21.12.2010

Politics & the Nation

• Titbits about Muharram
• Muharram is the martyrdom day of Prophet Mohammed's grandson Imam Hussain.
• Ashura, the 10th day of the first Islamic month Muharram, is an important mourning ritual for Shia Muslims while Sunnis pray and remember Hussain's sacrifice.
• On this day, Muslims remember Hussain who died fighting the forces of caliph Yazid around 1,400 years ago at Karbala in Iraq.
• Nine pacts in hand, India presses US to begin totalisation talks
• India has stepped up pressure on the US to start negotiations on a totalisation agreement that would exempt Indians working for a short period in the country from making social security contributions there.
• A social security agreement with the US could save India more than a billion dollar in lost salary every year, according to estimates made by software industry body Nasscom.
• A foreigner working in the US for less than five years could be exempt from paying social security tax if his home country has a totalisation agreement with the US and the worker contributes to the social security scheme of its native country.
• The US has been dilly-dallying on an agreement with India on the ground that social security structures of the two countries were different.
• India has totalisation agreements with Belgium, France, Germany, Switzerland, the Netherlands, Hungary, the Czech Republic, Denmark and Luxembourg.
• These agreements entitle people from both countries to be exempt from paying social security tax if they work for a short period in the foreign country and make contributions back home.
• Since contributions made for social security in the US yield benefits only after ten years of work, Indians working on H1B visas are not in a position to gain from it as the maximum stay allowed under these visas is six years.
• Sonia goes big time against graft
• But her satraps seem to be unamused.
• Sonia Gandhi on Sunday aggressively pushed for a radical anti-corruption agenda for retrieving the UPA government’s moral compass. In her address to the Congress plenary session here, Gandhi asked the government to have a fresh look at the proposal for state funding of elections; fast-tracking of corruption cases against politicians and bureaucrats; end of discretionary powers; transparency in public procurement and contracts; and a more open procedure for the exploitation of natural resources.
• With a procession of scandals trapping the government in the mud, Gandhi’s assertions showed the concern in the party over the subversion of common-sense ethics and its fallout: a widening of the emotional distance between the Congress and the electorate.
• Something about Magarpatta
• Remember Magarpatta?  We noted about this sometime back in our blog.  It is a revolutionary concept that empowered the ryots in having a say after giving up their land voluntarily.  Take a look at its web site here.
• State of Indo Russian ties on the eve of the Russian President’s visit
• Look at this graphic.
• India and Russia have reportedly set a target of more than quadrupling the bilateral trade to $20 billion in five years. The two countries identified pharmaceuticals, energy, IT & communication, chemicals & fertilisers and banking & finance as thrust areas in a protocol on trade and investment signed on Monday.
• Bilateral trade in 2009-10 was at $4.7 billion, with India’s exports at less than $1 billion.
• PM ready to face PAC of volleys to silence critics
• With the 2G spectrum allocation scandal becoming one of the most serious challenges for his government, Prime Minister Manmohan Singh on Monday stepped forward to defend his name by expressing willingness to appear before Parliament’s Public Accounts Committee (PAC), which is examining the national auditor’s report on the issue.
• Singh’s statement was clearly aimed at blunting the opposition’s charge that he was ducking a scrutiny of the PMO by a joint parliamentary committee (JPC) and that the government did not have the necessary clout to act against representatives of its allies.

Finance & Economy

• India’s fetish for gold
• India’s gold consumption (in $ terms) has risen by almost 100% y-o-y during the first three quarters ending September 2010 after declining 12% yo-y in 2009 according to World Gold Council (WGC). Cumulatively, India now holds over 18,000 tonnes of aboveg round gold stocks worth approximately $800 billion at the current gold price — nearly 50% of the country’s GDP. This represents 11% of the world’s stock, according to WGC. On an annual basis, India is the world’s largest consumer of gold in tonnage terms, followed by China. During the four quarters ending September 2010, India’s gold demand accounted for 21% of global gold demand.

• Why is ONGC at a disadvantage in its JV with Cairn in Rajasthan oil fields?
• We have noted from time to time the fact that ONGC is left bearing the entire burden of royalty payments while Cairn is enjoying humungous profits out of the Barmer fields in Rajasthan.  But at no point in time was the issue clearly explained in the media.  At least till today.  Take a look at this article that explains very well the whole issue.  It also suggests what could be the way out for solving the imbroglio.

