01.10.2010

Politics & the Nation

• Lucknow bench of the Allahabad High Court does a fantastic job
• Ending 60 years of tortuous litigation, claims & counter-claims, hope & despair, Allahabad HC rules in favour of makeshift Ram temple on disputed site; rest of land to be divided between Hindus & Muslims
• In what is perhaps the most awaited judgement in recent times, a split verdict handed out by a three-member bench of Allahabad High Court on Thursday supported many of the claims of the Hindu litigants while ordering a three-way division of the disputed land. The ruling provided legal sanction to the makeshift Ram temple that came up after the demolition of the disputed structure in Ayodhya on December 6, 1992.
• In a majority judgement, Justice Khan and Justice Agarwal said the disputed land would be divided into three parts. While the area where Lord Ram’s idol is placed will go to Hindus, the other one-third will be given to Muslims and the remaining one-third to Nirmohi Akhara.
• All three judges—Justices DV Sharma, Sudhir Agarwal and SU Khan—contented in favour of the faith that held the disputed site was the birthplace of Lord Ram. Justices Sharma and Agarwal agreed with the long-held claim of the Sangh Parivar and a section of archaeologists that the disputed structure cannot be treated as a mosque as it came into existence against the tenets of Islam.
• It was one of those rare events which made us stay riveted to the TVs all of yesterday (in the process we didn't blog yesterday).  Looked like people all over the country almost stopped in their tracks and waited anxiously for the verdict.  The verdict was widely expected to exacerbate strong feelings on both the sides of the communal divide.  The Central and State governments had gone in for an overdrive in ensuring that no unruly elements can get an upper hand in disturbing the communal peace and harmony.  Even the elders / leaders from both sides of the religious divide displayed an amazing maturity and calmness and pleaded for calm and peace in the wake of the judgment.  All this seems to have worked well and the country ultimately heaved a sigh of relief.  
• As expected the litigants to the suit are expected to approach the Supreme Court.  But the country and judiciary have won the day.
• Read this lead story in full in our favourite paper.
• Look at the ET analysis on what the judgement means.
• However we can’t ignore some of the criticism being levelled against the judgement.  Look at this.  Irfan Habib, a prominent intellectual who holds the Maulana Azad Chair at NUEPA (National University of Educational Planning and Administration) says that the judgement has ignored the vandalism of December 6, 1992 but is nevertheless a step ahead.  He feels the closure of the issue is still further away.  Take a look at his well articulated view point here.
• Our own favourite paper also is not happy with the way the issue was decided.  It feels that the Allahabad HC has failed to
• AN Tiwari to be new CIC
• Information commissioner Anugraha Narayan Tiwari is being elevated to the post of the Chief Information Commissioner (CIC). He will be succeeding Wajahat Habibullah, whose term comes to an end on Friday.
• The Chief Information Commissioner is chosen by a committee comprising the prime minister, Leader of Opposition and a minister of the Union Cabinet.
• Mr Tiwari was born in the Navapara district of Orissa, but studied in Allahabad. He had served as secretary to former vice-president of India, the late Bhairon Singh Shekhawat. One of the senior-most information commissioners, Mr Tiwari had joined the Information Commission on December 26, 2005, and is known for bringing the income-tax returns of political parties under public scrutiny.

