Current Affairs Oct. 2009

16.10.2009 Politics & the Nation • Swiss to amend laws to accommodate Indian concerns o Switserland has reportedly said that it will amend its laws to accommodate India’s demand for providing it with the list of tax evaders who have parked money in its banks. o Swiss Law does not permit fishing expeditions, or indiscriminate trawling through bank accounts in the hope of finding something interesting. It began disclosing the identity only after they were presented with evidence of terror finance after the 9/11 attack. • Obama knows how to reach out to various peoples of the world o Take a look at this snippet! He is celebrating Diwali in White House! o He is not preaching -- either conversion to other religions, beliefs or faiths -- he is just practicing what he has been preaching -- tolerance and accommodation to other beliefs and faiths. o This is what Gandhiji has said while he was alive. If only a majority of us could follow Gandhi, the way Obama could. • Peace prize or not, we get to learn more about the way Nobel Peace prize is awarded o Take a look at this news report, which is reporting about the objections to peace prize for Obama. o It is perhaps the first time in recent times that it is being drilled in everyone's mind that it is Norwegian Parliament which declares the peace prize. Many of us would have otherwise been blissfully attributing it to Sweden. • Pakistani chickens come home to roost o Take a look at this news report about Pakistan being under seize from within. Terrorists have been relentlessly striking at it with impunity. This is what happens when you groom terrorists. They will one day turn against you. This has what happened to the US in Afghanistan. This is what is happening to Pak now. It has happened to us in India too. Remember Bhindranwale and the LTTE? • An excellent insight into China's claims over Arunachal Pradesh o Take a look. This is from Brahma Chellany a noted strategic affairs expert. Finance & Economy • Know the Sivakasi of the World? o We all know that Sivakasi in Tamilnadu is the place from where we all get our firecrackers for every Diwali. The town makes eight out of every 10 crackers made in the country. o But it is Liuyang city (China) — which produces 90% of the world’s firecrackers. o More on Sivakasi:  Historians say Sivakasi’s association with China dates back a long time. Ever since the British imposed curbs on Indian fireworks factories in Kolkata after the first war of independence, India has been importing crackers from China.  The Nadar community, which built Sivakasi’s matchwork factories, embarked on the firecracker business by importing crackers from China in the early decades of the 20th century. An industry cluster started getting built around Sivakasi as Shanmugam Nadar and Iya Nadar set up the first units in late 1930s to combat import restrictions during the Second World War.  Today, Sivakasi is home to around 450 firecracker units employing 40,000 people, and providing livelihood to another 1 lakh. Revenues from cracker sales last year were Rs 1,500 crore, which could take a 30% hit this year because of sluggish demand. • What is the estimated potential of our country in so far as crude and natural gas are concerned? o The estimates suggest that 1 billion tonnes of crude and a trillion cubic metres of gas may be in situ in sedimentary basins. • Why is the NELP VIII round a failure? Can you identify some causes? o First, the fiasco over tax exemptions on the production of natural gas. While there were no questions over tax exemptions till two years back, now it was stated that all investments made so far (till 2008) will not be eligible for tax breaks if the exploration results in the production of

1

natural gas. Although tax sops will be available for new finds irrespective of oil or gas, investors are unsure of how long it would continue. o Then there is the flip-flop over the terms in the production-sharing contract and the various interpretations to the tenets of the contract over the last one year has raised far too many questions on the contractual sanctity and India’s regulatory regime. o Thirdly, the new Production Sharing Contract (PSC) has reduced the oil company to a mere contractor. It mandated that the oil company will have to sell as per the government’s utilisation policy and at prices approved by the government. This is in sharp contrast with the previous PSCs that were more liberal and market friendly. o Last but not the least is the impact of the ugly legal battle between two of India’s largest corporate groups — RIL and Anil Dhirubhai Ambani Group — that has raised some fundamental questions over regulatory issues and the role of the government. o If you want a greater elaboration on the above points, read today's op-ed in ET. • On chaos theory o Chaos theory, more commonly known as the ‘butterfly effect’, revolves around the notion of vast consequences emanating from a rather small action. o The 1972 paper read at a US science meet, which first made this idea popular, was titled “Does the flap of a butterfly’s wings in Brazil set off a tornado in Texas?” The idea being that the flapping of those wings might alter or affect the course of a storm far away. Science & Technology • What are the risks associated with the introduction of GM foods? What exactly needs to be done to mitigate these risks? o Three possible consequences of GM foods present rational risks: allergic reactions, gene transfer and outcrossing. The first is self-explanatory. The second one relates to the possible transfer of the ingested new genes to the bacteria inside the gut leading to unforeseen consequences like resistance to antibiotics. Outcrossing is jargon for GM crops getting mixed up with traditional crops. All GM foods are extensively tested to prevent and control for these risks. o Only when it is ensured after repeated trials and tests that these risks are minimal or have been mitigated is approval given for introduction of a GM crop or foods based on GM crops. o The problem in India is the general lack of faith in the integrity of the testing and approval process. Even if the final committee that grants the approval is above board, suspicion lingers that the data they are presented with have been tampered with. People fear that agribusinesses can influence decisionmakers in high places, who could, in turn, make science pliable in the mouths of weak-kneed scientific personnel. This is a systemic issue that goes beyond particular ministers and officials. Reforming this is the key to introduction of GM foods. o (Answer is an excerpt from today's ET editorial.) Language lessons • chickens come home to roost: Idiom o earlier actions come back to cause trouble for a person; haunt • cringe: Verb o Draw back, as with fear or pain; Show submission or fear • shrink: Noun o A physician who specializes in psychiatry o Such worries present healthy commercial opportunities — for the shrink, for science fiction publishers and the seminar/protest circuit, respectively — but pose no serious threat to human well-being.

19.10.2009 Politics & the Nation • Justice Dinakaran: End of the road? o Charges of land encroachment against Justice P D Dinakaran, Chief Justice of the Karnataka High Court, have been endorsed by an investigation ordered by the Supreme Court, dealing a serious blow to the prospect of his elevation to the apex court.

