April 3, 2010

April 3, 2010                                                                                                                         

Courtesy: The Hindu

ü       The Supreme Court collegium headed by Chief Justice of India K.G. Balakrishnan has advised Karnataka High Court Chief Justice P.D. Dinakaran to go on leave.

·         Since December last, Justice Dinakaran has not been performing judicial work.

·         In his place, the acting Chief Justice of the Delhi High Court, Justice Madan B. Lokur, is being appointed Chief Justice of the Karnataka High Court.

ü       Design shortcomings in the reactor the U.S.' biggest nuclear supplier, Westinghouse Electric, intends to sell to India are likely to delay the conclusion of a commercial agreement by at least a year.

·         The U.S. Nuclear Regulatory Commission (NRC) is examining the modified reactor design submitted by Westinghouse after an assessment in October last.

·         The NRC was not convinced that three aspects of the design shield would withstand earthquakes and tsunamis of a certain magnitude.

·         It has held several public and closed-door meetings on the design changes to be introduced in the shield building (SB) of the AP1000 reactor.

ü       Henry Edward Roberts, a developer of an early personal computer that inspired Bill Gates to found Microsoft, died on Thursday in Georgia. He was 68.

·         Mr. Roberts, whose build-it-yourself kit concentrated thousands of dollars worth of computer capability in an affordable package, inspired Bill Gates and his childhood friend Paul Allen to come up with Microsoft in 1975, after they saw an article about the MITS Altair 8800 in Popular Electronics.

ü       The Press Council of India (PCI) may finalise a report on the “paid news” controversy at a meeting on April 26 and then forward it to the Election Commission.

·         It will also bring out a White Paper on “paid news.”

·         The Council, at a meeting early this week in Indore, considered a report prepared by a sub-committee on the issue, but could not come to a conclusion.

ü       The upcoming steel hub in Orissa's Jajpur district appeared to be a war zone on Friday, with policemen surrounding hundreds of tribals, who were opposing the construction of a common corridor road to give access to Tata Steel's six million tonne proposed steel mill.

·         Three days after police opened fire at the villagers, injuring about 50 men and women, fear has gripped all those living in the tribal hamlets.

·         The local police have arrested at least 29 men from the villages where people have been spearheading an anti-displacement agitation since January 2, 2006, when 14 persons were killed in police firing while opposing work on the project.

·         On March 28, the Jajpur Collector held a discussion with the villagers and the office-bearers of the Bisthapan Birodhi Janamanch, the organisation leading the agitation. But the authorities started work on the common corridor road the next day.

·         On the second day of construction work the villagers staged a protest. Police opened fire, lathi-charged the protesters and damaged their houses. The villagers ran for their life and hid in the nearby forests.

ü      The Indian Commercial Pilots Association (ICPA), the union that represents 560 Air India (AI) pilots has threatened legal action if the management of India's national carrier goes ahead with plans to recruit 40 trainee pilots for the airline's international operations.

·         In a letter dated March 31 and addressed to the Chairman and Managing Director of AI, the ICPA has stated that as per the Memorandum of Settlement signed in July 2006 between the union and the management, it was agreed that their pilots “would fly up to 90 hours per month and 240 hours in a quarter.”

·         However, the ICPA says that at present, the base average for pilots of the National Aviation Company of India (Indian Airlines) — the holding company of the erstwhile Indian Airlines — had “dropped to about 60 hours per month and in some cases as low as 40 hours.”

·         This, the ICPA says, is a clear indication that pilots belonging to the erstwhile Indian Airlines but who now fly under the AI banner after the merger of the two airlines, “were under-utilised.”

ü       Wheat procurement has commenced with a higher purchase compared to the corresponding period last year from Madhya Pradesh, Rajasthan and Gujarat.

·         The total procurement so far is to the tune of about 5.3 lakh tonnes compared to 2.05 lakh tonnes last year, with Madhya Pradesh contributing 5.29 lakh tonnes.

·         Procurement in Punjab and Haryana will begin after Baisakhi.

