walking with exaggerated jerky motions
A report (often malicious) about the behaviour of other people
eg: Of course, there is no reason to aver that Venus Williams’ supposedly diaphanous corset and flouncy tutu-like miniskirt, teamed with near-invisible flesh-toned Lycra underwear, had anything to do with her straight set victory over her Spanish opponent at the French Open in Paris, but it did make her the subject of needless scuttlebutt.
Canada appears to be going too far in rejecting visas for Indian officials
Take a look at this news report which lists out some of the grounds on which Canada has reportedly rejected visas for some of the Indian serving and retired officials.
We are surprised as to how a country like Canada can resort to such blatant rejections. May be we will hear more about this issue in the coming weeks.
Finance & Economy
Investors may soon get to bet on global indices from home
Capital market regulator — the Securities and Exchange Board of India, or Sebi, — is close to finalising rules that will pave the way for local stock exchanges to launch equity derivatives contracts on popular indices of foreign bourses. The equity derivatives contracts on the S&P 500 and the Dow Jones Industrial Average (DJIA) indices will be the first to be offered to Indian investors through the National Stock Exchange, or NSE.
The move will enable domestic investors to bet on the US markets with the help of futures without currency risks, as the product will be rupee-denominated. Brokers said local investors would be able to benefit from sharp moves in the US markets for over an hour, as futures contracts on the US bourses open for trading at about 2:00 pm IST.
A futures contract is an agreement that allows an investor to bet on the underlying asset — an index or stock — for a pre-determined price and period.
Swiss banks woo back Indian clients
The famously secretive Swiss private banks are trying to persuade Indians to bring back the money they have pulled out from their numbered accounts in these banks.
In the last one year, more than a hundred Indians with secret accounts have shifted money from Switzerland to banks in Dubai Free Trade Zone and Singapore amid fears of regulatory and government action.
What is a numbered account and what convenience does it offer?
A numbered account with Swiss banks reportedly offers unparalleled transaction convenience. The client does not have to write a cheque for any transaction, but simply call up a dedicated relationship manager and share a code given by the bank to complete the transaction.
The manager uses a voice recorder to cross-check that the caller is indeed the holder of the numbered account. A client can call up from anywhere in the world to operate the account. Clients draw comfort from the belief that in case of enquiries the bank will do whatever it takes to protect the account holders’ identities. Till three years ago, these accounts offered an interest of 1-1.25%, but that has now stopped.
How is the GDP growth going to be?
GDP numbers for the last quarter of 2009-10 and for the full year are set to be announced on May 31. Take a look at this graphic which discusses how the growth is going to be.
Look at this news story also in this context. Well worth a read. This time the GDP numbers are attracting lot of attention because for the first time ever time the manufacturing sector is expected to contribute more to the national income than the farm sector. This is a major shift that happens to the Indian economy.
Foreign investors will have to take security pledge now
Foreign investors will be required to give a commitment that they will not do anything detrimental to India’s interest as the government looks to tighten scrutiny of foreign direct investment, but experts say the regulation is not so innocuous.
India has attracted $131 billion in foreign investment since 1991, when it opened its economy to foreign investors. Over 40% of this has come from Mauritius, which means its actually a third country investment, the origin of which may be difficult to trace.
Since enacting a new legislation will take time, the department of industrial policy and promotion (DIPP) has proposed making a security declaration mandatory for all foreign investors irrespective of the sector they plan to invest in. The rule will apply to all sectors including those on the automatic route and not requiring Foreign Investment Promotion Board’s approval.
Apple is the most valuable company
As of Wednesday, Wall Street valued Apple at $222.12 billion and Microsoft at $219.18 billion. The only American company valued higher is Exxon Mobil, with a market capitalisation of $278.64 billion. The revenue of the two companies are comparable, with Microsoft at $58.4 billion and Apple at $42.9 billion. Microsoft is sitting on more cash and short-term investments, $39.7 billion, to Apple’s $23.1 billion, which makes the value assigned by the market to Apple – essentially a bet on its future prospects – all the more remarkable.
Google, with a market cap of $151.43 billion, also appeared to leap ahead of Apple in a new potentially important area, Internet-connected televisions. And Google is steering consumers toward yet a new model of computing in which Internet applications, rather than iPhone or desktop applications, rule.
Apple and Microsoft initiated the personal computing revolution in the late 1970s, but Microsoft quickly outflanked Apple and grew to be one of the most profitable businesses ever created. A little more than a decade ago, Apple, which had pushed out Jobs in 1985, was widely believed to be on the path to extinction. Michael S Dell, the founder and chief executive of Dell computer, went so far as to suggest that Apple should shut down and return any money to shareholders. (The computer maker is now worth about a tenth of Apple.)
US GDP grows, but a tad less than forecast
Gross domestic product expanded at a 3% annual rate, the Commerce Department said on Thursday, below its initial estimate of 3.2%. That surprised analysts who had expected growth to be revised up to 3.4% after monthly data pointed to stronger consumption and capital spending.
New applications for state jobless benefits dropped 14,000 to 460,000 last week, above market expectations for a fall to 455,000.
Ever wondered about the difference between 'rule' and 'regulation'?