2

It is reported that the district collector of Thiruvallur near Chennai, found Justice Dinakaran to have encroached 197 acres of public land around his property in Kaverirajapuram village. In his report to the SC, the collector has also held that the encroachments by Justice Dinakaran have blocked access to government land. o Now the Chief Justice of India Justice K G Balakrishnan and other judges who form the Collegium, may be considering to withdraw their recommendation for Justice Dinakaran’s elevation in the light of the damning findings of the Thiruvallur collector. o The Supreme Court Collegium headed by the Chief Justice of India comprises Justices S H Kapadia, Tarun Chatterjee, Altamas Kabir and R V Raveendran. • US plane carrying marines grounded o An American aircraft carrying 205 US marines was forced to land at Mumbai airport on Sunday morning for allegedly violating the Indian airspace. The chartered North American Airlines Boeing 767 was on its way to Bangkok from Fujiriah in the UAE. o The transport aircraft reportedly had civilian clearance from the DGCA to fly over the Indian airspace but it was carrying military personnel, for which the aircraft should have obtained Air Operation Routing clearance (AOR), needed for a military aircraft. o After remainining grounded from 7.52 am, the IAF allowed the US plane to resume its flight late in the evening. Finance & Economy • Change in India's stand on climate talks? o India seems to have begun to shuffle its feet on climate change negotiations. Reportedly, the Environment minister Jairam Ramesh, appears to have suggested to the PM that India should junk the Kyoto Protocol, delink itself from G77 — the 131-member bloc of developing nations — and take on greenhouse gas emission reduction commitments under a new deal without any counter guarantee of finances and technology. o This comes just after he reportedly wrote to the PM suggesting India permit strict external scrutiny — as is done under IMF and WTO — of the mitigation measures it takes at its own cost. o If accepted by the government, the minister’s proposal will radically shift India’s stand from its position on climate negotiations that governments of all political hues have backed since 1990, and which was defended robustly as recently as at the UN talks in Bangkok earlier this month. o In his October 13 letter to the PM, Ramesh argues for a deviation from the Kyoto Protocol under which only the developed countries — listed in Annexure 1 — are required to take obligations for emission cuts, saying that it would also help in a better alignment with the US. • Country's largest flyover to be inaugurated today o The country’s longest flyover P V Narasimha Rao Expressway will open for traffic from today. Chief minister K Rosaiah will inaugurate the flyover at 4.30 pm. o The four-lane 11.633 kms expressway provides faster access to the Rajiv Gandhi International Airport. o The late CM Y S Rajasekhara Reddy laid the foundation stone for the flyover on March 16, 2006. According to schedule, the project should have been completed within 26 months, but due to various reasons, it got completed in September 2009. Nearly, Rs 600 crores was spent on the flyover. • NTPC to raise power tariff due to hike in coal prices o NTPC is set to hike the rates charged for supplying power to the distributors. The proposed move comes following an 11 per cent hike in coal prices by Coal India, which in turn would push the power generation expenses higher. o Out of a total of 30,000 mw power generated by NTPC, 26,000 mw comes from coal based plants. • Henceforth will it be monthly inflation data? o The government is likely to clear on Monday a proposal suggesting release of inflation data on monthly basis and not every week for bulk of the items tracked by the Wholesale Price Index (WPI). o

3

The Cabinet Committee on Economic Affairs (CCEA) is expected to take up the commerce and industry ministry's proposal, which was finalised on the recommendations of a working group headed by Abhijit Sen, member, Planning Commission. o In the first phase, data of only manufactured items, which have a weightage of 63.75 per cent on the WPI, would be released on the monthly basis. On a parallel track, weekly inflation figures would be given for the food articles and fuels. • Debit card usage surges ahead; while credit card usage slows down o Payments made through debit cards rose over 40% to Rs 9,911 crore in the first five months of this fiscal. o However, credit card transactions have slumped by more than 12% in the first five months of this fiscal to Rs 24,427 crore as as against Rs 27,834 crore registered last year for the corresponding period. o Credit card usage till the end of the last fiscal was to the tune of Rs 65,355 crore. Science & Technology • GEAC approves Bt Brinjal o In a significant first for India, the Genetic Engineering Appraisal Committee, the country’s biotechnology regulator, has deemed Bt brinjal suitable for consumption. That clears the path for it to become the first genetically modified (GM) food crop to be commercially cultivated. o Bt brinjal, and by extension all GM food, has been at the centre of a fierce debate over the safety and utility of GM food products. Criticism has focused on the assumption that altering the genetic make-up of a food item is bound to have consequences, which could prove to be deadly. o No adverse effects on health have been reported for any transgenic product introduced anywhere in the world so far. GM food has also been found to have the same nutritional value as unmodified food by various studies. o The Food and Agriculture Organisation, a UN agency, has warned that worldwide food production needs to increase by a staggering 70 per cent by 2050 to prevent mass starvation. Miscellany • Hank Ketcham: He is the creator of the cartoon character Denis, the menace. Language lessons • bugbear: Noun o An imaginary monster used to frighten children; An object of dread or apprehension o eg: In his letter, Ramesh emphasizes his concern about India being seen as a bugbear for the developed countries in the climate negotiations. • shenanigan: Noun o Reckless or malicious behaviour that causes discomfort or annoyance in others; The use of tricks to deceive someone (usually to extract money from them) o eg: That Dennis drives his parents crazy is beyond doubt – the Mitchells constantly wear either a harassed or a bewildered look thanks to their offspring’s shenanigans. • nettle: Verb o Cause annoyance in; disturb, especially by minor irritations o

20.10.2009 Politics & the Nation • China building a dam across Brahmaputra? o The Congress-led UPA government has come under enormous pressure to act on reports about China’s plans to build a dam on the river Brahmaputra in Tibet. With Assam chief minister Tarun Gogoi expressing serious concern over the development, the issue likely to become a political hot potato for the Congress state government unless the Centre is seen to be making efforts to stop the construction of the dam. • Situation in Pakistan very grim o With the Taliban, which has thrown the Pakistani security establishment in a tizzy by executing as many as six major terror attacks within the country in the last fortnight, threatening to expand

4

its zone of influence by bringing India within its jihadi framework, defence minister AK Antony warned that the situation in the western neighbourhood was “very grim and serious”, but asserted, at the same time, the country’s readiness to meet “any challenge”. • IIT entrance to have more weightage for Class XII result o Finding that Class XII exams and their results are becoming irrelevant by the day because of the excessive emphasis placed on the IIT and other entrance exams, the Centre decided to set up two committees to look into the issue. o The first, headed by Atomic Energy Commission chief Anil Kakodkar, will draw up a vision statement for IITs. The second committee will comprise department of science and technology secretary T Ramasami, department of biotechnology secretary M K Bhan and CSIR director general Samir Brahmachari. This will focus on the curriculum. o This decision to make the class XII exam relevant to the IIT admission process was taken at the meeting of the IIT council on Monday. Finance & Economy • New inflation index will debut on Nov 14 o The main barometer of inflation will debut in its revamped form on November 14. The updated wholesale price index (WPI), which will be made available monthly, instead of every week now, will have a wider and updated basket of products and a more recent base year -- 2004-05. o The new WPI will take into account price movements in more than 850 articles as against 435 commodities in the current index, which was last revised in April 2000. o India has one wholesale price index which is released weekly with a time lag of two weeks. There are three consumer price indices for industrial workers, rural workers and farm labourers, with data releases every month. o Though WPI is the key measure of inflation in India, it is not considered reliable as in any given week the prices of only about 16%-20% of the products included in the basket are updated. This is largely the reason that provisional figures are often revised sharply when more data becomes available. The monthly frequency of the new index will make the data more reliable. o Economists have long voiced the need for a good consumer price index (CPI) as the main measure of inflation. The CPI is the official inflation indicator in major economies such as the United States, Japan, China and the euro region. While the WPI measures changes in price levels for businesses, it cannot serve as an indicator of inflation at the retail level. o Take a look at this graphic; it is well worth our attention as it says figuratively what all we have noted above. • Who is Raj Rajaratnam and why is his arrest in New York making ripples in Indian and South Asian markets? o He is reportedly the richest Sri Lankan in the world. He has just been arrested on charges of insider trading in the US along with two others -- Anil Kumar, a McKinsey & Co director based in Silicon Valley, and Rajiv Goel, a director of strategic investments at Intel Capital. Besides, he is the founder of New York based hedge fund Galleon which has substantial investments all over the world especially in South Asia. o Edelweiss Capital is Galleon’s fourth-largest shareholding after eBay, Apple and Google. The fund’s other investments in India include that in Pipavav Shipyard (0.3% of equity share capital) and Reliance Telecom Infrastructure (RTIL), both pre-IPO investments. o Since Galleon normally invested around $5-25 million where a good book was built during an IPO, some bankers felt that investors in the hedge fund would now look at redemption and this could create pressure on the fund to liquidate its investments. o Read this news story and make out what you can. Don't you • Understanding the consumption patterns in the country o An excellent analysis on the subject appeared in today's ET. Take a look. • Here is an excellent primer on socio economic classification o Take a look at this graphic. • UAE is top export destination for Indian goods o United Arab Emirates has become the top destination for Indian exports in fiscal 2009 (AprilMarch), displacing the US from the No 1 rank on account of a sharp rise in gems and jewellery exports.