ü       New standards for carbon dioxide emissions from automobiles have been announced by the Obama administration, even as President Barack Obama came in for criticism from environmental groups for authorising a major offshore oil-and-gas drilling expansion.

·         According to a statement by the U.S. Environmental Protection Agency and the Department of Transport, the new emission standards could “potentially save the average buyer of a 2016 model year car $3,000 over the life of the vehicle and, nationally, will conserve about 1.8 billion barrels of oil and reduce nearly a billion tons of greenhouse gas emissions over the lives of the vehicles covered.”

·         The new rules aim to boost the Corporate Average Fuel Economy (CAFE). The current economy limit is 40 km per gallon.

·         Combined with the mandated greenhouse gas requirements, the new rules would raise mileage standards closer to 56 kmpg more quickly than a 2007 law that would achieve this level only by 2020.

·         According to reports, mileage standards for model year 2011 vehicles are 42 kmpg; however the new vehicle emissions standards will be phased in starting with the 2012 model year.

ü       Major steel producers Steel Authority of India Ltd (SAIL), JSW and Essar on Friday increased prices of their products by up to Rs. 2,500 a tonne due to rising input costs in a move that could make automobiles and consumer durables costlier.

·         World's sixth largest steel producer Tata Steel, however, said it has not yet taken a decision on raising prices.

ü       Unemployment remained at near-peak levels in March, with 15 million people, or 9.7 per cent of the labour force, out of work during the month, figures released by the Bureau of Labour Statistics on Friday showed.

·         However the BLS report also said that non-farm payroll employment increased by 162,000 — a large part of the addition to jobs coming from temporary help services (40,000 jobs) and health care (27,000 jobs).

·         Employment in federal government also registered an increase, reflecting the hiring of temporary workers for the decennial Census 2010 (48,000 jobs).

·         The report however said “Employment continued to decline in financial activities and in information.”

April 2, 2010

April 2, 2010

ü       India on Thursday launched “Census 2011,'' the biggest-ever census attempted in the history of mankind enumerating the country's 1.2 billion population and classifying usual residents according to their gender, religion, occupation and education.

·         The massive exercise, to be spread over next 11 months, will mark a milestone as the first-ever National Population Register (NPR) will also be prepared in which all persons aged over 15 years will be photographed and fingerprinted to create a biometric national database.

·         The 15th National Census exercise, since 1872, will see over 25 lakh officials capturing the socio-economic-cultural profile of its citizens.

·         It will cost around Rs. 2,209 crore while the expenditure on NPR will be Rs. 3,539.24 crore.

·         The exercise will also consume more than 11 million tonnes of paper.

·         A bit about the history of Census.

o    For obvious reasons, such as defence, collection of revenues and taxes and employment of population in profitable trades and services, the East India Company was anxious, soon after the Restoration in England, to obtain reliable estimates of population in its Indian settlements.

o    Moreland, the famous historian estimated the total number of Indians in 1600. For numerical basis of calculation he based his studies, in the south, on the strength of the armed forces and in the north on the land under cultivation on both of which subjects contemporary figures were available.

o    Meanwhile, England had begun her Census series in 1801 and the parliament was anxious to ascertain the populations of dependencies.

o    Under Statistical Despatch No. 2 of 23 July, received from the Home Government, in the year 1856, the Government of India had entered upon a consideration of the means by which a general Census of the population of India might be taken in 1861.

o    But the undertaking was postponed in 1859 in consequence of the Mutinies.

o    Statistical organisation moved fast at the close of this decade under the leadership of Lord Mayo, Governor General. W.W. Hunter was appointed Director General of Statistical Survey in 1869.

o    An experimental census of the Lower Provinces of Bengal was organised in 1869 by H. Beverley, Registrar General.

o    In 1865 the Government of India and the Home Government had agreed upon the principle that a general population census would be taken in 1871.

o    The years 1867-72 were spent in taking a census by the actual counting of heads in as much of the country as was practicable.

o    This series, commonly known as the Census of 1872, was not a synchronous project, nor did it cover all territory possessed or controlled by the British.

