25.04.2011

Politics & the Nation

• Sri Satya Sai Baba is no more
• Sri Sathya Sai Baba, whose message of love, peace and humility, resonated with millions of people including politicians, dictators, businessmen and cricketers, breathed his last on Sunday. He was 85.
• We deeply mourn the loss of this great soul which taught humanitarianism to one and all irrespective of caste, colour, creed and religion.  
• Baba, as he was popularly called, was in poor health for the past one month and died after multiple-organ failure. He leaves behind an enormous spiritual legacy, a wide network of charitable institutions, hospitals, schools, colleges, which some estimate to be worth about Rs. 40,000 crore, and a void in the hearts of many people who consider him to be a living god.
• Sai Baba was born on November 23, 1926 in Puttaparthi, but his spiritual journey actually began 14 years later when he announced to his stunned villagers that he was the reincarnation of Sai Baba of Shirdi, who had passed away in 1918. The story quickly became legend andBaba acquired God-like status after he started performing miracles which drew enormous number of followers. Controversy ensued when rationalists and scientists questioned the basis of his miracles and his refusal to allow himself to be tested. An incident at his ashram when police killed four intruders into his room and a BBC documentary which alleged widespread incidents of child molestation at his ashram threatened to sully his image. Fortunately for him and his ashram, the controversies died down and a number of social service activities,such as free treatment to the poor through his hospitals, the education provided by his network of schools and colleges, ensured a steady growth in followers. The poor and the wealthy in India were now joined by western celebrities such as Hollywood actress Goldie Hawn, Sarah Ferguson and Hard Rock Cafe founder Issac Tigrett, who sold his iconic restaurant chain and invested the fortune in Baba’s social activities.
• Ironically, the fame and fortune built up by Baba, could now prove problematic as he has died without announcing a successor to his Sri Sathya Sai Central Trust. Speculation has mounted in recent weeks that there will be bitter fight to control the fortune and that the government may step in to take over and run the trust.
• In an attempt to calm such fears, the trust issued a four-page release last week detailing how it receives money and listing the names of its trustees. All the institutions are controlled and run by the central trust which has six members, including Baba as the founding trustee. In addition, the council of management of the trust has four advisors.
• Dispelling rumours of any differences within the trust, the trustees who had a meeting with the governor,the chief minister and other state authorities on Sunday, assured the government that no interference was required and that the trust’s activities will continue normally without any impediment.
• The AP government has already said that it is not interested in taking over the affairs of the trust, which means that the trustees and other important followers will decide on the successor and the future course of action.
• Is Civil society's participation in law-making enshrined in the Constitution?
• If it is, then why question Lokpal Bill drafters?  This is the question that is posed by Pradeep Mehta in his article today in reaction to the articles that appeared in the Press arguing about how the law making process is being taken away from Parliament et al.
• World over, including India, the civil society is engaged in law-making, which only enriches the tapestry of a participatory democracy.
• Drafting a law is the duty of the executive either suo moto or under an international treaty obligation or when Parliament directs it. This is done through a consultative process to get views of all sections. It is the organised civil society that inputs in the process sometimes as part of a committee or through memoranda and/or hearings. Mass movements, like the one launched by Hazare, too work as catalysts and input providers. The civil society typically comprises of business chambers, trade unions, professional associations and non-government non-profit organisations (NGOs). On all economic legislations, whether new or amendments, often all the four actively participate in the formulation depending on their interest. Business chambers are best endowed in advocacy but the others, including NGOs, are also able to make their views heard. Indeed, it is the legislature that takes the final call, and that process cannot be usurped by any other process, except in cases where international treaty obligations reduce the space, like WTO agreements or UN conventions. In fact, the parliamentary standing committee system practised in India and other countries invite views of the civil society and citizens on Bills that come up for discussion before being sent back to the House for being adopted. The process does not end there, as the government keeps the power of notifying the law in full or parts, depending on the influence of the vested interests.
• Take a look at Article 51A of the Constitution.  It says that the fundamental duties of citizens as, inter alia, to develop scientific temper, humanism and the spirit of inquiry and reform; and to strive towards excellence in all spheres of individual and collective activity so that the nation rises to higher levels of endeavour and achievement.  This is the article which enshrines the participation of civil society in the law making process of the country.

