30.05.2011

Politics & the Nation

• An interesting debate on whether or not the accused should be jailed before trial and conviction
• Take a look at this debate by two eminent personalities on the issue.  Worth our attention.

Finance & Economy

• Credit default swaps to be allowed in India
• Credit default swaps, an insurance instrument partly blamed for the credit crisis and the near sinking of US insurer AIG, will be permitted in India from October with banks, primary dealers and non-banking financial companies’ participation and some strict rules to prevent abuse.
• The instrument, popularly known as CDS, which promises the holder payment of money to the insured amount of bond holding in case of a default, is aimed at developing the domestic corporate bond market.
• The new guidelines that will come to force from October 24, is framed with safeguards to prevent abuse of position by financial intermediaries to boost their revenues as it happened with currency derivatives that sank many small companies.
• Only the market makers or commercial banks will be allowed to buy and sell credit default swaps while the ‘users’ can only buy credit protection, but will not be allowed to sell them. Users may be insurance companies, housing finance companies, provident funds, listed corporates and foreign institutional investors. RBI, which received comments from public, has built-in protection for naive and put the onus on the sellers of CDS to ensure that they educate the buyer on what they are getting into.
• The users cannot hold these contracts without having eligible underlying bonds, though the market makers can buy protection without having the underlying bond. The users cannot buy CDS for amounts higher than the face value of the corporate bonds held by them.
• Though credit default swaps is only allowed on listed corporate bonds, the central bank has made an exception for rated but unlisted bonds of infrastructure companies.
• Some titbits relating to retail in India
• It is estimated that about 40% of all farm products in India rot by the time they reach the final point of sale.  
• India today allows 51% FDI in single brand retail and 100% for wholesale.
• The share of organised retail in India is a tiny 4% of the total, opposed to 20% in China, 30% in Indonesia and 55% in Malaysia.
• India is facing a problem of plenty in respect of foodgrains
• As of May 1, India’s food stocks stand at 27.8 million tonnes of rice, 31.4 million tonnes of wheat and 0.1 million tonnes of coarse grains, adding up to a food mountain twice as large as is required by official buffer stocking norms.

International

• What is becoming of the Pakistan state?
• Take a look at this assessment from Pervez Hoodbhoy, Professor of Nuclear Physics at Quaid-i-Azam University, Islamabad:
• Now, while it is true that the al Qaeda is losing support in Pakistan, this country has become a battleground in which there are several contending jihadi groups. Some are pro-Saudi and pro-Pakistan, like the Lashkare-Toiba, Jaish-e-Muhammad, and Hizbul Mujahideen. Others, like the Tehreek-e-Taliban and the Al-Qaida, are fully engaged in fighting the Pakistani and Saudi establishments. Still others, like the Lashkar-e-Jhangvi and Sipah-e-Sahaba, are largely focused upon killing Shias. In the Federally Administered Tribal Areas, there are many more groups, some of which are more criminal than ideological. It is a terrible mess. Clearly, Pakistan is becoming a dangerous place for many groups. It is most dangerous for Ahmadis, followed by Hindus and Christians. But even for Shias, who had initially been enthusiastic about Islamisation of Pakistan, things have become very difficult. Pakistan has slowly turned into a religious extremist country, although there are still islands of tolerance left here and there. This is the direct consequence of the Pakistani state's desire in earlier decades to breed militancy within its borders.

Language Lessons

• hoity-toity: Adjective
• Affectedly genteel
• eg: The staff found it difficult to deal with the hoity-toity snooty clients.
• hoi polloi: Noun
• The common people generally

16.05.2011

Finance & Economy

• The case for deregulating savings bank interest rates
• Savings bank (SB) deposits interest rate is the only regulated rate and has remained unchanged at 3.5% since March 1, 2003 even as the RBI’s policy rates have moved up and down over time.
• Savings deposits account for about 13% of financial savings of the household sector. Presumably, deregulation will improve monetary transmission. In the present context, it will raise both real and nominal rates. It will also encourage product innovation as banks will try to compete, not only on rates, but also on product design as, for instance, by offering differentiated rates depending on the size of the deposit (something they are not allowed to do at present).

