18.12.2010

Politics & the Nation

• On why the MPLAD scheme has to go
• Take a look at this ET editorial which argues for scrapping the scheme.  Of all the criticisms leveled against it the one that nobody can disagree with is about its contravention of the primary role of legislators -- which is to frame laws, not play the role of the executive.
• The editorial puts forth quite a few other reasons also.  A must read.  
• Rahul Gandhi gets entangled in wire mesh
• The WikiLeaks dump on Friday sparked a political firestorm here when one of the back-channel US diplomatic cables said Rahul Gandhi considered the “growth of radicalised Hindu groups” a bigger threat than Pakistan’s terror shop, Lashkar-e-Taiba.
• This security assessment, which is not in line with the security establishment's assessment, helps Pakistan more because it has been claiming that the threat for India’s security emanates from homegrown groups.
• The latest cache of cables gave BJP and Sangh affiliates an opportunity to question the ruling party’s ability to counter terrorism.
• The cables left many red, sputtering faces in Congress. The party, which questioned the credibility of the released documents, swiftly clarified that Gandhi saw all forms of terror as a threat to India.
• But Rahul Gandhi and leaders close to him like Digvijaya Singh have been consistently maintaining that terror cannot be attributed to any religious denomination.

Finance & Economy

• Ever heard of 'deficiency payments'?
• The system of making deficiency payments is in vogue in many countries including the US for a long time.  
• In this system, a MSP (minimum support price) is announced in the usual way. After the build-up of the desired stock level (through procurement operations), the difference between the MSP and the market price is paid directly to the farmer as a deficiency payment whenever the market price falls below MSP.
• This has the advantage of precluding the need for stocking on government account without adversely affecting the farmer’s incentive structure. Also, this eliminates the grain resiphoning .
• Another advantage is that through this system, price support can be extended to all the remaining commodities (other than rice and wheat), for which MSP is announced but little or no procurement takes place.
• Want to know more about it in the Indian PDS context?  Then read this.
• Per capita income in India set to double in 9 years
• According to the Planning Commission, the country’s per capita income would be doubled in nine years with the economy expanding at current rate of growth.
• The per capita income at current prices during 2009-10 is estimated at Rs. 44,345 per annum as per the latest government data.
• Cairn-Vedanta deal heads towards court
• The Cairn-Vedanta deal is heading for a stalemate and a possible legal tussle that may derail the $9.6-billion acquisition, unless the government, the British explorer and its partner ONGC formally negotiate contentious issues, officials and executives involved in the matter said.
• State-run ONGC, which owns 30% of Cairn’s main oilfield in Rajasthan, has opposed the sale of Cairn’s asset to Vedanta and asked for a renegotiation of the agreement which obliges it to pay its partner’s share of royalty.
• At the heart of the dispute are Cairn’s assets in Rajasthan, which include the country’s biggest privately run oilfield. Other two assets are Ravva and CB/OS-2. All the three blocks are awarded to Cairn before New Exploration Licensing Policy (Nelp).
• Ravva and CB/OS-2 in the west coast are oil and gas producing fields. The three comprises over 95% of Cairn India’s valuation as other seven fields, awarded under Nelp auction rounds are still in exploration stage.
• Cairn’s India arm holds 70% stake in the Rajasthan block which comprises about 85-90% of the $9.6 billion Cairn-Vedanta deal. Cairn India’s partner in the filed, state-run ONGC holds 30% stake in the oil producing asset.
• Vedanta Resources, controlled by the London-based billionaire Anil Agarwal, had agreed to buy up to 60% of the Indian unit of Scottish firm Cairn Energy Plc for $9.6 billion on August 16.
• As per the proposed deal, Vedanta group will acquire 51% to 60% of Cairn India for about $8.5-9.6 billion in cash. Post deal, it is expected that Vedanta Resources will hold 31-40% stake in Cairn India directly and group company Sesa Goa will hold 20%.
• Currency notes get a makeover to check forgery
• A slew of new security features such as invisible fibre, colour shift ink and machine-readable micro text are on their way to prevent counterfeiting of currency notes.
• These features were selected from responses received by the finance ministry to its request for security information in September.
• The move comes amid a sharp surge in recovery of 1,000 counterfeit notes this year.
• According to some estimates, eight in a million notes circulated in the country are fake.
• The value of fake currency seized and recovered has increased from Rs. 8.39 crore in 2006 to Rs. 23 crore in 2008. As on October 31, Rs. 21.1 crore worth of fake currency has been found. India produces 18 billion pieces of bank notes of which about 50% is high denomination notes ( 100, 500 and 1,000).
• The government has also constituted a high-level committee with the Union home secretary as its head to prepare a strategy to combat circulation of fake currency notes in the country. Parallel bodies have also been set up in the states. A directorate of currency has also been created in the finance ministry to coordinate and oversee acquisition and research and development of security features for currency notes. This followed recommendations of an expert panel chaired by Shilabhadra Banerjee, a former secretary to the government.

International

• Alternatives to consumption and investment lead growth
• In an op-ed in today’s ET Michael Spence, while writing about the need for global responses to the risk, throws us some light on alternatives to consumption and investment lead growth.  Worth our attention:
• Apart from the need to deleverage for a few more years, the US economy faces longer-term problems with aggregate demand, employment, and income distribution that cannot be solved through consumption and investment alone. America needs to expand its share in external global demand, which requires public-sector investment, structural change, and improved competitiveness in the tradable sector.

Language Lessons

• quoth: Verb
• said
• eg: ...Yes we can, as the ultra-slim Barack Obama has often quoth in another context — and it can be beneficial too, we may add.