15.01.2011

Politics & the Nation

• Indian farmers look to reap rich gains in Madagascar
• The island nation of Madagascar, located off Africa’s southeast coast, is drawing farmer-entrepreneurs in large numbers from India’s breadbasket, Punjab and Haryana.
• They expect to hit pay dirt as authorities in the former French colony lease out land for 50 or more years at prices as low as $15 (nearly 690) per acre a year for skilled farmers from abroad. Over the past few years, these new migrants from the cradle of India’s first Green Revolution have grown maize, pulses and peanuts, and are looking to try new crop varieties there.
• While Madagascar, which opened up its economy recently, is hard-selling itself to attract overseas funds and skills across sectors with sops, entrepreneurs see themselves as huge beneficiaries of this give-and-take measure.
• Some details about JNNURM
• JNNURM encompasses implementation of the 23 reforms, worked out in consultation with the states and committed to by states and cities through memoranda of agreement to be implemented as per periodic milestones agreed. The reform agenda, covering four broad areas like governance, citizen-responsive and process-oriented, land and property-related and financial, was widely welcomed because before the mission, the cities were not in a position to take up these much-needed reforms even if they wanted and it was high time that a push for these came from somewhere. There may not be any other flagship programme that walks on the two legs of reforms and funds for projects. And this stands out as a unique feature of the urban programme.
• Governance reforms cover implementation of the 74th Constitution Amendment, transfer of city planning function to the local bodies, administrative as well as structural reforms and encouraging PPP, all to be undertaken by state governments, and revision of municipal bylaws and provision of basic services, to the urban poor to be implemented by the city bodies.
• The second category of reforms is process-oriented and citizen-responsive such as adoption of double entry system of accounting, introduction of the system of e-governance, both to be taken up by the local bodies, whereas rationalisation of stamp duty to a uniform 5% across the country, enactment of public disclosure and community participation laws are the state mandate.
• Land- and property-related reforms cover reform of property tax and earmarking at least 20% to 25% of developed land for weaker sections, both to be done at the city level, whereas the state has to take steps to introduce computerised process of registration, repeal of urban land ceiling, amendment of rent control and introduction of property title certification.
• The fourth category of reforms aim at financial sustainability such as levy of reasonable user charges and city-wide property tax coverage and collection.
• SC questions govt on black money
• The Supreme Court on Friday questioned the government’s reluctance on disclosing information about the Indians who allegedly have parked huge unaccounted money in foreign banks.
• The court was hearing a petition filed by noted criminal lawyer Ram Jethmalani, who along with some retired bureaucrats and police officers, approached it seeking directions to the government to take steps to bring black money stashed in foreign banks.