Take a look at this convincing explanation given by Alok Sheel:
Regulation comprises a set of rules usually applicable to providers of specific services.Unlike laws and rules,regulations are applicable only to players engaged in particular activities, such as banking, insurance or motor driving. A rule or law, on the other hand,such as abjuring violence,is applicable to everybody at all times. Regulation also frequently has the effect of imposing additional compliance costs on players, although they may not always be easy to measure because it also has the effect of mitigating negative externalities, and hence involves complex cost-benefit analysis. Costs incurred through penalties imposed for non-compliance are easily quantifiable.
Take a look at this graphic which gives some cryptic details of the agreement reportedly reached between the brothers.
Pepsi India touches eco watershed, gives back more than it takes
The Indian arm of PepsiCo has become the first of its global units to put more water back into the environment than it consumes, the company said.
The beverage giant has achieved ‘positive water balance’ by recharging 6 billion litres and using 5.17 billion litres during 2009 with a net saving of 836 million litres. PepsiCo, which has 45 beverage bottling and snacks plants in India, said the figures were verified by audit firm Deloitte Touche Tohmatsu India.
PepsiCo said it has achieved water balance through conservation in agriculture to substitute transplanting of paddy with direct seeding technology, community programmes like construction of check-dams and recharge ponds, and rain or roof-water harvesting.
But environment activists are not entirely pleased with PepsiCo’s efforts. Sunita Narain of the Centre for Science and Environment said she would like to see companies achieve positive water balance, but this must happen within their factory compounds.
Should Air India be wound up?
What is the case? The troubles of the ailing behemoth go far beyond the union scrapes.
As many efficient players are now available for meeting the economy's needs without bleeding the exchequer, Air India should be given the go bye.
The combined losses of the National Aviation Company of India (Nacil), formed by merging Air India and Indian Airlines (IA), were estimated at a staggering Rs 5,448 crore in 2008-09.
Air India is also saddled with all the ills associated with state ownership. Political interference, policy inaction and patronage of vested interests have stifled the airline.
Most countries have got over the idea of owning a national flag carrier. The world's big airlines are publicly listed with dispersed shareholding. India should follow.
Therefore, the government should extricate itself from the mess rather than throwing in more money.
We were forced to think on the above lines because of the recalcitrant and irresponsible behaviour of the Air India employees unions who declared a wildcat strike even as the corpses from the Mangalore tragedy are being shipped all over the country. The Delhi High Court judgement declaring their strike illegal and staying the proposed ones, had hopefully driven some sense of purpose and responsibility in the unions and their members.
OECD upbeat about World economy
The Organization for Economic Cooperation and Development (OECD) raised its growth forecasts for this year and next as emerging economies such as China outpace debt- burdened developed countries to drive the global expansion.
The economy of the OECD’s 30 members will grow 2.7% this year, more than the 1.9% predicted in November, the Paris-based group said on Wednesday in a report. Including non-members such as China, the global economy will expand 4.6% this year and 4.5% in 2011, compared with an average of 3.7% during the decade through 2006.
What is the Little Festival about?
This is a festival about developing artistic sensitivities in children being organized in Chennai. It aims to bring child-oriented productions from different countries to the city stage.
The first edition of ‘The Little Festival,' which will run from June 10 to 19, promises to provide the city's children with a colourful escape into a world where magic reigns supreme. Comprising three performances, which will be staged across 10 shows at the Museum Theatre, Egmore, the International festival brings together Germany, Korea and Chennai on a single stage.
Wait in hiding to attack; Put in a dangerous, disadvantageous, or difficult position
eg: The government will launch a joint venture with private players to build roads under its protection in Naxal-dominated areas where companies fear to tread on their own, taking head-on a bottleneck that has long scuppered welfare schemes and security initiatives.
A harsh noise made by scraping; An abraded area where the skin is torn or worn off; A deep bow with the foot drawn backwards (indicating excessive humility); An indication of damage
eg: Though the strike was called off on Wednesday, the troubles of the ailing behemoth go far beyond union scrapes.
A temporary police force
Blatant or sensational promotion; [Brit] Game in which a ring is thrown to fall over an object and win it as a prize
Pak Supreme Court lets off Hafiz Sayeed, the Mumbai 26/11 plotter
Pakistan’s Supreme Court on Tuesday dismissed appeals challenging Saeed’s release from house arrest. The Lashkar founder, who is accused by India of masterminding the Mumbai terror attacks, was released by the Lahore High Court on the grounds that there was not enough evidence against the Lashkar founder. Now, Pakistan’s Supreme Court has upheld the high court order.
India has expressed disappointment with the Pakistan Supreme Court verdict allowing Lashkar founder Hafiz Saeed to remain a free man and hoped that Pakistan would take meaningful action to address Indian concerns.
The development on the Saeed front comes ahead of the latest dialogue initiative that is aimed at reducing the trust deficit between the two countries. Prime Minister Manmohan Singh had said on Monday that trust deficit remains the biggest problem between India and Pakistan and that the two countries could move forward towards substantive negotiations only after addressing this issue.
But Saeed continues to be an area of disagreement between India and Pakistan. Saeed was put under house arrest in December 2008 after the Mumbai attacks. Subsequently the UN Security Council declared the JuD a front for the LeT. In spite of the UNSC order, Saeed was able to challenge his incarceration successfully. A three-judge bench of the High Court ruled on June 2 last year that the Punjab and federal governments had failed to provide sufficient evidence to keep him in custody. Due to the international pressure an appeal was filed in the Supreme Court last year.