5

The country’s total exports to the UAE grew by a phenomenal 53% to $23.92 billion in FY09 from $15.63 billion in FY08 even as exports to the US remained almost flat at $20.82 billion, according to the latest commerce ministry data. Notably, exports to the Gulf country were even higher than the combined exports to China and Hong Kong, which added up to about $16 billion during the fiscal. o Take a look at this graphic for knowing some other important export destinations for Indian goods. Science & Technology • On rare earths o It is an interesting story. Many of you might remember rare earths as some of those elements that are tucked away somewhere in the periodic table that we read as part of our Chemistry classes. Is there a need to focus on them? If so, why? To get a comprehensive picture, do read this piece that appeared in today's op-ed. But some excerpts for us: o Rare earths are essential ingredients in mobile phones, video game machines, computers and even green technologies. o For example tantalum, a shiny, blue grey metal, can make batteries smaller even while storing more power. It also goes into modern nuclear reactors and lethal smart bombs. o Tiny amounts of two other rare earths dysprosium or terbium might soon be used in electric cars: they let batteries work at high temperatures. o For many years, India was the world’s largest producer of these rare minerals, mined from coastal sand. Till 1948, India was the world’s largest producer of rare earths. Today, it’s nowhere. India now is largely a coal and iron ore mining country. o Now, one country controls 95% of these minerals of the future: China. o If India has to become a significant player in tomorrow’s technologies, it needs to draw up special rules for rare earths. These rules should insulate investors from the clutches of state politicians and bureaucracies. And it’ll require New Delhi to draft special provisions for rare earths in its draft mining legislation. • More new planets found outside solar system o Astronomers have found 32 new planets outside the solar system, adding evidence to the theory that the universe has many places where life could develop. o The announcement increased the number of planets discovered outside the solar system to more than 400. Medicine • India heading for diabetes explosion o India leads the world in the looming epidemic of diabetes, the 20th annual World Diabetes Congress of the International Diabetic Federation (IDF) was told here on Monday. o In its annual report, the IDF said India currently has the highest number of 50.8 million people suffering from diabetes, followed by China with 43.2 million and the US with 26.8 million. The report projected 58.7 million diabetes cases in India by 2010 - almost 7 percent of its adult population. o By 2030, over 8.4 percent of the Indian adult population will suffer from diabetes, thanks to the increasing life expectancy and urbanization, the report said. o There are estimated to be 285 million diabetes cases worldwide, accounting for seven per cent of the world’s population. o Diabetes, along with cardiovascular disease, cancer and chronic respiratory diseases, accounts for 60 percent ff all deaths worldwide. Language lessons • Rolodex: Noun o (trademark) a desktop rotary card index with removable cards; usually used for names, addresses, and telephone numbers o eg: "a news reporter has to have a good Rolodex" • Blighty: Noun o A slang term for Great Britain used by British troops serving abroad • Beeb o

6

• •

o It stands for the BBC invective: Noun o Abusive or venomous language used to express blame or censure or bitter deep-seated ill will diffidence: Noun o Lack of self confidence

21.10.2009 Politics & the Nation • Two ministers bite the dust o Just a day after the position of these two ministers on some crucial issues is known to the public, they were made to retract their positions. The ministers in question are Jairam Ramesh and Kapil Sibal. o Take a look at these two reports. On Jairam Ramesh. On Kapil Sibal. Finance & Economy • Govt. mulling offer of shares at a discount to lure back investors? o The government is reportedly planning to give small investors a 5% discount when it sells shares in three state-owned companies, hoping to lure individual investors who have shown lukewarm interest in two previous public issues by government firms. o Retail investors in the follow-on public offers of Rural Electrification Corporation (REC) and NTPC and the initial public offer of Satluj Jal Vidyut Nigam (SJVNL) due in the coming weeks will likely be allotted shares at a discount. o All companies must reserve 35% of the share issue for retail investors, 15% for high net worth individuals and the rest for institutional investors. o This is not the first time that such discounts are offered to retail investors. o In 2004, the government had given a 5% discount to retail investors when it sold shares in ONGC, Gas Authority of India, IPCL, Dredging Corporation and IBP. o In 2007, ICICI Bank sold shares to small investors at a 5% discount, becoming the first private company to do so. Retail investors were given a similar discount by Reliance Power during its initial share offering last year. • Why should you avoid being an independent director on the boards of companies? o Look at the troubles and travails of one such indedendent director; a famous one at that: Mr. Nimesh Kampani. He made a name for himself in corporate India. o The police had instituted cases against the KS Raju-promoted Nagarjuna Finance in December last year for its inability to repay public deposits worth Rs 100 crore collected in 1997-98. Hyderabad police had arrested Mr Raju, the chairman of Nagarjuna Finance, and PK Madhav, CEO of Maytas Infrastructure and member of the Nagarjuna board, in December last year. Both were later released on bail. o The police had also filed a criminal case against Mr Kampani. He was an independent director on the board of this company for about year between 1998-99. He had no connection with the company ever since. The police actions has been widely linked in media coverage to Mr Kampani’s role in arranging funding for Eenadu, a local media group. This was allegedly objected to by the Andhra Pradesh administration. It has also raised question about the culpability of independent directors in case of offences committed by a company. o In spite of his plea that he was in no way involved with the alleged defaults or offences committed by Nagarjuna Finance the AP police were on the lookout for him and, both the Supreme Court and the Andhra Pradesh High Court had rejected Mr Kampani’s petition for an anticipatory bail. In his petitions, Mr Kampani had opposed custodial interrogation. o Mr Kampani’s travails has shocked India Inc. Bankers and industry captains earlier told ET that Mr Kampani was wrongly targeted by the AP police as he had resigned from Nagarjuna Finance 10 years ago. Independent directors, analysts argue, have become wary about sitting on the boards of companies after Mr Kampani’s troubles.

