27.11.2010

Politics & the Nation
  • Ratan Tata says Radia tapes a smokescreen
    • Ratan Tata, the chairman of India’s largest conglomerate, has described the media frenzy over the tape leaks featuring conversations between Niira Radia, the owner of a public relations agency, and prominent politicians, industrialists and journalists as a “smokescreen” which was deflecting attention from bigger scandals.
    • Mr Tata suggests that the real scandal was out-of-turn allocation of spectrum and what he described as the “hoarding” of spectrum by some telecom companies.  Mr Tata said the government should hold a proper investigation to book the guilty.
    • The tapes feature conversations between Ms Radia, Mr Tata and other industrialists, politicians and journalists. The tapes suggest that Ms Radia was lobbying for the continuation of Mr Raja as telecom minister after the 2009 elections.
  • On combating corruption
    • Raghunathan’s op-ed pieces are not missed by us usually.  Today he takes on ourselves as the reason for India being corrupt.  
    • As he rightly puts it, we all suffer from fatigue when it comes to discussing corruption.  
    • Take a look at his well written piece.  Once in a way we do need a shock treatment; don’t we?  In this case, we deserve it.  The ‘we’ here refers to us all Indians; not just the blog readers.
  • Even the Supreme Court is forced to make strong observations against judiciary
    • Look at this news report wherein the SC has found fault with the Allhabad High Court functioning.
Finance & Economy
  • Is our current account deficit worrisome?  How should we bridge the deficit?
    • This is an excellent editorial that tells us about why FDI is a better bet over FII for bridging the current account deficit.  It also suggests how we can do that.  
    • BTW the current account deficit at present is 3% of our GDP.  Not an alarming figure; yet. What is alarming however, is the fact that FDI inflows have fallen by 23% during the first half of the current fiscal.
  • Fine tuning the IIP
    • An expert committee chaired by Dr Saumitra Chaudhuri is reportedly fine-tuning the new series of the index of industrial production (IIP).
    • Product like LCDs, laptops, mobile phones and a large number of chemicals and pharmaceuticlas that were not manufactured when the last base revision was carried out in 1993-94 will be included in the basket this time.
    • The base year also should be as recent as possible, it being a normal year without extraordinary influences.
  • A titbit on PSUs
    • PSUs account for 26% of the gross domestic capital formation in our country.
  • What are the strategies that states in India have to follow to tap their demographic dividend?
    • According to the theory of demographic dividend, the rate of economic growth increases due to a rising share of working age people in a population. For India, falling fertility rates are resulting in a larger chunk of working-age people, who can contribute to the GDP and generate higher output per capita.
    • In fact, the International Labour Organization (ILO) has stated that India will account for the highest working age population in the next 10 years, in a report released recently. In the document prepared for the G-20 Summit held earlier this month in Seoul, the ILO says that the G-20 nations will see their working age population between 15 and 64 years increase by 212 million in the period 2010-2020. Over 64% of this increase will occur in India alone!
    • In this context, it is interesting to look at how our states are placed on the demographic dividend map.  Look at this article which identifies four broad categories of states and suggests the strategies that they have to follow to tap their full potential.  The accompanying graphic is also very educative.
  • What is our FDI policy?
    • The policy was enunciated through a series of Press Notes over the years.  But on March 31, 2010 the department of industrial policy and promotion (DIPP) had come out with Circular 1 of 2010, which enunciated a comprehensive policy overriding all the existing press notes, circulars and clarifications.  When this left some confusion on issues relating to upfront determination of price for capital instruments and non-inclusion of party paid shares and warrants within teh definition of 'capital', it came out with yet another Consolidated FDI Policy in Circular 2 of 2010.
  • Decrease in area of cultivation is causing concern among economists
    • Government data shows agricultural land has declined to 182.4 million hectare in 2007-08 from 183 million hectares in 2004-05, a drop of nearly 600 thousand hectares.
    • Land acquisition has increased for various non-agricultural needs such as special economic zones, urbanisation, power projects, roads and mining. As a result, the percent share of agricultural land has declined to 59.7% in 2007-08 from 59.9% in 2004-05.
    • India has more agricultural land than China, but its farm output is much less because of a sharply lower per hectare yield for most crops, thanks to outdated agricultural practices, poor use of inputs and fragmented land that makes mechanisation difficult.
    • Independent estimates put India’s crop land at 170 million hectare as compared to 135 million hectare for China, but the latter manages to produce more from the smaller area it has under cultivation.
    • A look at this graphic in this context is educative.
International
  • Some interesting statistics and data interpretation work on government debt
    • This is an interesting article that opens our eyes to how nations will be faring in incurring debt over the future years.  Some excerpts:
    • Based on IMF forecasts, the level of aggregate net government debt in the world will more than double from $23 trillion — 44% of world GDP — in 2007 to $48 trillion — 65% of GDP — in 2015. Advanced economies account for much of this increase.
    • In 2007, emerging markets (EMs) accounted for 24% of world nominal gross domestic product (GDP), in US dollars terms, and 17% of world debt. By 2015, they are expected to produce 35% of world output but account for just 14% of world debt. Thus, even as EMs increase their share in world GDP, their share in world debt is expected to come down. That is to say, EMs will power their growth from internal rather than borrowed resources.
  • Paul Krugman explains the Ireland problem
    • The Irish story began with a genuine economic miracle. Eventually, though, this gave way to a speculative frenzy driven by runaway banks and real estate developers, all in a cozy relationship with leading politicians. The frenzy was financed with huge borrowing on the part of Irish banks, largely from banks in other European nations.
    • Then the bubble burst, and those banks faced huge losses. You might have expected those who lent money to the banks to share in the losses. After all, they were consenting adults, and if they failed to understand the risks they were taking that was nobody’s fault, but their own. But, no, the Irish government stepped in to guarantee the banks’ debt, turning private losses into public obligations.
    • Before the bank bust, Ireland had little public debt. However, with taxpayers suddenly on the hook for gigantic bank losses, even as revenues plunged, the nation’s creditworthiness was put in doubt. So, Ireland tried to reassure the markets with a harsh programme of spending cuts. Step back for a minute and think about that. These debts were incurred, not to pay for public programmes, but by private wheeler-dealers seeking nothing but their own profit. Ordinary Irish citizens are now bearing the burden of those debts.
Language Lessons
  • smokescreen: Noun
    • (military) screen consisting of a cloud of smoke that obscures movements; An action intended to conceal, confuse or obscure
  • cloud cuckoo land
    • It refers to an unrealistically idealistic state where everything is perfect. ("You're living in Cloud Cuckoo Land.") It hints that the person referred to is na├»ve, unaware of reality or deranged in holding such an optimistic belief.
  • up to speed
    • being fully informed or up to date on some matter; being conversant with something
    • eg: Following the private meeting, the board now is up to speed on the investigation.

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