o    The problems of coverage and cartography that the 1872 group of censuses had presented were ably followed up by W.W. Hunter's Statistical Survey and the Survey of India, so that the Census of 1881 taken by W.C. Plowden, Census Commissioner for India, was a great step forward toward a modern synchronous and comprehensive operation.

o    The Government emphasised the importance of population data and set up a Population Data Committee in 1944 to examine and advise the Government of India on the available data relating to growth of population.

o    Census Act was passed in 1948 and was placed on the Statute Book.

o    In 1949, the Government of India decided to initiate steps for improvement of Registration of Vital Statistics and further decided to establish a single organisation at the Centre in the Ministry of Home Affairs under the Registrar General and ex-officio Census Commissioner for India to deal with Vital Statistics and Census.

o    The first census after Independence was taken in 1951.

o    The schedules of 1971 Census were further modified to suit the needs of the Govt., Planning Commission, various Demographic Bodies and Scholars.

o    Registrar General and Census Commissioner: C. Chandramouli

ü       The National Commission for Protection of Child Rights (NCPCR) has been mandated to monitor the implementation of the Right of Children to Free and Compulsory Education Act, 2009.

·          A special division within the NCPCR will undertake this task in the coming months and a special toll-free helpline to register complaints will be set up.

·         The NCPCR has invited all civil society groups, students, teachers, administrators, artists, government officials, legislators and members of the judiciary, apart from other stakeholders, to work together to build a movement to ensure that every child is in school and gets at least 8 years of quality education.

ü       With the Committee on Constitutional Reforms (CCR) presenting its draft to the presiding officers of the National Assembly and the Senate on Thursday, Pakistan is now poised for a major overhaul of its governance structure.

·         Besides the repeal of the 17th Amendment by which the former President, Pervez Musharraf, had transferred decisive powers to the presidency, the draft has done away with the Concurrent List to give more provincial autonomy and makes out a case for putting in place institutional mechanisms for making key appointments.

ü       New launches in the small car segment and robust economic growth have led carmakers recording impressive sales in the last fiscal (2009-10).

·          While leading carmaker Maruti Suzuki sold over 10-lakh units, making it the first company in India to achieve this feat in a single year, its closest competitors Hyundai and Tata Motors sold over 6-lakh and 3.5-lakh units, respectively.

·         Maruti Suzuki recorded 28.55 per cent rise in its annual sales, mainly due to spate of new launches and product refreshments that helped the company clock a sterling performance. These included Ritz, all-new Grand Vitara, new Estilo with K-series engine and Eeco.

·         Similarly, Hyundai recorded a 20 per cent growth during the year.

·         Tata Motors, which launched all-new Indigo Manza and Sumo Grande MK II last fiscal, recorded its highest-ever cumulative, where Nano sales stood at 30,350 units.

April 1, 2010

April 1, 2010

ü       26/11 Verdict - Marking the end of the year-long 26/11 trial, the special sessions court here on Wednesday announced May 3, 2010, as “the day of judgment.” Judge M.L. Tahaliyani gave the date after the lawyer for the third and last accused, Sabahuddin Ahmed, concluded his final arguments.

ü       Right to Education - On Thursday — April 1 — India will join a group of few countries in the world, with a historic law making education a fundamental right of every child coming into force.

·         Do download the article on the right side about Right to Education to know more about it.

·         Making elementary education an entitlement for children in the 6-14 age group, the Right of Children to Free and Compulsory Education Act, 2009 will directly benefit close to one crore children who do not go to school at present.

ü       India’s Sovereign Fund - In an indication of India turning aggressive in its hunt for energy assets abroad, the government is drawing up ambitious plans to set up a ‘Sovereign Fund' that would help its state-run companies pursue acquisition of oil, gas, coal, LNG and other raw material in other countries in order to compete with China.

·         The proposed fund is being aimed at providing financial backing for acquiring assets in various shapes that will include all the raw material that India imports. It will not be limited to energy assets.

·         Oil and Natural Gas Corporation Videsh Limited (OVL) had been told to pursue at least one major oil and gas asset every year.

