A landmark Judgement!

This refers to the recent Supreme court judgement on the allocation of 2G spectrum, cancelling all 122 telecom licences allotted on or after January 10, 2008. In the landmark piece of judgement, the SC has declared the allocation of spectrum by UPA govt as illegal and contrary to public interest.

In doing so, the SC has, in a single stroke, dashed all government efforts to vindicate their act which was a blatant example of arbitrary exercise of power.

Indeed a wonderful lesson to those who think they can pay bribes and work hand in glove with corrupt officials and politicians and get away scot free once the deal has been secured! The nation stood to be reduced to a comical farce of epic proportions. I hope all the aggrieved parties get together and demand that the bribes they paid and the favours they dished out now be returned by the corrupt!

Credit goes to SC for displaying integrity and clarity in the matter.

A Real Shame!

This refers to the recent event of Salman Rushdie cancelling his trip on India, following the threats to his life on account of his attending the Jaipur Literature Festival.

I'm extremely disappointed at the way the government has caved in and surrendered to the naked politics of religious fanaticism, in order to gain a few political points for the coming State Elections.

The fact that the voice of religious fundamentalists has once again prevailed over the secular forces, casts a deep shadow over our secular image, and is indeed a sordid commentary on the pluralistic culture and ethos of our vibrant democracy.

The government, by not ensuring protection to Rushdie for his visit, has lost a golden opportunity to demonstrate our religious tolerance to the world.

Standard and Poor’s lower the credit rating of 9 Eurozone countries

The Credit Rating company Standard & Poor's on Jan 13, 2012 lowered its ratings on nine euro-zone nations, citing insufficient policy initiatives taken by European leaders to address ongoing systemic stresses in the euro zone.

Essentially, S&P found that the Eurozone policymakers have not done enough to resolve the region's broadening and deepening financial crisis. It criticised the latest talks as failing to come up with a breakthrough of sufficient size and scope to fully address the Eurozone's financial problems.

The most high-profile casualties were France and Austria, which lost their prized AAA ratings – the top grade, held by only 14 countries worldwide.

Sharp downgrades were applied to Cyprus and Portugal leaving them with "junk" ratings on their debt – ranking them as very risky investments.

S&P has given nearly all the countries it downgraded a negative outlook, meaning there is a one in three chance of a further cut in 2012 or 2013. It says refinancing costs for some countries will stay high, credit will be hard to come by and growth will slow.

A handful of countries escaped the downgrading, notably Germany, which has a track record of prudent fiscal policies and expenditure discipline.

What are the possible outcomes of this downgrade?

The downgrades will increase borrowing costs for the affected countries when they try to raise hundreds of billions of dollars on international bond markets in 2012. France alone needs to borrow about $240 billion to finance its existing debts and annual deficit.

Italy and Spain, two large nations that are facing escalating debt problems, were also among the countries downgraded.

This development is also likely make bailouts harder to fund. The Eurozone's rescue fund, the European Financial Stability Facility (EFSF), uses guarantees from its member countries to raise funds in financial markets. If those backer countries are seen as less creditworthy, so is the fund – and it could well be downgraded too. That will make it more difficult and more expensive to raise money from financial markets and other countries outside the Eurozone.

The rising borrowing costs that many countries will face in the wake of these downgrades will have repercussions across the Eurozone. There are worries, for example, that rising borrowing costs for Italy mean it will sooner or later need to apply for help from the EFSF. If it does – and drops out of the fund as a backer – there are serious implications for key guarantors Germany and France. Their obligations to the rescue fund would rise – and put fresh pressure on their credit ratings.

Conclusion
While the downgrades did not come as much of a surprise they served as a sharp reminder that Europe's ongoing sovereign-debt crisis is far from being resolved and raised questions over the sustainability of triple-A status of the European Financial Stability Facility.

Food Security in India

With the Food Security Bill presented in Lok Sabha recently, there is an interesting debate going on concerning different dimensions of the issue. Ensuring food security is a long-unresolved problem in India, which houses the world’s largest number of undernourished children. The Government runs a number of special programmes to ensure food security and has a truly massive subsidy burden on this account. With a humongous population, a large proportion of which is truly living in penury, a broken PDS and fiscal limitations of the state, ensuring food security to all Indians is going to be a gargantuan task.

FDI in Retail – A deep look within

Quite a lot of speculation has been going around these days about the proposed govt plan for allowing FDI in multi brand retail sector. People from various sections of political and social classes, holding different ideologies, from the hard core socialists to neo liberals have voiced their options for or against the proposal. As a result, we have a rich and diverse set of opinions in public domain. Let us have a look at what it is all about.

