29.09.2010

You can download a copy of the gist of Ayodhya verdict from http://rjbm.nic.in.


You can download the rar version of the same from here.

Politics & the Nation

• Allahabad High Court to deliver the Ayodhya judgment tomorrow at 3.30 PM
• The Lucknow bench of the Allahabad high court will on Thursday deliver its verdict in the politically-sensitive Ayodhya case. This follows the Supreme Court’s rejection of a plea to defer the judgement.
• The three-member bench of the Lucknow bench will give its verdict on who owns the disputed piece of land, where once stood the Babri Masjid but is claimed to be the birth place of Lord Ram by Hindu groups.
• The verdict to a more than six-decadeold litigation will mark an important point in the dispute, but is unlikely to bring down the curtains as aggrieved parties are likely to move the Supreme Court.
• Authorities are bracing themselves for facing any eventuality in the wake of the order.  The political class appears to be confident that the verdict will pass over without creating law and order problems.      
• The confidence expressed by political parties could possibly be because the high court order may not settle the dispute. No party may emerge as a clear winner or loser in the judgement. This possibility was indicated by home minister P Chidambaram when he appealed for calm last week.
• Green court from Oct 18
• The nation’s first environmental court, the National Green Tribunal (NGT), will be notified on October 18 with the appointment of retired Supreme Court Justice L S Panta as chairperson.
• The legislation setting up a specialised court for dealing with environment issues was passed by both Houses of Parliament earlier this year and received the President’s assent on June 2.
• Anyone can approach this civil judicial body on grievances that involve the environment. The National Green Tribunal will have the powers of a high court. The verdict given by the tribunal can be challenged only in the Supreme Court. There are at present 5,600 environment-related cases pending in the courts. These cases will be transferred to NGT.
• Individuals, organisations, civil society and governments can approach the tribunal for redressal. The green court would be governed by the principles of precautionary principles, polluter pays principle and inter-generational equity.
• DoT refuses to answer CAG on 2G queries
• The department of telecommunications (DoT) has sought to stonewall queries from the auditor of India’s state-run institutions, using an opinion from the law ministry that said policy decisions cannot be second-guessed by auditors.
• The department has told the Comptroller and Auditor General, or CAG, that it would not respond to further queries on the award of frequency spectrum to a new set of telecom operators in 2008 because these were policy decisions. The DoT move sets up a possible confrontation with regulatory bodies investigating various decisions by A Raja, the telecom minister.
• This development is very interesting in the context of the CAG recently warning DoT not to relax M&A norms to provide exit options for new entrants.
• In its queries to the DoT, the CAG had alleged that Mr Raja’s failure to auction telecom licences in 2008 had led to losses of Rs 26,000 crore to the exchequer.
• The new pan-India licences issued in 2008 cost Rs. 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 large stakes in their operations to overseas companies at stupendous valuations. This triggered a furore.

Finance & Economy

• Oil cos to take bigger hit as govt set to cap subsidy at last year’s outgo
• The government plans to limit its share of fuel subsidy payout to last year’s levels despite higher losses this year, a move that could result in a significant drop in profits for domestic oil companies.
• This would require oil marketing companies IOC, HPCL and BPCL to absorb a substantial portion of the losses incurred in selling petro fuels below cost.
• A part of the subsidy will be paid by government-owned oil producing companies ONGC and OIL. The finance ministry will pay its share of subsidy compensation in cash.
• Subsidies, referred to as under recoveries in industry parlance, is equivalent to the loss suffered by the oil marketing companies for selling fuel at government controlled prices.
• In 2009-10, the government agreed to bear only Rs. 26,000 crore of the total under recovery of Rs. 46,051 crore. The total subsidy bill is estimated to be in the region of Rs. 53,000 crore this year, higher by almost Rs. 7,000 crore from last year’s figure, due to higher crude oil prices.
• Despite a partial decontrol of fuel prices, whereby oil companies are allowed to fix petrol prices, the bulk of the losses still remains as diesel, cooking gas and Kerosene continue to be sold at a loss. Diesel, which constitutes almost 45% of the total fuel consumption, accounts for a large portion of the losses.
• Centre releases the Budget manual
• We have all been following the budget over the years.  In spite of detailed explanations by various experts, the budget making process remains shrouded in a kind of mystery.  
• Now the Centre has done its best to lift the veil of secrecy by coming out with a budget manual.  
• This is a detailed 216-page document, that demystifies both the product and the process. It traces the history of the budget, dejargonises it and outlines its intricate passage through a fiscal year.
• Some interesting trivia about budget that is found in the manual:
• India’s first budget was presented by James Wilson on 7 April 1860. At that time, India followed a 1 May to 30 April fiscal. The current system of April to March fiscal began in 1867.
• Interestingly, a government committee suggested in 1984 that India should shift to January to December fiscal, but government did not find enough benefit to justify the trouble.  More trivia in this graphic.
• Have appetite for more?  Read the full manual here.