7

•

When we made a mention about lead indicators sometime back, many among you were confused and some even at a total loss as to how the weight of ships could possibly indicate something about the state of the global economy. o Thinking that we have bitten more than what we can chew and with a view to not to compound the matters further, then we decided to let the issue die a slow death. In any case that would have made an excellent snippet of info in an MBA class or MA Economics class. o But now there is a leading indicator making its appearance on Indian economics firmament. Take a look. It will be interesting to watch it progress over the next few years. • IT majors find government business a tall order o As India's top tech firms TCS, Infosys and Wipro intensify efforts to address the lucrative government outsourcing market, they realise that project delays, frequent changes in leadership and increased public scrutiny make it tougher to execute public sector projects. o Indian public sector enterprises, such as India Post and Indian Railways, along with other government agencies, are expected to spend nearly $2 billion over the next 12 months on outsourcing of different processes and software services. o However, potential project delays like in the case of TCS-Indian passport services are among concerns looming large, even as Indian tech firms continue to remain bullish about the $2billion Indian government IT-outsourcing market this year. • GST to rope in even small manufacturers into the tax net o A host of small-scale producers could come in the tax net under the proposed goods and services tax (GST) as the draft being examined by states seeks to impose the new levy on units with a minimum annual turnover of Rs 10 lakh. o At present, all taxes and levies have separate threshold levels—Rs 1.5 crore for excise levy, Rs 10 lakh for service tax and individual state limits for valueadded tax (VAT), such as Rs 2 lakh in Karnataka and Haryana to Rs 50 lakh in Punjab. GST will replace all these taxes, with a likely uniform exemption limit of Rs 10 lakh. o The low threshold limit for GST will bring more goods producers and service providers under the tax net and, conversely, a wider base will help keep the rate lower and make it more efficient. • In spite of a relatively non-benign CPI based inflation, why is there no case for tightening monetary policy? o For the faint hearted the question may look very esoteric. But a read of this article makes the issue very clear. An excerpt which answers our query: o It is true that consumer price index remains uncomfortably high. But disaggregated data does show that it is dearer food prices — along with higher, imported crude oil costs — that’s keeping the increase in the CPI much too buoyant and in the double digits. The point is that the inflationary trend remains very much supply-induced. Note that producer-price inflation, the increase in the wholesale price index, remains rather subdued — barely in the 1% range y-o-y. It indicates that the general increase in prices is not really demand-driven. In a demand-led price-rise scenario, there can be a fit case for monetary tightening. But when it’s rigidities in supply that’s driving up prices, tighter monetary policy may not so much bring down prices as decelerate overall growth. Personality: Kenneth Feinberg • He is the pay czar appointed by the Obama administration to oversee the compensation of employees at companies receiving billions in federal assistance. According to news reports, Feinberg has broad discretion to determine the salaries and bonuses of the five most senior executives and 20 most highly paid employees at each of these companies. Language lessons • on the same page: slang o When you’re on the same page as someone, you have an equal level of understanding about a situation. You have similar ideas about what needs to be accomplished. o When working with a group of people, it is important for everyone to be on the same page. Everyone should know what needs to get done and when it needs to get done. If people aren’t on the same page, problems arise.

8

23.10.2009 Politics & the Nation • Why is the CBI raiding the DoT offices? o The issue is possible corruption in the allotment of 2G licences last year. The Central Vigilance Commission suspects a criminal conspiracy between senior officials of the telecom department and some individuals and companies in the award of 2G spectrum licences for mobile phone services to eight firms. Hence it had asked the CBI to dig deeper into the issue. o The 2G licences, which came bundled with start-up spectrum, were awarded on a first-comefirst-served basis early last year. The cut-off date for applications was controversially advanced, which resulted in several companies losing their eligibility for the licence. A pan-India licence was given for Rs 1,651 crore (about $400 million), a price fixed in 2001. Datacom, Swan, Unitech, Loop and STel were among the companies that were awarded the 2G licences. o Even before starting operations, Swan offloaded a 45% stake to UAE’s Etisalat for $900 million and Unitech divested up to 67.25% in its telecom venture to Norway’s Telenor for $1.1 billion. o The manner in which the licences were allocated and the sale of stakes by Swan and Unitech caused a political uproar, with opposition parties alleging that spectrum was given away at throwaway prices and allowed the companies to rake in windfall profits. o Read the full story here. • How to tackle the Naxal menace? o It is very rare for politicians, especially of the Congress party, to have the courage (or should we say the indulegence of the GoP) to propound policy measures to tackle any issue. That is best left to the Mantris in the government, with the caveat that if what they propound is not liked by the GoP, it will be vetoed. Digvijay Singh is one such Congressman who commands that respect and/or shown that indulgence so that he can air his views publicly -- that too in a newspaper article. Take a look at some of his prescriptions. They are well worth our attention. Don't miss his narrative also. It well worth a read. It is here. Finance & Economy • Infosys's Narayana Murthy starts a PE fund o Infosys Technologies co-founder and chairman NR Narayana Murthy has sold company shares worth around $37 million (Rs. 174.3 crore) to set up a venture capital fund for incubating Indian start-ups. A statement issued by Infosys said the venture capital fund would encourage and support young entrepreneurs having brilliant business ideas. It further said that it will primarily invest in India and may, on a case to case basis, consider investing overseas. o So, if you have brilliant business ideas, you know where you should air them now. International • China's economy registers 8.9% growth! o China's economy expanded at the fastest pace in a year as stimulus spending and record lending growth helped the nation lead the world out of recession. Gross domestic product rose 8.9% in the third quarter from a year earlier, the statistics bureau said in Beijing on Thursday. Separate reports showed industrial production and retail sales accelerated in September. • 15th ASEAN summit under way at Hua Hin, Thailand o The fifteenth ASEAN Summit opened with the theme of “Enhancing connectivity, empowering peoples”. The Summit is expected to focus on issues relating to the vision of ASEAN as a Community of Connectivity, a Community of People. Also to be raised during the Summit are challenges that the region has to face, including food and energy security, climate change, pandemics, natural disasters and the financial and economic crisis. Language lessons • skulking: Noun o Evading duty or work by pretending to be incapacitated o Verb: Lie in wait, lie in ambush, behave in a sneaky and secretive manner; Avoid responsibilities and duties, e.g., by pretending to be ill; Move stealthily

9

•

o eg: "The lonely man skulks down the main street all day" lug: Verb o Carry with difficulty; Obstruct o eg: Right now, Rahul Gandhi’s effort to sensitise the party to the lot of the deprived has resulted in farce, with loyal party leaders lugging what they consider to be the bare necessities of material comfort along with them when they follow their leader on his poverty trail.

