20.08.2010

Politics & the Nation

• India to demand social security tax waiver for top IT cos in US
• Even as America’s new Border Security Act raises hackles in India, efforts are on to push for exemption of social security tax paid by top tech firms including Tata Consultancy Services (TCS), Infosys and Wipro in the US.
• Over the past three years India has been pushing for the agreement that will allow workers from both the countries working on short-term contracts to be exempted from contributing towards social security in their guest country.
• India already has such agreements with Belgium, France, Germany, Switzerland, the Netherlands, Hungary, Denmark and Luxembourg. The social security agreement with Canada is ready to be signed.
• Indian workers on H1B and L1 visas, and their employers, have been contributing over $1 billion annually to the US exchequer for social security.  But these temporary workers are not able to avail themselves of any social security benefit because US law prescribes a minimum qualifying period of 10 years in order to be eligible for pension. Employers and employees have to contribute 7.65% each of the salary towards social security.
• Centre starts trial run of new communication traffic tracker
• India has begun tests of its indigenously built centralised monitoring system (CMS), which can track all communication traffic — wireless and fixed line, satellite, internet, emails and voice over internet protocol (VoIP) calls — and gather intelligence inputs. The ministries of defence, law, finance, home, telecommunications and IT will soon seek Cabinet approval for implementing this system across the country.
• Planning for CMS, which was aimed at strengthening the country’s internal security apparatus, began in 2007 but the project was put on a fast track after the Mumbai attacks, when the terrorists received orders via VoIP (internet telephony).
• The centralised system aims to be a one-stop solution against the current practice of running several decentralised monitoring agencies under various ministries, where each one has contrasting processing systems, technology platforms and clearance levels.
• This CMS is modelled on similar setups in several Western countries — for instance, in the US, the National Security Agency monitors all communication traffic while in the UK, this is undertaken by the Government Communications Headquarters. The CMS is also considered as India’s equivalent of UK’s upcoming Interception Modernisation Programme (IMP) — a massive expansion of its current communications surveillance facilities for the internet age.
• At present, the country’s monitoring system works as follows. With no centralised system in place, officers of the Vigilance Telecom Monitoring (VTM) cells of the DoT assist the different security agencies which monitor mobile, fixed, satellite and internet services offered by both private and government companies. The VTM cells also act as the technical interface between telecom service providers and security agencies.
• Should MPs get higher salaries?
• This is an interesting debate.  Should MPs be paid any salary at all, we wonder.  They are all so rich and powerful -- barring a miniscule minority, rare commodity nowadays anyway -- that they may not need salary at all.
• However take a look at this face-off column which discusses the issue.