Finance & Economy

• GHMC and OSRT
• Read this op-ed by Sameer Sharma in full.  Worth a read.
• It explains how GHMC (Greater Hyderabad Municipal Corporation) has successfully deployed the ubiquitous mobile phone cameras as a tool for improving efficiency of the municipal workers.  They have come up with an innovative usage of the cameras for creating an off-site raltime data (OSRT) for the purpose.  
• Some research stats btw that will be of interest to us:
• Jensen, an economist from Harvard University, has found that access to mobile phones had increased fishermen’s profits in Kerala by 8% and brought down consumer prices by 4%. Additionally, studies by Leonard Waverman (London Business School) and Christine Zhen-Wei Qiang (World Bank) have found that a 10% increase in mobile phone adoption in developing countries increases GDP growth by 0.8%.

• On boosting manufacture in India
• This is a very good article that has some concrete ideas on the subject.  Well worth our attention.  Some excerpts for us:
• To boost manufacturing, two policy areas deserve attention, in addition to infrastructure, skills and the ease of doing business — restricted FDI in retail and undirected government procurement.
• The condition of value addition within India for FDI in multi-brand retail can act as a fairly effective instrument for giving a push to globally-competitive manufacturing.
• Public procurement is the other lever that can be used selectively in strategic areas to create manufacturing capability.  One instance where this approach is being tried is the bulk tender for super critical thermal power plants by NTPC with the condition that the successful bidders should do manufacturing in India.
• Another example is the solar mission. The guidelines stipulate that in the first year modules and in the second year, modules and cells should be made in India for plants being put up by private developers.
• The policy of defence offsets is another policy instrument for leveraging government procurement.
• There have, of course, been enormous benefits from global competitive tendering and this should continue to be the norm.
• The one area where we have surely missed the bus in leveraging our humungous business potential to nurture local manufacturing is telecom sector.  

• The status of Casinos in India
• While Sikkim and Goa permit gambling and casinos, union territory of Daman plans to have casinos soon.  Sikkim has one casino and has issued letter of intent for one more.  Goa has seven offshore casinos operating on vessels and more than a dozen onshore casinos housed in the numerous five-star resorts.
• There is no law anywhere in the country that regulates casino culture.  In the absence of that, the activity is regulated through executive orders that create uncertainty.  Though Sikkim government had enacted a law in 2008, it has to amend it in line with the deficiencies pointed out by FATF (Financial Action Task Force) that recently reviewed India’s money laundering laws.
• In what may bring to an end the legal uncertainty around casinos, the centre has asked states to put in place a clear and transparent regulatory framework for gambling and other gaming activities.
• The centre has told the states that the legislative framework should provide for a regulator or a commission too. The regulator would also be empowered to issue licences to casinos.
• The centre is keen that the legal framework is put in place at the earliest. The urgency to implement comes after the Financial Action Task Force (FATF), a global agency to monitor illicit flows, pointed to the uncertainty regarding regulation of casinos.
• The FATF had pointed out that the current regulations did not provide for the statutory fit and proper tests for owners, operators and managers of casinos. Doubts have also been expressed about the authorities, in current situation, to enforce compliance with antimoney laundering rules.
• Companies use LLPs as tax smokescreen
• Corporates are masking their true identities to jump regulatory hurdles and form holding entities that help them lower their tax burden.
• Promoters of at least 30 companies have formed limited liability partnerships (LLPs) by suppressing the information that the newly-floated LLPs would serve as group investment companies — a disclosure that would have called for a no-objection certificate from the Reserve Bank of India (RBI). Instead, they have tweaked the object clause to claim that the LLPs are into businesses like consultancy and broking — a simple manipulation that quickens clearance from the registrar of companies (RoC), the final authority that approves the formation of an LLP.
• In 2008, Indian businessmen were allowed to form LLPs, an internationally followed tax-efficient structure that is spared of dividend distribution tax and minimum alternative tax (MAT) on gains from sale of shares. Though the new law was aimed at making life easier for smaller businesses and such ventures as law and audit firms, there was nothing to prevent business houses from converting their investment companies into LLPs.
• But when businesses houses applied for such conversion, the RoC insisted on a noobjection certificate from the central bank. Most companies hit a wall as RBI was unwilling to comply with their requests. The banking regulator is keen to monitor corporate investment firms just as it keeps an eye on non-banking finance companies. And allowing them to transform into LLPs would mean losing control over these firms.
• Now, corporates have found a way out.  An entity that claims to be carrying out consultancy is not required to approach RBI. Since its business is unrelated to activities like share investment, banking, insurance and finance, it can directly approach RoC.  An entity that attains LLP status by falsely declaring consultancy as its main business activity is subsequently capitalised by the partners to buy out the shares that is held by the original group investment companies.
• However, the possibility of RBI coming out with new rules to stop LLPs from bypassing it is not being ruled out, more so, given its intentions to monitor investment companies. A year ago, RBI announced new rules which meant that group holding companies and investment firms would have to get themselves registered with RBI, fulfil certain criteria and share information on a regular basis. Amid corporate lobbying, the rules were later diluted to an extent to exclude investment companies which do not raise funds. But finance professionals said that even the diluted rules would cover a significant number of companies.