Former Haryana DGP gets 18 month jail term
Former Haryana DGP S P S Rathore was arrested for the molestation of Ruchika Girhotra after a sessions court in Chandigarh extended his prison term from six to 18 months on Tuesday.
This is the first time that Mr Rathore has been sent to jail for the molestation of the teenager in August 1990. Though a CBI special court had sentenced him to six months of rigorous imprisonment on 21 December 2009, Mr Rathore had appealed against the decision. The 14-year old he molested had committed suicide three years after the incident.
Additional district and sessions judge Gurbir Singh dismissed the 68-year-old Rathore’s appeal and enhanced his prison term. He also directed that Mr Rathore should be taken to the local Burail jail immediately.
The late Ruchika’s father S C Girhotra said that the family was “satisfied as justice has been delivered” but added that the family would continue the battle against Mr Rathore until he is charged with abatement to Ruchika’s suicide.
Finance & Economy
Markets tumble on fresh euro shocks
Stocks and commodities fell across the globe on Tuesday, on growing fears that the euro-zone sovereign debt crisis may deepen, adding to the uncertainty on economic growth. The ripple effect of this was felt back home where the benchmark indices slid close to 3%, as foreign investors continued to dump Indian shares in a flight to safer dollar-denominated assets.
The markets dropped on fresh concerns relating to the banking sector in Europe, especially Spain, and the threat of a face-off between North and South Korea.
The London inter-bank offered rate, or Libor, the rate at which banks lend to each other for three months, also rose, triggering fears of a credit squeeze.
The rupee fell to an eight-month low against the dollar, mirroring the weakness of the euro, which is being battered. A weakening rupee erodes the value of the holdings or the portfolio of overseas investors, but leaves policymakers in India free for now from having to unveil new measures to stem the inflow of foreign funds.
Gold rose as investors chose to buy into this safe haven asset. On Tuesday evening, gold rose 1.8% to close at Rs 18,659 in the Mumbai bullion market, an all-time high, tracking overseas cues.
However, base metals and crude oil also tanked, but the 1.5% decline in the rupee cushioned their fall on the local commodity bourses.
Foreign investors dumped shares worth Rs 1,460 crore on Tuesday, according to provisional BSE data.
Why should Indian investors be worried over problems in Europe?
Investors in India appear worried that the turbulence in Europe would freeze credit markets and prompt more selling in emerging markets that are considered riskier, including India. Foreign portfolio investors have invested close to $5 billion, or Rs 21,565 crore, so far.
What does the VIX portend?
India’s volatility index (VIX), a measure of traders’ perception of near-term risks in the market based on options prices, rose 10.3% to 34.52 on Tuesday. A rise in this index signals that traders are ready to pay an extra cost to buy options to protect themselves from sharp movements. The index mostly traded in the 16-21 range in the months before the euro-zone crisis broke out.
The case for adopting IFRS by SMEs
The phased implementation of IFRS (International Financial Reporting Standards) begins next year. The IASB (International Accounting Standards Board) has reportedly made a lighter version of IFRS available for the SME sector in view of the huge costs involved in implementing the fuller version. Besides, the IFRS reportedly depresses valuation of businesses. That being so, what is the case for adopting IFRS by SMEs?
Voluntary adoption of the new accounting standard would make financial statements of the SME sector comparable with those of similar entities elsewhere and more transparent. This would be particularly useful when partnerships are sought to be forged with entities overseas or when businesses need to raise funds. The rigorous requirements of the IFRS, both the full and lighter version, would also serve to improve a company’s credibility, and that could help them access funds at lower cost.
Govt achieves 95% of FY10 farm credit target till Feb
The government has achieved 95% of its farm loan disbursal target of Rs 3,25,000 crore for 2009-10 fiscal. Banks extended credit worth Rs 3,08,320 crore to farmers during April-February of last fiscal, against the target of Rs 3,25,000 crore.
According to official data, banks disbursed credit worth Rs 2,26,045 crore, cooperative banks extended Rs 52,282 crore and regional rural banks lent Rs 29,993 crore loan to the agriculture sector during April-February of last fiscal.
Govt plans to keep deficit targets off FRBM, wants leeway in times of crisis
The government plans to spin off deficit targets from the fiscal responsibility law and include them in the rules to afford more flexibility in times of economic exigencies, a move that could defeat the purpose of the law.
You might remember that the country passed the FRBM Act in 2003. The objective was then to eliminate revenue deficit by 2009-10 through an annual reduction of 0.5 percentage points. The fiscal deficit was to be cut to 3% of the GDP, reducing it by 0.3 percentage points every year.
Fiscal deficit is the difference between total receipts less borrowings and total expenditure of the government, while revenue deficit is the gap between revenue receipts and revenue expenditure.
In the proposed arrangement, the government will re-notify the targets as rules to avoid the consequences of breaking the law and the elaborate legislative process that will be necessitated by it.
The government managed to meet the fiscal deficit target in 2007-08, but had to prop up the rapidly slowing economy through higher government spending after a crisis triggered by the global economic downturn. Fiscal deficit slipped to 6% in 2008-09 and 6.7% in 2009-10.
Real effective exchange rate (REER) -- an excerpt from today's first principle column
Exchange rate is the price of a currency that is based on the demand and supply factors in the foreign exchange market.
