Business News - June 10, 2013.


India, which aims to become a significant economic power in the world, is still lagging behind in providing education to its children. A recent study by the United Nations Educational, Scientific and Cultural Organisation (UNESCO) has placed India fourth from the bottom in terms of the number of children out-of-school. However, the study also notes that India has also made a big progress in getting children into schools and as per the 2010-11 data, it has about 1.67 million children out-of-school.
This has helped in pushing the country up by one position to fourth bottom, with Ethiopia (1.7 million out-of-school children) taking its place. Nigeria, with 10.54 million out-of-school children is at the very bottom of the list, while Pakistan comes second with 5.43 million. India has consistently improved in providing basic education to the children from 2000, when 20 million children were out-of-school, to 2006, when the number came down to 2.3 million. According to the study, at 10 per cent, the country also receives the largest share of aid to basic education globally.

Forward trading -  Commodities, currencies, and securities trade with deliveries and settlement at a future (forward) date done at current market prices. Known also as front running.

The 'Nitaqat' programme, which is meant to regularise foreign workers, makes it mandatory for local companies to hire one Saudi national for every 10 migrant workers. The new NITAQAT program is the reflection and outcome of the voice of agitated and unemployed youth in the Kingdom. to reduce the dependence of foreign employees and try to intensify to finding out their own citizen's employment opportunities. NITAQAT is designed to get more opportunities for Saudi nationals in the private sector. It is introduced to evaluate private companies based on their achieved percentage of Saudization. Apart from the Saudization boosting, the Ministry claimed NITAQAT program includes many other short term and long term objectives like accelerate women employment sector, training for the employment seekers, minimum wage, protection of rights of employees etc. Nitaqat stipulates that at least one-tenth of the staff of any enterprise should be Saudis and assigned a colour coding for enterprises at different levels of compliance. Those which totally failed to comply with the norm are in the ‘red.’ The ‘red’ enterprises would have to close shops, but their workers are permitted to transfer to enterprises in the ‘green’ category.

OECD-Organisation for Economic Cooperation and Development.  The Organisation for European Economic Cooperation (OEEC) was established in 1948 to run the US-financed Marshall Plan for reconstruction of a continent ravaged by war. By making individual governments recognise the interdependence of their economies, it paved the way for a new era of cooperation that was to change the face of Europe. Encouraged by its success and the prospect of carrying its work forward on a global stage, Canada and the US joined OEEC members in signing the new OECD Convention on 14 December 1960.  The Organisation for Economic Co-operation and Development (OECD) was officially born on 30 September 1961, when the Convention entered into force.Other countries joined in, starting with Japan in 1964. Today, 34 OECD member countries worldwide regularly turn to one another to identify problems, discuss and analyse them, and promote policies to solve them.

UN convention against corruption - In its resolution of 4 December 2000, the General Assembly recognized that an effective international legal instrument against corruption, independent of the United Nations Convention against Transnational Organized Crime was desirable and decided to establish an ad hoc committee for the negotiation of such an instrument in Vienna at the headquarters of the United Nations Office on Drugs and Crime. The text of the United Nations Convention against Corruption was negotiated during seven sessions of the Ad Hoc Committee for the Negotiation of the Convention against Corruption, held between 21 January 2002 and 1 October 2003. The Convention approved by the Ad Hoc Committee was adopted by the General Assembly by 31 October 2003. The General Assembly, 18 December 2002, accepted the offer of the Government of Mexico to host a high-level political signing conference in Merida for the purpose of signing the United Nations Convention against Corruption. United Nations Convention against Corruption entered into force on 14 December 2005. A Conference of the States Parties is established to review implementation and facilitate activities required by the Convention.

World Economic Forum on East Asia - Nay Pyi Taw, Myanmar, 5-7 June 2013.Courageous Transformation for Inclusion and Integration. This year's meeting will focus on three pillars:

  • Inspiring Inclusive Transformation
  • Realizing Regional Integration
  • Scaling Regional Solutions for Global Resilience

After a series of bold economic and political reforms in Myanmar, the meeting will be the first leading international gathering of senior decision-makers from industry, government, academia and civil society to be held in the country. Through this unique multistakeholder platform, the meeting will be an unrivalled opportunity to understand and to shape Myanmar’s ongoing reforms and reconciliation process. Additionally, as Myanmar assumes the chairmanship of ASEAN in 2014, it will have a critical role in guiding the bloc’s ten member economies toward the planned economic integration in 2015. In this regard, the meeting will provide value not only to participants from the ASEAN region, but also to those who see in ASEAN an important evolving geopolitical and geo-economic pillar of the global economy.

Chief Economic Advisor Raghuram Rajan

The Reserve Bank of India on 10 June 2013 penalised top three private sector banks — ICICI Bank, HDFC Bank and Axis Bank — for violating, among others, know-your-customer (KYC) norms and failing to file cash-transaction reports in some cases. It levied a penalty of Rs 1 crore, Rs 4.5 crore and Rs 5 crore on ICICI Bank, HDFC Bank and Axis Bank, respectively.

Foreign Exchange Management Act - The Foreign Exchange Management Act (1999) or in short FEMA has been introduced as a replacement for earlier Foreign Exchange Regulation Act (FERA). FEMA became an act on the 1st day of June, 2000. FEMA was introduced because the FERA didn’t fit in with post-liberalisation policies. A significant change that the FEMA brought with it, was that it made all offenses regarding foreign exchange civil offenses, as opposed to criminal offenses as dictated by FERA. The main objective behind the Foreign Exchange Management Act (1999) is to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments. It was also formulated to promote the orderly development and maintenance of foreign exchange market in India. FEMA is applicable to all parts of India. The act is also applicable to all branches, offices and agencies outside India owned or controlled by a person who is a resident of India.The FEMA head-office, also known as Enforcement Directorate is situated in New Delhi and is headed by a Director. The Directorate is further divided into 5 zonal offices in Delhi, Mumbai, Kolkata, Chennai and Jalandhar and each office is headed by a Deputy Director. Each zone is further divided into 7 sub-zonal offices headed by the Assistant Directors and 5 field units headed by Chief Enforcement Officers.

