10.08.2010

Politics & the Nation

• Whistleblowers now get protection
• A proposed legislation to protect whistleblowers and provide for severe punishment to those exposing the identity of people disclosing information was approved by the Government on Monday.
• The Public Interest Disclosure and Protection to Persons Making the Disclosure Bill, 2010 provides the Central Vigilance Commission powers of a civil court to hand down harsh penalty to people revealing the identity of whistleblowers.
• The Bill is expected to encourage disclosure of information in public interest and people who expose corruption in government.
• The CVC will be the nodal authority to handle complaints against the state, Central government or PSU employees.
• Killing of Maoist Azad improper, says Mamata
• Ms. Mamata Banerjee displayed her disdain and mistrust for law enforcing agencies when she described the killing of CPI(Maoist) politburo member Cherukuri Rajkumar, alias, Azad, in a police encounter as cold-blooded murder.
• In the process, the Union minister, who occupies the power well at the Centre, advertised that she was not in agreement with the Centre’s strategy to deal with Red terror.
• Azad, No 3 in the CPI(Maoists) hierarchy was involved in dozens of murders including that of Congress legislator Narsa Reddy and a failed assassination attempt on former Andhra Pradesh chief minister N Janardhan Reddy. He had carried a reward of Rs 12 lakh on his head.
• Coming as they do from a Union Minister, these comments do no good for the concept of collective responsibility of the Union Cabinet. This is the price the country pays for having a coalition government.
• Opposition has dissent notes on N-bill
• In a move that does not augur well for the government’s plans of getting the Civil Liability for Nuclear Damages Bill, 2010, passed, BJP and the other Opposition parties, have decided to present their notes of dissent for being incorporated in the report of the Standing Committee on Science and Technology.
• BJP's main contention is that there is no need for the government to bring this bill forward, unless it wants to pave the way for the entry of foreign players through the back-door in the future.
• Under the existing arrangement, nuclear plants in India could be set up and operated either by the government or by a PSU. In the eventuality of a mishap, it was either the government which had to bear the liability of a certain amount, or the PSU as there was little difference between the ownership of the two entities.
• Under the existing legal provisions in India, it is the polluter who must pay. If the civil nuclear liability bill was passed, the BJP fears that the government will end up paying for the pollution caused by someone else. In the end, it would be the Indian tax-payer who would be paying the damages.

Finance & Economy

• Now it is ISRO's spectrum deal that is under the lens
• The law ministry has told the department of space, or DoS, that it could annul a contract under which 60 MHz of airwaves was leased to a private company five years ago. The DoS had asked the government’s legal arm for its views on an obscure deal between the Indian Space Research Organisation (ISRO) and Devas Multimedia, in which the firm paid Rs 600 crore for the airwaves.
• The law ministry has reportedly described the contract as ‘illegal’, and said the government should take back the spectrum citing ‘national interest’.
• This deal, hitherto virtually unknown, attracted the attention of several ministries during the recent auctions for third generation (3G) and broadband wireless airwaves, which raised over Rs 1.06 lakh crore.
• Before the auction, several operators had pointed out that India was auctioning broadband spectrum in the 2.3 GHz band while in most countries this service was offered in the 2.5 GHz band. The 2.5 GHz band is considered to be superior and there are over 125 WiMAX operators globally who offer broadband services in this frequency band.
• Companies such as chip maker Intel and some telcos had demanded that India too auction broadband spectrum in the 2.5 GHz band, but the telecom department washed its hands of the issue saying the bulk of these airwaves were with the space department.
• Industry analysts say the Centre could have increased its revenues by an additional 50% if the broadband auctions had offered airwaves in the 2.5 GHz band.
• For a counter argument, look at this lead story.

