Politics & the Nation
  • Law ministry opinion gives relief to Raja
    • The government’s legal arm has said policy decisions by the communications ministry cannot be questioned by the country’s chief auditor and an anti-corruption body. These bodies ‘have no duty or power’ to question policy decisions of the government, the law ministry said in its opinion. Policymaking involves trial and error, and even courts keep away from questioning the wisdom of government decisions, according to the ministry. Its views were sought by the department of telecom (DoT).
    • The CVC is investigating many key decisions of Mr Raja, including a move to allow some companies to offer mobile services using both CDMA and GSM technologies. The vigilance wing is also investigating licence allotments to new players in 2008.
    • The law ministry’s opinion also comes just ahead of the CAG’s plans to release a report in September that may quantify the losses to the exchequer allegedly caused by Mr Raja’s failure to auction telecom licences in 2008. In its queries to DoT, the CAG had alleged that the losses were to the tune of 26,000 crore.
    • The CAG’s audit of DoT relates to the issue of new pan-India licences in 2008 for 1,651 crore, a price fixed in 2001 when the mobile subscriber base was 45 million and industry valuations were poor. Nine companies were issued licences in a process that was controversial from the very beginning. Some months later, Swan Telecom and Unitech, two of the winners, sold a large stake in their operations to overseas companies at stupendous valuations. This triggered a furore. The CAG, in its queries to DoT, had pointed out that many experts, including the telecom secretary, had suggested that the award of new licences needed to be re-examined since the entry fee had not been revised from 2001.
    • Mr Raja has been savagely criticised by Opposition parties for allegedly causing the exchequer a loss of more than 60,000 crore by awarding 2G licences to companies at lower prices. The furore also prompted the CVC to investigate this issue.
  • US pressures India not to act tough on Dow Chemicals in the Bhopal gas leak issue
    • The US appears to be piling pressure on the Manmohan Singh government for providing relief to Dow Chemicals. In an e-mail to Planning Commission deputy chairman Montek Singh Ahluwalia, US deputy National Security Advisor Michael Froman, warned that India’s emphasis on Dow could have “a chilling effect on the investment relationship” between the two countries.
    • Read this news story. Looks like it is likely to hit some raw nerves in our country.
    • In 1999, Dow bought Union Carbide, whose pesticide plant in Bhopal leaked a poisonous gas which has killed more than 15,000 people. The Madhya Pradesh high court is considering a suggestion that Dow should be made to deposit 100 crore to fund the removal of the tons of toxic waste that still lie in and around the Carbide plant.
  • Satyam’s Raju gets bail on health grounds
    • Ramalinga Raju, the former chairman of Satyam Computer Services, who triggered one of Corporate India’s biggest fraud investigation by admitting to inflating revenue and hiding liabilities last year, was granted bail by the Andhra Pradesh High Court on Wednesday.
    • Raju, the prime accused in the 7,500-crore Satyam accounting fraud, has been in judicial custody for over 17 months.
    • The Wednesday’s decision means that all the 10 accused in the scam have managed to get bail.
    • The high court granted bail to Raju on health reasons. The court has also imposed condition that he should remain in Hyderabad until further orders were issued. Raju was also asked to submit two securities of 20 lakh each. The court also directed Raju to cooperate with the investigation agencies. Raju should appear before the magistrate on a daily basis after he is discharged from the hospital.
    • Raju was arrested on January 7 last year after he confessed to conducting financial irregularities at Satyam. In September last year, he was shifted to state-owned Nizam’s Institute of Medical Sciences in Hyderabad for treatment of Hepatitis C and other ailments.
Finance & Economy
  • Retail investment cap may be doubled
    • Retail investors in India may be allowed to buy more shares of companies in public offerings, with securities market regulator Sebi proposing to double the investment limit for such investors to 2 lakh for each application, a move that could help issuers attract some of the relatively wealthier individuals, but has been attacked by some primary market analysts and stock brokers.
    • According to Sebi’s rules on public share sales, a retail investor has been defined as one who puts in an application for buying shares for a value of up to 1 lakh. In any public offering—either initial or followon—35% is reserved for such investors. The other two categories of subscribers -- non-institutional and qualified institutional investors -- are allotted 15% and 50% respectively.
    • While Sebi argues that retail investors are now getting less and less number of shares for their money -- inflation has trebled nearly to 12% in the last five years, nay sayers say that if the limit is doubled, many of the smaller investors will get fewer shares, because of the proportionate basis of allotment in the event of oversubscription.
  • Trends: Private Labels gain currency
    • Private labels, or brands owned by retailers themselves — originally a by-product of the ‘margin’ differences between modern retail and manufacturers — are fast turning into solid brands, without big advertising campaigns and marketing activities.
    • Retailers give their own labels prime slots on their shelves and price them lower than established brands.
    • According to industry estimates, close to 80% of modern retail customers are repeats and its natural for them to develop a faith in the retailer’s own brands.
    • Retailers get higher profit margin in private labels despite pricing them cheaper as they do not have to spend on marketing and distribution.
    • Globally, private labels account for 40% of Wal-Mart’s sales, which stood at $408 billion (about Rs 19 lakh crore) in 2009. UK retailer Tesco gets half its revenue from private labels.
  • On duty free scrips
  • What has the dispute between ICWAI and ICAI got to do with the LLP existence?
    • There is an ongoing dispute between the two professional bodies over the substitution of the word "Works" in the name of the ICWAI with the word "Management".
    • While the work of a chartered accountant primarily relates to auditing, valuation and taxation, their function has expanded over the time to include management consulting and advisory. The role of a cost accountant has also considerably expanded from its traditional work of costing. So, the government thought it fit to bring an amendment to the ICWAI Act changing the name of the institute.
    • But the ICAI has said that a change in the name of ICWAI, a long pending demand, should be kept out of the present set of amendment to quickly get the necessary changes done so that big firms could be set up through the Limited Liability Partnership (LLP) route. The ministry of corporate affairs had notified LLP rules in April 2009, but this new form of business organisation has not been as successful as expected with just 2,039 firms registered so far.
    • One of the key reasons for the inability of members from the institute of chartered accountants, cost accountants and company secretaries to form LLPs together is because of their governing acts not allowing such a business format.
    • The amendments to the governing acts of both these bodies along with that of the institute of company secretaries, as proposed by ministry of corporate affairs, will enable multi-disciplinary firms under the limited liability partnership (LLP) structure.
    • LLPs are a hybrid form of business organisation that combines features of partnership firm and companies.
  • A Muslim centre in controversy
    • Muslims propose to build an Islamic cultural centre near the site of the World Trade Center. This proposal by Imam Feisal Abdul Rauf, the principal figure behind the project, has attracted lot of attention and debate in the US. The US President finally gave his support for the centre now.
    • Take a look at the heat and dust that it raised in the recent weeks in this column by William Dalrymple.
Language Lessons
  • thrum: Verb
    • Sound with a monotonous hum; Sound the strings of (a string instrument); Make a rhythmic sound
    • "thrum a guitar”
  • cachinnation: Noun
    • Loud convulsive laughter