20.05.2010

Politics & the Nation
  • 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.
    • This ET in the Classroom column explains to us as to the impact of the auctions on the fisc.
    • 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.
Language Lessons
  • 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.
  • smorgasbord: Noun
    • A collection containing a variety of sorts of things

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