12.01.2011

Politics & the Nation

• Five reasons to scrap the right to education
• It's a long time since we have noticed Manish Sabharwal writing.  In today's op-ed he takes on the proposed right to education.  Take a look at his reasoning:
• Lower capacity: RTE timetables the extinction of 25% of India’s 15 lakh schools that are ‘unrecognised’. These mostly low-cost schools have been an entrepreneurial response to parental choice. Our demographic dividend — 10 lakh people will join the labour force every month for the next 20 years — would have been a bigger nightmare if these private schools had not substituted for the missing state in the last 20 years. And while it is a lie that all these schools deliver quality, it is true that a bad school is better than no school.
• Higher cost: RTE essentially mandates a huge rise in school fees. It micro-specifies salaries, qualifications and infrastructure. RTE specifies that every school must have a playground. The 25% children from disadvantaged groups will require massive cross-subsidisation because state governments propose to reimburse way below cost. All this micromanaging of schools — to the delight of teachers and the real estate mafia — hits middle class parents with higher prices for essentially the same quality product.
• Lower competition: A big driver of higher quality and lower costs in higher education has been competition. RTE makes it impossible for education entrepreneurs to compete on price since many states propose to regulate fees and uncertainty has paused the Cambrian explosion of energy in school entrepreneurship. This means lower capacity and lower competition. And that means schools don’t have clients, but hostages.
• Hihger corruption: RTE mandates schools to take 25% students from ‘poor’ backgrounds. Some states are going overboard — Karnataka requires schools to conduct household surveys to create and maintain records of all children in a 1-3 km area from birth till 14 years of age to identify the poor. But who is poor? If the Indian government can’t decide whether 24% or 42% of India is poor, how will a BEO (block education officer)? In reality, he or she won’t; they will auction their certification of poor to the highest bidder. What constitutes appropriate efforts to bring back dropouts? How will teacher student-ratios be calculated? The BEO, long a thorn in the flesh, now has powers to be a dagger in the heart. RTE provides the BEO’s the ability to convert every school into a personal ATM. Not all, but most will.
• More confusion: Does changed evaluation mean no exams? What does immunity for government bureaucrats mean? Is incompetence good faith? How will mid-day meals be handled for the 25% in private schools? Where will these 25% go after Grade VIII? Will the 75% parent-populated government school management committees have the power to hire and fire teachers?
• RTE prohibits schools from admission procedures and forces them to select students on a random basis within a policy that “includes criteria for the categorisation of applicants in terms of the objectives of the school on a rational, reasonable and just basis”. By definition, don’t random, rational, reasonable and just mean different things to different people? Why take away the right to detain or expel till Class VIII? Can we be equal and excellent?
• Gujarat may get 1/3rd of India’s GDP in two days
• Over the next two days, India will see its industry pledge investments in one state that may add up to $450 billion, or one-third of the country’s GDP. Top names from Corporate India will announce projects they plan to start in Gujarat at the two-day Vibrant Gujarat Global Summit beginning Wednesday.
• Chief Minister Narendra Modi came up with the idea of an investment summit to divert attention from the 2002 communal carnage that claimed 2,000 lives in Gujarat. The first summit attracted proposals worth 66,068 crore. The figures kept multiplying since then: 1 lakh crore in 2005, 4.6 lakh crore in 2007 and 12.44 lakh crore in 2009. This time, there may be a 100% rise and the host, the chief minister, has once again tried to take the focus away - this time from investments to knowledge-sharing.
• The figures may be mind-boggling but there are detractors too.  Opposition leader Shaktisinh Gohil of the Congress has claimed that a mere 5% of investments proposed in 2009 summit have materialsed so far.
• The state government routinely defends the allegations on inflated investments saying these are long-term projects and may take between three and six years to come up. To further silence the critics, the state has set up a website with updates on the status of each project.
• Congress gets jittery as Jagan goes on fast
• Former Congress MP YS Jaganmohan Reddy brought his battle with his erstwhile party to the Capital on Tuesday, organising a show of strength not far away from the country’s Parliament that sent alarm bells ringing in the ruling party. He made it clear that the Kiran Kumar Reddy government’s survival in Andhra Pradesh was at his mercy, and that he could bring it down anytime he wanted.
• The former Kadapah MP sat on the fast at Jantar Mantar to ostensibly highlight the plight of farmers and protest against the Krishna Water Disputes Tribunal Award. The real purpose of his day-long protest, however, was to demonstrate his clout before the Capital’s political czars. In what came as a major embarrassment for the Congress, Jagan had by his side 20 Congress MLAs and another two MLCs. He was backed openly by two Congress MPs — Mekapati Rajamohan Reddy from Nellore and Sabbam Hari from Anakapalli.
• SC shocker for CVC Thomas
• The Supreme Court on Tuesday allowed the Kerala government to go ahead with the trial in Rs. 2.8-crore palmolein oil import scam, involving PJ Thomas, head of the country’s top anti-corruption watchdog, the Central Vigilance Commission (CVC).
• A bench, comprising Justices Aftab Alam and RM Lodha, gave the green signal to resume the trail in the case.
• The twojudge SC bench vacated its stay on the trial after treating the appeal of former Kerala chief minister K Karunakaran as “abated” in view of his death on December 23.
• SC had on August 3, 2007, stayed proceedings in the case before a designated CBI court in Kerala.
• The case pertains to the import of palm oil from a Singapore firm, which was allegedly done at prices higher than the international rate. The Karunakaran cabinet had approved import of 15,000 tonne of palm oil at a rate of $405 per tonne whereas the market price was $392.25 per tonne. As secretary, food and civil supplies, Thomas had issued the government order for the import, which caused a loss to the state exchequer.