• Is there a compelling opportunity for India from China?
• You must take a look at this interesting op-ed from Manish Sabharwal.  It discusses the issue at great length and very convincingly at that.  A must read.
• Some interesting statistics that he reels out in his article for buttressing his argument deserve a look from us:
• Five labour market megatrends that can reward politicians:
• The demographic dividend (one million people joining the labour force every month), the increasing unviability of agriculture (56% of our people produce 18% of our GDP), the high incidence of poverty among the self-employed (50% of the labour force), the stagnation of organised employment (8% of the labour force) and the low share of manufacturing employment (12% of the labour force).
• India accounted for only 1.8% of global manufacturing value added (MVA) last year versus China at 23.3%. Our per-capita productivity was a disappointing $107 versus China at $842.
• Budget 2011 plans a new manufacturing policy that aims to raise the share of manufacturing in GDP from 16% today to 25% in 10 years.

• Trends: Users snap deals on discount sites
• You would have most probably heard or experienced group buying by now.  
• Collective buying through the Internet, originally started during the dot-com boom, took off in late 2008 when startups such as Groupon and Tippr offered discounts on small local businesses in US cities. Since then it has become a rage. Today, there are more than 500 group-buying sites worldwide. Internet giants Google and Facebook recently entered the field with Google Offers and Facebook Deals.
• Some other sites that enable group buying include: mydala.com, snapdeal.com, taggle, deals and you, sosasta.com, groupon, and tippr.  
• If you want to check them out, Google for them and explore.  This graphic will help you more.
• Is moving to a consumption based economy good for India?
• No, says Chandran Nair, an Indian origin Malaysian based out of Hong Kong, who shot to prominence with his concept of ‘constrained capitalism.’  
• His world view deserves our attention and thanks to ET, we have this very well conducted interview.  Take a look.  Shouldn’t miss this.

International

• IMF Chief Strauss Kahn arrested in a sexual assault case
• Dominique Strauss-Kahn, the head of the International Monetary Fund and a potential candidate for the French presidency next year, was charged with attempted rape and a criminal sex act on a woman in a New York hotel.
• The charges stem from an incident that allegedly occurred on Saturday against a 32-year-old female at a Sofitel hotel in midtown Manhattan.  The alleged victim is a maid at the hotel.  
• Strauss-Kahn was arrested aboard an Air France flight at John F Kennedy airport.  Strauss-Kahn, 62, denies the charges and will plead not guilty, according to reports.
• Strauss Kahn is a leading contender for the post of French President.

Language Lessons

• egress: Noun
• (astronomy) the reappearance of a celestial body after an eclipse; The becoming visible; The act of coming (or going) out; becoming apparent
• Verb: Come out of
• claque: Noun
• A group of followers hired to applaud at a performance
• conurbation: Noun
• An aggregation or continuous network of urban communities
• outre: Adjective
• Conspicuously or grossly unconventional or unusual

14.05.2011

Politics & the Nation

• Some very good commentary on the Allahabad High Court's judgement on Ayodhya dispute
• Yet, the Allahabad High Court tried to clothe a compromise as a form of legal resolution, relying on faith as actionable evidence and doing damage, in the process, to the law and to vital political values. It is necessary and sufficient that the Supreme Court should undo this damage done by the high court. If it can delineate the boundaries of judicial action and leave needed further resolution to the political process, that would be what is required.
• What is the best way to compensate the landowners from whom land is taken away for urbanization needs?
• While it is true that there is no one ideal solution, what ET suggests in its editorial today is worth our attention:
• A viable form of stakeholdership is to transfer ownership of the land in question to a special purpose vehicle (SPV) in which half the ownership is vested in the original owners of the land, while the other half vests with the project developer. The project could pay the SPV lease rentals that reflect the commercial value of the new activity coming up on the land, offering landlosers a steady, certain stream of income. The value of the SPV’s shares would increase as the land rises in value over time and the erstwhile farmers would share in the upside. Further, the landlosers could be organised into production units that deliver assorted services to the new project, adding to their incomes. These should be an integral part of the project.
• Supreme Court rules out corrective action in Bhopal gas case
• The Supreme Court has refused to change its mind about a 1996 judgment and allow stricter punishments for seven corporate executives convicted for their role in the world’s worst industrial disaster.
• Dismissing the curative petition filed by the CBI, it observed “No satisfactory explanation is given to file such curative petitions after about 14 years from 1996 judgment of the Supreme Court.”
• In 1996, the Supreme Court diluted the charges against the accused from culpable homicide not amounting to murder to criminal negligence.