23.10.2009 Politics & the Nation • Why is the CBI raiding the DoT offices? o The issue is possible corruption in the allotment of 2G licences last year. The Central Vigilance Commission suspects a criminal conspiracy between senior officials of the telecom department and some individuals and companies in the award of 2G spectrum licences for mobile phone services to eight firms. Hence it had asked the CBI to dig deeper into the issue. o The 2G licences, which came bundled with start-up spectrum, were awarded on a first-comefirst-served basis early last year. The cut-off date for applications was controversially advanced, which resulted in several companies losing their eligibility for the licence. A pan-India licence was given for Rs 1,651 crore (about $400 million), a price fixed in 2001. Datacom, Swan, Unitech, Loop and STel were among the companies that were awarded the 2G licences. o Even before starting operations, Swan offloaded a 45% stake to UAE’s Etisalat for $900 million and Unitech divested up to 67.25% in its telecom venture to Norway’s Telenor for $1.1 billion. o The manner in which the licences were allocated and the sale of stakes by Swan and Unitech caused a political uproar, with opposition parties alleging that spectrum was given away at throwaway prices and allowed the companies to rake in windfall profits. o Read the full story here. • How to tackle the Naxal menace? o It is very rare for politicians, especially of the Congress party, to have the courage (or should we say the indulegence of the GoP) to propound policy measures to tackle any issue. That is best left to the Mantris in the government, with the caveat that if what they propound is not liked by the GoP, it will be vetoed. Digvijay Singh is one such Congressman who commands that respect and/or shown that indulgence so that he can air his views publicly -- that too in a newspaper article. Take a look at some of his prescriptions. They are well worth our attention. Don't miss his narrative also. It well worth a read. It is here. Finance & Economy • Infosys's Narayana Murthy starts a PE fund o Infosys Technologies co-founder and chairman NR Narayana Murthy has sold company shares worth around $37 million (Rs. 174.3 crore) to set up a venture capital fund for incubating Indian start-ups. A statement issued by Infosys said the venture capital fund would encourage and support young entrepreneurs having brilliant business ideas. It further said that it will primarily invest in India and may, on a case to case basis, consider investing overseas. o So, if you have brilliant business ideas, you know where you should air them now. International • China's economy registers 8.9% growth! o China's economy expanded at the fastest pace in a year as stimulus spending and record lending growth helped the nation lead the world out of recession. Gross domestic product rose 8.9% in the third quarter from a year earlier, the statistics bureau said in Beijing on Thursday. Separate reports showed industrial production and retail sales accelerated in September. • 15th ASEAN summit under way at Hua Hin, Thailand o The fifteenth ASEAN Summit opened with the theme of “Enhancing connectivity, empowering peoples”. The Summit is expected to focus on issues relating to the vision of ASEAN as a

10

Community of Connectivity, a Community of People. Also to be raised during the Summit are challenges that the region has to face, including food and energy security, climate change, pandemics, natural disasters and the financial and economic crisis. Language lessons • skulking: Noun o Evading duty or work by pretending to be incapacitated o Verb: Lie in wait, lie in ambush, behave in a sneaky and secretive manner; Avoid responsibilities and duties, e.g., by pretending to be ill; Move stealthily o eg: "The lonely man skulks down the main street all day" • lug: Verb o Carry with difficulty; Obstruct o eg: Right now, Rahul Gandhi’s effort to sensitise the party to the lot of the deprived has resulted in farce, with loyal party leaders lugging what they consider to be the bare necessities of material comfort along with them when they follow their leader on his poverty trail.

26.10.2009 Finance & Economy • Know what is 'reverse innovation'? o It is the concept that is given a momentum by Jeffrey Immelt, the redoubtable CEO of GE. o It is the flow of knowledge and products from emerging economies such as India to the developed world. • A bit about global consumption patterns o Currently the American consumer spends about $10 trillion and 40% of the global population (China and India) spends about $2.5 trillion. Over the next 10 years this number will change dramatically. Global CEOs are readying for this. • Blue Revolution o It refers to the convergence of policy and action to execute a quantum jump in the generation of energy. Just as green revolution is to agriculture, blue revolution is to energy. o This is a term coined by Ravi Uppal, the MD of L&T Power. Given below are some snippets of info taken out from his article in today's ET. o Our per capita consumption of about 700 kwhrs gives us the unenviable distinction of being in the league of 40 LDCs. o The figures are revealing: global per capita consumption is about 2,600 kwhrs; developed nations enjoy a level between 10,000 and 20,000 kwhrs. China, whose total power generation capacity until mid-’70s was comparable with India’s, now boasts the world’s second largest power generation capacity — 700,000 MW. Its per capita consumption is currently around 2,000 kwhrs — three times as much as India’s, and set to surpass global averages by 2011. o Often government agencies claim that India’s peak time power shortage is about 12%. o Simple arithmetic tells us that if India were to match US energy consumption levels, our power generation capacity would need to grow to 3.6 million MW from the present level of a mere 175,000 MW. o India’s present coal-based generation is about 120,000 MW, which needs about 350 million tonnes of coal from its own mines. This capacity will need to go up at least three times, i.e., up to 1.2 billion tonnes to realise our target of about 400,000 MW from coal alone. o Germany and Spain draw over 25% of their generation capacity from wind alone. o Energy conservation if implemented can certainly contribute equivalent to about 150,000 MW of power. • Excise collections drop by 17%; cause for worry

11

o o

o

o

Excise mopup fell reportedly to Rs 8,180 crore in September 2009, while the collection in the April-September period slipped by 21% from the corresponding period last year to Rs 43,230 crore. Part of the decline in excise collections can be attributed to a cut in cenvat rate from 16% to 8% in the last financial by the government, as part of the stimulus measures to tide over the economic downturn. The government had, therefore, budgeted a 2% decline in excise collections for 2009-10, compared with the previous fiscal year. A strong 22% growth in excise collections in August had raised hopes of excise collections beating estimates. Factory output had grown at 10.2% in August 2009. The disappointing excise collections in September give reason to doubt the output growth data. Excise collections peaked at Rs 1,23,000 crore in 2007-08. In the four-year period before that the collections grew at a average compounded rate of only 8%, well below the annual 16% growth in manufacturing for the same period. Indirect tax collections from other heads also have been disappointing. Customs collections were down 32% in April-September, 2009 to Rs 38,810 crore and service tax mopup was down 4.0% to Rs 22,920 crore. Customs collections and service tax collections stood at Rs 7,600 crore and Rs 4,020 crore in September, showing falls of 32% and 15 %, respectively.

International • Hurrah over hummus o Lebanese chefs have prepared a plate of hummus weighing over two tonnes that broke a world record held by Israel — a bid to reaffirm proprietorship over the popular Middle Eastern dip. o Hummus is a thick spread made from mashed chickpeas, tahini, lemon juice and garlic; used especially as a dip for pita; originated in the Middle East o Tahini is a thick Middle Eastern paste made from ground sesame seeds Miscellany • Comic book hero Asterix turns 50 o Remember this character? It is created by Rene Goscinny and is illustrated by Albert Uderzo. But ever since the death of Goscinny, it was being written and illustrated by Uderzo. o Don't recollect the character? Take a look at the story and the accompanying graphic. We are sure, you will recognize the character immediately. Sport • Wasim Akram's wife passes away o Huma Akram, wife of former Pakistani cricketer Wasim Akram, died at the Apollo Hospital in Chennai on Sunday morning after battling for life for the past five days. o Huma was suffering from sepsis (an inflammation of several tissues, including blood leading to kidney failure) and was admitted to Apollo Hospital on Tuesday after developing complications mid-air while on her way to Mount Elizabeth Hospital in Singapore from Pakistan. o Our deepest condolences to Wasim Akram. • India loses first ODI to Australia; crowd boos Dhoni o India lost the first ODI with Australia by just four runs and the crowd which got restive booed Dhoni. But Dhoni took it in his stride. Let us hope the team will play with the same spirit and win the series. Language lessons • redoubtable: Adjective o Worthy of respect or honour; Inspiring fear • chagrin o Noun: Strong feelings of embarrassment o Verb: Cause to feel shame; hurt the pride of o eg: The circular that has now been withdrawn had been successfully interpreted, to the chagrin of the tax department, to put the income generated for a foreign company by a business process outsourcing unit in India outside the ambit of taxation in India. • queer: Verb o Hinder or prevent (the efforts, plans, or desires) of; Put in a dangerous, disadvantageous, or difficult position