The Real Effective Exchange Rate (REER) is an inflation adjusted value that reflects the fundamental strength of a currency. This REER value is arrived at by calculating the weighted average of a country’s currency relative to a basket of currencies. The weights for different currencies are determined by comparing relative trade balances, in terms of one country’s currency, with each other country within the index. Unlike the spot market value, which is also driven by sentiments and has a speculative element, REER gives a currency trader an idea of the fair value of the currency and knows whether the currency concerned is overvalued or undervalued.
Many a times the market suspects that the central bank looks at REER to decide on the level of intervention in the currency markets.
A classic turns 50, and parties are planned
‘To Kill a Mockingbird’ from Harper Collins turned 50 and will be relived through at least 50 events around the US, in honour of the 50th anniversary of the publication of a book that became a cultural touchstone and an enduring staple of high-school reading programmes.
It tells the story of the small-town lawyer Atticus Finch, who defends a black man accused of rape.
Few novels have achieved both the mass popularity and the literary cachet of ‘To Kill a Mockingbird’. The book was originally published in 1960 by JB Lippincott and Co — now part of HarperCollins — won a Pulitzer Prize and has not been out of print since. It has sold nearly 1 million copies and in the past five years has been the second-best-selling backlist title in the country, beaten out only by the novel ‘The Kite Runner’.
Interest in the book intensified after the 2005 film ‘Capote’, in which Catherine Keener played Lee, and grew even stronger the next year, when Sandra Bullock played her in ‘Infamous’.
Afzal Guru was awarded death sentence by a Delhi court on December 18, 2002, after being convicted on counts of conspiracy to attack Parliament on December 13, 2001, waging war against the country and murder.
The death sentence was upheld by the Delhi High Court on October 29, 2003 and his appeal rejected by the Supreme Court two years later on August 4, 2005.
A sessions court also fixed the date of his hanging on October 20, 2006 in Tihar jail. Following this, Afzal filed a mercy petition with the President.
Finance & Economy
FDI in multi-brand retail set to get 100% backing
The commerce and industry ministry is likely to propose 100% foreign direct investment (FDI) in multi-brand retail, opening the doors to the likes of Wal-Mart and Tesco, but will suggest stiff local sourcing requirements and mandatory investments in backward linkages.
Though the earlier view within the department was to keep the FDI limit at 51%, same as in single-brand retail, it has veered around to keeping it much higher and even pegging it at 100% to have an intense debate on the subject.
The idea is that big multi-brand retail outlets should enable growth of small retailers and not threaten their existence.
Mandatory domestic procurement will ensure improved returns for farmers while strong backend linkages will contribute to the development of food processing and cold chains in the country.
The lack of cold chains in the country leads to wastage of about 40% of the farm produce, causing a loss of about Rs 50,000 crore annually, according to industry estimates.
To further prevent any danger to small shopkeepers, particularly in small cities, MNC retailers will be allowed to set up stores only in cities with population upwards of one million, as per the discussion paper being given finishing touches by Dipp. They will also have to have stores with a minimum built-up area as the government wants to ensure that these lead to employment generation.
Sebi wants rules tweaked to ensure promoters extend full voting rights to depository receipt holders
The Securities & Exchange Board of India (Sebi) has recommended a change in current rules to allow holders of American Depository Receipts or Global Depository Receipts issued by Indian corporates to exercise their voting rights, raising the possibility of increased shareholder activism in future.
Depository receipts, or DRs, are securities issued to overseas investors by Indian companies.
In September 2009, the capital market regulator had brought holders of such securities under the takeover code. Investors or holders of ADRs/GDRs are entitled to vote on the shares underlying or representing the receipts, but their rights are restricted by the clauses in the ‘terms of issue’ or agreements between the holders of these instruments and the issuers. In reality, their voting rights are as good as having none.
The regulator now wants to prevent Indian firms issuing ADRs/GDRs from incorporating provisions which curtail the voting rights of depository receipt holders and which empower the management to exercise voting rights on their behalf.
ADRs form a significant minority and if the custodian votes on behalf of the ADR holders and for the management, then the incumbent obtains additional support in its favour and would easily be able to control the company. Once the new rule is implemented, each ADR holder can exercise his vote either in favour or against the management, allowing each to have a unilateral say in the company proposals.
Look at how much the oil spill in Gulf of Mexico is costing BP (British Petroleum)
The total cost to BP of the disaster to date has reached about $760 million, or $22 million a day, compared with an initial estimate of $6 million a day last month.
The longer it takes, more costs are going to be incurred. The final bill, which may not be known for more than six months and depends on litigation, could be as much as $10 billion.
About £29 billion ($42 billion) has been wiped off the company’s market value.
Hope all of you have by now been acquainted with the disaster in Gulf of Mexico.
FIFA World Cup related stuff
The official mascot: a stuffed leopard with spiked green hair.
The official World Cup anthem: “Waka Waka (This Time for Africa),” was written by the Colombian pop star Shakira.
The official restaurant: McDonald’s.
Trivia about Indian cinema
The past few months have seen many ‘firsts’ for Indian films.
Aamir Khan’s Peepli Live became the first Indian film to compete in the World Dramatic section of the Sundance Film Festival; Udaan became the first Hindi film in 16 years to compete in the Official Selection at the Cannes Film Festival; and, for the first time an Indian film, 3 Idiots, grossed close to $7 million at the US box office.
Results from Cannes film festival
A surreal movie from Thailand about the reveries of a dying man was the surprise victor of the Palme d’Or at the Cannes film festival.
