Politics & the Nation
  • India wins the match but Pakistan walks away with the peace award
    • Pakistan may have lost the match in cricket; but it surely is going home with near normalized relations with India, if sentiments are any indication.
    • The signs of near-normalisation were evident when Pakistan Prime Minister Yousuf Raza Gilani reciprocated his Indian counterpart’s initiative and invited Manmohan Singh to visit his country. This will be worked out through diplomatic channels. Sporting ties between the two nations are also set to be revived with Gilani inviting the Indian cricket team to play in Pakistan.
  • Why is 'merit' not a reasonable consideration when it comes to expecting women to have it for board membership?
    • TT Ram Mohan explains the point in his op-ed very well today:
    • For educational institutions or jobs, ‘merit’ is defined in terms of academic performance. A person who has secured the cut-off level of, say, 85% is deemed to be meritorious. A person from a disadvantaged group, who gets 82%, is said to lack merit even if he has managed the performance without paying for expensive tuitions.
    • In the case of independent directors, claims about selecting people on merit sound even more hollow. First, promoterrun companies in India overwhelmingly prefer to select independent directors from amongst friends and associates.
    • Secondly, retired bureaucrats, serving or retired corporate executives and celebrities, who are the second-most important source of independent directors, also tend to be people known to the promoter.
    • Thirdly, independent directors are not so independent of management because it is management that selects them and compensates them handsomely. In this situation, the so-called merit has little bearing on the key outcome, namely, good governance.
Finance & Economy
  • The issues that need to be addressed by a new policy to revive the PPP mode of executing projects
    • First, governments, mostly at the state level, allow private players who win in competitive auctions to wangle sweetheart agreements with the state thereafter. This has to stop. There must be no post-bid revisions of the contract.
    • Second, governments must take away projects, or impose strict penalties on private players if they fail to meet project milestones.
    • Third, almost every state has its own PPP department, each functioning with its own set of rules. These rules have to be harmonised among states, to make sure that there is no race to the bottom. If states start competing among themselves to give sops to attract projects, the quality of governance and state revenues will slide dramatically.
    • Finally, land acquisition has become a political minefield. A new law to humanise India’s colonial-era land acquisition rules is to be made.  It should provide for some guaranteed income for the dispossessed.  
  • India's strengths and weaknesses in manufacturing
    • India was the ninth largest manufacturer in the world in 2010 in terms of manufacturing value added (MVA), says the United Nations Industrial Development Organisation, ahead of all emerging markets save China.
    • But India accounts for just about 1.8% of the world MVA. China accounts for 15.4%, and the US 23.3%.
    • Similarly, India disappoints on per capita productivity: average output was estimated at $107 compared with China’s $841.6.
  • Hemline forecasting
    • Do you know the old saying which says that hemlines go up during boom times and come down with recession?
    • Mary Quant is credited with introducing miniskirts to the world of fashion.  That was sometime in the 1960's.
    • She was also credited with introducing hot pants.
  • The impact of oil price on our economy
    • Experts say that every extra $10 in oil prices increases the government’s borrowing requirements by Rs. 36,000 crore and the fiscal deficit by 0.3%.
  • Islamic banking
  • Economic calculus of Japan’s tragedy
    • Some snippets from an article that appeared in today's ET.  Worth our attention:
    • Direct losses are currently estimated at between $100 and $200 billion. The 1995 Kobe earthquake resulted in approximately ¥10 trillion in damage (around $102 billion), equating to around 2.5% of Japan’s GDP at the time.
    • As the level of insurance cover is limited, the bulk of the reconstruction cost will have to be financed by governments and individuals drawing on savings.
    • Financial markets have assumed that Japan will sell its overseas financial investments including US government bonds (holding of around $900 billion) to finance reconstruction.
    • The ‘repatriation thesis’ sees US interest rates rising as the Japanese sell dollar bonds and the yen increasing in value as the dollars are converted into local currency. But it is not clear that this actually happened following the Kobe earthquake. Currently, there are no signs that the government, insurance companies or private investors are selling or plan to sell foreign assets to finance the rebuilding.