12

• •

o eg: The global recession is having a queer effect in unlikely quarters. pummel: Verb o Strike, usually with the fist frat: Noun o A social club for male undergraduates

27.10.2009 Politics & the Nation • What ails Pakistan's policy towards extremists? o Take a look at today's ET editorial on the subject. It gives an excellent ringside view of the matter. An excerpt which we couldn't resist from giving: o Pakistan’s policy of differentiating between terrorists operating on its eastern and western flanks, and of elements within the security establishment still abetting the groups arrayed against India, was based on the fundamental misconception that different extremist Islamist groups would not, after a certain point, seek similar objectives. Tackling the Taliban in south Waziristan, thus, must be supplemented by going after the groups in south Punjab as well — and by initiating a far-reaching agenda of development and governance. • Now look at what Pakistan is saying!! o It accused India of backing the Taliban to create instability in Pakistan. This comes after revelations by western security experts that troubles within Pakistan were being fomented by the Tehrik-e-Taliban, Al Qaeda and extremist outfits operating from its soil. o These accusations only prove that Pakistan has few parallels in adopting over-the-top posturing. Finance & Economy • Govt. to clarify that FDI in multi-brand retail is not allowed o The need for such a clarification arose out of the revised FDI policy announced in February 2009. o Under the revised FDI policy, a joint venture company in which the Indian entity has more than 50% stake and the right to nominate majority of its directors will be deemed to be an Indian company. o If such a joint venture makes investment in another company, the entire investment in that company will be counted as Indian investment. Under the earlier policy, downstream investment by such a joint venture was counted as indirect foreign investment. o The new rules, it was argued, allow indirect entry into forbidden sectors such as multi-brand retail through layered corporate arrangements where initial foreign investment is kept below 50%. o Look at this graphic too for a bird's eye view of the issue. • Why are companies worried about your health? o Take a look at this story; it is an interesting read that points to the emerging trends in corporate India. o A global study published last year showed that companies can save $1.65 in healthcare expenses towards employees for every dollar spent on a comprehensive employee wellness programme. • RBI smells something fishy in TMB share transfers o Former McKinsey CEO Rajat Gupta, NRI businessman Ramesh Vangal and a string of foreign investors have, according to a Reserve Bank of India (RBI) report, “acted in concert” with local investors while buying shares in Tamilnad Mercantile Bank (TMB), an old, closely-held private sector lender. o The regulator has observed that the nonresident investors and some influential Nadar community members had “formed a group” when they acquired a substantial stake in the bank two years ago. Under banking regulations, RBI’s approval is mandatory for transaction of 5% or more equity of a private bank. If the shares change hands without regulatory clearance, RBI has the power to cancel voting and dividend rights on the bloc of shares.

13

The entry of top-flight professionals like Gupta and Vangal in TMB two years ago had caused ripples in banking circles. Mr Vangal, former president — Asia Pacific for PepsiCo Foods, is the founder of the Katra Group and is widely known as the man who led PepsiCo’s entry into India. Mr Gupta, the first India-born CEO of a US transnational, is also an independent director at Goldman Sachs. o To get an inkling of the power struggle that is going on for the control of TMB, do read this story that appeared in today's ET. Don't miss the last couple of paragraphs of the story. • India gets a pride of place in prosperity rankings o India fares better in overall prosperity, despite weak economic indicators, and is ranked 45th in the world, ahead of China’s 75th rank, according to indices compiled by global think tank, Legatum Institute. o The composite prosperity index is compiled based on nine parameters, including factors such as economic fundamentals, environment for entrepreneurship and innovation, access to quality edu c a t i o n , democratic institutions, governance, health, personal freedom, social capital and security. The index ranks world’s 104 countries, covering 90% of the world’s population. o Finland tops the Index, followed by Switzerland, Sweden, and Denmark; the United States is 9th and the United Kingdom is 13th. India is ranked 5th on measures of social capital, which reflects among others, the percentage of citizens who volunteer, give charity, help strangers, and who feel they can rely on family and friends. In this area, India is ahead of Finland, the US, and the UK which occupy the sixth, seventh and the 11th spot, respectively. International • US healthcare system wastes about $850 bn annually! o The US healthcare system wastes between $505 billion and $850 billion every year, according to a report. That’s one-third of the nation’s healthcare bill. o The waste results out of some of the most obvious inefficiencies, mistakes and fraud. o One example — a paper-based system that discourages sharing of medical records reportedly accounts for 6% of annual overspending. • France hopes to talk India out of the wine dispute o France hopes that it will be able to settle the dispute about import duties on wines and spirits with India to mutual satisfaction without going through the WTO dispute settlement mechanism. o In 2007 India had slashed the additional customs duty it charged on imported spirits, up to 150% of value of imports in some case, but simultaneously hiked the basic customs duties to 150% from 100%. o Prior to this, the European Commission had dragged India to WTO in 2007 seeking redress of its grievances which included what it called denial of ‘national treatment’ to liquor imported from Europe. o Under the national treatment rules, imported products have to be treated on par with domestic items. The WTO consultation process on the issue was suspended following New Delhi action on duty front in 2007. o EU is not completely satisfied because of the increase in basic duty. Moreover, major consuming states of imported wines such as Goa, Tamil Nadu and Maharashtra also impose special fee on these items. In 2007 EU exports of spirits to India amounted to about 57 million euros, while EU exports of wine totalled about 11 million euros. Miscellany • Do you know that nickname for English cricket fans? o They are called the "Barmy Army." • Do you know the exact geographical centre of India? o It is the Zero Mile marker at Nagpur. o

