Indian Current Affairs: 09.12.2010

Politics & the Nation

Take a look at this article by Arun Duggal sharing some thoughts on how we should fight corruption. Reasonably good one.

Under relentless pressure from the Supreme Court to investigate irregular allocation of spectrum in 2008, officers from the Central Bureau of Investigation, or CBI, on Wednesday searched the residences of former telecom minister A Raja in Delhi and in Chennai, as well as four of his close associates in the ministry. His business partner, Sadiq Batcha, too was taken in for questioning in Chennai.
The raids failed to yield anything substantial, according to CBI officials. But the investigative agency is not unduly perturbed by the failure to recover any substantial documentary evidence during the latest round of searches because it has reportedly got enought material during its search of the DoT headquarters on October 22 last year.
The 2G spectrum allocation scam refers to the allotment of permits and frequency spectrum, or airwaves, to a number of cellular operators in early 2008 at prices that were set in 2001. In a report released last month, the auditor of government accounts—Comptroller and Auditor General (CAG)—said Raja’s actions cost the government 1,76,000 crore, or $39 billion. While the veracity of this number has been questioned by analysts, the notion that the government could have earned higher revenues had it auctioned the licences is not controversial.

Finance & Economy

This ET editorial argues strongly in favour of decontrol of diesel prices. Good one.

If you are ever asked to suggest some measures for correcting the structural imbalances in our economy, what could your answer be?
This article from Vikram Kotak can be an excellent answer. He dwells on three broad areas: FDI vs. FII, Consumption vs. Investment led growth, Financial vs. Human capital. Very good one. A must read for every economics student.

Corporate governance issue has come to the fore thanks to the Satyam scam. The role of independent directors was questioned ever since and the issue of selection of independent directors has been bogging the minds of many a thinker. Take a look at this article by one of our favourite writers -- TT Rammohan. Makes a good reading. Some meaningful suggestions that he gives:
In the name of corporate governance, companies have enacted a huge farce. Management selects ‘independent’ directors and often heaps big rewards on them in the form of fee, commission and stock options. In exchange for this munificence, the worthies on the board are expected to question, challenge and even oppose management. I don’t know if such people exist on this planet — I haven’t met any in my lifetime.
No, independent directors can be effective, if at all, only if they are not selected by management. To begin with, let management select no more than 50% of independent directors. The rest must be appointees of institutional investors, employees, minority shareholders and other interest groups. Then, there is at least a fighting chance that we will see the commitment that is sadly missing now.

To know the basics about capital controls look at today’s ET in the classroom column.

A government panel has reportedly favoured exempting crisis mergers between banks from the Competition Commission of India’s oversight, a decision that could boost the corporate affairs ministry’s efforts to get speedy Cabinet approval for the proposed merger norms.
The Reserve Bank of India’s view was that all mergers between the country’s lenders should be kept outside the purview of the competition regulator.
The Competition Act, which does not provide any sectoral exemption for vetting mergers beyond a certain threshold, has taken RBI’s plea as an exception due to various reasons including CCI’s lack of domain knowledge on the sector.
The CCI has distanced itself from the dispute, saying it is for policy makers to make a final call.

The Planning Commission has termed as impractical a draft bill which calls upon mining firms to share a quarter of their net profit with people displaced or affected by their projects. The commission has instead asked the government to redraft the legislation offering the affected people 26% of the royalty as compensation.
The panel's suggestion is based on the possibility that the mining firms could be fudging their accounts to circumvent their liability. It would also require the government to audit the accounts of these firms, increasing administrative work.
The Federation of Indian Mineral Industries (FIMI) is lobbying for a change in the draft Bill that proposes an annuity equal to 26% of a company’s net profit from mining operation or royalty amount, whichever is higher. Mining companies say that compensation should be limited to an amount equivalent to 26% of royalty that would ensure availability of funds on continuing basis also be easy to calculate.

Dedicated infrastructure lenders will enjoy greater access to long-term retirement savings because the government -run organized sector fund manager, employees’ provident fund organisation, is likely to give their government guaranteed bonds top billing.
This will allow EPFO’s fund managers to invest in the bonds of the likes of India Infrastructure Finance Company Ltd, helping them earn slightly more than what they get on other AAA-rated bonds that rank highly in terms of safety but earn low returns.
The EPFO has been under severe pressure to invest in equities to earn a higher return for its subscribers.
The fund has 4.7 crore subscribers and a corpus of over Rs 3 lakh crore. The incremental corpus of the fund is around Rs 50,000 crore-Rs 60,000 crore per annum.
The provident fund contributions of organised sector workers are managed by four funds, ICICI Pru, HSBC, Reliance Capital and SBI, appointed by the EPFO in 2008.

International

Branding Pakistani intelligence agencies, mainly the ISI, as a “rogue agency”, country’s top nuclear scientist A Q Khan has said that it takes orders from the army chief and not the civilian government.
Charging that ISI operated outside the law and totally ignored court orders, Khan, in a scathing attack on the military intelligence agency, said it was being used against politicians and as a “extended arm of the dictators.”
The intelligence agencies “operate outside the law, are least bothered about the judiciary and totally ignore court orders,” wrote Khan, who was placed under house arrest after he admitted running a clandestine nuclear proliferation ring in early 2004. In recent months, Pakistani authorities have removed or relaxed some of the restrictions imposed on him.

Language Lessons

Ridicule with satire;
Verb: A composition that imitates or misrepresents somebody's style, usually in a humorous way

Indian Current Affairs