International

• Why should the US care more for India?
• In the context of the American Presidential visit, there is some clamour for pressing the US to relax the provisions of a recently enacted law that goes against the interests of the Indian infotech companies.  But the US is largely seen as playing its cards close to the chest and expecting matching concessions from India. Is it right for the US to keep expecting matching concessions from India every time it gives some concession?  Why should the US care more for India?  
• This is what Arvind Panagariya discusses very well in his op-ed piece today.  Recommend a read.

Language lessons

• nub: Noun
• A small lump or protuberance; A small piece; The choicest or most essential or most vital part of some idea or experience
• eg: This is not just a question of procuring more sophisticated equipment — breaking codes calls for very heavy computing power and supercomputers will, no doubt, need to be deployed. But that is not the nub of the problem.

28.09.2010

Politics & the Nation

• India makes substantial progress in reducing maternal morality rate
• This is a story with a difference.  We are so accustomed to seeing / reading reports about our country that are non-flattering to say the least.  There is at least one area where we are making substantial progress as acknowledged by UNICEF.
• A WHO-Unicef-UNFPA-World Bank report, Trends in maternal mortality, says that 63,000 of the estimated 3,58,000 deaths due to complications during pregnancy and childbirth worldwide occur in India. That is, one in six women who die due to pregnancy-related causes worldwide live in India.
• It is necessary to probe further to see what the statistics on maternal mortality mean before we give in to our ritual cynicism and condemn the national record on improvement in maternal mortality.
• The report tells us that, first, Indian maternal mortality ratio (MMR) fell from 570 per 1,00,000 births in 1990 to 230 in 2008. This is a 59% decline. Second, given the uncertainty of estimation, it is possible that MMR could be as low as 150 or as high as 350 in 2008. Third, the estimate of 230 implies an annual decline in MMR of 4.9% between 1990 and 2008, only slightly below the 5.5% annual decline needed to achieve the ambitious Millennium Development Goal (MDG) of 75% reduction in MMR by 2015. Fourth, the report documents MMR decline from 390 to 230 between 2000 and 2008, nearly 6% annual decline with Janani Suraksha Yojana (JSY) only getting rolled out towards the middle of this period.
• If the above excerpts are leaving you still confused, read the entire story by following the link given at the beginning.

Finance & Economy

• Govt seeks to amend contract labour law
• With a vast part of the workforce now employed on contract basis without any job security, the Centre wants to amend the Contract Labour Act of 1971 to ensure a fair deal for such workers.
• The proposed amendment mandates that contract workers get the same wages, facilities and benefits as regular employees. So even if contract workers have no security of tenure, they would get better salaries with health cover and social security benefits under the Employees’ State Insurance Corporation and Employees’ Provident Fund, respectively.
• Though there is no official fix on how many of India’s 450 million-odd workers are employed on contract, such workers’ exploitation is being seen as one of the reasons for rising industrial unrest in recent times.
• Ironically, rules to give contract workers fair wages and benefits already exist under the 1971 law, but they aren’t implemented in letter or spirit.
• What is the impact of the proposed move?
• Firstly, it would take cognisance of the fact that contract labour is here to stay—something that trade unions have been refusing to accept for two decades. More importantly, the changes could set the stage for Indian industry to hire workers with more freedom and give Indian youth a chance to realise the country’s much-vaunted demographic dividend.

• Govt hopes to demystify budget-making process
• The finance ministry has reportedly prepared a comprehensive document that demystifies the budget making process of the government. The first ever compendium of general provisions and procedures of the budget will be released today by the finance minister Pranab Mukherjee. The 200-page document will outline the entire chain of events relating to the making of the union budget, lifting the veil of secrecy from this closely guarded process. The government hopes to make the budget process more transparent and also generate greater awareness about the budget and the systems.