As Oscar winners Javier Bardem and Juliette Binoche took the main acting honours on Sunday, little-known arthouse director Apichatpong Weerasethakul’s “Uncle Boonmee Who Can Recall His Past Lives” won the best film award.
The director has been an outspoken critic of government censorship rules but his film steered cleared of politics, telling the tale of a man suffering from acute kidney failure who decides to spend his last days in the jungle where he is met by the spirits of the dead. Among the surprises, his son appears as a giant monkey and an old-world princess has watery sex with a talking catfish.
“Uncle Boonmee” is only the sixth Asian offering to win the top prize at Cannes in seven decades of the festival, and the first for more than 10 years.
While the best movie award went to Asia, the acting awards went to some of Europe’s biggest stars. Bardem, who plays a good-hearted terminally-ill hustler in “Biutiful” by Mexico’s Alejandro Gonzalez Inarritu, shared the best actor award with Italy’s Elio Germano, star of gritty social drama “Our Life”. Binoche was named best actress for her role as an unhappy art dealer in “Certified Copy” by Iran’s Abbas Kiarostami.
South Korean director Lee Chang-Dong’s “Poetry” was named best screenplay while Frenchman Mathieu Amalric won the best director prize for “On Tour”, about a troupe of buxom American stripteasers touring French seaside towns.
A former British bronze coin worth a quarter of a penny
Showing characteristics of age, especially having grey or white hair; Ancient
An abstracted state of absorption; Absentminded dreaming while awake
The government is planning to set up a huge Public Information Infrastructure. These kendras are what constitute the core of the PII. A Bharat Nirman Kendra — the computer centre at the heart of the exercise — that will act as the physical access point for exchange of information, will be set up in each of the country's 2,50,000 village panchayats.
The project is expected to change the way government programmes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme (NREGS), Right to Education (RTE), and others schemes are implemented on the ground.
The government is planning Wi Max or wireless broadband connections in each panchayat in the first phase of the exercise which may take up to six months and cost Rs 3,000 core. In the second phase, it will take fibre lines to each village over 18 months at the cost of Rs 9,000 crore.
The project is being executed under the guidance of Sam Pitroda, advisor to Prime Minister Manmohan Singh on infrastructure, innovation and information.
The government is reportedly considering using the corpus of Rs. 18,000 crore that is available in the USO fund (Universal Service Obligation) for this exercise.
Finance & Economy
Mukesh and Anil patch up
The family dispute that drew the attention of the whole of the country finally seems to be headed for some kind of solution.
Mukesh and Anil Ambani took a giant step towards ending their bitter feud by agreeing to scrap a set of agreements that had stirred up trouble between them. The two billionaire brothers said in a joint statement on Sunday afternoon that they had decided to end agreements preventing them from investing in industries where the other was present and pledged to work together in an atmosphere of harmony.
The two sides also said they would soon negotiate a new gas supply agreement in keeping with a May 7 ruling by the Supreme Court.
The poblem of U without Q
We were dumbfounded when we came across this phrase in today's ET. This is shortcut for universalisation without quality.
Smaller towns steal the attention of fast food chains now
Take a look at this graphic which gives some quick details of how the smaller towns in India are attracting the attention of the fast food chains. They have suddenly acquired a place of pride and importance in their scheme of things.
Banks to offer ‘clean loans’ to telcos for 3G spectrum buy
Banks have agreed to give clean loans — the industry term for loans against which there is no specific security — to telecom companies to acquire bandwidth for third generation (3G) mobile telecom licences. This follows a decision by the department of telecommunications (DoT) not to allow telecom companies to pledge the new 3G licence with banks to avail of loan.
At the time of the 2G spectrum auction, DoT, telecom companies and banks had entered into a tripartite agreement wherein the licence was pledged with banks to the extent of loan availed of by the telecom company. But, during 3G auction, the telecom regulator has forbidden pledging of licence as it would amount to a transfer. As a result, banks have decided to give loans to telecom companies against cash flow and corporate guarantees.
Banks are generally not very comfortable providing unsecured loans since they have to set aside more capital on such loans. Secondly, they do not have a security to fall back on if the borrower defaults.
Nonetheless, most banks are going ahead with such unsecured loans since most of these loans would be short term, as telecom companies are expected to replace the domestic borrowing with foreign borrowing in order to bring down their cost of funds.
Have you ever been at the receiving end of an ATM?
We have had experiences wherein ATMs dispense less cash and at first it will appear as if we can do nothing about it. But we have, to our surprise, found out that there is a redressal mechanism through which we can get some relief.
Now RBI seems to be mandating tougher norms for this redressal mechanism. Take a look. It will be of interest to us.
Restoring American Financial Stability
With the American Senate passing a bill to restore America's financial health which differed from the version that is passed by the House of Representatives, the stage is now set for a process called 'conference' through which the two versions would be reconciled and a final one emerges.
Take a look at this piece which gives cryptic details about it.
John Shepherd-Barron, the man who invented the world's first ATM in Enfield, London, in 1967, died on Saturday.
He had come up with the idea after wondering why banks couldn’t operate a system like a chocolate-vending machine.
The first product was installed at Barclays Enfield branch in London June 27, 1967.
On India's health insurance market
India’s insurance market is under-penetrated, with less than 15% of the population having a health cover in some form or other.
