26.05.2010

Politics & the Nation

• 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.

International

• 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’.

Language Lessons

• pelf: Noun
• Informal term for money