The Cabinet recently agreed to allow foreign multi-brand retailers such as Wal-Mart Stores Inc. and Tesco PLC to own up to 51% of retail joint ventures and single-brand retailers to own 100% of their Indian operations, up from 51% now.

This proposal, which has come after at least five years of setting the stage for the creation of a modern retail industry by allowing 51% FDI in single brand retail, is being acknowledged as a step in the right direction towards economic liberalization by the Indian corporate sector and most economists.

The rationale for liberalization is based on a definite premise. It will create an opportunity to leverage foreign investment in the supply chain infrastructure, which suffers from certain inherent deficiencies due to the lack of investment flows into the sector. Inadequate storage facilities and limited cold chain infrastructure causes heavy losses in terms of wastage in quality and quantity of produce in general, and of fruits and vegetables in particular.

While allowing FDI in Multi brand retail will provide the much needed impetus to the crumbling infrastructure, it will also help in improving supply chain efficiency, with the better technology, management practices and decades of experience of foreign retail majors coming in to play.

The opening up of Multi Brand Retail will also aid in regulating food inflation in the long run as it would contribute to saving the food which perishes on account of inadequate infrastructure.

It will also help in securing remunerative prices for the farmers. In the present dispensation, there is a complex chain of procurement involving several middlemen. As a result, Indian farmers realize only 1/3rd of the total price paid by the final consumer as against 2/3rd with higher degree of retail. Also, the average price a farmer receives for horticulture produce is barely 12 to 15% of what is paid at the retail outlet. FDI in retail will create the enabling environment which can ensure direct procurement, at least of horticultural produce from farmers to enable them secure remunerative price.

Huge investments in the retail sector will see gainful employment opportunities in agro-processing, sorting, marketing, logistic management and the front-end retail business. About 1.5 million jobs will be created in the front-end alone in the next 5 years. Assuming that 10% extra people are required for the back-end, the direct employment generated by the organized retail sector in India over the coming 5 years will be close to 1.7 million jobs. Indirect employment generated on the supply chain to feed this retail business will add millions of jobs. Examples from other countries like Russia, China, Thailand and Indonesia also present figures of impressive growth in retail and wholesale trade along with growth in agro processing industry.

One of the counter arguments put forward against the proposal is that opening the retail sector will drive millions of small shopkeepers and kirana stores out of business, thus depriving them of their source of livelihood. Based on this argument there has been a stiff opposition against retail FDI from many political parties, some of which include the allies of the government.. This led to a stalemate in the proceedings of the parliament, and consequently government had to suspend the decision to allow FDI in retail for now.

Most of the economists are of the opinion that the government should be praised for finally taking a measure that should allow India to take advantage of 21st-century supply-chain management. Finally, it remains to be seen whether Indian consumers are ready, en masse, to abandon the model that has served them well for decades, that being a model that still elicits awe from the foreigners who come to India, hence posing a challenge for the foreign companies to get Indians to flock to their doors.

Anna Hazare movement - A Bash-Congress Forum

It is really unfortunate to see the movement which started as an apolitical crusade against corruption, getting slowly transformed into a platform for opportunism and politicking (All thanks to Anna Hazare). Use of this platform for the unabashed display of  furore against the UPA government by some political parties which themselves do one thing when they are in power and take a u-turn when in opposition, can only be perceived as a sordid attempt to gain political mileage.
The movement for a strong Lokpal bill is fast turning into a Bash-Congress forum.
The need of the hour is for the political class as a whole to rise to the occasion and respond to the challenge of enacting an effective law.. Targeting the government will not help.
Also Team Anna's unilateral posturing on the Lokpal bill and making it an ego issue of 'my way or no way' is only making things worse.

Startling Claim

It was astonishing to read about the Planning Commission's affidavit in the Supreme Court which says that an individual income of Rs.25 per day is sufficient to make both ends meet.
When even a rickshaw puller and vegetable vendor can understand the minimum daily expenditure, why does it appear elusive to our expert committees? If after 60 years of independent democratic governance a huge chunk of society still lives a substandard life, it is because of a failure of our developmental planning.
When we talk about the stupendous growth rate that India has achieved over the past decade, because of the booming Service sector, we often tend to overlook the fact that this growth has not been all inclusive, and has left the marginal and deprived sections of our society even farther behind by widening the poverty gap.
Today one-third of the world's population living on less than one dollar a day is in India. These figures if incorporated in the country's growth projections in terms of per capita GDP consumption, will seriously expose the flaws in our development and planning machinery.
I think time has come for a serious rethink over the way planning and budget allocations are carried out in our country.