Finance & Economy

• What went wrong with Economics and Economists?
• You must read this op-ed by Bradford Delong.  It tries to answer this question in the context of the recent financial crisis that the globe had witnessed.  A very interesting read.
• Know what is ‘middle income trap’?
• This refers to countries that have grown out of poverty and can no longer compete with low-cost producers, but cannot also make the leap to an advanced economy.  ADB says that many Asian economies are in danger falling into this kind of trap now.  

• Managing farm inventories
• Today, about 60% of the produced wheat enters the market as marketed surplus. Hence, of the 84 million tonnes, about 50 million tonnes enter the market. About half of this is absorbed through the procurement process by the government, thus leaving just 25 million tonnes for private traders.

International

• Personality
• Haruhiko Kuroda: Is the President of Asian Development Bank

• Is a Lehman moment immanent in Greece?
• Many an expert is speaking of a possible “Lehman moment” — a shock so severe that it would cause banking crises and domino bankruptcies throughout Europe -- for Greece.
• The fears are genuine.  Greece’s debts are officially forecast to hit 159% of GDP in 2012. Sustaining such a burden would require so much austerity that the economy would be crushed for years. Though the country is supported by a 110 billion-euro European Union/International Monetary Fund programme, it is only funded until early next year, and will need to raise 27 billion euros in 2012.  The logic for restructuring is compelling because with every month that passes, more bailout money gets used to pay off private debt, helping those who lent to it foolishly at the expense of taxpayers in other countries.
• But how to prevent a restructuring becoming a Lehman moment?
• First, haircut Greece’s debt by about 40%, so that its peak borrowings are just under 100% of GDP. This will help maintain pressure on the Greek government to go ahead with a privatisation programme that could cut the ratio by another 20 points. It will also serve as an incentive to further reform.
• Second, recapitalise the Greek banks. A failure to do this would destroy the country’s financial system and cause depositor runs elsewhere.
• Third, recapitalise weak banks elsewhere as soon as the latest Europe-wide stress tests are published next month.
• Finally, provide banks with medium-term funding if they can’t raise money in the market.

Language Lessons

• cloying: Adjective
• Overly sweet;
• Verb: Supply or feed to surfeit; Cause surfeit through excess though initially pleasing
• praxis: Noun
• Translating an idea into action
• eg: The EC might, during polls, do a good job of keeping parties and candidates on a leash to end the prevalence of practices like sops-for-votes or plain intimidation, but changing the wider political praxis calls for a re-envisaging of how politics is conceived of, and practiced.
• Cry havoc and let slip the dogs of war: Idiom
• The military order Havoc! was a signal given to the English military forces in the Middle Ages to direct the soldiery (in Shakespeare's parlance 'the dogs of war') to pillage and chaos.
• The term is the predessor of 'play havoc' (with). This is now more common than 'cry havoc' but has lost the force of the earlier phrase - just meaning 'cause disorder and confusion'.

