03.02.2011

Politics & the Nation

• CBI arrests Raja, aides in 2G spectrum case
• In a move aimed at containing the decline in the government’s popularity ratings following the eruption of a string of scandals, the CBI on Wednesday arrested former telecom minister A Raja, his private secretary RK Chandolia, and former telecom secretary Siddharth Behura. The former minister and his aides are accused of conspiring with a slew of corporate groups for awarding 2G spectrum licences in early 2008.
• The arrests, which obviously had the blessings of the political leadership, was announced here Wednesday evening. They were summoned to the CBI headquarters for questioning at 10.30 am, and placed under custody later in the day. They will be produced before the designated CBI judge at the Patiala House courts on Thursday, and are likely to be remanded to police custody.
• The CBI has slapped cases under Section 120-B of the IPC (criminal conspiracy), and Section 13 (2), read with Section 13(1)(d) of the Prevention of Corruption Act, 1988, against the three.

• Census operation begins next week
• Come February 9, millions of population enumerators will access every nook and cranny of the country over 20 days to achieve the census authorities’ objective of counting each and every individual resident in India.
• An interesting snippet in this regard:  They collect the census data of the elusive Sentinelese tribe in Andamans by videographing them, as the tribesmen come out and collect parcels that drift ashore after being dropped in the sea by census authorities.
• While Sachin Tendulkar and Priyanka Chopra are roped in as star campaigners for the census operations, the Registrar General of India had even appointed its first enumeration mascot  — a salwaar kameez-clad woman enumerator. The mascot was unveiled by Union Home Minister P Chidambaram here on Wednesday. The mascot, however, has not been given a catchy name, indicating perhaps the faceless nature of the millions of school teachers who will double up as enumerators to visit nearly 240 million households across the country between February 9 and 28.
• For the first time, trans-sexuals will be able to record their gender as “others”. Along with age, the enumerator will also record the date of birth of the individual.

Finance & Economy

• TT Rammohan too joins Malegam bashing
• We have noted in the last couple of days as to how the recommendations of the Malegam committee on reforming MFIs are having some holes in them.  Now it is the turn of one of our favourite columnists to point loopholes in the recommendations.  Take a look at it in full here.
• He says that profit-oriented financial inclusion efforts are bound to create problems and that it would be futile to regulate MFIs for bringing about more/better financial inclusion.  He recommends that it is banks which should be at the forefront of financial inclusion efforts.

• Govt may convert funds in PSU banks into equity
• The government may convert its perpetual bonds and preference shares in state-run banks into equity, to help the lenders meet the Basel-III norms.
• Banks would need Rs. 6,00,000 crore over nine years to meet the norms, according to a study by ratings agency ICRA.
• The Basel-III framework, which seeks to strengthen regulation, supervision and risk management in the banking sector, is to be implemented in phases beginning January 2013. The new prudential norms under Basel-III, which are yet to be finalised, will restrict Tier-I capital to common equity and retained earnings.
• Other forms of capital, on which a bank has to pay interest or dividend, will not be included in Tier-I structure for meeting the capital adequacy requirements. At present, 15% of the capital raised through these instruments, called innovative perpetual debt instruments, is allowed to be included in Tier-I capital.
• The challenges before the FM in the run up to the budget
• Look at this graphic.

International

• What should China guard against, in so far as its economy is concerned?
• First, the growing size of the economy and of the private sector makes it harder to control the economy from Beijing.
• Second, there is a need to rebalance the economy away from investment, towards consumption. While investment always sounds good, it is now so high in relation to GDP that not all of it may be worthwhile.
• Third, China’s vulnerability arises from its underdeveloped financial sector. Thus, as income rises, there are limited options for investing household savings: into low interest-bearing bank accounts, into equities where governance concerns persist, or into real estate where prices are already sky-high in many cities. This makes
• the economy prone to bubbles.

Obituary

• Subbu
• Noted defence analyst K. subrahmanyam is no more.  Take a look at this obituary about him.