• RBI bats for single-point authority
• RBI has told the government to empower a committee under the proposed Financial Stability and Development Council, or FSDC, to handle all inter-regulatory issues and financial stability, to replace the High-Level Coordination Committee on Capital and Financial Markets, or HLCCFM, a forum for discussing and co-ordinating policy moves among regulators.
• The RBI was responding to the concept paper on FSDC circulated to all financial sector regulators by the finance ministry.
• In the concept paper on the formation of the FSDC, first announced by finance minister Pranab Mukherjee in this year’s budget, the government had proposed two separate committees—one to address inter-regulatory issues to be headed by the RBI governor and a second group headed by the finance secretary to look at issues relating to financial stability.
• RBI has been of the view that it is better placed to deal with financial stability, although the government believes that it should take the final call since in the event of any crisis, it is the taxpayers’ money that is at stake, thus making it more directly accountable. Like many other central banks, RBI too has signalled that it would pay greater attention to financial stability and improve skills in that area, having already formed a financial stability unit within the bank.
• The HLCCFM, which was formed a little after the securities scam of 1992, has come under fire for its failure to resolve the turf war between Sebi and insurance watchdog Irda on unit-linked insurance plans (Ulips). The HLCCFM, which is headed by the RBI governor, does not have any executive powers and the FSDC concept paper does mention some of its failures on inter-regulatory co-ordination and also on development of the financial markets. Earlier, a committee on financial sector reforms headed by Raghuram Rajan too had pitched for a financial sector oversight agency to replace the HLCCFM.
• While on the subject, a look at today’s ET in the Classroom column on regulatory autonomy will be of help.
• Oil spill off Mumbai coast causes worry
• We have noticed the collision between two Panamanian cargo ships — MSC Chitra and Merchant Vessel Khalijia — on Saturday off the Mumbai coast. The collison caused an oil spill from one of the vessels.
• Initially our authorities thought that they can handle the spill on their own. But their efforts proved futile.
• Now the Mumbai Port Trust (MbPT) has roped in a Netherlands-based company, SMIT Salvage, to arrest the spread of oil.
• All coastal districts of Maharashtra have been put on high alert, as the oil slick is found inching closer to the Alibaug and Uran areas, and also close to Elephanta caves. The Coast Guard and other government agencies are worried that the oil slick may also affect the mangrove belt along the coastline.
• BARC has been told not to use sea water as coolant.
• Hit by the ban on fishing following the oil slick, the fishermen in Mumbai are now demanding compensation. Over 6,000 small fishermen owning small boats have been rendered jobless. There are around 800,000 registered fishermen with more than 21,000 large fishing boats and another 6,000 small fishermen with around 500 small boats in Maharashtra.
• PSUs out of 25% public float norm
• The finance ministry has exempted state-owned firms from the recent rule that requires listed companies to achieve at least 25% public holding within three years after some of them said they will not participate in disinvestment if the rule was forced on them. Public sector firms will now have to maintain a minimum public float of only 10%, the finance ministry said in a notification on Monday.
• The modified rules also gave a breather to the private sector companies. They will have to comply with the minimum 25% public float within three years but they will now have flexibility in how the limit is reached, without the annual 5% increase mandated in the current rules.
• Listed state-owned companies that have less than 10% public stake will have to reach that threshold over a period of three years, but those listing through a public offer will comply with the 10% norms at the time of listing in one go.
• The finance ministry had amended the rules to the Securities Contracts (Regulation) Act on June 4, asking companies to lower their promoter holdings in order to increase opportunities for common investors and also increase free float to discourage manipulation.
• But many public sector firms like CIL and Nalco as well as the department of disinvestment had sought a review of the norms saying that it would impact the valuation and keep them away from the stake sale programme. Many PSUs had agreed to get listed because the government wanted to divest stake in them and not because they needed to raise funds, they had argued.
• Fruits of reform have failed to reach the poor
• The top 20% of India’s population has a more than 50% share of the national income in 2009-10, up from 36.7% in 1993-94, says a study by the National Council for Applied Economic Research, or NCAER. This would seem to confirm the charge that income disparities have increased in the reform years, 1991 onwards, and the rich have got richer as a freer economy has created more opportunities.
• What should worry the policymakers is not the high income inequality per se, but that it continues to widen even today, after two decades of reforms. In the initial years of reforms an increase in income inequality was understandable as those with access to resources or equipped with skills would be in a position to make use of the opportunities better or command a better price. However, over time, a larger share of population should have been able to benefit from the near double-digit growth of the Indian economy.
• The problem is not that the rich have got richer but that those at the bottom have not been provided the wherewithal to improve their earning capability. And that continues to be the case even now. Access to meaningful and affordable education, for one, continues to be an issue, and lack of physical infrastructure makes it difficult for the hinterland to be integrated with the market economy.
• India at the FATF high table
• On June 25, India became the 34th country to join the Financial Action Task Force (FATF). This puts India into one of the most critical standards-setting bodies in international finance, and will have far-reaching ramifications both for global capital operating in India, and the ability of Indian firms to undertake exports of financial services.
• In 1989, recognising the emerging complexities of money laundering in a world of technological and financial innovation, the G-7 and the European Commission established the FATF. This is an inter-governmental body aimed at creating a global policy environment that would combat money laundering and terrorist financing, by writing standards and monitoring the worldwide implementation of these standards.
• FATF is important to India from three points of view.
• First, India faces terrorist attacks, and needs the comprehensive toolkit for law enforcement agencies to be able to track the money behind terrorist attacks, both within India and from other countries.
• Second, India needs to combine an open approach to global capital alongside tough enforcement against terrorism and money laundering.
• The third dimension lies in the country emerging as an exporter of financial services. FATF non-compliance is shaping up as a significant barrier in the export of financial services.

