06.11.2010

Politics & the Nation

• Copenhagen Accord on climate change
• The accord which is supported by approximately 140 countries, including India, commits all major economies to taking actions to limit their emissions and to do so in an internationally transparent manner. The agreement also includes landmark provisions for financial assistance to support clean technology development, adaptation and forest protection in those countries most in need. These provisions consist of a pledge for ‘fast start’ funding by developed countries approaching $30 billion over the years 2010-12 and a commitment to a goal of mobilising $100 billion annually from public and private sources by 2020 in the context of meaningful mitigation and transparency.
• Indo-American initiatives to mitigate climate change
• President Obama and Prime Minister Singh agreed to strengthen US-India cooperation on energy and climate change through several initiatives. Our two nations have formed a Partnership to Advance Clean Energy through an initiative supported by eight US government agencies and their Indian counterparts to promote research and deployment of renewable energy technologies throughout India. Under this initiative, both India and America are working with the private sector to fund R&D on potential breakthrough technologies toward ‘green building’ efficiency, solar energy, and advanced biofuels. We are also partnering to jointly develop, deploy, and commercialise innovative clean energy technologies to accelerate the transition to a low-carbon economy.
• (Excerpted from an article by Timothy Roemer, the US Ambassador to India)
• Global agencies offer help to promote insurance for poor
• A number of international agencies have stepped in to help the government expand the scope and improve the performance of Rashtriya Swasthya Bima Yojana (RSBY), an insurance scheme that covers 22 million poor families in the country.
• Agencies such as UNDP, Unifem, Unicef, GTZ and DFIT will support the government’s plan to extend the scheme meant for families below poverty line to cover other vulnerable groups free of charge and to general public on payment of a premium.
• The RSBY scheme kicked off in 2007 and has resulted in a sharp increase in the poor’s access to hospitals, government data show.  The figures given by the labour ministry on increased access to hospitals by RSBY card holders is supported by an independent survey carried out by the Indian subsidiary of Westat US, the largest statistical services research corporation in the US. According to the study, as many as 97% of the surveyed RSBY patients receiving care in hospitals reported that they decided to get treatment for their conditions or sickness because they had an RSBY smart card. The survey also highlighted the level of patient satisfaction amongst cardholders was high.
• Earlier this year, ILO and UNDP had selected the scheme in its list of best performing social sector schemes in the world.

Finance & Economy

• Indian economy dashboard
• Economix column.
• A bit about the PMI
• The uptick in the purchasing managers’ index (PMI) for November, with the figure adding up to 58.4, the highest in six-months, is notable in that it corroborates recent buoyant quarterly growth estimates.  But what is PMI?
• The PMI, which is compiled by HSBC, is a survey of new orders, suppliers’ delivery times and stock of items purchased, etc, and so is indicative of production trends in the short-term. The index is really a leading indicator to gauge output while still in production.
• The case of deregulating savings bank interest rates
• Excerpted from today's op-ed by Mythili Bhusnurmath.
• Indian households save more than other emerging markets like China (15%) or Brazil (5%) and 2% for Britain and 1% for the US, respectively. Yet the RBI governor was drawing attention to increasing the savings rate and channelling savings to investment?
• The reason is that a substantial share of domestic savings is held in the form of physical, rather than financial, assets. The household sector is the main contributor to our high savings rate, (accounting for as much as 70% of gross domestic savings at the end of March 2008-09). But it holds 54% of its savings in relatively unproductive physical form — land, gold, silver. What is worse, this ratio seems to be increasing, rather than decreasing, over the years.
• Today, faster growth in credit (22% year-on-year) relative to deposits (15%) has led to a severe resource crunch for banks. The RBI has been tweaking liquidity periodically by offering additional support under its liquidity adjustment facility. Government, on its part, has promised an additional capital infusion of Rs. 6,000 crore into government banks. But these are at best temporary sops. A longer-term solution to the resource crunch would be increase the flow of household savings into banks by deregulating the interest rate.
• How would this help? For one, increased competition among banks would lead to product innovation and make the humble savings bank deposit a far more sought-after investment avenue for households. For instance, banks could design separate products for customers who want to have savings (with liquidity and ease of operations) as opposed to those who are looking mainly at ease of transactions.
• Fears that deregulation would inevitably push up interest costs for banks and thereby affect bank profitability adversely are unfounded. Competition does not necessarily mean higher interest rates as rates are a function of market conditions. However, there would be better price discovery and as a result, greater incentive for households to park their surpluses in savings bank deposits.
• Experience has shown the core nonvolatile portion of saving bank deposits is very high. In effect, therefore, banks will get stable funds at a far lower cost than in the case of fixed deposits. Even if the cost does go up marginally, it would still be lower than in the case of fixed deposit funds so overall banks will benefit.
• Thus, deregulation of interest rates on savings bank deposits will lead to deposit growth and product innovation, possibly even resulting in more financial inclusion as banks tailor savings bank deposit accounts to customers’ needs. It could be a win-win for both banks and customers. Customers will have more choice and banks, more funds.
• What does it take to India becoming more innovative?
• In this and long article R. Gopalakrishnan of Tata group shares some interesting thoughts.  Worth a read.  Do so here.
• In the process we also learn some Hebrew words: bitzua, chutzpah, rosh gadol, davka.
• bitzua: getting things done
• chutzpah:  gall, brazen nerve, effrontery, presumption plus arrogance
• rosh gadol: a can-do and responsible attitude with scant respect for the limitations of formal authority
• davka: in spite of a threat responding to something
• Some interesting statistics: A good 22% of the Nobel Prize winners are Jewish; among women who have been awarded the Nobel Prize, 38% are Jewish. These are amazing statistics, considering that the number of Jews on the planet peaked at 18 million before World War II, and today, number only about 12 million.

International

• Something about the TAPI project
• The proposed 1680 KM pipeline would deliver 90 mn cubic meters of natural gas a day to Afghanistan, Pakistan and India.  India is expected to get about 38 mmscmd gas, the same as Pakistan. The rest of the gas will go to Afghanistan.
• The pipeline will start from the Dauletabad gas field in southeast Turkmenistan and after 145 km stretch in the country enter Afghanistan. After traversing 735 km in Afghanistan and 800 km in Pakistan, the pipeline will cross into India.
• This is in the news because Turkmenistan has proposed to charge different prices for supplying natural gas for the three countries.
• India has not firmed up its view regarding price of gas as it is focusing on two key agreements --  the Inter-Government Agreement and the Gas Pipeline Transmission Agreement -- among heads of the four nations expected on December 10-11. The pricing issue will come when gas consuming nations will sign GSPA (gas sale purchase agreement) with Turkmenistan.
• The four nations have in-principle agreed to outsource execution and management of the $7.6 billion project to a global energy major, selected through a competitive bidding process.

Language Lessons

• parsimony: Noun
• Extreme care in spending money; reluctance to spend money unnecessarily; extreme stinginess
• coddle: Verb
• Treat with excessive indulgence; (cooking) cook in nearly boiling water