28.10.2009 Finance & Economy • The beginning of the end of easy money policy

14

Reserve Bank governor Duvvuri Subbarao on Tuesday ended the soft monetary policy — aimed at easing the credit crisis that kicked in last year — as he began the exit by withdrawing liquidity boosting measures, becoming the third central banker in the world to do so after Australia and Israel. An increase in lending rates is now imminent next quarter if consumer and asset prices remain high. Benchmark rates were, however, kept unchanged. o The governor withdrew a special facility making available funds from banks to mutual funds and finance companies, made it more expensive to lend to commercial real estate, forced banks to invest more in government bonds and asked lenders to set aside more funds for bad loans. The special facility was introduced last year to boost liquidity for firms in the financial sector after the credit markets froze. o RBI maintained the repurchase rate or repo rate — the rate at which the central bank provides funds to banks — at 4.75%; the reverse repo rate — the rate at which it takes funds from banks — at 3.25%, and the cash reserve ratio — the slice of deposits that banks have to mandatorily park with the central bank — at 5%. o But the central bank surprised the market in its choice of instruments to announce the exit of an easy money policy. The statutory liquidity ratio (SLR), which prescribes the percentage of deposits that banks are required to invest in government debt, has been raised from 24% to 25%, which Mr Subbarao said was a reversal of an exceptional measure. Last year, at the height of the global credit crisis, the central bank had lowered the SLR to ease credit flow to industry. o The apex bank also raised its forecast of inflation as measured by the wholesale price index to 6.5% by March 2010, from 5% earlier, as food prices continue to rise on short supply due to the worst-ever monsoon rains in more than a quarter of a century. o The RBI has introduced new financial instruments, which would fill the gaps in hedging needs and make the debt market thicker and more mature. They include floating rate bonds, repos on corporate bonds, credit default swaps, STRIPS, forex futures for currencies other than the dollar and some more. o It also contributed to the cause of financial inclusion by expanding the eligibility for becoming a banking correspondent and allowing banks to collect service charges. Excise duty reductions to be rolled back? o The finance ministry is reportedly exploring the possibility of a partial year-end rollback of the excise duty cuts doled out earlier in a bid to boost collections from this tax, which have been sharply lower in the first six months of the current fiscal. o The rate increase looks feasible because of the large unused cenvat credit available with industry. The manufacturing industry can offset the higher excise duty against the available cenvat credit, ensuring that greater excise levy does not cause prices to increase and thereby affect the economic recovery underway. o The government had halved the cenvat rate from 16% to 8% in stages beginning budget 200809 as part of the measures to stimulate demand after the global financial crisis caused hiccups in the Indian economy. Cenvat rate is the median rate of excise duty, levied on nearly 90% of manufactured goods. Country's DGH denied extension; new DGH to take over soon o OIL India director (operations) and former deputy director general in the Directorate General of Hydrocarbon (DGH), SK Srivastava, is likely to replace the controversial chief custodian of country’s oil and gas assets, VK Sibal. The change has been necessitated following the oil ministry’s refusal to extend Mr Sibal’s tenure. The incumbent DG has been in the news for his alleged proximity to a private oil firm and the connection is being probed by the Central Bureau of Investigation (CBI). o Oil ministry had earlier recommended a two-year extension to Mr Sibal till his superannuation from Oil India in January 2012 after his fiveyear contract as DG was coming to an end on October 31. The recommendation, however, required mandatory clearance by the Central Vigilance Commission (CVC), the top agency to prevent of corruption in the public services. Upon an investigation, CVC found prima facie evidence that Mr Sibal took undue favours from a private oil company and asked CBI to probe it further. o

•

•

15

The government established DGH in 1993 to act as an upstream advisor and technical regulator. Its prime function is to manage country’s hydrocarbon resources. • Restrictions on loan securitisation o You might remember what we noted on the subject on 22.10.2009. Compare that with what is reported today below: o Banks now have to wait for a year before they can splice loans into marketable securities and sell them to prospective investors. Originators of securitised debt will also have to retain a tenth of the total assets securitised, as part of the central bank’s objective to bring greater transparency to the market. o In securitisation, the originator bank repackages loans in the form of marketable securities. These are in the form of pass through certificates (PTCs) — like bonds — issued by a special purpose vehicle (SPV) holding the loan. An investor in securitised debt is typically the one who aspires for higher returns and has a stomach for higher risks associated with a loan. o ICICI Bank, Kotak Mahindra Bank, Yes Bank, Citi and Standard Chartered are some of the key banks active in the segment. o Market estimates place the size of the securitised debt market at close to Rs 40,000 crore in fiscal 2009. Entertainment • Jackson's "This is it" opens to big draws. o Are you a Michael Jackson fan? If so, you should not miss this news report on the subject. We love Jackson as well as Madonna; and are never tired of comparing their long but divergent music careers. We love them both in equal measure for what they are. Both of them are greats in their own ways. Language lessons • hornet's nest: Noun o A highly contentious or hazardous situation o eg: Jairam Ramesh has stirred the hornet’s nest by his outof-the-box thinking, arguing for a fresh approach to climate change negotiations. o

29.10.2009 Politics & the Nation • Indians get a place of pride within Microsoft o Read this story; it's really heart-warming. This is the stuff that dreams should be made of for the average Indian techie. o All the best wishes from all of us here for those in the reckoning to be at the top within Microsoft. • On Udham Singh o How many of you remember him? From the annals of our modern history. o For those of you with Indian History as an optional, perhaps he would not be a stranger. But for others, perhaps he is. o In short he is the guy who killed Michael O'Dwyer in 1940, for the latter was the Governor of Punjab when the Jallianwallah Bagh massacre took place in 1919. The killing was retribution for his role in imposing martial law and defending the perpetrators of the Jallianwalla Bagh killings at the end of the First World War, carried out almost exactly twenty one years later. o Take a look at this interesting story that appeared in today's ET about him. Finance & Economy • India tops global confidence charts o Global consumer confidence is rebounding, and in the US has risen for the first time since 2007, amid signs the world economy is picking up although spending is still restrained, according to a survey conducted by The Neilson Company. o Confidence was highest in India, followed by Indonesia and Norway, and was weakest in Japan, Latvia, Portugal and South Korea, although in Korea it had improved markedly. o Take a look at this graphic.

16

•

Gas based power generation goes up by a decent 35% o Gas-based power plants in the country have seen over 35% increase in power generation during the first half of the financial year over the year-ago period, buoyed by the flow of gas from Krishna Godavari (KG) basin from April this year. o Power from gas-based plants has contributed to nearly 13% of total power produced in the country during this period, against 9.5% last year. o The additional power generation by gas-based units corresponds to the consumption of about 16 mmscmd of gas. o Due to better supply of gas, a number of new gas-based power plants, with total capacity of 1800 mw, have also been commissioned in the last six months. o The aggregate capacity utilisation of the gas-based units measured in the form of plant load factor (PLF) shot up to 66.7% for the first half, compared to 55.7% during the year-ago period. Private sector companies, which account for a third of total 16,500 mw of gas-based generation capacity, have seen a higher increase in capacity utilisation as compared to the state owned firms such as NTPC. o All this surely augurs well for the country. • Foreign currency inflows encouraging o In the first six months of the fiscal, India received $14 billion in foreign direct investment (FDI), in line with government expectations. Total FDI inflow was $34.9 billion in 2008-09. o Foreign institutional investments, which were negative in the last fiscal, reached $15 billion in the first six months of the current fiscal. o In 2007, India put limits on external commercial borrowings and curbed the use of participatory notes to invest in the stock market as part of measures to stem the inflow of foreign capital. External borrowing rules were later relaxed but a sharp and sudden surge in capital inflow may tempt the government to review them again. Science & Technology • Demand for nuclear power engineers way up o In the context of India aiming at adding about 20,000 MW nuclear power generation capacity by 2020, there is a huge demand for nuclear power engineers. But these engineers are not easy to come by. The Indian engineering institutes are not well prepared to supply the kind of required numbers. It is said that the industry norm is a requirement of 1 to 1.4 person per MW. o Currently, the number of specialist nuclear post-graduates and PhDs from IITs and other universities is only about 50 people every year. In addition, Nuclear Power Corporation of India (NPCIL), the sole nuclear power generator in the country, has a capacity to train 250 people annually, while the department of atomic energy schools around 500-700 people every year. o The attrition in this sector is the lowest at about 3-5%, while it is as high as 10-12% in other streams of engineering. Leisure/Travel/Archaeology • Machu Picchu (meaning: Old Mountain) in Peru o This is an Inca citadel wherein the remains of complex agricultural terraces, workers’ huts, noblemen’s homes, sacred temples and scientific instruments survive. This has miraculously survived the onslaught of the marauding Spanish conquistadors of the 16th century. o Incas' is a civilisation that had stretched in its heyday to Bolivia, Chile, Ecuador and to the borders of Argentina and Brazil. o The site was first uncovered in 1911 by an American scholar-explorer, Hiram Bingham. But Bingham didn’t know he had found Machu Picchu: he thought it was Vilcabamba, final refuge of the Incas against the Spanish invaders. o Take a look at some of the photographs of this beautiful place here. Sport • Agassi admits to drug use o Read this story in The Hindu about it. What a pity? Language lessons • alcove: Noun o A small recess opening off a larger room • hacienda: Noun

