11.01.2011

Politics & the Nation

• How should India deal with Pakistan and Afghanistan?
• In these excerpts from a lecture delivered by Rajmohan Gandhi during the Saifuddin Kichlew Lecture at Jamia Millia Islamia, traces of some original thinking that proffers a more humane embrace with both of these countries are seen.  Though we may not necessarily agree with the conclusion, the thoughts presented, though sound very utopian, are worth our attention.  Makes a good reading.
• Sibal onslaught against CAG estimates on 2G losses
• With Union minister Kapil Sibal and his party firing a fresh salvo at the CAG over its calculation on the loss to the exchequer because of the sale of 2G spectrum, the confrontation between the ruling side and the Opposition is likely to intensify in the coming days, putting a question mark over the fate of the budget session of parliament.
• On a day when the CAG said it stood by the 2G report submitted by it and the Supreme Court expressed its indignation over the Union minister’s decision to trash the 1.76 lakh crore loss figure arrived at by the audit watchdog, Sibal sought to complicate matters by expressing doubts over its leakage in the media even before it could be submitted in parliament. The Congress, on its part, came out backing the Union minister, endorsing his contention that the allocation of the 2G spectrum had not resulted in any loss to the government.
• Shunglu panel seeks info on OC staff from whistleblowers
• VK Shunglu Committee, which is investigating allegations of corruption in organisation of Commonwealth Games 2010, has put up a list of 2,100 Organising Committee employees on the national portal and sought information regarding their appointments from whistleblowers and common citizens.
• While making the list public, the committee has said, “It has been represented that several of these candidates are relatives of VIPs or friends of office bearers of the OC. It has been stated that some have been given salaries disproportionate to their qualifications and experience.
• Shunglu Committee is likely to submit its report in February. Appointed in October, the committee has been given a free hand as the office order on terms of reference clearly said that Shunglu Committee would determine its own ways of functioning. It also has the powers to summon officers and government records.

Finance & Economy

• After self-assessment, India goes to IMF, World Bank for health check
• India has voluntarily asked the International Monetary Fund and the World Bank to conduct a comprehensive and in-depth analysis of the country’s financial sector.
• The scrutiny of the country’s financial sector will take place under the Financial Sector Assessment Program (FSAP) established by the two multilateral lenders in 1999 after the Asian crisis.
• Since the FSAP was launched, more than 130 countries have volunteered to participate in the programme, according to the IMF website.
• India was among the first to undertake the pilot FSAP in 2000-01. In addition, India also undertook a comprehensive self-assessment of International Financial Standards and Codes during 2002 and undertook a review in 2005.
• New manufacturing policy
• The country’s more than 35 million small and medium firms that accounts for roughly 45% of the country’s industrial output get just 5-8% of the available institutional funding, despite the priority status accorded to them by the central bank.
• More than 60 million people are employed by SMEs in the country. The sector accounts for almost 95% of the industrial units and contributes about 40 per cent of the value addition in the manufacturing sector.
• The priority status means banks will have to lend a certain faction of their total advances to SMEs every year. But even this provision has failed to ensure adequate funds for the sector.
• Now the government is reportedly coming out with a new manufacturing policy to help the SME sector.
• The manufacturing policy that is expected to be unveiled in a month will propose an exchange that will offer an exit window for investors, steps to institutionalise factoring services to allow companies to cash their future income and easier bank guarantees to support small businesses.
• The industry policy looks to create 100 million jobs in the next 15 years, bringing the share of manufacturing in the country’s gross domestic product to 25% by 2022.
• The policy will propose a stock exchange that will focus on finding money for SMEs. The proposed exchange would address an important piece missing in the financial markets. The entry and exit of firms will be made much easier through these exchanges.
• Institutionalising of factoring services is another long-standing demand of the SMEs, which are dependent on short-term working capital loans. Factoring is the process by which receivables are sold to companies who take the responsibility of collecting those funds. Such companies would provide the companies with cash, after charging a fee.
• The government is also considering stamp duty exemption for factoring services under the Factoring and Assignment of Receivables Bill 2010 that will be placed before the Union Cabinet ahead of the budget session of Parliament.
• Global investors flee Street as rate hike fears loom
• HDFC Bank and developer DLF led the fifth straight day of declines in equities as global investors fret over the potential increase in interest rates by the central bank to tame price rise.
• With global commodity and crude oil prices rising on revival of demand in the US, analysts believe that Indian companies’ earnings would be hit due to high input costs.
• The benchmark Sensex fell 2.4% to 19,224.12 and the S&P CNX Nifty shed 142 points. The benchmarks are off 8.5% since their peaks last November. All sectoral indices on BSE fell. An average of 3.4 shares declined for every share that rose. As many as 28 of the 30 Sensex components fell.
• The Sensex is now at a one-month low after the second biggest fall this year.
• ET in the classroom on some of the functions overseen by RBI
• This is a good column that explains us about concepts like oversight by RBI, ECS, NEFT, RTGS etc.  Good read.

Sport

• The IPL auctions
• An excellent piece about the IPL auctions.  Makes an interesting reading.  Must read.

International

• China’s trade surplus dips for 2nd year
• China's trade surplus narrowed in 2010 for the second straight year, giving Beijing grounds to rebuff US pressure for faster currency appreciation ahead of President Hu Jintao’s visit to Washington next week. The Chinese government will point to the latest numbers as evidence that it is making steady progress in rebalancing its economy toward domestic consumption, cutting reliance on exports and giving the world a lift through surging demand for imports.
• For the United States, however, this may be happening too slowly, with the politically sensitive bilateral trade gap between the world’s two biggest economies widening further in 2010.
• For all of 2010, China’s trade surplus was $183.1 billion, down 7% from $196.1 billion in 2009. The surplus had fallen 34% in 2009 from its pre-crisis peak of nearly $300 billion in 2008.
• A smaller trade surplus means that less money is flowing into China, decreasing the central bank’s urgency to mop up the excess cash in the economy that has pushed prices higher. Beijing has let the yuan rise 3% against the dollar since mid-June, when it lifted the currency from a nearly two-year peg that cushioned the economy from the impact of the global financial crisis.

Language Lessons

• natty: Adjective
• Marked by up-to-dateness in dress and manners
• Adverb: nattily -- In a natty manner; with smartness
• go out on a limb: idiom
• Put oneself in an isolated or disadvantaged position in one's support of someone or something.