Politics & the Nation
- Some details about the rehashed land acquisition bill
- The Land Acquisition (Amendment) Bill sets aside three categories of projects for which the government can acquire 100% land. These include establishment of installations pertaining to national security, infrastructure and facilities designated as “social infrastructure,” such as health, education and space research.
- For any project other than the above, land could be acquired in the 70:30 ratio, with the company planning to set up the facility on that land being asked to purchase 70% of it. The state government would step into the picture only after the private player had done its bit, by agreeing to take over the remaining 30% if it felt the project fell in the “public purpose” domain.
- On the compensation package, the Resettlement and Rehabilitation Bill wanted the displaced persons to be granted 60% solatium over and above the market rate of the land being taken over. Market rate was defined as the average of the highest transactions in the last three in the same area on a similar tract of land.
- Even these highly liberalised provisions are not going to convince the Trinamool Congress as it has been saying that it is opposed to the governments -- either at the Centre or at the State level having anything to do with land acquisition.
- IITs to offer medical courses
- IITs will now be able to offer medical education, permanent faculty positions to foreign nationals and admit foreign students at the post-graduate level. These decisions were taken at a meeting of the IIT Council headed by human resource development minister Kapil Sibal on Friday. The Institute of Technologies Act will have to be amended to enable IITs to offer medical courses.
- The health ministry has been opposed to the idea of IITs setting up their own medical schools. It asked that the engineering schools start courses on health information technology, biomedical engineering and e-health rather than running a hospital or starting MBBS courses.
- At present, only IIT Kharagpur has expressed an interest in setting up a full fledged medical school. IIT Kharagpur has argued that there are no hospitals or medical colleges in the area and that it would actually be addressing a need.
- Industry grows 13.8% in July, rate hike looms
- India's industrial output beat analysts’ expectations by a huge margin in July, strengthening the case for further monetary tightening ahead of next week’s crucial monetary policy review.
- Industrial production expanded 13.8% during the month, compared with 5.8% growth in June, government data released on Friday showed.
- Manufacturing, which has an 80% weight in IIP, grew 15%, powered by a 63% increase in capital goods output.
- The central bank has the difficult task of tackling high inflation without upsetting the growth momentum in the economy amid doubts about the global recovery. It had hiked policy rates four times this year to a combined one percentage point.
- RBI is under pressure to raise rates further to bring down sticky food inflation that continues to be in double digits despite a good monsoon and prospects of a bumper harvest. Food inflation stood at 11.5% in the week ended August 28. Many economists expect RBI to raise policy rates by 25 basis points in its September 16 review.
- Take a look at the ridiculously low price that is quoted for managing SAIL's FPO
- SAIL has a Rs. 8,000 crore FPO (Followon Public Offer) lined up. It comprises fresh issue of 5% pre-issue paid-up equity of the company and offer for sale of 5% by the government. For this it wanted merchant bankers to bid for managing the issue.
- Deutsche Bank has emerged as the lowest bidder at a tenth of a paisa per 1,000 crore. At this rate, the fee for the entire issue will be less than a paisa. The US-based leading investment banker JPMorgan quoted the second lowest bid – 0.75 paise per 1,000 crore, while UK-based Royal Bank of Scotland had quoted 0.99 paise per 1,000 crore. Out of 12 contestants, nine had bid less than 100 for the entire issue. These include Morgan Stanley, Goldman Sachs, Nomura, HSBC and Kotak.
- Interestingly, domestic I-banks have quoted the highest fee. Out of 12 bidders that qualified for the financial round, only two bidders — JM Financial and Enam — have put in bids for 95 crore and 5.6 crore, respectively.
- SAIL is forced to approached the law ministry for advice on how to deal with a clutch of merchant bankers who wants to charge less than a paisa for managing an issue.
- Considering that managing such a large issue will cost a bank at least about 30-40 crore, the low bids really mean the merchant banks are willing to pay for bragging rights. In the year-end ranking, managing a 8,000-crore issue will be a big boost, and that can then be used to win private sector mandates.
- The government has to appoint six bankers for the issue, so the 0.8 paise cost needs to be shared by six bankers to pay 0.13 paise each. Since the fees quoted by these bankers are inclusive of service tax at 12.5%, SAIL will retain service tax of 0.1 paise on this.
- Is this the first time that I-banks have quoted such low rates? No. Prior to this, bankers had bid the lowest at the rate of 1 per one crore for the 14,000-crore initial public offer of Coal India.
- On taxing Vodafone for the M&A deal with Hutchison Essar
- We have noted quite a bit frequently about this issue. In spite of being souding repetitive, this is one issue which is likely to stay in public memory for long because of the tectonic shift the HC ruling in the case has heralded. It will do us no harm in taking a look at various experts' explanation about the issue.
- Take a look at this op-ed which explains the issue in detail again.
- Nokia turns to MS for new chief
- Nokia, the leading mobile phone maker, replaced its chief executive, Olli-Pekka Kallasvuo, on Friday with the head of Microsoft’s business unit in a bid to turn around the handset maker’s struggling smartphone lineup and stop a decline in U.S. market share.
- Nokia said it had appointed Stephen Elop, a 46-year-old native of Ancaster, Ontario, who has run Microsoft’s largest division, to replace Mr. Kallasvuo, a 30-year Nokia veteran who will continue as chairman of Nokia Siemens Networks.
- What is wrong with the US housing market? How can it be fixed?
- Take a look at this excellent piece written by Joseph Stiglitz. Worth a read in full at least once. Some excerpts for our keeps:
- A sure sign of a dysfunctional market economy is the persistence of unemployment. In the United States today, one out of six workers who would like a full-time job can’t find one. It is an economy with huge unmet needs and yet vast idle resources.
- The housing market is another US anomaly: there are hundreds of thousands of homeless people (more than 1.5 million Americans spent at least one night in a shelter in 2009), while hundreds of thousands of houses sit vacant.
- In short, government policies to support the housing market not only have failed to fix the problem, but are prolonging the deleveraging process and creating the conditions for Japanese-style malaise. Avoiding this dismal ‘new normal’ will be difficult, but there are alternative policies with far better prospects of returning the US and the global economy to prosperity.
- Corporations have learnt how to take bad news in stride, write down losses, and move on, but our governments have not. For one out of four US mortgages, the debt exceeds the home’s value. Evictions merely create more homeless people and more vacant homes. What is needed is a quick write-down of the value of the mortgages. Banks will have to recognise the losses and, if necessary, find the additional capital to meet reserve requirements.
- This, of course, will be painful for banks, but their pain will be nothing in comparison to the suffering they have inflicted on people throughout the rest of the global economy.
- Is the US headed for a double-dip recession as predicted by some experts?
- It will appear so, if we look at the bumpy ride car sales are having in the US market. Read this news report to get a feel of the problem.
- veritable: Adjective
- Used as an intensifier; actual; Not counterfeit or copied
- eg: Investment banking firms, including major global names, are in a veritable race to the bottom to secure a piece of the state-owned steel manufacturer’s upcoming public offering, in which shares amounting to 10% of the company’s equity stake will be up for sale.
- Synonyms: authentic, bonafide, regular, unquestionable
- befuddled: Adjective
- Stupefied by alcoholic drink; Perplexed by many conflicting situations or statements; filled with bewilderment; Confused and vague; used especially of thinking
- purvey: Verb
- Supply with provisions
- eg: Today, no one will or should trust the rating agencies, or the investment banks that purveyed flawed products (sometimes designing them to lose money).
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