Finance & Economy

• Govt to manage its own debt in 2 years
• The government will create an independent debt management office, or DMO, within two years, relieving RBI from the burden of managing sovereign borrowings and helping it focus on monetary policy like its global peers.
• Some states have opposed the plan to establish a debt management office on the ground that RBI was managing their debt programmes well and they do not see any rationale for mandating the new agency to handle their public borrowings. The central bank has been handling the public borrowings of both the central and state governments for decades, having been empowered by the government to do this through legislation.
• An autonomous public debt management office will help the government consolidate all its debt management functions now scattered over several departments, and reduce the conflict of interest that the central bank now faces over setting shortterm interest rates and also selling bonds to a set of captive banks in its role as an investment banker to the finance ministry. This has been identified as one of the major reasons for the stunted growth of the Indian corporate bond and government securities market by policymakers and economists.
• The government then decided in 2007-08 to kick off the exercise to set up a DMO. A middle office, which works on medium-term strategies for managing debt and risk management besides monitoring macroeconomic data and preparing the government borrowing calendar, is already functional within the finance ministry.
• The middle office will now be bolstered with staff from RBI and the finance ministry and also by drawing on market talent. The finance ministry does not envisage any procedural hassles in taking over the debt management function from the apex bank.
• Globally, many countries have a clear separation of roles between the central banker as an interest setter and inflation fighter, and management of public debt. In the US, UK and many other countries such as South Africa, Argentina, New Zealand and Portugal, for instance, the treasury department, which is the equivalent of the finance ministry here, manages both internal and external debt, including borrowings.
• The argument in favour of an independent debt management office is separating monetary policy from debt management reduces actual or perceived conflict of interest and, therefore, it is a good thing. This logic stands regardless of the level of debt of the government or the cyclical position of the economy.
• In the current arrangement, RBI manages the government's borrowings and public debt through a formal memorandum of understanding. Therefore, North Block can take over this function from the central bank through an executive order.
• CAG may get to audit private telcos’ books
• The auditor of India’s public accounts is set to delve into the books of private telecom companies in what will be a unique intervention by the constitutional body that has so far confined its audits to public sector units and ministries.
• The government is reportedly planning to amend the licences under which private phone companies operate, allowing the Comptroller and Auditor General, or CAG, to audit their books every year to ensure that they do not fudge their numbers and pay the government less than its due.
• These developments come even as the telecom department is trying to fend off an unrelated investigation by CAG into the award of telecom licences to a set of new operators in 2008 on the grounds that policy decisions cannot be second-guessed by auditors.
• Unhappy at the prospect of CAG poring over their books, telecom companies are gearing up to strongly oppose this change in licence conditions. They feel that the public auditor has no powers to examine their books under Article 149 of the Constitution.
• Last year, the DoT directed private audit firms to examine telcos’ books amid allegations that some companies were under reporting their revenues. These reports were given to the CAG. This led to mobile phone companies seeking relief from the Supreme Court. But last month, the apex court directed private telecom firms to open their books to the government auditor, but stopped CAG from vetting the papers till a case on jurisdiction was decided by the Delhi High Court.
• Earlier this year, the telecom tribunal also refused to entertain a plea from mobile phone companies challenging the powers of the CAG to examine their books.
• The CAG mandate would be a onestep solution to widespread allegations of under-reporting of revenues that have plagued the sector over the past couple of years.
• Since mobile phone companies pay 6-10% of their annual revenue as licence fee and 2-6% as spectrum usage charges, reporting lower revenue brings down the component they have to share with the government.
• A very good primer on current account deficit
• Take a look at this ET in the Classroom column that deals with the subject.  Good one.
• Core sector growth dips to 3.7% in Aug
• The six key infrastructure industries grew at 3.7% in August, the second slowest pace in the last 10 months, raising the spectre of poor industrial growth numbers for the month.
• The six core industries — crude oil, petroleum refining, coal, electricity, cement and finished steel — have a combined weight of 26.7% in the index of industrial production (IIP) and are considered an advance indicator of industrial activity. These sectors had recorded 4% growth in July.
• Robust industrial growth is the key to India achieving the projected 8.5% economic growth in the current financial year. Asia’s third largest economy grew by 7.2% last year, after recording 6.7% growth in year ended March 2009. It had posted 9%-plus growth rates in the three preceding years.
• Govt widens ambit of rural health cover
• The government has extended a health insurance scheme earlier restricted to people living below the poverty line to a wider range of groups, a development which could drive down insurance premiums and treatment costs at hospitals.
• The Rashtriya Swasthya Bima Yojana, or RSBY — the United Progressive Alliance government’s flagship health insurance scheme for the poor — can now be tapped by all sections of society, even those above the poverty line. RSBY offers the so-called cashless medical insurance facility in which payments are made directly by the insurance company to the hospital. Experts believe widening the ambit of the scheme, widely regarded as a success, could alter the face of the health insurance market in India, as it solves a fundamental problem faced by insurers — high risk of losses due to fraudulent claims, inflated bills put up by hospitals and lack of standardised rates for medical procedures and surgeries. Individual citizens above the poverty line can join the scheme as part of a group.
• The government’s aim is to bring sections such as truck drivers and street vendors within the scheme’s remit because the overwhelming majority of these sections are above the poverty line, but usually do not have access to medical insurance from government owned or private insurers. Access to health insurance is crucial for reducing the incidence of poverty, as many Indians slip below the poverty line due to high out-of-pocket spends on healthcare.
• Launched in April 2008, RSBY has become a rare success story among myriad government schemes plagued by weak implementation and financial leakages. Nearly two crore poor families across 27 states receive annual medical care cover of 30,000 under the scheme.
• Citizen groups interested in joining the RSBY will have to apply to the Centre with data about its membership.  The insistence on groups is to avoid the prospect of only sick and vulnerable individuals seeking health cover — what experts call the adverse selection risk in insurance.
• While the cashless promise of mediclaim policies available in the market has become unreliable in recent months, the RSBY functions like a smart credit card that allows the insured to choose between private and public hospitals with no upfront costs.
• Expanding the scheme will also mean more business for the 4,500 odd private hospitals and 2,000 public hospitals that are part of the scheme. The premium for providing 30,000 medical cover to a poor household of five varies from Rs. 300 to Rs. 600 across states.
• The government may have to pay Rs. 300 crore as annual premium for covering all domestic workers and over Rs. 500 crore for vendors.
• G20 nations, the World Bank, Harvard University and a slew of think tanks have lauded the model, while several developing countries, including Pakistan, want India’s help in replicating the scheme.
• Food inflation is still a cause for worry
• Look at this graphic.