    • If the government chooses to finance the rebuilding by raising debt, then attention will be on the increasingly parlous state of Japan’s public finances.
    • Even before the disaster, Japan’s government borrowing was over $12 trillion, around 200% of its GDP, although net borrowing is around 140%. This debt reflects the effect of two decades of government spending in unsuccessful efforts to restore the Japanese economy to health after the crash of the ‘bubble economy’ in 1989. The cost of re-construction may add additional debt, of as much as 5-10% of the GDP.
    • Japan’s current debt position is very different from the time of the Kobe earthquake. In 1995, Japan’s debt levels were much lower (net government debt was around 25% versus 140% today). In addition, the global economy was in a more robust position with stronger economic growth. These factors helped Japan absorb the effects of the Kobe disaster. Japan’s three problem Ds, depression, deflation and demography, have now been joined by two new Ds, disaster and destruction.
Language lessons
  • anodyne: Adjective
    • Capable of relieving pain; Noun: A medicine used to relieve pain
  • portmanteau: Noun
    • A portmanteau is a blend of two (or more) words or morphemes into one new word.  A portmanteau word typically combines both sounds and meanings, as in smog, coined by blending smoke and fog.  More generally, it may refer to any term or phrase that combines two or more meanings.  In linguistics, a portmanteau is defined as a single morph which represents two or more morphemes.
  • sotto voce: Adverb
    • In an undertone
    • eg: The policy, as the Prime Minister sotto voce suggested, was to subsidise mobile users, but a good bit of it ended up in the pockets of spectrum resellers.


Politics & the Nation
  • Cricket is after all a game; enjoy it as one
    • We all know that a cricket match between the traditional rivals -- India and Pakistan -- evokes more than enthusiasm.  Is that required at all?  The fans on both sides of the border, aside from some ill-thought comments from people on the field too, contribute a lot to the rise in temperature.  Today, it’s more important than ever to sit back and enjoy a game of cricket as a game and nothing more.  All the best to the game and the spectators.  May their wishes be fulfilled.
    • The following comments by Mukul Kesavan in today’s ET are well worth our notice in this regard.  Take them well for their ability to represent the collective feelings of the reasonable people.  But enjoy the game as a game.
    • Most of this (cricket matches between India and Pakistan being reduced to a blood sport sustained by an excitement born of desperation and fear and loathing) has to do with the insufficiently bifurcated histories of India and Pakistan. The quarrel over Kashmir, nightmares like the slaughter of 26/11, the residual Indian belief that Partition was a tragic cock-up and the furious Pakistani rejection of the idea that their nation was a mistake, means that Indians and Pakistanis watch their two countries play in a state of bilious delirium.
    • The disproportion between fact (losing a cricket match) and feeling, the absurdly inflated sense of joy and despair that characterises any India-Pakistan ODI, makes every such match an occasion to be avoided by sensible people.
    • Pakistani cricket is so oppressively freighted with nationalism at the moment that it’s unreasonable to expect the team or its captain to treat Wednesday’s encounter as just another game. To be fair to the Pakistanis, hundreds of millions of Indian spectators will also see the match as a kind of proving ground for nationalism.
  • SC comes down heavily on Government
    • While looking into the progress report submitted by the ED, the SC observed that the probe should be widened to include the other names that have popped up in ED's report.  It has also questioned whether Government had any in principle objection to the formation of a SIT (Special Investigation Team) comprising of officers from various agencies like the RAW, CBI, IB and ED to go into the wider issue of black money being stashed abroad by Indians.
    • The SC deferred its decision on the formation of SIT till the next date of hearing when the ED is expected to submit another progress report.
    • Dealing with another case, the Supreme Court has said that political parties supporting an agitation should be derecognised if public property is destroyed during the stir.
    • The court indicated that it would frame guidelines fixing responsibility on state governments for their failure to deal with agitationists destroying public property.
    • It asked the Haryana government to explain why it should not pay the loss incurred by Railways during the course of 11-day stir organised by 12 'khap' panchayats against booking of some ‘upper caste’ people in connection with the Mirchpur Dalit killings case.