17

•

o A large estate in Spanish-speaking countries; The main house on a ranch or large estate trilby: Noun o A hat made of felt with a creased crown

30.10.2009 Finance & Economy • Why would a rising US economy mean a fall in the value of the dollar? o Restored confidence would reverse the flight to safety in the wake of the Lehman collapse in September 2008. The funds that had fled emerging and other markets to take refuge back home in the US in a bid to minimise uncertainty are now likely to retrace their steps back to markets where the returns are higher. Just as the influx to safety had driven up the dollar, the funds’ redeployment across the globe would drive down the dollar. • On resident and non-resident asset holdings o It is an article that gives some interesting interpretation to the FEMA. Take a look. For our purpose it may suffice to note the following two points: o Sections 4 and 8 of Foreign Exchange Management Act (FEMA) don’t apply to them. They apply only to residents. These provisions impose restrictions on residents to acquire, hold, own, possess and transfer foreign assets, and require them to repatriate the proceeds of foreign assets to India. o Even residents can now freely maintain and operate foreign assets. For example, a resident can freely hold, own, transfer and invest foreign assets provided these were acquired or held or owned when he was a non-resident. This follows from Section 6 (4) of FEMA. • CCI frowns prepayment penalties by banks? o The Competition Commission of India is reportedly not happy with the way prepayment penalties are being levied on borrowers by financial institutions. o Let us get a peek into why the penalties are levied in the first place: o The business of a bank/ financial institution involves borrowing and lending and in the process the lending institution tries to run a matched balance sheet of assets and liabilities. Prepayments are essentially accelerated payments before the schedule. Any prepayment will disturb the assetliability match and in order to mitigate the negative impact of the prepayments the institutions/banks charge a prepayment charge. Everytime when there is a prepayment from the borrowers it will not be feasible for the banks to prepay its lenders as its loan agreement with lenders may either not permit it or permit it only with certain charges, notice period and may be subject to other conditions. • Centre not to force states to slash tax on imported spirits o You might remember that we noted about this issue as far back as 3rd June 2007 o Now it is reported that EU may take India to WTO if it fails to bring down taxes in some states. o According to the European Union, Maharashtra, Karnataka, Andhra Pradesh and Tamil Nadu have imposed local levies on imported liquor, which are much higher than those levied on locally produced liquor. This violates the WTO rule of national treatment that lays down that once imported, foreign products should be treated the same as domestically produced goods. o As per EU calculations, incidences of taxes on foreign liquor are as high as 200%-790% of the sale price, depending on the type of liquor and its price and also the state in which it is being sold. The four states identified by the EU as the ones applying high taxes, together account for more than half of India’s consumption of wines and spirits. In 2008, EU’s export of wine to India totalled € 8 million while its export of spirits was to the tune of 52 million euros. International • US out of recession ahoy! o THE US economy returned to growth in the third quarter after a year long contraction as government incentives spurred consumers to spend more on homes and cars. The world’s largest economy expanded at 3.5% from July through September. Household purchases climbed 3.4%, the most in two years.

18

Policy makers will now focus on whether the recovery, supported by government spending and tax credits, can be sustained into 2010 and generate jobs. The record $1.4 trillion budget deficit means President Barack Obama has little room for manoeuvre as he tries to keep unemployment from rising above 10%, while Federal Reserve policy makers wind down emergency programmes in a bid to prevent a surge in inflation. o Since the recession began in December 2007, the US has lost 7.2 million jobs. Payroll cuts peaked at 741,000 in January before falling to 263,000 job losses in September. The economy will likely grow at a 2.4% annual rate from October through December. GDP will also grow 2.4% next year and 2.8% in 2011, compared with an average of 3.4% growth over the past six decades. o What does the recovery in US economy mean for India? Take a look at the expert-speak. Language lessons • Real McCoy: Idiom o It is used throughout much of the English-speaking world to mean "the real thing" or "the genuine article" e.g., "he's the real McCoy". It is a corruption of the Scots "The real MacKay", first recorded in 1856 as: "A drappie o’ the real MacKay," (A drop of the real MacKay), and this is widely accepted as the origin. o eg: The United States surprised the world with strong growth between July and September, but a wary India is waiting to see if the recovery is the Real McCoy. • hubble-bubble: Noun o An oriental tobacco pipe with a long flexible tube connected to a container where the smoke is cooled by passing through water o

31.10.2009 Politics & the Nation • Indian American appointed to a key post in US o Suresh Kumar, who served as a special adviser to the Clinton foundation and was a news anchor in India from 1970 to 1985, has been appointed to a key administration post by President Barack Obama. o Kumar, known for his expertise of public-private partnership, has been nominated by Obama as Assistant Secretary of Commerce and Director General of the United States and Foreign Commercial Service in the US Department of Commerce. Finance & Economy • Take a peep into lawyers' fees and incomes o You will surely be startled. You will be left wondering whether you made a wrong choice sometime back. • How big a hole will the IOC depot fire in Jaipur in the insurance companies' books? o Estimates are putting the claim to be a full claim. Meaning that the claim will be filed for the entire facility. It is expected to be around Rs. 230 crores. But what is remaining beyond estimations for the present is the collateral property damage that the fire would have caused for others. The extent of such losses will be known only after some time. o To get a picture of the issue read this story. Science & Technology • Anil Kakodkar to demit office o Atomic Energy Commission (AEC) Chairman, Anil Kakodkar, will demit office on 30th November. o Kakodkar will also retire from the post of Secretary, Department of Atomic Energy (DAE) on the same day, when his term ends. o Kakodkar took over as Chairman, AEC from Dr R Chidambaram in November 2000 and was the first chairman to get three extensions in 2003, 2005 and 2007 in the history of India's nuclear programme.

19

Sport • Jeev Milkha Sing's record o Jeev Milkha Singh reaches another golfing milestone in his illustrious career as he becomes the first Indian to tee up at the 16-man World Matchplay Championships in Casares, Spain. o The reigning Asian Tour No 1 conceded his ankle injury has not healed yet but sounded confident of making it to the semifinal. • India seeded VI in World Cup T20 o India have been seeded 6th in next year's Twenty20 WC in the West Indies and will open their campaign on 1st May. India got a relatively easy first round as they have been placed in Group C along with South Africa and a qualifying team yet to be decided. o Defending champions Pakistan have got the top billing in the event followed by Sri Lanka and South Africa. o Hosts West Indies are seeded fourth, while England occupy the fifth place. Language lessons • wallop o Noun: A forceful consequence; a strong effect; A severe blow o Verb: Hit hard; Defeat soundly and utterly o eg: "Modi wallops Dhoni, Sachin on tax charts" • throw out the baby with the bathwater: Idiom o to lose the good parts when you get rid of the bad parts of something o eg: You can't close the airport because one airline has problems - that's just throwing out the baby with the bath water.

20