Politics & the Nation
  • An excellent editorial comment worth our noting in the context of the impending decision on Babri Masjid dispute
    • Despite political exigencies — chiefly those relating to the needs of coalition formations as well as the plateauing of the electoral benefits of sharply communal politics — having tempered the Sangh Parivar’s current stance, it must be remembered that the Ayodhya episode displayed how conceptions of ancient and medieval history can be brought to bear on the political present, leading to acute strife. It is true that the agitation has lost steam, that most of its protagonists have faded, that a generation has passed since the demolition. But that event itself showed that history and memory, real or invented, recent or hoary, can be used for political ends, destructively. We would do well to also remember that.
Finance & Economy
  • Basel III and some worthy comments about it
    • Against 2% tier I capital that banks are presently mandated to hold, they will have to hold 4.5%, the additional amount being phased in by 2015. In addition, they will have to set aside another 2.5% as contingency capital, taking the overall capital ratio to 7%.
    • This higher capital-to-risk-weighted assets ratio is to be supplemented with a leverage or debt-equity ratio (likely to be pegged at 3% of tier I capital, i.e., the balance sheet size cannot exceed 33 times tier I capital) to ensure banks do not overreach themselves. In addition, a liquidity buffer, akin to our statutory liquidity ratio, is to be made mandatory by January 2018.
    • These are some of the Basel III requirements as pointed out to us by Mythili Bhusnurmath in her today's op-ed in ET.
    • Are tighter regulations enough to prevent another crisis?  The simple answer is a 'No.'  Then what else needs to be done?  She explains how an effective policing regime that ensures compliance with the regulatory regime is as important as the tough regulations in her article.  Take a look.  Well worth a read.
  • Two of the things that a current account deficit in the country's books reflects:
    • That its imports of goods and services are higher than its income from exports and remittances from non-residents.
    • That the country is pushing for its investments to be higher than that supported by its savings.
  • A few of the several options that the government is reportedly mulling for rationalizing subsidy on cooking gas
    • The government is reportedly considering several options to rationalise the subsidy on cooking gas such as excluding income tax payers from getting subsidised cylinders, limiting availability per household and higher prices for urban customers to provide this clean fuel in rural areas.
    • About 83% of the over 110 million cooking gas connections are currently with urban consumers. The consumer pays about 43% less than the market rate of a 14.2 kg cooking gas cylinder. The balance burden is shared between the government and state-owned oil firms in an ad hoc ratio. A gas refill is currently sold at Rs. 345.35 in New Delhi.
    • Increased availability of cooking gas in rural areas is expected to help the government check diversion of cheap kerosene for adulterating costlier transportation fuel.
  • The two sides to an airport
    • While reading this news report, it is but inevitable that we question what is the 'other side' of an airport.  It is the 'air side.'  Air side functions have direct bearing on the terminal building operations.
    • The city side constitutes commercial facilities around the airport for the benefit of passengers.
    • AAI currently possesses a total land bank of about 45,000 acre across various airports in the country. It has an equity base of Rs.623 crore as on April 2010. The country’s largest airport operator manages 128 airport in the country, which include 14 international airports, 25 civil enclaves and 8 customs and 81 domestic airports.
  • What are the causes of financial exclusion for the urban poor?
    • Urban financial exclusion typically results from the inability to access necessary financial services in an appropriate form. Urban financial exclusion is also a result of problems with conditions imposed, pricing, marketing or self-exclusion in response to negative experience, or actual or perceived absence of benefits in betterment of their social or economic conditions. Physical access is not a critical issue for financial exclusion among the urban poor.
      • Absence of relevant know-your-customer (KYC) documents is perceived as a key reason for financial exclusion given the profile of the urban poor.
      • Insufficient effort at creating financial literacy is an important reason for urban financial exclusion.
      • Time involved in banking activities means time lost on earning livelihood.
  • How are the UID and NPCI going to make a difference for extending financial inclusion in India?
    • With the UID project establishing recognition on the basis of biometric details — fingerprints, photograph and iris scan — banks will be able to identify customers, thus taking care of KYC issues and use the UID-based authentication service to process transactions. Innovative solutions leveraging UID authentication ability can bring about the true last-mile connectivity.
    • In conjunction with the work being done by the UIDAI, the National Payments Council of India (NPCI) has also been mandated with creating the financial infrastructure on several major projects: other than managing the National Financial Switch (NFS) for domestic ATMs, the NPCI is working on creating a National Automated Clearing House (ACH) system, a switch for mobile-to-mobile payments — called India Pay Mobile Switch — and creating an infrastructure to enable UID-to-UID micropayments.
    • The vision is to link the UID to a bank account and a mobile number in a central database. Once this mapping is done, a payment can be initiated through any bank or mobile phone-enabled business correspondent, and routed to the beneficiary’s UID or mobile number, and this will be automatically credited to the bank account linked to that UID. The UID-based payments initiative, coupled with the mobile payments switch, is going to be a major enabler for financial inclusion, and has the potential to completely redefine the country’s payments landscape, a representation of which is given in this graph.
  • On Global Partnership for Development or GPD
    • The development of a GPD is what is stated in the Millennium Development Goal 8 adopted in 2000.
    • The GPD is best defined as a multi-stakeholder partnership, involving state as well as non-state actors, to address significant challenges in regard to the attainment of global public goods (GPGs). GPGs, in turn, may be operationally defined as values, facilities or institutions that enhance welfare for populations all over the globe. Thus, security, promotion of democracy, aid (including debt), disaster management, alleviation of climate change, food security, trade and investment have all been referred to as GPGs.
  • On the G-20
    • We note below an excellent description of the G-20 as given by Pradeep Mehta, the Secretary General of CUTS International:
    • The G-20, a club of nations that has recently attained the status of a principal mover on the world stage, accounts for 65% of the world’s population and more than 85% of the world’s GDP. Thus, the G-20 has been able to achieve the ideal blend of representativeness and economy in numbers, a characteristic needed for quick and timely decision making and achievement of consensus in a fast changing global environment.