    • The court also sought the responses of all parties to suggest guidelines and on fixing responsibility for damage done to public property during agitation.
    • Though the response of the SC may look too intrusive on the domain of the Executive, the citizenry of the country is expected to back such interventions in the light of the past and present experience wherein the political class (which is supposed to control the executive) has miserably failed to tackle lawlessness and corruption.
Finance & Economy
  • Why did the financial meltdown happen?
    • The recent report of the Financial Inquiry Commission set up by the US government provides an exhaustive narrative of the crisis and its proximate causes.  It found that just prior to the crisis, there was an explosion in risky subprime lending and securitisation, an unsustainable rise in housing prices, widespread reports of egregious lending practices, a dramatic increase in household mortgage debt and an exponential growth in unregulated derivatives, among many other red flags. The commission also identified widespread failures in financial regulation, corporate governance and risk management, lack of transparency, and a systematic breakdown in accountability and ethics as key causes of the crisis.
  • Nothing Global about Nelp-IX
    • Most global oil majors shunned India’s offer of oil and gas blocks as its patchy exploration record and tax worries deterred potential investors, although crude oil’s sustained rally usually encourages companies to hunt for hydrocarbons.
    • BP’s recent acquisition of a stake in 23 exploration blocks of Reliance Industries had raised hopes that more big companies would bet on the country’s oil and gas sector, but the only large foreign firm that bid for a block in the ninth round of the New Exploration Licensing Policy (Nelp )was BG.
    • Domestic companies dominated the auction, with ONGC set to win five of the eight highly prospective deepwater blocks while private oil major Reliance Industries is seen as the frontrunner in two.
    • The government received total 74 bids for 33 blocks from 37 companies, including eight foreign firms.
    • Of the 74 bids, 41 were from private firms and 33 by state-run companies.  Experts criticised unstable fiscal policies and the finance ministry's approach towards taxation as a key reason for the poor response.
    • The government offered 34 blocks in this round, but one shallow-water block received no bids.  Of the 34 blocks, eight are deepwater, seven shallow-water and 19 on shore blocks.
    • India has awarded 235 blocks in the previous eight Nelp rounds, more than half of them which are held by ONGC and OIL.
  • Primer on reserves
  • Country goes gaga over Tiger population
    • The 2010 tiger census, unveiled on Monday, raised some hopes for the future of the endangered Royal Bengal Tiger. Tiger population has seen a 20% increase over four years between 2006 and 2010. The All India Tiger Estimation puts the figure of tigers at 1,706. While these numbers would suggest that the previous decline in the number of tigers has been reversed, experts are not convinced. But, even if the increase in tiger population is not contested, what is worrying is the shrinking of the tiger habitat. In 2006, India’s tigers occupied 93,600 square km; it is down to 72,800 square km in 2010.
    • The previous enumeration undertaken in 2006 estimated the total number of tigers at 1,411. The latest census reveals a 12% increase in tiger population (1,580 tigers) in the area surveyed in 2006. The current census takes into account the 70 tigers in the Sunderbans, which had not been assessed in 2006. New areas in Uttarakhand, Maharashtra and Assam were covered in the 2010 census. Several other areas outside tiger reserves and national parks were also reviewed for the first time.
  • Indian geeks in the US heading home?
    • Today's ET report says that Indian entrepreneurs in Silicon Valley are finding their dreams imprisoned in an immigration warp.
    • Over half-a-million highly-educated and skilled immigrants are stuck with temporary, non-immigrant work visas like the H-1B, which don’t allow them to start a company or even change jobs. Pushed to a corner, they come back to India, where the entrepreneurial climate is far from ideal.
    • These are people with new business ideas, energy and the drive to succeed in an ecosystem that fosters creativity, but their dreams are shattered by a system which believes they are taking away American jobs. But in reality, this is actually hurting job creation in recessionhit US.