Finance & Economy

• Some thoughts on taking forward the stalled dialogue on GST introduction
• Take a look at this face-off column.  What are surely needed are some innovative measures and a willingness to accommodate different view points.
• On our failure to control inflation
• Take a look at this column to see how every expert from the venerable Prime Minister himself to all others have bitten the dust on their forecasts about inflation.
• States struggle with pension dues
• Reeling under the burden of a sharp hike in salaries and benefits awarded by the Sixth Pay Commission, most states have failed to transfer any pension money to the fund managers. Finance Minister Pranab Mukherjee is expected to meet Pension Fund Regulatory and Development Authority (PFRDA) chairman Yogesh Agarwal soon to take stock of what is holding the states back.
• The NPS is applicable on all workers paid from the state budget — from schoolteachers to employees of rural, urban and autonomous bodies. Direct and indirect employees of state governments form about 6% of the paid workforce and roughly 2% of India's population.
• The scheme was meant to cut generous pension promises for civil servants and pare rising liabilities for the states and the Centre. Benefits are not fixed under the new system but equal contributions from the employee and the government are to be invested actively to build a large corpus for the employee by the time he retires.
• Citizens under the NPS have earned 15% to 20% returns in the last two years. Central government employees have earned a weighted average return of about 12.4% over the same period.
• State cos told to pay extra dividend
• The finance ministry has asked select public sector enterprises to declare special dividend for the current financial year as it struggles to raise resources for additional spending including higher-than-budgeted subsidies.
• The directive comes days before these companies meet to finalise results for the October-December quarter. Most state-run companies announce hefty interim dividends ahead of the budget, but this time the government is looking for something extra.
• In 2005, the finance ministry had advised all commercial profit-making public sector enterprises to declare a minimum dividend on equity of 20% or a minimum dividend payout of 20% of post-tax profits, whichever is higher, subject to availability of disposable profits. In respect of oil, petroleum, chemical and other infrastructure sectors, this amount would be 30%.
• India explores non-$ payments for Iran oil
• India is looking at currencies other than dollar, including the euro, yen and dirham, to resolve the impasse over payment for oil imports from Iran as settlement in US dollars has become difficult due to sanctions imposed against the Gulf country.
• Last month, the RBI had directed that imports of oil and gas from Iran should be settled outside the Asian Clearing Union, a regional payment mechanism between nine nations, including India and Iran. This regional payment mechanism allowed companies to skirt US and European restrictions on doing business with the Middle East country. In ACU mechanism, payments are made in dollar or euro.
• India imports 12 million barrels of crude oil every month from Iran. Iran accounts for 12 % of India's supplies.
• Milk output in India to touch record 121.5 mt in 2011
• India's milk output is expected to touch 121.5 million tonnes in the current year, translating into a growth of nearly 4% vis-a-vis the previous year.  India's milk production in 2010 is estimated at 117 million tonnes and is forecast to increase approximately 4% to a record 121.5 million tonnes in 2011.  
• In 2009, liquid milk production in the country stood at 112 million tonnes, despite poor monsoon rainfall.
• India is the world's largest producer of dairy products and home to the world's largest dairy herd. However, the country still faces a production shortfall due to massive demand from the growing population.
• What is Mark-to-Market?
• It is a valuation method for various securities in the books of account of a business entity. According to this method, the security portfolio of the entity is linked to market prices. From a bank’s perspective, the regulator prescribes the percentage of portfolio that can be ‘mark-to-market’. ‘Mark-to-market’ norms came into existence after the financial reforms were in place in the 90s. These were helpful accounting tools to bring out the fair value of the banks’ investment portfolio. In a rising interest rate regime, the prices of securities fall and so do the market valuations and it is vice-versa when interest rates fall.

Language Lessons

• yowl: Verb
• A prolonged, loud cry, like the sound of an animal; a wail; a howl.