·         But what is a sovereign fund?

o    A sovereign wealth fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments.

o    Sovereign wealth funds invest globally. Some of them have grabbed attention making bad investments in several Wall Street financial firms.

o    Some sovereign wealth funds are held solely by a central bank, which accumulates the funds in the course of its management of a nation's banking system; this type of fund is usually of major economic and fiscal importance. Other sovereign wealth funds are simply the state savings which are invested by various entities for the purposes of investment return, and which may not have significant role in fiscal management.

o    The accumulated funds may have their origin in, or may represent foreign currency deposits, gold, SDRs and International Monetary Fund reserve positions held by central banks and monetary authorities, along with other national assets such as pension investments, oil funds, or other industrial and financial holdings.

o    SWFs are typically created when governments have budgetary surpluses and have little or no international debt.

o    SWFs may be created to reduce the volatility of government revenues, to counter the boom-bust cycles' adverse effect on government spending and the national economy, or to build up savings for future generations.

o    But, SWFs are not always rosy.

o    There are possible concerns of having a large scale impact on various asset markets, fear of other countries gaining political mileage, inadequate transparency and non-homogeneity.

o    The 3 largest sovereign fund holders are U.A.E ($ 627b), Norway ($ 445b), Saudi Arabia ($ 431 b). All these 3 nations got their SWFs from oil trade.

ü       General Vijay Kumar Singh on Wednesday took charge as the Chief of Army Staff from General Deepak Kapoor, who retired from service.

ü       A new legal agreement committing nations around the world to curb greenhouse gas emissions is unlikely to be completed before the end of 2011, two years later than originally envisioned, the top U.N. climate official said on Wednesday.

·         Yvo de Boer, executive secretary of the U.N. climate change secretariat, said countries need to restore confidence in U.N. negotiations following the dismal results of the Copenhagen summit in December, which ended in a vague agreement of principles and a pledge of finances for poor countries most threatened by climate change.

·         The next annual conference in Cancun, Mexico, beginning in November should get negotiations “back on track” among the 194 participating nations, with the aim of agreeing on the main elements that could be enshrined in a binding agreement a year later in South Africa.

ü       A towering steel sculpture, taller than the Statue of Liberty and designed by the internationally renowned Mumbai-born artist Anish Kapoor , will form the backdrop to the London 2012 Olympic Games stadium in East London.

·         Unveiling the design of the £19.1m project — a massive web of spiralling steel in the form of five Olympic rings — the Mayor of London Boris Johnson hailed it as an “inspired work of art'' that would change the East London landscape forever and come to be internationally recognised as an “iconic cultural legacy'' of the Games.

·         The 115-metre tall ArcelorMittal Orbit, named after Lakshmi Mittal's steel company which is partially funding the project, will be 22 metres higher than the Statue of Liberty providing what is promised to be a panaromic view of London.

·         It will be placed in the Olympic Park.

ü       In a major boost to the ailing export sector, the Centre on Wednesday announced Rs.625-crore incentives to some industries like electronics, garments, jute and carpet, even as exports registered 34.8 per cent growth at $16.09 billion in February.

·         Over Rs.400-crore worth of incentives will go for exports of about 300 garment items to the U.S. and Europe, while the balance will be given for exports of 200 engineering, electronics and agro chemical items to 15 countries, including China and Japan.

·         Exports to these nations would be covered under the Market Linked Focus Product (MLFP) under which exporters can claim 2 per cent of their merchandise value for one year. The incentives would be given for six months from April 1.

·         Meanwhile, revival in some segments like tea, coffee, plastics, chemicals and man-made yarns and fabrics, saw exports picking up fast. In February exports registered 34.8 per cent growth for the fourth straight month, but due to dismal performance up to November 2009, cumulative exports during the April-February period declined by 11 per cent to $153 billion.

March 21-22, 2010

March 21, 2010

Ø       Union Petroleum Secretary S Sundareshan on Saturday said that south India will start getting natural gas from the Krishna-Godavari basin from 2012.

·         Reliance has been authorised by the government to lay a pipeline from Kakinada to Chennai and this pipeline would further extend to Tuticorin.

·         Reliance would also lay a pipeline between Chennai and Bangalore.

