29.12.2010

Politics & the Nation

• How many policy does a 'company' of police involve?
• About 90.
• Justice Srikrishna commission members
• Besides Justice Srikrishna, the panel comprises Ranbir Singh, vice-chancellor of Delhi's National Law University; Abusaleh Shariff, senior research fellow, International Food Policy Research Institute, Delhi; Ravinder Kaur, professor, department of humanities and social sciences, Indian Institute of Technology- Delhi; and Vinod K. Duggal, former Union home secretary.
• On sprucing up PF
• Take a look at this graphic which gives us findings from an interesting study that was carried out.  Also look at the suggestions.

Finance & Economy

• India's R&D spend
• India's R&D spend as a proportion of GDP, at 0.7%, is one-fourth than that of the US, less than half of China’s and lower than Brazil's.
• In 2009-10, as global corporate R&D expenditure dropped 3.5%, the R&D spend of the top 100 Indian companies in terms of R&D expenditure rose 1.5%, keeping pace with their revenues.
• Is financing by MFIs really poverty alleviating?
• According to a recent survey conducted in Andhra Pradesh, households use less than 2.5% of all micro-loans to start new businesses.  The survey reveals that big-ticket items on the list of customers taking micro-loans are agricultural inputs, repayment of old debt, health and ‘other consumption’. The customers use the bulk of their borrowings to bridge temporary financing gaps rather than create new businesses. While such uses can bring much-needed relief in times of financial stress, they cannot lead to sustained reduction in poverty.
• Citibank caught in 400cr staff fraud at retail unit
• Citibank is caught in an estimated 400-crore fraud and forgery by staff at its retail banking unit in Gurgaon, involving funds from wealthy individuals and corporate clients.
• The fraud was discovered early this month when a customer told a relationship manager that he had invested in a Citibank scheme that promised high returns in a short period, when no such scheme existed.
• Nearly 40 clients, including some corporate treasuries, could be affected because of the fraud, but their identities are not known. It is unclear whether Citibank will compensate its clients for the losses.
• One or more employees at Citibank’s Gurgaon office are alleged to have forged the letterhead of the bank to peddle a scheme—claimed to have been approved by Citibank’s investment product committee regulator—to clients that could yield high returns in a short span. The funds generated by selling the product to some investment companies and individuals were transferred to accounts of some brokers, who utilised the money for their transactions. The people at Citibank involved in the process were supposedly paid bribes by those brokers.

• China eyeing an oil entry in India
• China's largest government-owned energy firm, CNPC, has reportedly approached state-run Oil & Natural Gas Corp (ONGC) to forge a comprehensive agreement that could provide it access to India’s oil and gas assets.
• India, which allows 100% FDI in the oil and gas business, is extremely cautious about China’s entry in certain sensitive sectors such as energy, ports and telecommunications.
• If the government gives its go-ahead, CNPC and ONGC could collaborate in several ventures in the country.
• The US Energy Information Administration (EIA) estimates India’s proven oil reserves at about 5.6 billion barrels in January 2010, second largest in the Asia-Pacific region after China.
• China, the world’s second-largest energy consumer after the US, is aggressively looking for oil and gas assets abroad as its largest oil fields are mature and production from them is on the decline.
• ONGC’s collaboration with cashrich CNPC will help the state-run explorer finance major projects besides sourcing ultra-deepwater technology. The partnership will also help ONGC in acquiring cheaper oil and gas assets overseas by reducing stiff competition from CNPC and its arm PetroChina, the world’s most valuable oil company.
• So far, Chinese firms have joint ventures with ONGC’s overseas arm, ONGC Videsh, in foreign countries only such as Syria and Colombia.

