01.06.2010

Politics & the Nation

• Monsoon arrives on time in Kerala
• Kerala woke up on Monday to the sound of raindrops, though most of the day was sunny. But the India Meteorological Department confirmed that the monsoon had indeed arrived.
• The news is particularly refreshing, considering that 2009 was the warmest year for the country since 1901. During 2009, the annual mean temperature was 0.913 degree Celsius more than the average mean temperature of 24.64 degrees C.
  
• What ails Kashmir and what needs to be done? (Excerpts from today's ET editorial)
• Despite the two decades of a massive counter-insurgency effort and even with an elected political structure in place, separatism hasn't dimmed in Kashmir. In the context of recent revelations that an army unit gunned down three youths and passed them off as infiltrating terrorists, what would you suggest to better the situation on the ground?
• This incident underscores the failure of politics as usual, the need for resolute political will at the top to change the status quo on the ground. Those entrenched in the matrix of power in the state — the security forces, the local administration, the separatists — have little incentive to change a configuration which yields them lots of unaccounted money, unaccountable power.
• Therefore the initiative for change has to come from New Delhi. At its core, the initiative must envisage Kashmir differently, New Delhi's relations with Kashmir differently. New Delhi should summon the needed political resolve to make the government machinery follow through on its promises. After having significantly pushed back militancy, the ‘holding operation' in Kashmir has to be envisaged as a consolidation of political practice, including allowing dissent, not the armed forces running amok.
• Vivek Sahai takes over as chairman of Railway Board
• Vivek Sahai, a senior railway official who earned accolades for deftly handling the suburban train operation in the wake of the Mumbai terror attacks, on Monday took over as the new chairman Railway Board.
• Sahai, an Indian Railway Traffic Service officer, who was the Railway Board (member) traffic, has taken up the top job from S S Khurana upon his superannuation.
• Patient revolution
• This is a must read for each one of us. Perhaps in what can be called 'inclusive governance', the Chattisgarh government has come out with the concept of Mitanin to spread healthcare availability. Can't we take a leaf out of this for improving other sectors of governance? The possibilities appear to be limitless. Is the political brass taking cognizance of this?

Finance & Economy

• MTN rings Anil for merger with RCOM?
• With the rapproachment between the two Ambani brothers making headlines all over the world, MTN is reported to be considering in its board meeting, as early as today, a merger with RCOM.
• MTN is a South Africa based telecom giant with interests in Africa. Currently, South Africa’s Public Investment Body holds 18% in MTN, Lebanon’s Mikati family holds 10, while the rest is owned by institutional and individual investors.
• In 2008 also there were merger talks between MTN and Anil Ambani. But they came to a naught with the elder brother Mukesh saying that he has the first right of refusal over RCOM and hence MTN cannot be acquiring any stake in RCOM without his refusal.
• MTN has proved to be the runaway bride for many. So far, the company has entered into nine negotiations with a stated objective to sell out.
• The last among them was Bharti Airtel. The proposed $24-billion transaction would have seen Bharti acquire a 49% stake in MTN while the South African company and its shareholders would have purchased 36% of Bharti. The deal would have created a telecom giant with the third-highest subscribers of any wireless carrier in the world.
• If the RCOM and MTN join hands, the combined entity would have annual revenues of approximately $13.4 billion, with earnings before interest, tax, depreciation and amortisation of $7.7 billion. The two would also have 218 million subscribers, putting it among the top five companies around the world.
• GDP grew at 7.4% in FY 2010
• Indian economy expanded at a better-than-expected 7.4% in 2009-10, helped by strong growth in manufacturing and agriculture that lifted fourth quarter numbers, but faces global headwinds as it pushes for 8.5% growth in the current fiscal year.
• The country’s gross domestic output grew by 8.7% in the fourth fiscal quarter as agriculture grew 0.7% and manufacturing cruised at 16.3%, data released on Monday showed.
• The numbers emboldened finance minister Pranab Mukherjee to say the economy would grow by more than 8.5% in the current year. But his optimism is not shared by many others.
• In the three months to March 2010, gross fixed capital formation—a measure of investment activity—grew 34.6% quarter-on-quarter, indicating that investments have begun to pick up. However, analysts suspect that these investments are largely by the government in infrastructure sectors and will like to see private players stepping in.
• Take a look at this graphic in this context.
• India gets help in piracy fight
• A number of developing countries from East Asia, Latin America and Africa have extended their support to India in its fight against an attempt by developed countries to narrow the difference between fake medicines and counterfeits.
• Counterfeits are drugs produced in violation of intellectual property agreements. These are different from fake medicines.
• WHO launched IMPACT in 2006 -- International Medical Products Anti-Counterfeiting Taskforce -- which allegedly represents the interest of multinational pharmaceutical firms. WHO, in partnership with IMPACT, has been actively considering using the term counterfeit to define fake and spurious medicines.
• Developing countries including India argue that if counterfeits are confused with fake medicines, it could result in more seizures across the globe and affect supply of genuine and cheap medicines to the poor.
• India had submitted that its genuine generic medicines were seized at European ports because EU followed intellectual property laws that went beyond the international Trips agreement and this should not be allowed to become the norm.
• The attempt by the developed countries could adversely affect exports of generics from India worth Rs 30,000 crore annually.
• Countries such as Thailand and Indonesia supported India’s position at the recent world health assembly, an annual gathering of 193 members of the World Health Organisation (WHO), in Geneva.
• IT Department reiterates its stand in Vodafore Hutch-Essar deal
• Vodafone had approached the High Court and later the Supreme Court of India after the department sent them a show-cause notice, to its Netherlands headquarters in September 2009, asking it to explain why tax was not deducted as it had paid $ 11 billion to acquire controlling stake in the Indian company. Then Vodafone approached the High Court and the IT Department won the case there. When the company approached the Supreme Court, it was directed to return to the I-T department to sort out the issue of tax jurisdiction.
• Now, the IT department has reiterated its stand that tax is leviable on the transaction.
• The issue is whether the Indian tax regime has jurisdiction to claim tax on a transaction that took place outside India between two overseas parties. The transaction was structured in a way that Hong Kong-based Hutchison International sold its stake in Hutch Essar to British company Vodafone through the medium of a Mauritius-based company.
• The premise is that the ownership of Indian company Hutch-Essar changed hands because of a transaction that took place outside India. As a result the Indian authorities have every right to claim capital gains tax from the profit made from the investment in India.
• If the I-T authorities have their way, the tax payable by the telecom major could be over $2 billion according to the revenue authorities’ earlier tax demands.
• About offshore banking units
• This is an ET in the Classroom column that explains what all we need to know about OBUs. A good read.

International

• The Queen wants a pay rise.
• The British Queen is seeking a multi-million-pound ‘pay rise’ for the first time in 20 years to carry out her public role. Buckingham Palace officials have demanded a seven-figure increase in the Civil List—the annual £7.9 million which the Queen gets from Parliament to maintain spending on state duties, the Daily Mail reported. The £7.9-million grant covers the cost of the official royal household, from banquets and furnishings to housemaids and footmen.
• But the Queen’s official budget is estimated to be overspent by £6 million a year. It is being covered by a £35-million emergency reserve, expected to run out by 2012—the Majesty’s Diamond Jubilee Year.