02.05.2011

Finance & Economy

• Should savings bank interest rates be de-regulated?
• The savings bank (SB) deposits interest rate is the only regulated rate and has remained unchanged at 3.5 % since March 1, 2003 even as the RBI’s policy rates have varied.  The RBI is reportedly toying with the idea of de-regulating SB interest rates.  It is interesting to note in this connection that SB deposits account for about 13% of financial savings of the household sector and for 22% of total deposits of scheduled commercial banks.
• Deregulating the SB interest rate could enhance asset-liability mismatches, as banks treat a large part of these deposits as ‘core’ deposits and use them to make long-term loans. The share of term loans increased over 2000-09 even as the share of term deposits came down, suggesting maturity mismatches have increased.
• The other consequences of deregulation are more competition and volatility.  More competition is good and volatility is part of the game.

• Some banking stats
• Currently, India has 89 scheduled commercial banks— 27 public sector banks, 31 private banks, and 31 foreign banks. Together they account for about 53,000 branches and 17,000 ATMs.

• PSU aided SWF in the works
• A government panel is considering forming an investment fund bankrolled by state-run companies to help India acquire large natural assets abroad.
• The committee of secretaries, which has members from various ministries, department of public enterprises and the Planning Commission, will discuss the composition and size of this fund later this month.
• Large state-run companies have huge free cash. Coal India, for instance, could have as much as $10 billion at the end of the 2010-11 financial year.
• The finance ministry is also not averse to the idea of setting a sovereign wealth fund given that India’s foreign exchange reserves now stand at about $300 billion. Last year, the government had abandoned its proposal for a $5b sovereign wealth fund, or SWF. Such funds invest globally and are usually funded by foreign exchange assets.
• China has aggressively backed its companies in their attempt to acquire natural assets abroad. It has a $300-billion sovereign wealth fund, China Investment Corp.
• At present, there are around 50 sovereign wealth funds managing assets worth nearly $3 trillion, the most notable ones being from Singapore, Kuwait and Norway.

Language Lessons

• bromide: Noun
• A trite or obvious remark; Any of the salts of hydrobromic acid; formerly used as a sedative but now generally replaced by safer drugs
• eg: Despite rhetorical bromides about requiring “ministers to unlearn ingrained habits and focus on substance, not rhetoric,” and about “business associations engaging with the granular detail of what companies want”, this proposed Plan B would strengthen the bilateral and regional trade initiatives that have diverted energy and attention from Doha and the WTO.
• landau: Noun
• A four-wheel covered carriage with a roof divided into two parts (front and back) that can be let down separately
• straight as an arrow: idiom
• Honest, genuine

29.04.2011

Politics & the Nation

• PAC does not endorse MM Joshi's draft report on 2G scam
• The United Progressive Alliance on Thursday prevented the adoption of the draft report on 2G spectrum allocation scandal by Parliament’s Public Accounts Committee by managing the support of the Samajwadi Party and the Bahujan Samaj Party in the committee. The PAC meeting which witnessed unprecedented scenes — heated arguments, adjournments and even ‘expulsion’ of Chairman Murli Manohar Joshi by members belonging to the UPA and supporting parties — pointed to the worsening of relations between the ruling side and the Opposition.
• Although the meeting did not adopt the report, there is room and precedence for Joshi to present the report to the Lok Sabha Speaker. The rules of PAC allow the chairman to present the report after conclusion of discussions and circulation of the report among panel members. What could also strengthen the hands of Joshi is a precedent set by former PAC chief Buta Singh. In 2004, Buta Singh tabled a report on the coffin scam without even perfunctory discussions with panel members. It would be interesting to watch how Speaker Meira Kumar responds if Joshi decides to present the report on Friday.

Finance & Economy

• Percentage of people filing IT returns in India
• It is just 3%.