Medicine & Health

• Is eradication of polio a good idea?
• Arthur Caplan, Professor of Bioethics and the Director of the Center for Bioethics at the University of Pennsylvania in Philadelphia, while admitting that the
• goal is a noble one, says that it is not the right one. The best that can be done is to seek to control polio, and to hope that politics, economics, and ethics allow us to get that far.  Those involved in efforts aimed at complete eradication should rethink their goal, lest faith in the unattainable leads to disaster.  Take a look at his reasons for it not being the right goal:
• For starters, the surveillance required to establish eradication is a huge challenge. Political instability, wars and civil breakdown, and balky governments sometimes make access nearly impossible in some parts of the world. Moreover, it is not clear that all polio cases can be detected, because some infected people do not show symptoms. And the challenge of ensuring adequate surveillance appears insurmountable when one considers that polio can suddenly reappear out of the blue in a so-called wild-type form.
• Chasing down the last cases of polio is very costly. Fragile health-care infrastructure and community support are being strained by the eradication effort, as government budgets and resources in poor countries are diverted from more pressing local problems.
• In other parts of the world, the emergence of respect for a patient’s right to refuse vaccines creates a difficult challenge for those seeking to eradicate diseases such as polio. Vaccination rates in many parts of the United States have fallen well below 90% for polio, meaning that the risk of an outbreak is very high should a case be introduced. And, in an age of mass air travel, a case in Tajikistan can be in Utah in a day.
• Finally, there is the ever-present possibility of bioterrorism. For this reason alone, no trust should be placed in claims of eradication of diseases like polio.

International

• Can India race ahead China?  What could possibly slowdown China?
• China is largely seen as having raced past India in the in the economic sphere because of its authoritarian advantage.  Democracies don't permit policy framework changes that quickly as can be implemented in authoritarian systems.  Are there any reasons to suspect that the Chinese advantage will not last longer?  Yes, says Professor Jagdish Bhagwati of Columbia University.  Look at his reasoning:
• First, while authoritarianism can accelerate reforms, it can also be a serious handicap. In a top-heavy system, growth paths can become unpredictable, and thus subject to volatility.
• As growth accelerates, political aspirations are aroused. Will the Chinese authorities respond to them with ever greater repression, as they have with dissidents and Falun Gong, creating discord and disruption, or will they accommodate new popular demands by moving to greater democracy?
• China’s authoritarian politics means that it cannot profit from the innovations that depend on software, as that is an instrument through which dissent can flourish and become subversive of total control. As one wit has observed, the PC (personal computer) and the CP (Communist Party) do not go together.
• Finally, China’s growth must continue to depend on its exploitation of external markets, which makes it vulnerable in a world that is increasingly making democracy and human rights a central preoccupation. In such a world, continued hassles and hiccups for Chinese exports can be confidently expected.
• Economic factors also militate against Chinese prospects. China was clearly able for many years to exploit a “reserve army of the unemployed” à la Karl Marx – to grow rapidly without facing a labor-supply constraint, so that capital accumulation would not run into diminishing returns. But now, given China’s one-child policy and lack of adequate infrastructure (including housing) in rapidly growing areas, labor is getting scarce and wages are rising.  In economic jargon, the supply curve of labor was flat but is now sloping upward, so that rapidly increasing demand for labor resulting from rapid growth is driving up wages. That means that China is beginning to “rejoin the human race” as capital accumulation meets scarcer labor and growth slows.
• By contrast, India has a far more abundant supply of labor, as well as a more favorable demographic profile, so that, as India’s investment rate increases, labor will not be a constraint. India will thus become the new China of the past two decades.
• Besides, in contrast to China, where economic reforms were quicker and more complete, India still has a way to go: privatization, labor-market reforms, and opening up the retail sector to larger, more efficient operators are all pending – and will give a further boost to India’s growth rate once they are implemented.
• US to reintroduce estate duty
• America’s ‘death tax’, which was repealed in 2010, is set to be introduced in the new year. Formally called the estate tax, it is levied on inheritance before it is passed on from one generation to the next. The tax was introduced in 1916 and has been in force ever since. The brief window in 2010 was the only exception.
• Under new laws being passed by the Obama administration, the first $5 million in value of any individual’s estate is tax-free, but all value above this figure is taxed at 35%. The tax will kick in from January 1.
• However, tax experts feel that there are ways to minimize estate duty. They suggest that NRIs could divest their properties in the US by gifting smaller quantities rather than giving all at one go — gift tax is exempt up to $1 million. This could reduce the amount of estate tax considerably.
• Most developed countries like the UK or France also have estate duty, in one form or another.