• Free pricing of urea to rationalise use: Panel
• A committee set up by the government has suggested freeing the prices of urea and inclusion of the fertiliser in the new nutrient-based subsidy (NBS) scheme to discourage its excessive use, stem soil degradation and reduce government subsidy.
• The panel, led by former agriculture secretary T Nanda Kumar, also recommended a “comparatively higher level” of subsidy for critical nutrients like sulphur, zinc and boron to make them affordable to farmers.
• The NBS currently includes nitrogen, phosphorous, potash and complex fertilisers. Its underlying concept is equal subsidy for the same nutrient in any form, either as a straight fertiliser or as a complex one.
• Fertiliser subsidy is pegged lower at Rs. 49,980.73 crore this fiscal year from Rs. 52,980.25 crore last year on the premise that it would drop in the NBS regime.
• Keeping urea, a key source of nitrogen, out of the NBS has led to heavy use of the cheapest fertiliser in the first three months of the policy, defeating its objective of balanced use of nutrients.
• When the NBS scheme was introduced in April, subsidy for indigenous and imported P&K fertilisers was announced on an annual basis for 2010-11, based on the prevailing fertiliser prices and price trends in the international market. That allowed the private sector to clinch imports at attractive prices while domestic competition was expected to keep prices affordable to farmers. The Centre plans to amend the new pricing scheme for urea to determine the quantum of urea subsidy, although the industry has demanded inclusion of urea in the NBS and free imports either within or outside the scheme.
• The new WPI still has holes; hence govt. mulls additional indices
• The reworked wholesale price index (WPI) with a new base and a current product basket will give a more reliable measure of price inflation, but it falls short as a relevant measure of inflation for policymakers.
• While the WPI is a weekly index, it is not either the international equivalent of the producers’ price index or the consumer price index (CPI). This technically makes India’s inflation measure incomparable with the rest of the world.
• The various retail measures of inflation are of extremely poor quality. Besides, the four retail measures of inflation – CPI for rural labourers, agricultural labourers, industrial workers and urban non-manual employees — are too narrowly targeted, making them irrelevant for macro policy formulation. The central bank, therefore, considers all the measures of inflation, behaviour of individual components, and other economic and financial indicators to assess inflation.
• The government plans to launch three new retail price indices by early next year, based on consumption patterns revealed in the large round NSS surveys, making the indices more representative.
• The proposed CPI rural and urban indices would be based on weights taken from a large sample of over one lakh households. The two indices will be combined, proportionate to their relative weights in the economy, to arrive at a national measure of retail inflation.
• A strong argument in favour of a USO Fund for banking
• Remember the noting we made about RBI asking governments not give their transaction business to private sector banks?  Here is a strong argument advanced by today's ET editorial on why such a move is retrograde and what could possibly be a better alternative:
• ...all banks could contribute to a Fund whose corpus could be used to subsidise unviable banking operations. As for the mandate for managing government business, whether of the Centre or the states, it must be given to whichever bank gives the best service at the most competitive (read, least) cost. Anything less would mean hurting the taxpayer twice over; once by using a less efficient instrument (banks) to achieve socio-economic goals and then by not using the most competitive bank to handle government business.
• About Overnight Index Swaps
• Here is a good ET in the Classroom column that explains the concept.

International

• US wants internet to be wiretap-ready
• US security officials are seeking sweeping new regulations of the internet, arguing that their ability to wiretap criminal and terrorism suspects is “going dark” as people increasingly communicate online instead of by telephone.
• Essentially, officials want Congress to require all services that enable communications – including encrypted e-mail transmitters like BlackBerry, social networking websites like Facebook and software that allows direct “peer to peer” messaging like Skype – to be technically capable of complying if served with a wiretap order. The mandate would include being able to intercept and unscramble encrypted messages.
• The technorati complain that the security agencies basically want to turn back the clock and make internet services function the way that the telephone system used to function.
• But law enforcement officials contend that imposing such a mandate is reasonable and necessary to prevent the erosion of their investigative powers.
• Investigators have been concerned for years that changing communications technology could damage their ability to conduct surveillance. In recent months, officials from the FBI, the Justice Department, the National Security Agency, the White House and other agencies have been meeting to develop a proposed solution. There is not yet agreement on important elements, like how to word statutory language defining who counts as a communications service provider etc.
• In the United States, phone and broadband networks are already required to have interception capabilities, under a 1994 law called the Communications Assistance to Law Enforcement Act. It aimed to ensure that government surveillance abilities would remain intact during the evolution from a copper-wire phone system to digital networks and cellphones.
• Often, investigators can intercept communications at a switch operated by the network company. But sometimes — like when the target uses a service that encrypts messages between his computer and its servers – they must instead serve the order on a service provider to get unscrambled versions.
• Like phone companies, communication service providers are subject to wiretap orders. But the 1994 law does not apply to them. While some maintain interception capacities, others wait until they are served with orders to try to develop them.
• To counter such problems, officials are coalescing around several of the proposal’s likely requirements:
• Communications services that encrypt messages must have a way to unscramble them.
• Foreign-based providers that do business inside the United States must install a domestic office capable of performing intercepts.
• Developers of software that enables peer-to-peer communication must redesign their service to allow interception.
• Providers that failed to comply would face fines or some other penalty. But the proposal is likely to direct companies to come up with their own way to meet the mandates.