International

• India to get access to its landlocked N-E states through Bangladesh
• India will get access to its landlocked seven northeastern states through Bangladesh with "unfettered movement of people and goods" as Dhaka seeks to transform itself into a "regional hub" by boosting road and railway connectivity in the country.
• Relations between the South Asian neighbours were chilly between 2001-2006 when the Islamist-allied BNP was in power in Bangladesh and New Delhi regularly accused Dhaka of harbouring anti-India insurgents and fostering militancy.
• The bilateral ties, however, have been on the upswing since Prime Minister Sheikh Hasina came to power after the landmark general election in 2008.
• In the largest-ever loan India has given to any foreign country, New Delhi on Saturday signed an agreement with Bangladesh to extend a USD 1 billion credit line to Dhaka for developing 14 infrastructure projects, mostly in the communications sector.
• India has agreed to facilitate transit between Bangladesh, Nepal and Bhutan while Dhaka signed a deal to allow New Delhi access to its landlocked northeastern states during Prime Minister Hasinas maiden tour to India in January.
• US Senator’s chop-shop remark hits a raw nerve
• You might have noticed the tasteless comments made by US Senator Charles Schumer a couple of days ago about Indian software companies in general and Infosys in particular, describing them as a chop shops. The comment came up during the discussion on the US border security Bill which will be funded out of a hike in H1B and L1 visa rates.
• A chop shop is American slang for places where stolen cars are dismantled for their parts.
• Industry bodies including Ficci, CII and Assocham have reacted strongly to the comments saying the remark is not only uncalled for but unacceptable to India Inc. The chambers have condemned the US senator’s ‘chop shop’ comment on Infosys with Ficci planning to write to the US administration, expressing its concern.
• America consumes less and saves more
• For the first time since the start of the financial crisis in August 2007, US investors own more Treasuries than foreign holders.
• Mutual funds, households and banks have boosted the domestic share of the $8.18 trillion in tradable US debt to 50.2% as of May, according to the most recent Treasury Department data.

Language Lessons

• prescient: Adjective
• Perceiving the significance of events before they occur
• eg: Slumdog Millionaire star Dev Patel’s lament that his post-Oscar role offerings have been restricted to stereotypical roles of terrorist, geek or goofy sidekick is prescient.
• goofy: Adjective
• Ludicrous, foolish