On inward remittances
Officially-recorded remittance flows to developing countries were $316 billion in 2009, of which around 16%, or $49 billion, flowed to India, making it the top recipient — ahead of China, Mexico and the Philippines.
The latest balance of payments data published by the RBI, however, puts the figure at $55 billion.
Remittance flows currently constitute around 4% of India’s GDP.
Why is that there will be a hike in electricity charges for most of the North India while there won't be a comparable hike for other regions?
The answer lies in APM gas and NTPC's electricity generation network.
The government is reportedly going to hike the price of APM gas. Natural gas produced by ONGC and Oil India from blocks given to them without competitive bids are termed as APM gas.
Gas-based power plants of NTPC drawing APM gas supply power mainly to north Indian states such as Haryana, Punjab, Delhi, Gujarat, J&K, Rajasthan and Himachal Pradesh. Only its Kayamkulam plant is Kerala supplies power to a few south Indian states.
Gas-based power plants account for only about 10% of the total generation capacity of about 1,55,000 MW. And APM gas is largely used by central utility NTPC that runs seven of its power plants (excluding RGPPL) with a total capacity of 3,955 MW on APM gas.
Against a requirement of 16-17 mmscmd of gas, NTPC sources only 8-9 mmscmd of APM gas for its plants at Anta, Auraiya, Dadri, Faridabad, Kawas, Gandhar and Kayamkulam. It also gets gas from RIL’s KG D-6 block and through spot purchases.
Maharatnas of India
State-owned blue chip companies Oil & Natural Gas Corp (ONGC), SAIL, NTPC and Indian Oil Corp (IOC) have been declared ‘maharatnas’, a status that gives them enormous financial powers and greater operational autonomy.
The new status empowers their boards make investments up to Rs 5,000 crore without the government’s approval. So far, these companies were classified as `navratnas’ with powers to take investment decision up to Rs 1,000 crore without the government’s approval.
The decision to name the top performing PSUs as Maharatnas was taken at the meeting of the Cabinet, presided over by Prime Minister Manmohan Singh in December last year. But a formal note was issued on Wednesday. The exercise of Maharatna powers would be subject to the same conditions and guidelines as laid down by the government in respect of navratnas from time to time.
Polish and make shiny
eg: The 55-year-old former trader is attempting to burnish the image of the once-venerable investment bank...
Displaying or suggesting a lack of maturity; Lacking interest or significance or impact; Lacking in nutritive value
eg: ... It has been made worse by the unexpectedly jejune statements by people in high office who should be expected to know better.
More on the issue of using 'development' to counter Maoist threat
Take a look at this op-ed penned by Mani Shankar Aiyar. He explains very clearly how PESA could clearly deal a severe blow to Maoist influence in tribal areas. An interesting read.
Is he joining ranks with Digvijay against Chidambaram?
Finance & Economy
3G auctions conclude
Four years of delay, 34 days and 183 rounds of frenetic bidding later, the auction of 3G mobile spectrum wound down on Wednesday, delivering an unexpected bonanza of Rs 67,719 crore ($15 billion) for the government’s dry coffers and paving the way for services such as video calling and highspeed internet using phones to be launched across India.
For auction-weary mobile firms already battling a savage price war, the end of the process marks the start of life under a pile of debt that could strain balance sheets for years, possible consolidation activity or network-sharing pacts between operators as losers look to plug service gaps to prevent customers from jumping ship.
The auction failed to throw up a pan-India licence holder. The country’s top two mobile firms—Bharti Airtel and Reliance Communications (RCOM)—each won 13 of the 22 telecom zones on offer while other major operators Vodafone Essar, Idea Cellular and Tata won a total of 9, 11 and 9 circles, respectively.
MR RAJA promised to release spectrum to all winners by September and said customers could have 3G services by the year-end or early next year.
Take a look at this graphic for the final picture that emerged out of the auctions.
How do you judge a clear winner from the auctions?
ET has come up with a model wherein the winning bid paid by each company for every Rs 100 crore of market potential in the circles they have won, is taken as a measure of smart bidding. And this is the result. That shows that Idea and Aircel have bid smartly.
A couple of downsides about these auctions:
By mobilizing about Rs. 68,000 cr through auctions, loanable resources to that extent will be transferred to the government through telcos. This could squeeze credit availability to industry in general.
The high revenue yield would prove a bane for state-owned telcos BSNL and MTNL, who have to match the bids by their successful private sector competitors for the 3G spectrum they already have.
TK Arun analyses the auctions quite well says that the bigger problem in this model is the obsolete idea of dedicated spectrum for a telco. He suggests that India needs to invest in technology that will create a real-time spectrum exchange, so that all the spectrum is available to all the telcos to service their customers, with the exchange matching demand for and supply of spectrum at every point of time, the usage charge accruing to the government right then and there. This is a departure from the legacy model of the west and puts people first. To understand more of this you must read this op-ed.
The auction involved multi-stage bidding that was conducted online in the nature of an ascending e-auction where bidders could log in from anywhere in the world. They were also able to access the electronic auction system (EAS) using standard web browsing software. To ensure a totally secure environment, pre-qualified bidders had also been issued authentication tokens (including passwords) to access the EAS safely.
Nobody had a clue about who is bidding, and more importantly, how much a company is bidding. In such a scenario, there is virtually zero possibility of cartelisation, which on the contrary can easily happen in an open auction.