Language lessons

• bleat: Verb
• Talk whiningly; Cry plaintively
• eg: The lambs were bleating.
• leitmotif: Noun
• A melodic phrase that accompanies the reappearance of a person or situation (as in Wagner's operas)

27.09.2010

Politics & the Nation

• Know anything about Swavalamban?
• Launched by the Finance Minsiter Mr. Pranab Mukherjee in West Bengal’s Murshidabad district, the scheme floated by the Centre is for the unorganised sector. The scheme was launched as part of a broader plan for financial inclusion.
• As per the scheme, the central government will contribute Rs. 1,000 a year for four years to every Swavalamban account holder who can deposit up to Rs. 12,000 a year into his pension account.
• Reportedly only about 13% of the working population in our country is eligible for some kind of retirement pension.
• Some statistics and findings about the state of our country's health
• Excerpted from today's op-ed on the subject.
• According to the World Health Statistics 2010 India has the highest number of tuberculosis (23% of world’s patients), diphtheria (86% of world’s patients), leprosy (54% of world’s patients), pertussis (29% of world’s patients), polio (42% of world’s patients), tetanus (22% of world’s cases) and malaria (55% of world’s patients) cases. It is the second highest in measles, the fourth highest in Japanese encephalitis and the 14th highest in cholera. It has the highest percentage of underweight children below the age of five years (43.5%). This is all far in excess of the percentage of the world’s population (17%) that India supports. To no other country goes the dubious distinction of being first in so many arenas.
• The density of doctors per 10,000 of population is about six, while the average for SEAR (South-East Asian Region) is only five. The global average is 14. Similarly, the density of nurses/mid-wives is 13 per 10,000 population compared with the SEAR average of 11 and the global average of 28.
• Lack of availability of human resources is not a cause of poor healthcare but a result of lower healthcare expenditure.
• In the pharmaceutical field, manpower at a density of six per 10,000 people beats the SEAR and global average of four. This is because almost 75% of health care expenditure is on drugs.
• Though well below global averages, India spends higher at 4.1% of its GDP on healthcare compared with 3.6% in SEAR. In purchasing power parity terms, per capita annual expenditure on healthcare is about $109 in India compared with $104 of SEAR. So, our health indices should have been better.
• Evidently, the issue is not about the money; it is about how and where the money is spent, especially in the rural areas where over 70% of India resides. Intriguingly, there is a gross urban bias in government expenditure on district hospitals and urban tertiary centres.
• The latest National Health Accounts (NHA) 2004-05 places the government expenditure on rural healthcare services and family welfare at Rs.52,970 million, the urban counterpart getting the lion’s share at Rs.92,408 million. It is around Rs.71 per capita for rural against a far higher Rs. 289 for urban people. Private out-of-pocket expenditure (OOPE) works out to Rs. 777 per capita for rural and Rs. 1,099 for urban people in that year.
• Govt floats green mission
• The government is setting up a new body, with a corpus of up to Rs.200 crore, that will help companies develop environment friendly technologies for hybrid and electric vehicles.
• The National Electric Mobility Mission will try to promote ecofriendly technologies as an alternative to use of non-renewable fuels such as petrol and diesel that dominate the Indian car and twowheeler market. This will also help control air pollution in the country.
• Today is World Tourism Day
• The World Tourism Organization (UNWTO) forecasts that international tourism will continue growing at the average annual rate of 4 percent.
• Taking tourism towards its tech-age dimension will be the space tourism which is expected to resume in 2012 with better technical advancements. Although compared with traditional destinations, the number of tourists in orbit will remain low until technologies such as a space elevator make space travel cheap.
• A recent UNWTO report (which assesses highest annual tourist footfalls) points out the top 10 global destinations as: France with 67,310,000 tourists United States with 47,752,000 tourists Spain with 43,252,000 tourists Italy with 34,087,000 tourists United Kingdom with 25,515,000 tourists China with 23,770,000 tourists Poland with 19,520,000 tourists Mexico with 19,351,000 tourists Canada with 17,636,000 tourists Hungary with 17,248,000 tourists.
• India has emerged as one of the fastest leading travel, tourism, aviation and hospitality powers in the world. According to a survey, passengers annually travelling by railways are 5.8 billion, by domestic airlines 15 million, and by international airlines 7 million. Over the next decade, World Travel and Tourism Council (WTTC) estimates a demand hike of 8.8 percent annually which is the highest projection across the world.