·         The gas would start flowing to Tamil Nadu anytime between March 2012 and the end of that year.

·         This leaves us with an important question. Pricing/ Deregulation of petroleum products,

o    What is deregulation? Deregulation generally means lifting of government control and letting market forces control the price of the product.

o    For the oil industry, it may be of two scales. (1) Price decontrol ; (2) Removal of restrictions on the establishment, operation, export and import of oil.

o    India’s history - In April 2002, in an attempt to phase out subsidy on petroleum products, the government dismantled the administered pricing mechanism (APM) paving the way for free pricing mechanism for petrol and diesel, while prices of kerosene and LPG were still kept under the Regulator's purview.

o    During 2002, the government gave limited freedom to the OMCs to revise retail prices within a band of +/-10% of the mean of rolling average of the last 12 months and the last 3 months international cost and freight prices.

o    When the crude prices began to increase in 2004 and oil companies wanted to pass on the same, but the government interference halted the free pricing of petrol and diesel.

o    What are the pre requisites for successful implementation of price deregulation? (1) Stability in crude prices; (2) Stable price range for lower products like diesel and kerosene as these are the most used; (3) Stable government; (4) Efficient subsidy sharing mechanism.

o    But who will benefit?

o    (1) The government will feel lesser pinch on its finances. (2) Since, there are no oil bonds to be going to be disbursed, more money would be available for other projects and reduce the fiscal deficit; (3) The Oil Marketing Companies would benefit with better profit and better control over oil prices.

o    But who will lose?

o    (1) The end consumer might not be protected from the oil shocks; (2) The agriculture farmers and rural households which consume the most diesel and kerosene stand to suffer more; (3) Even industries relying on gasoline might be affected because of uncertainties in the prices.

Ø       The Union Cabinet has approved a proposal of the Labour Ministry to amend the Employees State Insurance Act, 1948, to provide medical facilities to unorganised workers in ESIC hospitals and recognised private hospitals under the Rashtriya Swasthya Bima Yojna (RSBY), a cashless health insurance scheme.

·         This scheme was originally started to cover the Below Poverty Line families in the unorganised sector.

·         Later, construction workers, railway porters and beneficiaries under the Mahatma Gandhi National Rural Employment Guarantee Scheme were included.

·          There are about 43 crore unorganised workers in the country, which make up about 94 per cent of the total workforce.

·          The ESIC will be empowered to enter into an agreement with any local authority, local body or private body for commissioning or running ESI hospitals through third party participation for providing medical treatment and attendance to insured persons.

·         So far, the Centre has distributed about 1.14 crore smart cards under the RSBY. A smart card issued to each beneficiary under the scheme covers a family of five persons, providing health cover for hospitalisation up to Rs. 30,000 per annum.

Ø       The West Bengal government is raising a special force to counter the Maoists active in certain parts of the State. It will be trained by the elite Greyhounds of Andhra Pradesh.

·         Personnel selected from the State Armed Police will receive training at the Greyhounds Academy in Andhra Pradesh that trains commandos to tackle extremists.

March 22, 2010

Ø       BrahMos, the supersonic cruise missile, lifted off vertically from Naval destroyer INS Ranvir and punched a hole in a decommissioned vessel 290 km away in the Bay of Bengal off the Orissa coast on Sunday.

·          The missile, which was fired at 11.30 a.m. from INS Ranvir, climbed 200 metres vertically, then manoeuvred at supersonic speeds to cruise horizontally before smashing into the vessel INS Meen.

·         This is the 22nd launch of BrahMos, which has already been inducted into the Army and the Navy. It has been jointly developed by India and Russia.

Ø       The third National Free Software conference brought together ideologues, Free Software organisations and stake-holders in the public sectors, from at least 10 States across the country and announced the formation of National Free Software Coalition.

·         This coalition, which has 16 movements in its fold, to begin with, aims at taking Free Software and its ideological implications to computer users “across the digital divide” and to various streams of science and research.

Ø       Now that a final price tag of $2.33 billion has been fixed on aircraft carrier INS Vikramaditya (Admiral Gorshkov) going against the proverbial caution, perhaps it is time to look the ‘gift' horse in the mouth.