Finance & Economy

• Anil & co to keep off listed stocks for a year
• Anil Ambani and four top executives of two firms controlled by him will not be able to invest in listed stocks till the end of this year as part of a settlement of an investigation into the alleged use of borrowed overseas funds to invest in the stock market.
• Two Anil Dhirubhai Ambani Group companies—Reliance Infrastructure and Reliance Natural Resources (RNRL)—will also have to keep away from the secondary market till December 2012, market regulator Sebi said in an order posted on its website on Friday evening. But both will be free to raise funds by issuing new securities.
• Ambani and the four officials—Satish Seth, SC Gupta, JP Chalasani and Lalit Jalan—have paid a settlement charge of 50 crore without admitting or denying the charges. The five have made the payment on behalf of the companies, according to the order.
• The settlement, which was finalised earlier this week, relates to a case of alleged misuse of funds raised by ADAG through foreign borrowings to invest in the Indian stock markets using overseas investment vehicles.
• According to the order, the regulator said it launched a probe after it received information that money raised through foreign borrowings and foreign currency convertible bonds by Anil Ambani group companies were invested in the stock market, including shares of Reliance Communications, another company owned by Ambani. Overseas investment vehicles were allegedly used for this.
• A consent order—similar to an out-of-court-settlement—comes about if a person or a firm facing a probe related to the securities market submits an application to Sebi without admission of guilt and without denial of liability.
• RBI cracks the whip on fund diversion by cos
• The Reserve Bank of India has said some corporate clients of banks have diverted loans meant for business purposes and has provided a six-step approach to prevent such diversion.
• The six steps banks should follow are: meaningful scrutiny of the periodical progress reports; regular visits to assisted units and inspection of securities charged; periodical scrutiny of accounts; introduction of stock audits; initiation of prompt action if warranted, including withdrawal loans; and examination of all aspects of diversion of funds during internal audit.
• Although the RBI did not explicitly state why the circular has been issued now, many believe the series of corruption episodes, including the Citibank fraud, might have forced it to let banks know that it is watching. Many officials, including executives of LIC Housing Finance and Bank of India, were arrested last year in the bribes-for-loans scandal. Also, there were preliminary enquiries into loans given to some real estate companies, a sector the central bank has flagged as ‘sensitive’.
• Citibank to compensate investors duped by Puri
• Citibank will compensate all clients of Shivraj Puri, the rogue relationship manager who embezzled several wealthy investors.
• The bank is in the middle of reconciling the accounts of these high networth individuals (HNIs), who either put money in the sham investment scheme floated by Puri or trusted him to manage their savings.
• Of Puri’s 40 clients, Citi will approach 12-13 in the next few days with formal settlement terms that will enable these investors recover the principal amounts. Negotiations with these customers have been completed. Subsequently, compensation terms will be discussed with other investors who dealt with Puri.
• Puri dealt with three kinds of investors. Some like Aggarwal, who are wealth management clients of Citi with investment accounts. There are others who had no account with Citi, but were independently approached by Puri. In the latter case, Puri credited cheques from these investors to a collection or custodian account named after his grandfather Premnath.
• Puri, the mastermind in the estimated Rs 400-crore fraud, was remanded to 14 days’ judicial custody by a local court on Friday.
• Current state of renewable energy in India
• This is an excellent article that looks at the issue and also gives us some important statistics in regard to energy sector in India.  Worth a read.
• World Bank lends $1.7b for roads, fighting cyclones
• The World Bank on Friday pledged $1.72 billion in loans to India, mainly for building 24,000 km of roads in rural areas.
• The global lending agency also pledged $255 million to the first phase of a project that aims to mitigate effects of cyclones.
• Inflation at 8.43%, rate hike looms
• India's inflation rate accelerated by almost a percentage point in December, increasing pressure on the Reserve Bank of India to hike key interest rates in its monetary policy review due later this month.
• The wholesale price index (WPI) rose 8.43% in the month from a year ago, government data showed on Friday. The index was at 7.48% in the previous month.
• The surge in the data for December was largely driven by food items, which carry a 14.3% weight in the WPI. Inflation in food items quickened to 13.55% in December from 9.41% in the month before. Fuel inflation was up at 11.19% from 10.32%.
• Economist were, however, more concerned with the momentum in the so-called core inflation, a measure that strips out the volatile food and fuel items. Core inflation is considered a better indicator of the underlying long-term inflation and largely corresponds with inflation in non-food manufactured products.
• New Deputy Governor for RBI
• The government has approved the appointment of Anand Sinha, a career senior central bank official, as a deputy governor of the Reserve Bank of India (RBI).
• Mr Sinha will be the fourth deputy governor at RBI, joining Shyamala Gopinath, KC Chakrabarti and Subir Gokarn. He will succeed Usha Thorat who retired a little over a month ago. Two deputy governors are appointed from within the central bank, besides a banker and an economist.
• Mr Sinha, who turns 60 next month, may get a two-year term since deputy governors normally get to serve till the age of 62.

International

• China tops US as No 1 economy by purchasing power
• China overtook the US last year as the world’s biggest economy when measured in terms of purchasing power.
• The size of China’s economy in 2010 was $14.8 trillion, compared with the US’s $14.6 trillion, when accounting for the countries’ differing costs of living.
• Purchasing power parity calculates gross domestic product using exchange rates that adjusts for price differences of the same goods between nations.
• China’s GDP per capita, which reflects the average standard of living, would increase to $11,047 from the $7,518 estimated by the IMF in its World Economic Outlook.
• Rising debt may put US’ AAA rating at risk
• Two major credit ratings agencies warned Thursday that the United States might tarnish its triple-A credit rating if its national debt kept growing. It was not the first time the agencies, Standard & Poor’s and Moody’s Investors Service, warned that the nation’s gilt-edged rating might fall into jeopardy.
• In a quarterly report on the nation’s credit risk, Moody’s said there was an increasing probability of revising its outlook on its Aaa rating for the United States to negative from stable within the next two years if no action were taken.
• That stops well short of actually reducing the rating. But even a small revision, if it comes, would probably rattle the financial markets and might even hamper America’s ability to borrow the money it needs to finance its deficit. Moody’s has been rating US government debt since 1917 and has always rated it Aaa.
• Only once, in 1996, did the agency put some US debt on review for possible downgrade — a much stronger step than a negative outlook. That was after Republicans refused to vote to increase the debt ceiling.