    • Between 1995 and 2005, 25% of Silicon Valley’s startups — which had at least one immigrant founder — employed nearly 4,50,000 people. The companies generated $52 billion in revenue in 2006. Besides losing some of the brightest minds, US immigration is putting Silicon Valley’s innovation hub status in serious jeopardy. So what in a nutshell is the H1-B visa enabling or entailing?
    • The H-1B visa is a non-immigrant employer-sponsored visa for professionals to work in the US for a maximum of six years.
    • The US issues just 85,000 H-1B visas each year, and the demand is immense.
    • Dependent spouses on H4 visas are not allowed to work. They don't qualify for a social security number. Consequently they can't get a credit card, a phone connection, etc. and in some cases even a driver's licence. The social and psychological effects are immense.
    • H-1B visa holders are glued to their employers. They can't change jobs, leave alone open their own company. And if they lose their jobs they have to leave the US immediately with little notice.
    • Moves are afoot in US to come up with a Startup Bill to help immigrant entrepreneurs.  According to a new bill, startup visas will be available to some groups, subject to conditions:
    • Entrepreneurs living outside the US: If a US investor agrees to financially sponsor their entrepreneurial venture with a minimum in-vestment of $100,000. Two years later, the startup must have created five new American jobs and either have raised over $500,000 in financing or be generating over 500,000 in yearly revenue.
    • Workers on an H-1B visa, or graduates from US universities in science, technology, engineering, mathematics, or computer science: If they have an annual income of at least $30,000 or assets of at least $60,000 and have had a US investor commit investment of at least $20,000 in their venture. Two years later, the startup must have created three new American jobs and either have raised over $100,000 in financing or be generating more than $100,000 in yearly revenue.
    • Foreign entrepreneurs whose business has generated at least $100,000 in sales from the US: Two years later, the startup must have created three new American jobs and either have raised over $100,000 in financing or be generating more than $100,000 in yearly revenue.
    • The investor must be a qualified government entity or a qualified venture capitalist or an angel investor who is a US citizen: He should have made at least two equity investments of at least $50,000 every year for the past three years.
Language lessons
  • oafish: Adjective
    • Ill-mannered and coarse and contemptible in behaviour or appearance
  • perfervid: Adjective
    • Characterized by intense emotion


Politics & the Nation
  • Are IIM’s about to be privatized?
    • If you read this op-ed today, that is the impression one gets.  The op-ed rails the attempts by the HRD minister to ‘privatize’ the IIMs.  Some cogent arguments are put forth.  Worth a read; though we may not necessarily agree with all of the criticism.  The point is, IIMs being the higher institutions of learning that they have become in India, need to constantly be in the forefront of innovation, research and new ideas.  Any attempt -- howsoever misconceived it may look -- at trying to better them, should not be lampooned only for the sake of preserving the status-quo.  Let’s study what is really bad in the proposals and then give up the bad ideas.  Not all ideas need be or can be bad.  
    • New ideas that are sought to be tried, need not necessarily be seen as attempts at thwarting the academic freedom that prevails in IIMs.  Any impression that an institute is good and happy and at equilibrium with itself and the world with the way things stand, is a sure recipe for disaster and decline.  By their very nature, academic institutions -- especially of the IIM kind -- should be constantly innovating and experimenting.  They should ideally be unhappy with the way things are.  It is only then that innovation and research are promoted.
    • Look at ISB, Hyderabad.  Has more interaction with non-academics at the board level brought it any encumbrances in excelling as an institution of higher learning?  Why should we fear that such a thing will happen with IIMs?  
Finance & Economy
  • Sunlight and water to planet’s energy rescue?
    • Look at this interesting interaction.  Will we see it in our lifetimes?  Grids should be passe.  Governments and people will be far better off without grids.
  • Pension bill tabled in Parliament
    • The government moved a step closer to initiating the financial sector reforms it promised in the budget with the introduction of the much-awaited pension and factoring bills in Parliament on Thursday.
    • The much-awaited Pension Fund Regulatory and Development Authority Bill, 2011, will give a greater legal authority to the pension regulator that has been set up through an executive order, and lacks the legislative sanction it needs to develop the pension sector through greater private participation.