In fact, to prevent a bidder from using specific bids to signal intentions to each other, the auctioneer had presented the bids in an ascending order. The bidders had to either accept the auctioneer's proposal or decline. This was unlike other auction systems where it is the bidder who quotes sums in an increasing order. India’s 3G airwaves auction continued for 34 days. Throughout the span of the auction, operators had to match the DoT’s base price, which was revised at each round.
NM Rothschild & Sons India and DotEcon Ltd were the auctioneers who designed the unique auction mechanism.
RBI to decide Indianness of banks now
The Reserve Bank of India will decide on the ‘Indian-ness’ of the country’s leading private sector banks as the government deliberates a solution for them without relaxing the provisions of the new foreign direct invesment policy.
The move will give reprieve to seven private sector lenders including ICICI Bank, HDFC Bank, ING Vysya, Development Credit Bank, Federal Bank, IndusInd Bank and YES Bank that have been branded as foreign banks under the current norms.
The issue arose out of Press Note 2 of 2009, which provided a framework for calculation of total foreign investment in Indian companies based on ownership and control of such firms. It has stated that all types of overseas ownership will be counted as foreign investment.
Further, any company with over 50% overseas investment would be considered foreign owned. It defines control as the power to appoint majority of directors on the board of a company. More importantly, all downstream investments by a foreign-owned company would be considered as foreign investment and be subject to sectoral caps and restrictions. After these norms had come out, the banks had taken up the issue with the RBI and had sought clarifications on their exact status and investments.
Thailand, India talk of replacing limited trade pact with FTA
India and Thailand are likely to restart talks on a full-fledged free trade agreement including goods, services and investments. Talks on an FTA were suspended after the two sides implemented a limited agreement involving just 82 items six years back.
Both countries want to double bilateral trade to $12 billion by 2012 from the present level of $5-6 billion.
India and Thailand signed an early harvest programme in 2004 under which the two sides agreed to eliminate duties on 82 items like television tubes, refrigerators, mangoes, apples grapes and some metals.
The EHP led to protests from the Indian industry which complained that Thailand had gained much more than India and the domestic market was flooded with products like television picture tubes.
The programme was not followed by a FTA because of disagreements related to the rules of origin (the rules which determine which products are to be considered as originating from the partner country and which are to be considered as originating from a third country) and political instability in Thailand.
Thailand is an important member of the ten member Asean group that has signed an FTA with India. A separate FTA between India and Thailand would give both countries the option of offering more than what has been agreed under the India-Asean FTA.
Indian tourists take an offbeat summer break
Egypt, Turkey, S Africa & Australia Top Favourite List
Indian tourists are reportedly dropping traditionally favourite destinations such as Western Europe and Thailand from their leisure travel list.
Tourists keep off Western Europe as ash clouds disrupt flights. Thailand takes a hit due to civil war.
Malaysia, Singapore, Sri Lanka and Hong Kong, meanwhile, are milking Thailand’s troubles.
Industry estimates say nearly 9 million Indians travelled overseas two years ago, of which at least 50% were leisure travellers, while the rest were those visiting families abroad or on business trips.
high jinks or high jinx
Noisy and mischievous merrymaking
eg: Once known primarily for skateboardriding cats, dancing geeks and a variety of cute-baby high jinks, YouTube now features a smorgasbord of more professional video that is drawing ever larger and more engaged audiences.
A collection containing a variety of sorts of things
In a shocking reminder to the governments, both at the Centre and in Chhattisgarh, about the uphill task they face in their efforts to restore order in the Naxalite-infested areas in the state, at least 47 people, including 32 civilians and 15 special police officers (SPOs) and local policemen, were killed and several others injured when the private bus in which they were travelling blew up under the impact of a landmine midway between Dantewada and Sukma late Monday afternoon.
They had, on April 6, killed 76 CRPF personnel in the Mukrana forests of Dantewada district, inviting popular outrage and all-round condemnation.
Some of the major Naxal attacks in the last two years:
April 6, 2010: 76 security personnel, of whom 75 belonged to the Central Reserve Police Force (CRPF), slaughtered by Maoists in the Chintalnar forested hamlet of Dantewada district.
April 4, 2010: Maoists detonate powerful landmine and blow up police bus in Koraput district, Orissa, killing around 10 Special Operations Group personnel and injuring 16.
March 23, 2010: Maoists blast a railway track in Bihar’s Gaya district, causing derailment of the Bhubaneswar-New Delhi Rajdhani Express. On the same day, a landmine attack in Orissa leaves an empty freight train derailed and hitting railway services on the Howrah-Mumbai route.
February 15, 2010: Around 100 Maoists storm a police camp in Silda, West Bengal, killing 24 policemen and looting arms.
October 8, 2009: 17 policemen were killed in an ambush by Maoists at Laheri police station in Gadchiroli district of Maharashtra.
July 27, 2009: Six CRPF men killed in a landmine blast by the ultras at Dantewada district in Chhattisgarh.
July 12, 2009: Three separate attacks in Rajnandgaon district of Chhattisgarh claim the lives of 30 security personnel.
June 23, 2009: A group of motorcycle-borne armed Maoists open fire on Lakhisarai district court premises in Bihar to free four of their men.
June 10, 2009: Nine security personnel, including CRPF troopers, ambushed by Maoists during a routine patrol in Saranda jungles in Jharkhand.