• On the status of women and undernourishment in children in India
• India is home to about a third of the world’s underweight and stunted children under the age of 5.
• What explains undernourishment in children of this age group (even in children from well to do families) in India?
• Surveys suggest that this has got to do with our traditional social and cultural values and practices that hurt the health and welfare of our children.
• In India, a third of the children have low birth weight. A child’s birth weight is an indicator of the health and nourishment of the mother when she is pregnant as well as her overall health and nourishment as a child and while growing up.
• Only a third of the breast-fed children aged 6 to 9 months receive complementary foods in India.  This results in retarded growth.  Most of the retardation in the growth of the child in India occurs either during the pregnancy or during the first two years after birth.
• A sustained long-term dent in child undernourishment can only be achieved by improving the health, opportunities and rights of the mother, the primary caregiver of children. Not just legislative rights but rights to participate in decision-making both at home and outside it, opportunities for social interactions, rights to improve their lives through education and employment.
• The historical pattern of the state and status of women in India reveals that it is largely unrelated to economic growth.  Let’s look at sex ratio — a number that has been much discussed since the release of the provisional 2011 census results. At 914 women per 1,000 men, the sex ratio at birth is the lowest since Independence.
• Debate on banning endosulphan
• We have noted about this raging controversy a few days earlier too.  Today’s face-off has a good debate and presents two contrasting views on the subject.  Well worth our attention.  Take a look and draw your own conclusions.  
• In this context it is interesting to note what POP stands for.  Persistent Organic Pollutant.  If a pesticide / insecticide is declared as POP under the Stockholm Convention, then the signatory countries to the Convention ban the item.
• The Stockholm Convention was adopted in 2001 and entered into force in 2004. It requires Parties to take measures to eliminate or reduce the release of POPs into the environment.  The Convention is administered by the United Nations Environment Programme and is based in Geneva, Switzerland.  
• Meanwhile it is reported that India has agreed to phase out endosulphan at the ongoing meet in Geneva of the Stockholm Convention.  This means endosulphan will be listed in Annexe A of the Stockholm Convention on Persistent Organic Pollutants but exemptions will be allowed for crop-pest combinations. It will allow India to continue to use this broad spectrum pesticide.
• Chemicals listed in the Annex A of the Convention are banned for production and use due to the threat they pose to living beings, particularly the environment.
• This will not come as good news for the Left parties or the Kerala government, both of which have been actively seeking an immediate nation-wide ban on endosulphan.
• All exemptions sought by India have been accepted. The listing in the Annexe will take one year to be effective, and the exemptions are valid for five years, with the provision for renewal for another five years. Thus, making the time-frame for the global phase 11 years.

International

• Some of the quirky commemorative days that the US follows
• National Pretzel Day (April 26)
• National Potato Chip Day (March 14)
• Pizza Day (February 9)
• Hamburger Day (December 21)
• Pak favouring MFN status to India?
• India and Pakistan announced a path-breaking blueprint to spur trade between the two nations at the end of a two-day meeting of the commerce secretaries of the two countries on Thursday in Islamabad.
• Pakistan said it would take immediate steps to ensure that non-discriminatory trade regime is operationalised at the earliest.
• India has been seeking MFN status from Pakistan for a long time, which would lead to the country getting the same treatment as other countries in terms of allowing exports. Pakistan so far has been allowing exports from India on the basis of a small positive list of items instead of trading the normal way using a negative list of excluded items.  Pakistan said it will move to a system of trade-based on negative list as opposed to the current positive list.
• India has already given the MFN status to Pakistan, allowing trade to be done on the basis of a negative list. Pakistan said consultations with business chambers have already begun on replacing the positive list with a negative list and the process would be concluded by October 2011.
• The two countries will also set up groups of experts for expanding trade in petroleum products and to enable trade in electricity.