    • The interim regulator currently overseas the New Pension Scheme, or the NPS, which the government hopes will become the flagship scheme for building a retirement corpus.
    • So far, the scheme has failed to make a dent in the non-government sector. It manages the retirement savings of central government and many state employees who are on a defined contribution scheme.
    • The bill had failed to get parliamentary approval in the previous term of Prime Minister Manmohan Singh's government due to strong opposition from its then Left allies.
    • This time the government has decided to play safe and keep the foreign investment issue outside the bill.
    • The bill has greater chance of getting through this time as it has the tacit support of the key opposition party, the BJP. On Thursday, the bill could be introduced only with the support of the BJP after the Left opposed its introduction in the Lok Sabha.
    • The Bill was introduced after a division of votes with 115 of the 159 present supporting it, including 30 from the BJP. Earlier, FM Pranab Mukherjee had urged the opposition to support the Pension Bill.
    • The government also introduced the Factoring and Assignment of Receivables Bill 2011 that will provide for a consolidated legal framework with specific provisions covering all aspects of the factoring business in the country.
    • The government is also set to notify the expert body, the Financial Sector Legislative Reforms Commission (FSLRC), which has been set up to rewrite the country’s financial laws.  The 11-member FSLRC will be headed by retired Supreme Court Justice BN Srikrishna and will hold its first meeting on April 5.
    • Among other things, the commission will examine the architecture of the legislative and regulatory system governing the financial sector in India and look at the most appropriate means of oversight over regulators and their autonomy from the government.
    • The commission will submit its report to the FM within 24 months.
  • How is the NPS superior to EPFO?
    • The NPS’ organisational structure with electronic accounts portable across jobs and geography, maintained by a single record keeper at a low cost, asset management flexibility as to both assets and managers, ultra-low asset management costs and regulatory oversight make the NPS far superior to the EPFO.
  • Centre moves to restore fiscal order
    • The finance ministry has moved to impose fiscal discipline on states by asking them to limit their net borrowings in the new financial year.
    • It has also asked the Central Statistics Office, or CSO, to provide an estimate of the gross state domestic product, or GSDP, of each state for 2011-12, a reflection of the Centre’s lack of confidence in the numbers put out by the states.
    • The ministry has asked the states to cap their net borrowings between 3% and 3.5% of GSDP in 2011-12, in line with the recommendations of the 13th Finance Commission.
    • The Centre had relaxed the fiscal deficit target for states to 3.5 % of GSDP in 2008-09 and further to 4% in 2009-10 in view of the economic slowdown.
    • But now that the economy is back on track, it wants states to stick to the fiscal consolidation roadmap and achieve the targets set by the Finance Commission.
Language lessons
  • burnish: Noun
    • The property of being smooth and shiny
    • Verb: Polish and make shiny
  • prole: Noun
    • A member of the working class (not necessarily employed)


Politics & the Nation
  • Rajat Gupta is getting painted into a tight corner
    • Goldman Sachs Chief Executive Lloyd Blankfein made his much-anticipated appearance at Raj Rajaratnam’s trial, telling jurors that former director Rajat Gupta leaked inside details to the accused hedge fund manager.
    • Blankfein was called to testify by prosecutors in Manhattan federal court.
    • The Goldman chief told jurors that Gupta violated Goldman confidentiality policies by revealing to Rajaratnam the board’s June 2008 discussion of a possible merger with Wachovia Corp or an insurance company.
    • Gupta, a former worldwide managing director at consulting firm McKinsey & Co, has denied the SEC’s accusations and sued the agency last week. Goldman has not been accused of wrongdoing.
Finance & Economy
  • Country is sitting on grain bomb, warns the CACP
    • The Commission for Agricultural Costs and Prices (CACP) warned that the country's overflowing grain bins will lead to a crisis if the government did not come up with a plan to dispose of the stored grain.