• Cap MFI margins: Rangarajan
• Two days after pointing out that the microfinance institutions (MFIs) should change their business model, Chairman, Economic Advisory Council to the Prime Minister, C Rangarajan suggested that the margins of the MFIs should be capped.
• He, however, refused to suggest an ideal figure to be followed on the interest, because that depends on the rate at which they borrow and the rate at which they lend.
• Reworked debt recovery laws to give a leg up to secured lenders
• The reworked debt recovery laws will uphold the rights of secured creditors above government claims to incentivise banks and financial lenders to deal with their nonperforming assets expeditiously. There are numerous cases pending in the country’s courts where banks fight the government for precedence over claims. Such cases discourage banks from resolving bad debts.
• The finance ministry has suggested amendments to the Debt Recovery Bill and Securitisation and Reconstruction of Financial Assets and Enforcement Act (SARFESI) to recognise the first right of secured creditors.
• The reworked laws will ensure that banks will not have to pay for state dues such as excise tax, sales tax or contribution towards employee’s provident fund from asset sale of the defaulting borrower. These claims will come only after those of secured creditors are settled.
• The combined non-performing assets of public sector banks were Rs. 57,301 crore in 2009-10, up 30% from the previous year.
• Tax-free infra bonds don’t give us advantage: PF commissioner
• India's top retirement fund administrator has given a lukewarm response to the government’s plan to part finance its $1 trillion infrastructure spend from bond markets by saying that the bonds’ tax free status does not mean much for  an already tax free EPFO.  
• The EPFO is India’s largest retirement fund with assets over $100 billion under its ambit. It manages $60 billion in pension assets and regulates an additional $40 billion in corporate retirement trusts.
• The finance ministry and the Reserve Bank of India are keen to route long-term insurance and pension funds into infrastructure projects. Pension funds regulated by the EPFO could finance widening of 1.32 lakh km of state highways at the current cost of Rs. 5 crore per km.
• New players in solar power may find the going tough
• The country’s first solar auction, planned to boost clean energy in the world’s fourth-biggest polluter, may risk failure after winners were selected without experience or proof that they can keep projects afloat earning low margins.
• Under auction rules, project developers offering to sell their electricity at the cheapest rates were selected. The lowest solar photovoltaic bid price came in at Rs 10.95 (24 cents) per kilowatt-hour and the lowest solar thermal bid was Rs 10.49 per kilowatt-hour, offering discounts of more than 30% to government proposed rates.
• By contrast, the global average rate solar thermal developers need to earn is about 28 US cents (Rs 12.70) a kilowatt-hour, according to New Energy Finance data.
• The auction awarded 470 megawatts of solar thermal capacity and 150 megawatts of photovoltaic capacity.
• India, which averages 300 sunny days a year, aims to generate 20 gigawatts of solar power by 2022, equivalent to 12% of its total electricity production today.

International

• The rebound effect
• Bjorn Lomborg, a leading figure on climate thinking globally, whom we follow quite regularly, while explaining how individual contributions are not going to bring about a beneficial change on climate front, throws light on this concept.  Take a look at these excerpts to get a hold:
• Back in the early 1970s, the average American expended roughly 70 million British thermal units per year to heat, cool, and power his or her home. Since then, of course, we have made great strides in energy efficiency. As The Washington Post recently reported, dishwashers now use 45% less power than they did two decades ago, and refrigerators 51% less. So how much energy do Americans use in their homes today? On a per-capita basis, the figure is roughly what it was 40 years ago: 70 million BTUs.
• This surprising lack of change is the result of something economists call the ‘rebound effect’. It’s a phenomenon familiar to urban planners, who long ago discovered that building more roads doesn’t ease traffic jams — it merely encourages more people to get in their cars and drive.
• The underlying principle is a decidedly counterintuitive fact of life. You might think that learning to use something more efficiently will result in your using less of it, but the opposite is true: the more efficient we get at using something, the more of it we are likely to use. Efficiency doesn’t reduce consumption; it increases it.

Language Lessons

• wonky: Adjective

• Turned or twisted toward one side; Inclined to shake as from weakness or defect
• eg: ...Also, the continuingly unfavourable duty structure, wonky logistics and warped investment rules all discourage independent oil retailers.
• felon: Noun
• Someone who has committed a crime or has been legally convicted of a crime; A purulent infection at the end of a finger or toe in the area surrounding the nail
• scofflaw: Noun
• One who habitually ignores the law and does not answer court summonses