Finance & Economy

• The state of the economy
• Take a look at this graphic.  It gives a very good picture how the economy of the country is faring at the moment.  Very good one.
• RBI tells states to stop new biz to pvt banks
• The Reserve Bank of India has asked several state governments not to give new businesses, which could generate thousands of crores of income, to private sector banks.  The move is suspected to be driven by the private banks' comparatively lower lending in government-sponsored programmes.
• Currently, private banks handle a slice of the overall tax and excise collection and certain payments of ministries like health, civil aviation and urban development.
• Private banks are obviously unhappy with the move.  They aver that the tax money that took two-to-three weeks to reach government coffers became possible in a few days with the entry of private banks. In electronic payments, funds are transmitted within a day. Earlier, banks charged more than 11 paise for transferring every 100 of tax collected and this has dropped to a flat rate of 45 per challan now. The commission earned by banks on government business was Rs. 2,800 crore last year, of which around one-tenth went to private banks.
• The entry of private banks started in April 2001, when HDFC Bank was allowed to handle tax collection, followed by three institution-backed banks — ICICI Bank, UTI Bank (now Axis Bank) and IDBI Bank which was then a private bank — in November 2003.
• A bit about LEDs
• The high-lumen light emitting diodes (LEDs) consume very less power -- as low as half a watt, as against 7-10 watt for compact fluorescent lamps (CFLs). Also, LEDs are ‘install and forget’ systems, providing up to 1,00,000 hours of illumination or, at six hours of usage per day, have a life of 45 years! LEDs are also perfect for lighting up with solar power, requiring as they do DC supply, very unlike, say, CFLs.
• However, LEDs remain pricey, although costs have been tumbling following economies of scale in production worldwide.
• India inks rider-free trade pact with Japan
• India has clinched a bilateral trade pact with Japan, the world’s third largest economy, without taking on iron clad commitments on opening government purchases to foreign companies and agreeing to tighter intellectual property rules.
• The final agreement is scheduled to be signed during Prime Minister Manmohan Singh’s visit to Tokyo next month, opening greater trade opportunities for India.
• India ran up a trade deficit of $3.1 billion with Japan in 2009-10.
• Japan has been running a trade surplus against India for a number of years. India exported $3.63 billion worth of goods to Japan while imports from the country added to $6.7 billion in 2009-10.

International

• Developments on the TAPI pipeline front
• Turkmenistan, Afghanistan, Pakistan and India have agreed to rope in a global energy major to execute and manage a $7.6-billion natural gas pipeline running on their land, brightening the prospect of a steady flow of gas from central Asia to energyhungry South Asia.
• The decision was taken after Afghanistan assured to secure the pipeline through the Taliban heartland and Pakistan in-principle agreed to do so in its territory.
• The pipeline will start from the Dauletabad gas field in southeast Turkmenistan and after 145 km stretch in the country enter Afghanistan. After traversing 735 km in Afghanistan and 800 km in Pakistan, the pipeline will cross into India. The 1,680 km pipeline will have a capacity to transport 90 mmscmd (million standard cubic metres a day) gas. Asian Development Bank (ADB), the development partner of the TAPI project, had estimated its cost at $3.3 billion about 10 years ago.
• The Afghanistan government has already guaranteed the security of the pipeline by burying it underground and paying local communities to guard it.
• India is expected to get about 38 mmscmd gas, the same as Pakistan. Balance gas will go to Afghanistan.