Finance & Economy

• FDI in multi-brand retail
• The commerce and industry ministry has set up a five-member committee to study the possibility of allowing FDI in multi-brand retailing.
• The committee, which has been set up by the department of industrial policy and promotion, will be headed by an officer of the rank of additional secretary from the department of consumer affairs, and will include representatives from the agriculture ministry, department of economic affairs and the ministry of micro, small and medium enterprise, besides DIPP.
• The subject is a political hot potato, with the principal Opposition party, BJP, making it clear that it will resist any move to permit FDI in multi-brand retail, arguing that such a step would sound the death knell for the small and medium enterprises and local kirana stores, which form its core constituency.  There are nearly 10 crore enterprises (SME and trades) in India and it is believed that they are growing by 15% annually. MNCs, with their predatory pricing policies and large cash reserves, will crush our retailers, argues BJP.
• Rising Indian middle class
• The Asian middle class, powered by India and China, is fast replacing Europeans and Americans as the global consumers who anchor the world economy, says a new study by the Asian Development Bank.
• India’s booming middle class — or, those who spend anywhere between $2 and $20 ( 93 to 930) a day on purchasing power parity basis — is now spurring consumption and innovation in the country, said the study, The Rise of Asia's Middle Class, released on Thursday.
• However, more than three-fourths of India’s 274 million-strong middle class face the risk of slipping back into poverty in the event of a major economic shock as they are in the lowest spending bracket of $2-4 ( 93-186) a day.
• Over the next two decades, the Indian middle class population is expected to touch one billion, it said.
• And 55% of the world’s middle class will be in Asia by 2030, up from 25% now.
• The study found that Asia’s consumers spent an estimated $4.3 trillion (in 2005 purchasing power parity dollars), or about one-third of OECD consumption expenditure, in 2008 and by 2030 will likely spend $32 trillion, comprising about 43% of the worldwide consumption.
• China had 817 million people, or 63% of its population, in the middle class bracket in 2008.
• India's answer to Kindle
• Bangalore-based EC Media will launch a desi version of the e-book reader, Wink, on September 1.  It will allow readers to access their favourite content anytime and anywhere, in the language of their choice and aims to revolutionise the way people read.
• It will be having a 6-inch display screen and will come with a 2GB internal memory expandable up to 16 GB and can last up to 300 hours when fully charged. The product will be priced at Rs. 11,400.  
• The gadget will offer a one-stop e-store where consumers can access e-book titles, newspapers, magazines and journals across 15 Indian languages. Wink will initially provide access to over 2,00,000 titles and has enrolled top publishers like Penguin, Roli, Oxford University, Harper Collins and Permanent Black.
• Irda, Sebi get reminder to park surplus with govt
• The finance ministry has reportedly asked market regulator Sebi and insurance watchdog IRDA to deposit their surplus funds with the government, a move that may be resisted by these bodies citing regulatory autonomy.  The directive follows repeated suggestions by the Comptroller and Auditor General (CAG) of India, the government’s statutory auditor, which says this will improve the regulators’ accountability to the exchequer.
• The issue first surfaced in 2001 when the finance ministry asked Sebi to transfer funds to government accounts and get its expenditure vetted by Parliament. In 2002, the ministry asked asked IRDA to follow the procedure.
• In January 2005, the department of economic affairs in the finance ministry directed all ministries and government departments to ensure that funds of regulatory bodies are maintained in the Public Accounts.
• Sebi and IRDA had resisted earlier attempts by the government to make them park their income and surplus funds in government accounts. About 1,800 crore of surplus funds generated by financial sector regulators through fees and penalties on companies are parked in their respective accounts at present.  The finance accounts of the Union government, therefore, do not present a correct and complete picture of government finances as this much money is lying outside government accounts, the CAG said in its report on Union government accounts for 2008-09.
• Public expenditure needs parliamentary approval.  Under Article 266 of the Constitution money collected by the regulatory authorities should be submitted towards the government account.
• The finance ministry has directed the chief controller of accounts to open a new accounting head to keep the funds from regulators and evolve a method for transferring them into the public accounts.
• Some very good alternatives to the vexatious land acquisition issue
• Land acquisition for establishing new industries or other rising economic activity is a burning issue.  More often than not the person who is dispossessed of his land feels cheated and helpless, as he feels that the land acquired from him for a pittance has become more valuable subsequent to his dispossession.  Some alternatives suggested for land acquisition include:
• Land should be priced as any other asset, capitalising the future stream of incomes arising from it. This marks a total departure from forcing the farmer to accept the current market price, as is the norm in the 1894 Act and in the 2007 Bill — changed land use would push future incomes far above what current price captures.
• Land pooling and reconstitution, in which a sizeable part of the land is restored to the landloser in a developed form and the land is acquired from all the landowners in the vicinity so that some people do not end up losers while the others free-ride on the rise in property values consequent on development at somebody else’s expense.
• Another alternative is to retain a stake for the original landholder in the development undertaken on his land. Transfer, for example, parcels of land to a special purpose vehicle in which the original landholders hold a majority equity stake, with a lock-in period of, say 10 years. The developer of the facility that needs the land could have the remaining stake, lease the land from the SPV for a rental related to the income generated from the facility and have the first right of refusal over the original landholders’ stake in the SPV when the lock-in gets over.

International

• Intel adds software muscle with $7.7-b McAfee buy
• Intel said it would buy security software maker McAfee for $7.7 billion to capitalise on rising demand for better safeguards for laptops, smartphones and tablets. Intel will pay $48 per share in cash for McAfee in its biggest acquisition ever. The price represents a 60% premium to McAfee’s Wednesday closing price.
• McAfee, which was founded in 1987 and had revenues of $2 billion in 2009, has been working with Intel on a variety of projects for the past 18 months.
• US looks to be headed for a bumpy ride, but UK and Germany fare better
• The frail US economy was dealt further setbacks as new US jobless claims scaled a nine-month high last week and Mid-Atlantic factory activity contracted in August for the first time in more than a year.
• Data on Thursday also showed that growth continued to lose momentum after a brisk first quarter.
• Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000 last week, the highest since mid-November.
• Recovery gains strength in the UK
• British retail sales volumes rose nearly three times faster than expected in July, and a surge in corporate tax receipts cut public borrowing sharply, data showed on Thursday, suggesting the recovery remains strong. The better-than-expected figures — plus a rise in factory orders to a two-year high — bode well for the recovery after unusually strong second-quarter growth, and eased some concerns that the economy would rapidly lose steam.
• Germany ups growth forecast
• The Bundesbank raised its growth forecast for Germany this year after the economy expanded at the fastest pace in two decades in the second quarter.
• Gross domestic product will increase by about 3% in 2010, the German central bank said in its monthly bulletin published in Frankfurt on Thursday, lifting its forecast from the 1.9% it predicted in June. Data last week showed the economy grew 2.2% in the three months through June, the fastest since records for a reunified Germany began in 1991.
• Booming global demand for German goods is fuelling the recovery in Europe’s largest economy from last year’s recession, when it contracted 4.7%.

Language Lessons

• tine: Noun
• Prong on a fork or pitchfork or antler