Politics & the Nation
  • Corruption in CWG
    • A sampler:
      • A treadmill is being hired for 45 days for 9.75 lakh. A cross trainer for 8.8 lakh.
      • Diesel power will be generated at 80 per unit at some Commonwealth Games venues. The market rate is less than a tenth this.
      • Umbrellas are hired for 6,308 a piece and chairs are rented at 8,378 a piece for a month and a half?
      • Tissue rolls are purchased at 4,138 for bathrooms.
    • Such deals are just a sampling of the common-sense-defying contracts that have been awarded for Delhi 2010, which is less than two months away and enveloped in a thick cloak of scandal. Mr Kalmadi has denied any wrongdoing, maintaining that he has nothing to do with the projects that have at-tracted the attention of the Central Vigilance Commission. But the deals for the overlays — the treadmills, chairs, refrigerators and such-like that form part of the temporary infrastructure meant only for the duration of the Games — have Mr Kalmadi’s fingerprints on them. They have been cleared by the Organising Committee, of which he is the chairman.
    • The overlays deals total about 650 crore and have been awarded to four contractors, three of them having an Indian and foreign partner each. The most lucrative deals, worth 230 crore, have gone to the PICODeepali consortium.
Finance & Economy
  • Hallmarking of Gold
    • It could well turn out to be a golden opportunity for India’s gems and jewellery exporters. With India joining an international convention on precious metals, jewellery exports are likely to get a fillip, at least in select European markets, including UK, Sweden, Switzerland, Denmark and Ireland to name a few.
    • Once India accedes to Vienna Convention, 1972, the cross-border trade with 19 of its existing member countries would become easier as the convention provides a common set of requirement for verification or hallmarking, and a specific mark indicating fineness. That means, an Indian jewellery exporter selling his products in any of these 19 countries need not go through the verification process in the importing country again. After all, India will then have hallmarking centres of its own which would be authorised to put common mark on jewellery articles acceptable to all member nations.
    • The move will not only improve the current annual turnover of 70,000-crore gems and jewellery exports, but speed up the upgradation of current hallmarking methods.
    • India’s gold jewellery exports during the first quarter of the current fiscal stood at about $2.24 billion, 23% higher than exports in the same period last year.
    • With more countries likely to join the convention in the near future, the number of articles of precious metals with the convention’s Common Control Mark is bound to increase. Already, such articles increased from 3.4 lakh articles in 1977 to 2.5 crore in 2002, indicating the growing demand for getting the convention’s endorsement. Since 2002, the number of such articles has marginally declined to reach at 1.2 crore in 2008, mainly because of recession in the jewellery markets such as the UK.
    • India has about 150 hallmarking centres, but there are concerns about their quality of testing.
    • Despite India being the largest consumer of gold, no attention has been paid so far to improve the hallmarking techniques.
  • Insurance industry agents face the axe
    • Change in regulations is forcing life insurance companies to give marching orders to thousands of agency managers. The industry expects a 20% shrinkage in workforce following the new Ulip guidelines which force insurance companies to work with margins that are a fraction of what they are today.
    • The decision to cut costs overnight follows a July 20 meeting with the Insurance Regulatory & Development Authority (Irda), where the regulator refused to give companies more time to meet the new guidelines.
    • The private life insurance industry has on its rolls around 3 million agents. And as on end-December, private life insurance companies had 1,52,874 employees. Over threefourths of these are executives involved in sales. Insurers estimate that a million agents will drop out. This will lead to a proportionate drop in the number of agency managers.
  • Social investing coming of age in India?
    • Social investing refers to investing in businesses where the pursuit of profits is accompanied by the premise of social good.
    • A few Venture Capital funds started the trend (in 1997) in India where they see in people a genuine ability to pay. These VCs, which started investing in social businesses at various points between 1997 and 2009, have invested $220 million in such ventures in India so far. In the next six months, they say, they expect to add a combined $53 million. These investments were made in 77 social businesses in India. But there hasn’t been a single exit. In conventional commercial ventures, VCs work with a holding period of 3-5 years. In social businesses, the holding period is longer — typically, 6-8 years.
    • Traditional VCs are beginning to see the base of the pyramid as future consumers, with significant collective buying power. The growing presence of traditional VCs in the social-investing space is opening up a debate on the ‘social impact’ of the businesses they are investing in. In other words, the profitability of a scalable business model is much more attractive to such funds than doing social good, which can be incidental.
    • Social investing is a difficult space, where the challenge is to manage costs and squeeze more out of capital. Commercial funding tends to become available only after a business shows proof of concept.
  • Of late there is a lot of debate going on about Jatropha cultivation
    • Here is a very good graphic that presents the issues involved in a succinct manner.
  • GST delay looks real after BJP opposition
    • The BJP-ruled Madhya Pradesh and Gujarat have opposed the constitutional changes required for the rollout of goods and services tax from April next, threatening to upset finance minister Pranab Mukherjee’s calculations to muster two-thirds support for the crucial indirect tax reform in both the houses of Parliament.
    • The proposed changes need to be ratified by at least 15 state assemblies.