·         Navy officials maintain that the aircraft carrier will be good for the next three to four decades.

·          Its hull remains good with value additions done to modify the cruiser class to meet the force requirement.

·         Some of the features built into the contract are replacement of the entire length of cables/wiring running into thousands of kilometres; delivering infrastructure machinery for repair and maintenance support in Indian docks; training of personnel from Indian docks and personnel on board the carrier and spare parts for 10 years from the time the carrier is to be handed; repair and technical detail documents for maintenance; and pilot training/trials.

Ø       China's Commerce Minister and several of the country's leading economists have rejected American claims that China was undervaluing its Yuan currency, and have warned of an “all-round trade war” if the U.S. imposed trade sanctions on China.

·         What is happening in China?

o    Political leaders and economists in Washington have been calling on the U.S. Treasury Department to officially label China a “currency manipulator”.

o    The U.S., and several other countries, say China has artificially undervalued its Yuan currency to support exporters here.

o    The value of the Yuan has been pegged at around 6.83 to the dollar since mid-2008.

·         But, what determines an exchange rate?

o    Short run exchange rates are determined by the supply and demand of a currency. For example, if a person wants to buy Indian goods, he would need Indian currency and thus demand for Indian currency would shoot up.

o    At the constant supply, we understand that when demand goes up, price of the currency also goes up.

o    Speculators and Central Banks also play an important part in shooting up the price of the currency.

o    In the same way, if the demand for foreign goods increases, the person of a particular country will sell of his home currency in exchange of the foreign currency and hence supply of the home currency increases.

o    Thus, the value of the currency is basically decided by demand and supply.

·         But, the above explanation is valid only if the currency is free floating. Chinese Yuan is a currency that is pegged to a certain value and does not reciprocate to the changes of the market factors

Blogorial

What’s wrong with our national air carrier?

Air India is the national air carrier and operates out of Air India Building, Nariman Point, Mumbai.  The merger of Air India and Indian Airlines is operated by National Aviation Company of India Limited.

After India got its independence, the availability of the cheap planes from World War 2 had given an impetus for several private airlines. Their deteriorating financial status prompted the government to nationalize these services and start the Indian Airlines in 1953.

Famously known as the Maharaja, Air India, after decades of indulgence and pampering as a state-owned airline, has been struggling to survive the global aviation downturn. The civil aviation minister Mr. Praful Patel has stated that the National Carrier will possibly incur a loss of Rs. 5400 crores in the fiscal year 2009-10, leading to a cumulative loss of Rs. 13,714 crores in the past 3 years. Moreover, he also stated that Air India will be able to save only Rs 753 crores as against the Rs 1911 crores envisaged.

But, where does the root of the problem lie? We need to take a look at what is causing the losses. Around 80 percent of losses are on account of paying interest on borrowing, depreciation and rentals.

Experts have suggested that the problem has been brewing for the past 15 years. The airline began facing its problems since the liberalization of the Indian economy. Still, for several years after liberalization, Indian Airlines used to command the lions share in the market.

With a plethora of competition stepping in, Air India allowed decades of problems to heap on and failed to utilize its dominant position and gave the newer players an easier way of establishing their feet in the industry.

Air India also suffered from other major problems like a bloated workforce, political interference, underinvestment and a weak management. Moreover, the decision taken b Praful Patel to purchase 111 new aircrafts and the merger with Indian Airlines added to its woes. Handicapped by the financial stress, the company was not able to utilize the synergies of the merger purposefully. Add to that, the monthly loss and the ever diminishing market share.

But, can Air India fly again? The government has been trying its best. It recently infused Rs 800 crore as equity base and has been restructuring and implementing cost cutting measures. But the foreign players and other domestic players have brought in a sense of competition under which Air India is crumbling.

The airline needs to look at privatization. True, the flavor of being the national carrier might be lost, but it will infuse a new life along with more funds, better restructuring and a better and stronger management. Pay cuts and job cuts seem inevitable, but it could help in the longer run. Moreover, a government stake would help in keeping the controls. Hope the Maharaja does not lose his way.