27.04.2011

Politics & the Nation

• Government to go ahead with Jaitapur nuclear park
• The Centre will go ahead with the 9,900 MW Jaitapur nuclear power park in Maharashtra. A high-level meeting convened by Prime Minister Manmohan Singh on Tuesday decided to set up an autonomous Nuclear Authority of India to address people’s safety concerns.  
• The proposed Nuclear Regulatory Authority will be an autonomous body answerable to Parliament. It will subsume the Atomic Energy Regulatory Board. The government will introduce a Bill to this effect in the monsoon session of Parliament.
• The meeting also decided to provide a higher compensation for displaced people.
• Following the Fukushima disaster, there have been apprehensions about the safety of nuclear plants and this added fuel to protests in Jaitapur. The meeting acknowledged the need for better safety standards and decided to put each of the six reactors at Jaitapur under their own operations system. Government leaders said the operational safety review team of the International Atomic Energy Agency will be invited to conduct safety reviews and audit of all nuclear plants.
• At present, India operates 20 small nuclear reactors at six sites with a capacity of 4,780 MW, or 3% of total power capacity. It hopes to increase nuclear capacity to 7,280 MW by next year, more than 20,000 MW by 2020 and 63,000 MW by 2032, adding nearly 30 reactors.

• Justice PD Dinakaran moves SC to stay probe against him
• Sikkim High Court Chief Justice PD Dinakaran has asked the Supreme Court to stay an inquiry against him by a Parliament-appointed panel.
• The panel, appointed by the Rajya Sabha chairperson Hamid Ansari after the House initiated impeachment motion against him, had asked Dinakaran to respond to the 16 charges framed against him. The panel is examining charges of corruption, land grabbing, abuse of judicial office and amassing wealth disproportionate to known sources of income against Dinakaran. The three-member panel headed by Justice Aftab Alam of the SC, Karnataka High Court Chief Justice JS Khehar and senior advocate PP Rao had rejected Dinakaran’s plea seeking stay on proceedings till he is supplied with all documents being looked into.
• Dinakaran sought quashing of the panel’s order, which rejected his appeal, seeking recusal of PP Rao alleging that he was biased. Dinakaran had said he apprehended that there was likelihood of bias in the proceedings as Rao had earlier campaigned against him when his elevation to the SC was under consideration.
• Charges against Justice Dinakaran, who is due to retire on May 9, 2012, were levelled when he was Chief Justice of the Karnataka HC. He was subsequently transferred to the Sikkim High Court.

• The only Indian Prince who has been invited to the Prince William and Kate wedding
• Raghav Raj Singh, the current maharajsahib of Shivrati, a jagir in the former princely state of Udaipur, is the only Indian aristocrat to be invited to the wedding of Prince William and Kate Middleton in London on Friday.
• He is a good friend of Prince William.  Singh, a Sisodia Rajput, has played with William at the famed Cirencester Park Polo Club and Windsor Polo Club, both favourites of the Wales brothers.
• Wearing a resplendent traditional Mewari sherwani and colourful headgear, he will stand out among the grey morning suit clad men in the congregation. His wife, Shelja Kumari, from the thikana of Umaidnagar in Jodhpur, draped in a classic sari favoured by Indian nobility and heirloom family jewellery is equally likely to stand out.
• An alumnus of Mayo College, Ajmer and St Stephen’s, Delhi, Singh did a stint at Cheltenham College in Gloucestershire as an exchange , which should come in handy for his future foray into healthcare and wellness segment in Rajasthan and Delhi.

Finance & Economy

• Is it the right time to allow export of food grains?
• Yes, argues today's ET editorial.  Look at its reasoning:
• First, India’s stockpile of foodgrains is now around 45 million tonnes, double the buffer stock that is mandated for food security. A bumper harvest is forecast, after which the government will add another 25 million tonnes to this pile.
• Second, the government and its main procuring and stocking arm, the Food Corporation of India (FCI), have proved that they cannot handle such large food stocks. In many places, grains are piled high under plastic sheets, exposed to the weather and rodents. Even after distributing rice for as low as Rs. 1 or Rs. 2 per kilogramme in states like Tamil Nadu and Andhra Pradesh, stocks stubbornly refuse to run down. It is likely that by the time the government decides to do something about this food mountain, worth around Rs. 40,000 crore, much of it would have become dinner for rats.
• Three, food inflation is not being driven by foodgrains, but by the spiralling prices of vegetables, edible oil, pulses and milk. Exports of foodgrains will not add to food price inflation at home; indeed, it might help to increase farmers’ incomes.
• Finally, the most compelling argument is about prices. The glut has pushed market prices of wheat to below the minimum support price (MSP) of Rs. 1,170 per quintal. Indeed, in states like Uttar Pradesh, wheat is being sold for Rs. 1,050 per quintal, a substantial discount to the MSP. In global markets, wheat is being traded at around Rs. 1,530 per quintal. So, if India lifts its export curbs on foodgrains, imposed after the food price scare last year, exporters can make a nifty profit, storage costs would come down and farmers’ incomes would go up, yielding some incentive to invest in technologies to boost productivity.

