09.10.2010

Politics & the Nation

• A very good definition of wicked problems
• Take a look at the definition given by Sameer Sarma in his op-ed today:
• Wicked problems, as opposed to tame problems, lack definitional clarity and depend upon an elusive political judgment for resolution. Moreover, diverse perspectives of multiple stakeholders add to the definitional conundrum.
• Second, solutions are often indeterminate. Wicked problems do not have stopping rules and only best solutions are possible. Often, we do not know when the job is accomplished and once we run out of time, money or patience, the problem is deemed to be resolved. Furthermore, solutions depend upon the level of analysis and choice of explanation and the “halflife” of consequences is long, every trial counts, and path reversal leads to another set of consequences.
• Third, wicked problems are unique and the singularity is accentuated by the fact that wicked problems are unstable and uncertain — problems are like “moving targets”, they evolve as they are being addressed.

Finance & Economy

• The murky world of India Inc
• Do take a look at this story.  
• The kind of allegations being bandied about and the course of events over the last two years discussed in the story present a repulsive picture.  All along we thought that such kind of behaviour is the preserve of government babus.  But India Inc is proving to be no less equal.
• Centre hardens stance on GST, it’s up to states now
• The Centre is unlikely to propose a fresh set of constitutional amendments to facilitate the goods and services tax, or GST, having already bent backwards enough to accommodate concerns of the states.
• This hardened stance of the Centre means the onus is on states to take the process forward at the October 29-30 meeting of the empowered committee of the state finance ministers, the body that is negotiating with the Centre, at Goa.
• The Centre has attempted to accommodate the concerns and suggestions of states in the second draft of the constitutional amendment proposals, but has failed to get them on board so far.
• The Centre dropped the contentious veto power to the finance minister in the proposed dispute settlement council in the first draft, but many states now want the idea of such a body to be dropped altogether. This is not acceptable to the finance ministry for the reason that it has agreed to states demand of a dual rate structure --goods are taxed at two rates, one concessional and other regular -- as opposed to a singe one suggested by the Centre.
• This compromises the basic structure of the new tax and the finance ministry thinks it could undermine the stability of the overall tax structure. In such a situation, an effective dispute settlement mechanism is necessary for the smooth functioning of GST.
• But with the hardening of stance on part of both the Centre and the states, which are unrelenting on the amendment bill, may make the GST rollout even in middle of the next year difficult.
• The rollout of GST has already missed the April 1, 2010 deadline and the new proposed date is April 1, 2011.
• The proposed GST will have two components, one levied by the Centre and another by the states, implying that both will need to have concurrent powers to tax goods and service. Therefore, a facilitating constitutional amendment is needed to allow Parliament and state assemblies to tax the same items. At present, the Centre can impose taxes on goods at the factory gate and services while states can only tax goods at retail level. States do not have the power to levy tax on services.
• Further developments on India EU agreement on drug seizures
• The drug seizure agreement with the European Union (EU) (we have noted about this yesterday) may be an eyewash as another international treaty will allow 40 countries to seize in transit generic medicines.
• Indian drugmakers and health activists have voiced strong concerns against Anti-Counterfeiting Trade Agreement, or ACTA, which they allege emboldens EU's earlier move and will affect Indian drug exports. The final draft of ACTA released last weekend follows the 11th and final round of the negotiations held in Tokyo last month. Although some delegate countries had expressed reservation about certain parts of text, the treaty is expected to be signed soon with minor changes.
• Although, India is not a treaty member of ACTA, locally made generic drugs can be seized at the 40 countries who are going to be the signatories to the treaty. These include the EU countries, US, Canada, Mexico, Switzerland, New Zealand, Morocco, Japan, Australia, S. Korea and Singapore.
• India is considered the pharmacy of the world because of its ability to produce and export drugs at low-cost and huge quantities. The ACTA could adversely impact exports of medicines worth about Rs. 42,000 crore annually.
• In the last couple of years, Customs authorities in a number of European countries seized about 20 drug consignments shipped from India enroute various African and Latin American countries. This was based on complaints by European companies holding patents for those drugs in their countries, who claimed the products were counterfeit.
• India’s wealth triples in a decade to $3.5 trillion
• Total wealth in India has tripled over the past decade to $3.5 trillion and could further increase to $6.4 trillion by 2015, says a report on global wealth by investment bank Credit Suisse.
• Relative to the rest of the world, the distribution of wealth in India is heavily biased towards the lower end of the wealth pyramid, with the proportion of adults having wealth below $1,000 roughly double the global average, says the report.
• At the other end of the scale, a very small proportion of the adult population (0.4%) owns more than $100,000 on average.
• The investment bank expects the global wealth to grow 61% to $315 trillion by 2015, driven by robust economic expansion in emerging markets. The middle segment of the wealth pyramid is composed of one billion individuals who are located in the fastest-growing economies of the world and who hold one-sixth or $32 trillion of global wealth.
• In total, almost 60%, or 587 million, of individuals in the middle segment of the wealth pyramid are located in Asia-Pacific. China stands out as the thirdlargest wealth generator in the world, behind US and Japan, and is 35% ahead of the wealthiest European country, France.
• China stands out as the third-largest wealth generator in the world, with total household wealth of $16.5 trillion, behind only the US ($54.6 trillion) and Japan ($21 trillion). Furthermore, China’s wealth is almost five times that of India’s.