Language lessons

• slumming: Verb
• Spend time at a lower socio-economic level than one's own, motivated by curiosity or desire for adventure; usage considered condescending and insensitive
• causerie: Noun
• Light informal conversation for social occasions
• diorama: Noun
• A picture (or series of pictures) representing a continuous scene

25.09.2010

Politics & the Nation

• The story of slow but sure death of the quarry workers
• Take a look at this story which tells us how the poverty stricken quarry workers in Rajasthan are dying a slow but sure death.  What are your suggestions with regard to tackling this problem?
• Celebrations cut short, extra 1% EPF interest to be taxed
• The government’s surprise gift for workers isn’t much of a gift after all. The labour ministry has hiked the employees’ provident fund, or EPF, rate to 9.5%, but a finance ministry notification says that anything in excess of 8.5% will be taxed.  This is because, even before the EPF board met to declare the higher rate, the CBDT (Central Board of Direct Taxes) had notified a tax-free PF rate of 8.5% for 2010-11 -- effectie from September, 1.  This means that the 9.5% provident fund return would be tax-free from April to August, but taxable thereafter.
• This is an unprecedented situation that is witnessed.  Historically, the tax-free PF rate notified by the income tax department has never been lower than the EPF rate declared for the year.
• Implementing tax deduction by the EPFO and the company-run trusts is sure to pose lot of problems.  For instances they will find it hard to calculate the tax liability on 1% PF income for seven months, as they don't have the appropriate systems in place to do so.
• The labour ministry is, however, confident that the tax department will renotify the higher rate, as otherwise a lot of contentious issues will come up.
• Cabinet agrees for giving statutory powers to UIDAI
• The government on Friday cleared the decks for the formation of a statutory body to be christened — National Identification Authority of India (NIAI), in order to give collection of data for allocating unique id numbers, a legal sanction. The approval by the cabinet paves way for introduction of the NIAI Bill 2010, in winter session of the Parliament.
• The legal sanction is for collection of private data of citizens and makes it difficult to challenge in a court of law. The sanction is needed as the government plans to allocate the first set of numbers to citizens in a few weeks in Maharashtra. In 2009, the Unique Identification Authority of India (UIDAI) had already made it clear that an Act of Parliament will set it up as a statutory body. But, already many NGOs are planning to challenge the proposed Bill.
• Once passed, the NIAI Act 2010 will contain a prescription against collecting any other information than the information permitted, with specific prohibitions against collection of information regarding religion, race, ethnicity and caste. It will also contain penal provisions against persons employed by, or associated directly or indirectly with, the data repository, registrars, enrolling agencies and other service providers for failing to comply with the directions issued under the Act.
• A very good comment made in the context of Sonia and Rahul realizing the importance of protecting the rights of the displaced and poorer sections of society
• You might be, by now, aware of the way Rahul has been conducting himself.  He championed the cause of the Dalits in the Dalit hinterland -- UP.  Then he took up the cause of the displaced tribals in Orissa and congratulated them saying that they won the battle against Vedanta.  
• It is in this backdrop that the following comment made by CP Bhambhri in today's op-ed deserves to be appreciated:
• “There is no disconnect between social welfare market economics of Europe and their economic growth trajectory because every social class and group, on the basis of historical experience of industrialisation, has come to realise that a politics that seek to primarily uphold working class interests has to be guided by a pragmatic definition of enlightened self-interest. Hence, European welfare capital is not at all guided by any ideology of socialism because experience has shown that non-ideological pragmatism is a good guide to diffuse social conflicts which arise if the labouring classes are neglected and they are not provided with social security.”
• Sonia and Rahul seem to have realized that what is possible in Europe, cannot be impossible in India.

Finance & Economy

• SEBI boss slams steep IPO pricing
• Market regulator CB Bhave (SEBI Chairman) charged investment bankers with fleecing investors by pricing initial public offers (IPOs) at astronomical valuations, leading to investor anguish when the market tide turns.
• Steep pricing could enrich bankers and companies, but persistence of the practice could demoralise investors, damaging capital markets, he said in what may be the first regulator comment on share-sale pricing since the abolition of the Controller of Capital Issues in 1992.
• The underperformance of the BSE IPO index—it gained 14.5% in the last 12 months, when the benchmark Sensex rose 19.45%—reflects the Sebi chairman’s charges. Furthermore, a price performance study by CARE Research, a unit of rating company CARE, showed that 62% of the 116 IPOs between August 2007 and August 2010 are trading lower than their sale price while 35% are ruling higher.