    • It said the Centre, which is the biggest buyer of grain in the country, was sitting over huge grain inventories and that the problem will compound further when the wheat procurement begins in a few days. India’s wheat production is expected to touch a record 81.47 million tonnes (mt) this year.
    • The disclosure is indicative of an increasing concern in the government on the subject and comes barely a year after the country faced an acute grain supply strain, which resulted in double-digit inflation and spiraling food prices.
    • The CACP computed the cost to the government on the storage of additional grain based on current economic cost of around Rs. 20 per kg for rice and Rs. 16 for a kg of wheat.
    • According to government estimates, foodgrain harvest in 2010-11 would be to the tune of 232mt, second highest of all time.
    • The government has set a procurement target of 26.3mt, but storage is woefully inadequate and incentive schemes for the private sector slow and unattractive. The government had sanctioned 150 lakh tonne of additional storage facility, but less than 1% of it has been constructed so far.
    • Last year, archaic distribution rules forced release of only a small amount of grain despite high inflation. This led to wastage of about 50,000 tonnes of wheat.
  • On potential growth rate and its link to inflation
    • Some economists link the persistently high prices to the pace of economic growth. They say Indian economy is expanding at a rate beyond its ‘potential growth rate’. ET examines the concept and its relationship with prices in today's ET in the Classroom column.  Interesting concept to learn.
  • An noteworthy criticism of our petroleum sector
    • Successive petroleum ministers have been alleged to milking these companies for political largesse. Skewed policies geared towards the vote bank have consistently killed competition, creating an uneven play for both public and private sectors.
  • How do we take India on a $45 trillion path?
  • Liz Taylor
    • Elizabeth Taylor, the violet-eyed film goddess whose sultry screen persona, stormy personal life and enduring fame and glamour made her one of the last of the old-fashioned movie stars and a template for the modern celebrity, died Wednesday at age 79. She was surrounded by her four children when she died of congestive heart failure at Cedars-Sinai Medical Center, where she had been hospitalised for about six weeks.
    • Taylor was the most blessed and cursed of actresses, the toughest and the most vulnerable. She had extraordinary grace, wealth and voluptuous beauty, and won three Academy Awards, including a special one for her humanitarian work. She was the most loyal of friends and a defender of gays in Hollywood when AIDS was still a stigma in the industry and beyond. But she was afflicted by ill health, failed romances (eight marriages, seven husbands) and personal tragedy.
    • Her more than 50 movies included unforgettable portraits of innocence and of decadence, from the children’s classic “National Velvet” and the sentimental family comedy “Father of the Bride” to Oscar-winning transgressions in “Who’s Afraid of Virginia Woolf?” and “Butterfield 8.”
    • The historical epic “Cleopatra” is among Hollywood’s greatest onscreen fiascos and a landmark of offscreen monkey business.
    • The London born actress was a star at age 12, a bride and a divorcee at 18, a superstar at 19 and a widow at 26.
    • Taylor’s ailments wore down the grudges. She underwent at least 20 major operations and she nearly died from a bout with pneumonia in 1990. In 1994 and 1995, she had both hip joints replaced, and in February 1997, she underwent surgery to remove a benign brain tumour. In 1983, she acknowledged a 35-year addiction to sleeping pills and pain killers. Taylor was treated for alcohol and drug abuse problems at the Betty Ford Clinic in Rancho Mirage, California.
    • Her advocacy for AIDS research and for other causes earned her a special Oscar, the Jean Hersholt Humanitarian Award, in 1993.
  • Global wheat output figures
    • Global wheat output is estimated to rise by 3.4% to 676 million tonnes in 2011 as high global prices led to an increase in the area under coverage in many countries, United Nation's body Food and Agriculture Organisation said on Wednesday.
    • The production in 2011 would still be below the bumper harvests in 2008 and 2009. Besides rise in area, FAO expects that productivity would increase in countries which were affected by drought in 2010.
Language lessons
  • peroration: Noun
    • A flowery and highly rhetorical oration; (rhetoric) the concluding section of an oration
  • stupor: Noun
    • The feeling of distress and disbelief that you have when something bad happens accidentally; Marginal consciousness