• RBI fines 19 banks for selling complex derivatives to corporates
• State Bank of India, ICICI Bank, Citibank and Axis Bank are among 19 lenders penalised by the Reserve Bank of India for violating currency derivatives norms and selling products to companies which did not understand them. This ends a three-year dispute between banks and small companies burnt by derivatives.
• The penalty may be small, ranging from 5 lakh to 15 lakh. But the ruling was a blow to banks since it vindicated the claims of tiny companies that claimed banks sold meaningless contracts to earn fees to boost earnings.
• The RBI has been scanning the derivative books of banks for more than a year and had sought information from 22 lenders about these transactions.
• The RBI order vindicates the stand of corporates, some of whom had sued banks on grounds of misselling. Others had claimed that some of the contracts were contrary to law, particularly the FEMA.  Already, most matters had been settled out of court with banks picking up 25-50% of the losses. This order will hasten the settlement of remaining disputes.
• Banks had sold currency derivatives to allow corporates to either improve the earnings on their exports, lower the outgo on imports, or cut the interest and repayment cost on loans.  The better exchange rates that such swaps and options offered always came with risks that most corporates either ignored or thought were academic — eventualities that are unlikely to materialise.
• Several bets backfired when currencies like euro, swiss franc and yen surged in 2007. By late 2007 and early 2008, when corporates were asked to pay up after the markets moved against them, there was a hue and cry. Private lenders, including ICICI Bank, HDFC Bank, ABN Amro (now RBS), Axis and Kotak were sued by companies. Most cases were settled out of court.
• Amid court feuds between banks and corporates, the RBI appointed an inter-departmental group to inspect the trades. The group spotted transactions where the underlier was inadequate while in some cases multiple transactions were done against photocopies of the same document that served as an underlier. In such situations derivative deals are no longer hedges, but pure currency bets.
• In some cases, documents on a company’s past export performance that is used to arrive at a hedging limit was not certified by the auditor. The RBI decision will be followed by parties in the case pending before the SC.

International

• Compulsory sectoral talks not acceptable, says India
• India is examining the latest draft proposals circulated by the World Trade Organisation to bring to life the deadlocked Doha round of global trade talks, but will continue to oppose the US move to make participation in sectoral talks compulsory.
• Disagreement between the US and large developing countries, including India, China and Brazil, over sectoral negotiations to eliminate duties on select industrial goods has been identified by WTO director general Pascal Lamy as the biggest issue blocking the progress of the round.
• The US has been insisting that large developing countries should agree to eliminate tariffs on some industrial goods through compulsory participation in sectoral negotiations while the opposing countries maintain that it is outside the mandate of the Doha round.

• US charges 4 Pakistan based LeT men for 26/11 attack
• The US federal prosecutors have charged four Pakistanis — Sajid Mir, Abu Qahafa, Mazhar Iqbal (also known as Abu al Qama) and ‘Major Iqbal’, all from the Lashker-e-Taiba — as conspirators in the 26/11 attacks on Mumbai. The charges filed before an Illinois court on Tuesday mentions an unnamed individual, ‘Lashker member D,’ as co-conspirator.
• The accused face six counts of aiding and abetting the murder of US citizens in India, and three of the conspirators named in the indictment —Mir, Qahafa and Mazhar Iqbal — have been charged with conspiracy to bomb public places in India.
• The charges against the four LeT men carry a maximum statutory penalty of life imprisonment or death.