Politics & the Nation
  • Country's new Central Vigilance Commissioner
    • Former telecom secretary P J Thomas was on Tuesday sworn in as the new Central Vigilance Commissioner (CVC).
    • BJP objected to the choice in the light of he being under a cloud in the palmolein scam in Kerala in the early 90s and alleged that it was a “cover up” for the 2G spectrum scam.
Finance & Economy
  • Ohio bans offshoring of IT projects by govt depts
    • The US state of Ohio has banned outsourcing of government IT and backoffice projects to offshore locations such as India, raising fears of similar moves by other American states struggling to cope with high unemployment rates.
    • The move is yet another blow to the Indian IT industry, which is facing higher visa costs and rising protests against outsourcing in other US states. Offshoring work to India is a $50-billion industry, and the Indian tech industry has benefitted immensely from American firms wanting to take advantage of its low wages and top-quality skills. The industry employs about three million people across India and has largely been responsible for the sea change in the West’s perception about the country.
    • Last month, the US Congress passed a controversial legislation increasing visa fees for funding the country’s Mexico Border Security program. States such as Virginia are facing a massive backlash against outsourcing that could further affect the prospects of Indian IT firms. Last week, the West Virginia Public Workers Union filed a lawsuit against proposed outsourcing of IT jobs by the state’s office of technology.
    • Though Indian companies largely rely on private companies for the bulk of their business and orders from state governments are rare, that approach has slowly been changing.
    • Nasscom, on its part, said at a time when top American firms such as IBM and Accenture are gaining more business from the Indian government’s IT spend, such measures by US states are discriminatory.
  • Govt may ease norms to infuse funds into core sector projects
    • The finance ministry has sought a lower credit rating threshold for investment in infrastructure sector by insurance companies to facilitate greater flow of the long-term savings into creation of physical assets.
    • According to government estimates, infrastructure sector needs over $1 trillion funds in the 12th Five-Year Plan period beginning 2012.
    • The current rules allow insurance companies to invest only in AAA or AA credit-rated debt paper. Moreover, at least 75% of investment in debt instruments for every fund in the case of life insurers and investment assets of general insurers should have a AAA rating.
    • These restrictions has meant that though life insurance companies are required to put at least 15% of their funds from traditional policies into infrastructure and housing, the actual allocation is a lot less.
    • At the end of March 2009, less than 9% of life insurer’s fund from traditional products were invested in the housing and infrastructure products.
    • The Deepak Parekh committee on infrastructure financing had gone a step ahead and suggested that insurance companies be allowed to invest in secured debt with a BBB rating, usually considered investment grade.
    • Physical infrastructure has emerged as the single biggest constraint to the country’s attempts to achieve 9%-plus economic growth. Channelling long-term insurance funds to the infrastructure sector has become particularly important as banks cannot meet the needs given the asset-liability mismatch such lending causes. Banks’ deposit funds that typically have a 3-5 year maturity and providing long-term loans from such fund opens them to risks if they are not able to replace the deposits at the same costs. Banks also have restrictions on how much they can lend to an individual project. Pension and insurance funds have no such constraints as their investments are also long-term.
  • Know anything about locavores?
    • Look at the meaning of the word given in our ‘language lessons’ section below.  
    • If you want a good criticism of ‘locavorism’ and food miles, you need not look further.  We have an excellent essay from SSA Aiyar in today’s op-ed on the subject.  A very good and thought provoking article.  Deserves a read at least once.  
  • On SPVs
    • Look at what today’s first principle column is saying on the subject:
    • Special Purpose Vehicle, or SPV, is a specially created business entity for a specific financial transaction. An SPV can be a corporation, trust, partnership, or limited liability company. Most often, the SPV is set up as a trust. These entities are very common in securitisation transactions. Here the originator or the entity which converts loans into bonds and sells it to the third party, does most of the transactions through an SPV, specially created for the purpose. These SPVs are responsible for servicing of the securities sold to third parties issued by originators. The originator on his part, transfers the interest amount to the SPV on which it has a legal right. The SPV, in turn, ensures that the securities sold to the investors are serviced by the originator.
Language lessons
  • dissembling: Noun
    • Pretending with intention to deceive; The act of deceiving
    • Verb: Make believe with the intent to deceive; Hide under a false appearance; Behave unnaturally or affectedly
    • eg: Dissembling is not something that our prime minister does well.
  • locavore: Noun
    • Someone one who tries to eat mostly (or only) locally grown foods