International

• IMF worries about global currency wars
• The annual meeting of the IMF is due to be held in Washington shortly.
• The IMF chief warned that global recovery is still fragile and worried that currencies can be used a policy weapon.  When such a thing happens it would pose a serious risk to global recovery.
• The prospect of currency wars, where countries engage in competitive devaluation of their currencies to stimulate exports and the creation of jobs, has become a major concern in recent weeks.
• At the centre of the debate is China, which has refused to allow its currency to appreciate quickly, warning of domestic social unrest if it were to do so. The US, in turn, has accused China of ‘stealing’ American jobs by artificially keeping its currency devalued, making its exports cheaper. China allowed the yuan to appreciate to its highest level on Friday, jut before the crucial meeting.
• Last week, Japan and Brazil took steps to weaken their currencies. The Bank of Japan announced measures to keep the yen down while Brazil doubled its tax on inflows of hot money, or short-term capital, to keep the real competitive. Brazil’s finance minister Guido Mantega coined the phrase ‘currency war’.
• Meanwhile, India has called for greater engagement among nations to correct misalignment of currencies.  Even World Bank chief Robert Zoellick also cuationed that ongoing tension over currency could lead to trouble if not properly managed.
• "Unlike in the past, in the present age of globalisation such fluctuations are more likely to have serious crossborder social and economic implications. Governments and central banks therefore have to play a key role in supervising and regulating markets, collectively and individually in their respective economies," said our Finance Minister.
• Emerging economies are worried that surging capital flows in search of higher returns would artificially strengthen their currencies, damage their export competitiveness and make them much more vulnerable to hot money flows.
• Chinese dissident wins Nobel peace prize
• Jailed Chinese democracy activist Liu Xiaobo won the Nobel Peace Prize on Friday for decades of non-violent struggle for human rights. The prize shines a spotlight on human rights in China at a time when it is starting to play a leading role in the global stage as a result of its growing economic might, and drew muted reactions from the European Union, France and Germany.
• Liu rose to prominence as a strike leader during the Tiananmen Square pro-democracy protests in 1989. He was sentenced to 11 years’ jail last December for writing a manifesto calling for free speech and multi-party elections. The Norwegian Nobel Committee praised Liu for his “long and non-violent struggle for fundamental human rights” and reiterated its belief in a “close connection between human rights and peace”.
• Liu, a former literature professor, was jailed last December for subversion of state power. He had been arrested a year earlier as lead author of Charter 08, a manifesto by intellectuals and activists calling for democratic reform in the one party state. In 1989, Liu was pilloried by China as one of the “black hands” who fomented the Tiananmen protests, although he was among a group of intellectuals who tried to defuse the standoff before it ended with army shootings that killed hundreds of students and residents. A 20-month jail sentence followed, and he also spent three years in a “labour re-education” camp in the 1990s.
• China, which had warned against giving the prize to Liu, said the award would hurt ties with Norway, with which it is currently negotiating a bilateral trade agreement.

Language Lessons

• coleslaw: Noun
• Basically shredded cabbage