24.02.2011

Politics & the Nation

• An excellent article on funding political parties
• This is one article that you should NOT MISS reading.  Very good one.  Some excerpts worth our noting:
• The basic goal in political funding reform should be to achieve complete transparency as to how much parties and politicians spend and how they finance that spending.
• Reform of political funding is necessary, even if not sufficient, to tackle corruption. Indian democracy is funded by corruption. Politicians take money out of the exchequer, sell patronage and extort money, all in the name of mobilising funds for political activity. They pocket a large part of the collection and pass on the rest to the party and the workers they employ. Since civil servants must collude for misuse of state power, this method of mobilising political funds suborns the bureaucracy and procedural hurdles proliferate as rentseeking opportunities.
• All the scams rocking the country have this common root.

• JPC to Have 30 Members
• The government will constitute a 30-member Joint Parliamentary Committee (JPC) to probe 2G spectrum allocation, following the Opposition’s request.
• The initial plan was to have a 21-member JPC. The panel, to be headed by Congress MP PC Chacko, will now have 20 members from the Lok Sabha and 10 from the Rajya Sabha.
• The panel will probe implementation of the telecom policy from 2003. It will be get six months to complete the investigations.
• The Opposition, under whose pressure the government relented to the demand for formation of a JPC, will have 12 representatives on the JPC. If the Samajwadi Party, which had also backed the Joint Parliamentary Committee demand, and the BSP take an antigovernment stand, the Opposition and UPA would have equal numbers on the panel.
• Congress was keen on a 21-member panel, but several parties including the BJP, the Left and smaller parties demanded that its numerical strength be increased to accommodate more political parties.

Finance & Economy

• Some interesting statistics about population
• India is expected to be the world's most populous country by 2025. Currently, India has more than 50% of its population below the age of 25 and more than 65% below the age of 35. It is projected that by 2020, the average age of an Indian will be 29 years compared with 37 for China. Yes, by 2030, India’s dependency ratio is projected to be just over 0.4.

• Is there a case for enhancing the exemption ceilings on insurance premiums paid?
• Take a look at this article which argues for a rise in the exemption ceilings that are currently in force in so far as premium payments for life and health covers are concerned.  Some solid reasoning given there.

• Investments from tax havens may be blocked
• India could restrict investments from tax havens such as Panama and Lichenstein that are reluctant to enter into tax information exchange agreements as it looks to stop the flow of black money back into the country.
• India has signed tax information treaties with Bahamas, Bermuda, British Virgin Islands and Isle of Man. It has completed negotiations with Cayman Islands, Jersey, Monaco, Saint Kitts & Nevis, Argentina and Marshall Islands out of 22 identified countries or jurisdictions. Some jurisdictions, however, have not responded to India’s request or are insisting on a double taxation avoidance agreements, which could take time to conclude. India is not keen on entering such treaties with tax havens where there is little direct Indian investment. DTAAs are pacts between two countries to avoid both taxing an income earned in one country. Measures could be taken to restrict investments from such places to put pressure on them to enter into formal information sharing treaties.
• Some snippets of info that is useful in this regard:
• Over 600 tax information exchange agreements have been signed since the London G20 Summit in 2009
• An OECD forum has initiated 40 peer reviews; it plans to have 70 completed by G20 Summit in Cannes this year
• India volunteered to be first to be reviewed and was found to be meeting all requirements
• Global community putting pressure to act through peer reviews

• Why is a large current account deficit a worry?
• A current account deficit of over 1.5-2% of the GDP is undesirable as the country needs to have stable capital flows to finance such deficits. Otherwise, there could be excessive reliance on foreign borrowings to finance these shortfalls. Reliance on debt beyond this threshold level could push a country into a sovereign debt crisis like the way some European countries are now facing. India too was on the brink of a soverign debt crisis in 1991, but managed to avert a default
• How can this be addressed?
• Promoting policies conducive to stable long-term capital flows is one option. That would mean primacy to foreign direct investment and non debt creating inflows. Policies which could encourage more remittances and other private transfers will also help besides promoting merchandise and services exports

• Airwaves in 700 MHz Band to be Sold in ’12
• The government could be in for a windfall from the sale of additional spectrum that will be vacated by state agencies, after raising record amounts from 3G and broadband airwaves auction last year that helped it contain fiscal deficit within the budgeted limit.
• The telecom department has initiated the process of auctioning airwaves in the 700 MHz band, which, it says is the ‘most efficient and cost-effective’ frequency for delivering wireless broadband.
• The ministry has set a target for Doordarshan and other government agencies to vacate these frequencies by the year-end so that the auctions can be held in 2012.
• The country has about 108 units of airwaves in the 700 MHz band that can be utilised for commercial services, half of which is used by Doordarshan, while the armed forces have about 36 units or MHz. The remaining 24 MHz is held by other government agencies.
• The broadband wireless spectrum auctions in India last year delivered the government an unexpected bonanza of Rs. 38,543 crore ($8.25 billion), twice the amount predicted by analysts. The 3G and broadband spectrums jointly fetched Rs. 1,06,000 crore for the government against its estimates of Rs. 35,000 crore.
• Wireless broadband is seen as the only solution for telecom companies to meet the demand for high-speed internet connections in the country. India has just 11 million broadband connections and less than 1% penetration in high-speed internet, compared with 750 million mobile users with over 65% of the its population owning a cellphone. The government has fallen short of it target of achieving 20 million broadband connections by 2010.

• RIL's tie-up with BP has the potential of doubling D-6 gas output
• Reliance’s tie-up with BP will help it more than double gas output from the D-6 block to 120 million cubic metres a day and endorse its capital expenditure in developing the country’s biggest gas field, which is being scrutinised by the national auditor.
• BP is buying 30% in Reliance’s gasrich D-6 and 22 other blocks for an initial payment of $7.2 billion and another $1.8 billion after commercial discoveries. Analysts said the deal would also help Reliance justify its capital expenditure in developing the D-6 block, which is being scrutinised by the Comptroller and Auditor General of India.
• Gas prices in India vary from $4.2 per unit for D-6 to $12 per unit that customers pay for imported liquefied natural gas (LNG).

International

• Arab rulers are facing the heat
• Even as governments rushed to evacuate thousands of expatriates from Libya the writing on the wall is that the spreading revolt may topple the regime within days.
• The evacuations follow Gaddafi’s warning in a televised speech late on Tuesday that he will fight the uprising until his “last drop of blood.” Heavy gunfire broke out again in Tripoli and the streets were empty.
• While Middle East rulers have tried to put down uprisings that have overthrown leaders in Tunisia and Egypt and spread to Bahrain and Yemen, none used as much force as the Libyan ruler. Gaddafi’s crackdown on the week-long demonstrations has already left almost 300 dead, according to Human Rights Watch, and driven oil prices to a 2 1/2-year high. Libya holds Africa’s largest oil reserves.
• Saudi King Abdullah returned home Wednesday after a 3-month medical absence and unveiled benefits for Saudis worth $37 billion in a bid to insulate the world’s top oil exporter from an Arab protest wave. The king, who had been convalescing in Morocco after a surgery in November, stood as he descended from the plane in a special lift, before taking to a wheelchair. Saudi Arabia has so far escaped protests that have raged across the Arab world.

Language Lessons

• bathetic: Adjective
• Effusively or insincerely emotional