• Government turns cautious in gauranteeing loans of PSUs
• The government came out with a policy shift in respect of its gaurantees to the loans advanced by bankers to the PSUs.  This is reportedly done with a view to ensure two things -- one to discourage laxity in loan appraisals by the bankers and two to ensure that the lenders do bear some risk in advancing loans to PSUs.
• This is a marked shift from the earlier policy where the entire loan was guaranteed. The new policy on government guarantees says the state will back only 70-90% of the loan amount in some cases, leaving the lender to bear the balance risk.
• In the case of default on such a partially-guaranteed loan, the borrower will also have to first negotiate with the lender for the unguaranteed part. It could then approach the government to settle the balance amount.
• The immediate fallout of the new rules will be that despite the credit enhancement provided through government guarantees, such loans will be priced higher because of the partial risk that will stay with the lender.
• The government had committed to keeping such guarantees in check by putting a limit of 0.5% of GDP in any financial year in the fiscal discipline act, or the Fiscal Responsibility and Budget Management Rules, 2004.
• At the end of fiscal 2007-08 the total outstanding central government guarantee was Rs. 1,04,872 crore, 2.2% of GDP. The bulk of these relate to those given to international financial institutions for funding local lenders.
• The tighter rules will help free up guarantees where they may be needed more.
• It went on to suggest that instead of a 0.5% annual ceiling, the government should put a cap of 5% of GDP on the guarantee outstanding at the end of every year.
• The reduced level of government guarantee will have the desired effect of forcing public sectors to use the public-private partnership mode more for financing projects.

• Govt names WDRA chief; FMC may lose turf war
• Putting to rest a simmering dispute between the commodity futures market regulator and the food department, the government has appointed Dinesh Rai, a retired IAS officer, as chairman of Warehousing Development & Regulatory Authority (WDRA). The regulator is being set up to develop a negotiable warehouse receipt (NWR) system for agri commodities.
• Soon after Parliament passed the WDRA Act in 2007, Forward Markets Commission held that since its jurisdiction extended from the execution of a trade on exchanges to the settlement of a futures contract, it should be notified as the WDRA authority.
• However, the food department was in favour of having a separate regulator for monitoring warehousing and had been scouting for a whole-time chairman and two members to sit on the board of WDRA. In the absence of an independent regulator for warehousing, FMC has been regulating over 1.5 million tonne of warehousing capacity.
• A very good editorial comment on the reported move of the government to raise the ceiling for investment in government and corporate bonds by foreign funds
• Take a look at this comment here.  Well worth a reading.

International

• Petrobras offers the largest share sale ever
• Petroleo Brasileiro, the state-controlled oil company, raised as much as 120.4 billion reais ($70 billion) from the Brazilian government and other investors in the world’s largest share sale as it seeks cash to develop offshore fields. Petrobras, based in Rio de Janeiro, sold 2.4 billion common shares for 29.65 reais each and priced 1.87 billion preferred stock at 26.30 reais apiece.

Arts & Literature

• Jnanpith for Kurup, Akhlaq Shahryar
• Eminent Malayalam litterateur ONV Kurup and noted Urdu poet Akhlaq Khan Shahryar have been chosen for the Jnanpith Award for the year 2007 and 2008, respectively, for their contribution to literature.
• The recipients for the country’s highest literary honour were announced on Friday after a meeting of Jnanpith Selection Board chaired by noted Oriya writer and Jnanpith award winner Sitakant Mahapatra.
• Born in 1931 in Kerala’s Kollam district, Kurup is a leading voice among the contemporary Malayalam poets who has reinvented the narrative transition of Malayalam poetry. Born in 1936 in a Muslim Rajput family in Bareilly district, Shahryar shaped himself as an “intellectual poet”, whose poetry strongly expresses an “ideological noncommitment”.

Language lessons

• epiphany: Noun
• A moment of sudden understanding or revelation; A divine manifestation
• eg: During the Cold War, one bumper sticker used by peace activists read: “Nuclear weapons: May they rust in peace.” We need a similar epiphany for the malcontents of the information age.
• snifter: Noun
• A globular glass with a small top; used for serving brandy