May 22, 2009: Maoists kill 16 policemen in the jungles of Gadchiroli, Maharashtra.
April 13, 2009: Around 10 policemen are killed in eastern Orissa’s Koraput district when Maoists attack a state-run bauxite mine.
A decent editorial comment in this regard:
The home minister, the prime minister, Congress president Sonia Gandhi and Congress leaders all are on record, on the need to have a two-pronged strategy to combat Maoist extremism: policing and development. Development is not just a question of better delivery of government schemes; rather, it begins with political mobilisation of the people to make them the subjects, rather than the objects of development. Once they have agency, a whole lot of problems related to leakages, targeting, etc, would disappear. Once people are politically mobilised, and have a stake in development, eliminating the Maoist security threat would become relatively easy.
He is the director general of the India Meteorological Department (IMD).
Finance & Economy
There is no case for tolerating the bankrupt politics that generates shortages and stampedes. Comment.
Made in the context of the stampede in New Delhi railway station that killed two people and left many injured, this is a truism in our country.
The stampede is the result of economics of shortage being at work. The supply of train seats is grossly inadequate to meet the demand. In a functional market, the price of whatever is in shortage would rise, leading to a fall in demand and a rise in the supply. However, in the case of trains, as with piped water supply and urban public transport, the market does not function. To say public policy intervenes to prevent the market working in these cases is to give bankrupt politics a good name. When the price of a good is kept repressed, it creates queues for the good in short supply, but also makes it affordable for a section of the population that would have been excluded by a price that cleared the market. This concern for the poor has been touted by our politicians as the reason for building a shortage economy for a variety of public services. This is the core problem.
What is the core issue in climate change negotiations?
Equitable sharing of carbon space. To put it in one sentence.
Take a look at this op-ed which explains the concept in detail. Very interesting read.
India's defence sector stats
India is among the top 10 countries in the world in terms of military expenditure
Defence spending budgeted at Rs 1,47,344 crore for 2010-11
The country imports 70% of its defence requirements
India's defence exports are 1.5-2.4% of the total production
FDI in defence was a measly $0.15 m over Apr ’00 to Feb ’10
RBI's proposed move on regulating holding companies raises alarm for big conglomerates
The central bank recently initiated a process to regulate large holding companies, typically those with assets of more than Rs 100 crore, mainly to restrict the recent rush toward raising easy money. It has also suggested limits on such holding companies to borrow. The central bank’s concern stems from the disproportionately high fund-raising by many of these companies with shallow capital base.
Most of India’s top corporate names, including the Tatas, the Aditya Birla Group, the Bajaj Group, the UB Group, GMR, have holding company structures that are essentially unlisted family-owned parent companies with equity stakes in all group companies. Holding company structures have been popular, as they allow fundraising at various levels, without the promoter losing control. It is also possible to own control of another company with less investment than is required in a merger or a consolidation. This is because a holding company only needs a controlling interest in the acquired company and not complete holding.
The business houses are against the draft measures, as they would mean imposition of limits on the amount of investment a holding company can do in a group company and also because the measures restrict holding companies from borrowing outside the group. RBI has suggested that holding companies can’t borrow more than 2.5 times their adjusted net worth from outside the group.
The draft guidelines also say that the holding companies need to have a minimum capital ratio whereby the adjusted net worth is not less than 30% of the aggregate risk weighted assets. Holding companies have been used to hold shares of subsidiary companies, as assets on the books of the parent company. These are then used as collateral for debt financing.
UK’s Conservative view on offshoring worries IT
The newly formed coalition government in the UK is reviewing at least six outsourcing contracts, including the $850-million pension administration deal signed by the Labour government with Tata Consultancy Services (TCS) earlier this year.
The move, which comes in the backdrop of UK’s mounting public debt and budget deficit, is likely to call into question the business plans of IT companies that were banking on the UK and continental Europe to spur their outsourcing business following the dramatic slowdown in the US during 2008-09. They are likely to face tough times as politicians in Europe grapple with rising unemployment and increasing anger over outsourcing and immigration.
The UK government’s IT spending is estimated to be over $36 billion every year. But the Conservatives plan to scale down large government IT projects.
US sees record capital inflows in March
Foreigners bought a record $140.5 billion of long-term US securities in March and more than doubled their purchases of US government bonds.
China remained the largest holder of Treasury debt and added to its holdings for the first time in seven months. Net Treasury purchases by all foreign investors jumped by $108.47 billion in March from $48.1 billion in February. Net foreign purchases of US corporate debt also jumped to $16 billion from a net outflow of $12 billion in February, and net purchases of US agency debt rose sharply to $21.9 billion from $2.4 billion.
China bought $17.7 billion worth of U.S. government debt in March, swelling total holdings to $895.2 billion. It was the first time China added to its Treasury stash since September. Japan remained in second place with $784.9 billion, up from $768.5 billion in February.
eg: Indians are still — above a certain age — obsessively Anglophilic, and finally, we’re highly chuffed to see the poor Brits struggling with something that we’ve learnt to live with long ago.
Delight in another person's misfortune
suss out: Verb
Examine so as to determine accuracy, quality, or condition
eg: Prolonged exchanges between the vendor and the buyer, sussing out other places offering more variety, squabbling over design and appearance are all part of the ceremony...
cross the Rubicon
To make an irreversible decision or to take an action with consequences