International

• India to export petro products to Pakistan
• The thaw in relations between India and Pakistan, which started with cricket diplomacy at Mohali last month, could soon see India exporting petroleum products to its neighbour.
• India, which has surplus refining capacity, has agreed to export fuels such as petrol and diesel to Pakistan to help the neighbouring country meet its fuel shortfall and open up a new market for large refineries of Reliance Industries, Essar Oil and a new unit in which the LN Mittal Group is a co-promoter.
• India imports about three quarters of the oil it consumes, but its refining capacity has expanded rapidly, making it a key player in the international market. Exports of refined products have risen to 51 million tonnes in 2009-10 from 746,000 tonnes in 1999-2000 according to government data.
• Commerce secretaries of the two sides are meeting in Islamabad on April 27-28 to renew trade ties between the two countries, which have been at a standstill since November 2008 after the Mumbai terrorist attack. The acrimonious relations between the two neighbours eased last month when Prime Minister Manmohan Singh and his Pakistani counterpart Yusuf Raza Gilani watched the India-Pakistan World Cup semi-final together at Mohali. The two countries have fought three wars since both attained independence in 1947, besides a major skirmish in Kargil between May and July 1999.
• Indian officials said increased trade inter-dependence would force the two nations to keep friendly relations, and India was in a position to meet Pakistan’s fuel demand. Pakistan has about 12-milliontonne refining capacity, which meets only half of its annual requirements, while India exports about 25% of its 185-million-tonne refining capacity.
• Talks between India and Pakistan to start trade of petroleum products were initiated in 2005 by the then oil minister, Mani Shankar Aiyar, who favoured diesel supply to the neighbour. India had exported some petrochemicals such as PTA and LOBS to Pakistan through the sea route.

Language Lessons

• nary: Adjective
• (used with singular count nouns) colloquial for 'not a' or 'not one' or 'never a'
• eg: So there is nary a protest here at special rules for VIPs …
• curmudgeonly: Adjective
• Brusque and surly and forbidding
• eg: "his curmudgeonly temper"
• cogitate: Verb
• Consider carefully and deeply; reflect upon; turn over in one's mind; Use or exercise the mind or one's power of reason in order to make inferences, decisions, or arrive at a solution or judgments