    • Currently, the Centre can impose tax on goods at the factory gate and services while states can impose tax at the retail level on goods.
    • States do not have the power to tax services. The proposed single tax will, therefore, require constitutional changes to allow Parliament and state assemblies to impose tax on the same items. The amendments seek to create a joint council of all state finance ministers with Union finance minister as its chairman. It is also proposed that the Union finance minister will have the power to veto any proposal for a change in the structure or rate of GST.
    • This arrangement is not palatable to many states, but it is only the Opposition-ruled that have come out against it.
    • The empowered group of state finance ministers will meet on August 4 to discuss the constitutional changes proposed by the Centre at its July 21 meeting. State finance ministers will meet the Union finance minister after the meeting to convey to him the decision of the panel. The August 4 meeting is crucial for the government’s plans to introduce the new tax regime from the next fiscal year. If the amendment bill is not introduced in the ongoing monsoon session of Parliament, GST rollout could be delayed.
  • PM panel to help check mounting T&D losses
    • Concerned over transmission and distribution losses of over Rs 40,000 crore a year, Prime Minister Manmohan Singh has constituted a panel headed by the former comptroller and auditor general to suggest corrective measures.
    • The suggestions of the committee, to be headed by former CAG V K Shunglu, will be used as input for the 12th Five Year Plan (2012-17), according to sources. As per the terms of reference, the panel will assess the financial position of distribution companies and state electricity boards, and project losses between 2010 and 2017.
  • Indian economy could touch $2 trillion by ’13-14
    • Pegging India’s GDP growth at 9%, Prime Minister’s Economic Advisory Council (PMEAC) has said the economy will grow to $1.7 trillion in 2011-12, and will touch the $2-trillion mark by 2013-14.
    • The country’s GDP at the market and current prices was measured at $1.3 trillion in 2009-10 and is estimated to be $1.5 trillion in the current fiscal year. If the 9% growth trend is maintained, India would become a $2-trillion economy in 2013-14 fiscal.
  • Onshoring is the buzzword now in US
    • Onshoring or domestic outsourcing—some even call it rural outsourcing—is the new buzzword in US business circles. Already, companies such as Microsoft, Mattel and RJ Reynolds have started giving business to onshoring firms, which are sprouting across the hinterland. Which also means that business that would have otherwise been given to companies in India or the Philippines has started going to these new breed of entrepreneurs. Their rise isn’t a big worry for BPOs and call centres in India yet, but the trend cannot be ignored either.
    • Indian companies have been themselves expanding their local presence in the US in various sectors such as consulting, project management and sometimes in software design and development. They have development centers close to customer locations, in what is termed near-shoring.
    • Many experts say that the opportunities emerging in the US after the recession will be immense and both American and non-American companies will get to share those opportunities. Indian companies will have to co-exist with a new breed of US firms as entrepreneurship gets a leg up in a new America. Afterall, US onshoring could even become the peg that is required to survive in a world where offshoring starts losing its sheen and the advantages of labour and time arbitrage are taken away. It’s time for Indian IT services majors to start innovating.
  • Google and other IT giants bet big on Indic web
    • What Indic web refers to is web content in local language.
    • Only 7% of the Indian population knows English and only 7% uses the Internet. There is very little content available in the local languages. The next wave of Internet users will be from Indic web. In the billions of pages on the net, there are only 40 million Indian language pages.
    • You can now type in English and get Indic text. This was a local need inspired software. It started with Hindi and the R&D for this happened in Bangalore.
    • Microsoft has a number of products in the pipeline which can be localised and the company is also doing a lot of research on Indian language products. Project Bhasha, for instance, is a key milestone in Microsoft’s effort to stimulate local language computing and take IT to the masses, driven by the fact that 95% of Indians use their local language rather than English in their work and personal life.
    • It’s no surprise that software giant Microsoft saw an opportunity in the Indian language market even a decade back and started off with localisation of Windows 2000 and two Indian languages—Hindi and Tamil. Today, Microsoft supports 12 Indian languages. Assamese, Bengali, Gujarati, Hindi, Kannada, Konkani, Malayalam, Marathi, Oriya, Punjabi, Tamil and Telugu.
  • Bjorn Lomborg is at it again
    • We have been following his articles for quite some time. He writes very meaningful articles on climate change related issues.
    • In today’s article he argues that the world should spend money on R&D for making solar power and power from other such renewable sources cheap. Well worth a read.
  • KM Mathew
    • This chief editor of Malayala Manorama daily and a doyen of Indian media industry, passed away. He was 93. Mathew was a former Chairman of Press Trust of India.
    • He is survived by three sons — Mammen Mathew, Philip Mathew and Jacob Mathew — and daughter Thankam. His wife Annamma Mathew had predeceased him.
    • Mathew had played a key role in making Malayala Manorama one of the major Indian language dailies after he took over the reins of the media house a few decades ago.
Language Lessons
  • buccaneer: Noun
    • Someone who robs at sea or plunders the land from the sea without having a commission from any sovereign nation
  • diffident: Adjective
    • Showing modest reserve; Lacking self-confidence