KYC - KYC is an acronym for “Know your Customer”, a term used for customer identification process. It involves making reasonable efforts to determine true identity and beneficial ownership of accounts, source of funds, the nature of customer’s business, reasonableness of operations in the account in relation to the customer’s business, etc which in turn helps the banks to manage their risks prudently. The objective of the KYC guidelines is to prevent banks being used, intentionally or unintentionally by criminal elements for money laundering. KYC has two components - Identity and Address. While identity remains the same, the address may change and hence the banks are required to periodically update their records.

AML (anti-money laundering) - A set of procedures, laws or regulations designed to stop the practice of generating income through illegal actions. In most cases money launderers hide their actions through a series of steps that make it look like money coming from illegal or unethical sources was earned legitimately. Though anti-money-laundering laws cover only a relatively limited number of transactions and criminal behaviors, their implications are extremely far reaching. An example of AML regulations are those that require institutions issuing credit or allowing customers open accounts to complete a number of due-diligence procedures to ensure that these institutions are not aiding in money-laundering activities. The onus to perform these procedures is on the institutions, not the criminals or the government.

PAN (permanent account number) - Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department, to any “person” who applies for it or to whom the department allots the number without an application. PAN enables the department to link all transactions of the “person” with the department. These transactions include tax payments, TDS/TCS credits, returns of income/wealth/gift/FBT, specified transactions, correspondence, and so on. PAN, thus, acts as an identifier for the “person” with the tax department. PAN was introduced to facilitates linking of various documents, including payment of taxes, assessment, tax demand, tax arrears etc. relating to an assessee, to facilitate easy retrieval of information and to facilitate matching of information relating to investment, raising of loans and other business activities of taxpayers collected through various sources, both internal as well as external, for detecting and combating tax evasion and widening of tax base. 

National Advisory Council - The task of the National Advisory Council (NAC) is to provide inputs in the formulation of policy by the Government and to provide support to the Government in its legislative business.In the discharge of its functions, the NAC will have a special focus on social policy and the rights of the disadvantaged groups. The NAC comprises distinguished professionals drawn from diverse fields of development activity who serve in their individual capacities.

As per the latest RBI data, the household sector accounted for 58.1 per cent of the total deposits of Rs 64,10,967 crore in Indian banks as of March 2012. 

Economic Affairs Secretary Arvind Mayaram

US Federal Reserve Chairman Ben Bernanke

Inflation-indexed bonds will become an effective addition to Indian authorities’ policy tool kit for addressing macroeconomic imbalances, Moody’s Investors Service has predicted. Real Effective Exchange Rate (REER). This rate is the rupee exchange adjusted for the relative differences in inflation with its trading partners. When this rate is at 100, the rupee is said to be rightly valued. While the RBI publishes REER for 36 as well as six countries, it is the latter that is tracked closely by it. The central bank was known to keep the six country REER close to 100 to maintain export competitiveness of the currency. The six-currency in this basket belong to the US, the Euro Zone, UK, Japan, China and Hong Kong.The REER was the most overvalued in July 2011 when this index was at 117.7. It may be recalled that the rupee was at 43.8 against the dollar at this point.

International Energy Agency (IEA) - The International Energy Agency (IEA) is an autonomous organisation which works to ensure reliable, affordable and clean energy for its 28 member countries and beyond. Founded in response to the 1973/4 oil crisis, the IEA’s initial role was to help countries co-ordinate a collective response to major disruptions in oil supply through the release of emergency oil stocks to the markets. While this continues to be a key aspect of its work, the IEA has evolved and expanded. It is at the heart of global dialogue on energy, providing authoritative and unbiased research, statistics, analysis and recommendations. Today, the IEA’s four main areas of focus are:

  • Energy security: Promoting diversity, efficiency and flexibility within all energy sectors;
  • Economic development: Ensuring the stable supply of energy to IEA member countries and promoting free markets to foster economic growth and eliminate energy poverty;
  • Environmental awareness: Enhancing international knowledge of options for tackling climate change;
  • Engagement worldwide: Working closely with non-member countries, especially major producers and consumers, to find solutions to shared energy and environmental concerns.

The energy sector is the single largest source of climate changing greenhouse gas emissions.Redrawing the Energy-Climate Map - a Special Report from the IEA’s flagship publication World Energy Outlook.The IEA World Energy Outlook special report proposes implementation of four measures by countries which would make this target achievable – Adopting specific energy efficiency measures (49 per cent of emission savings), limiting construction and use of the least efficient coal fired power plants (21 per cent savings), minimising methane emissions from upstream oil and gas production (18 per cent savings), and accelerating the phase out (partial) of subsidies to fossil fuel consumption (12 per cent savings).In 2012, China made the largest contribution to the increase in global carbon-dioxide emission, but its growth was one of the lowest in a decade. This was driven largely by deployment of renewables and a significant improvement in the energy intensity of its economy.

Central Information Commission - The Central Information Commission (CIC) set up under the Right to Information Act is the authorised body, established in 2005, under the Government of India to act upon complaints from those individuals who have not been able to submit information requests to a Central Public Information Officer or State Public Information Officer due to either the officer not having been appointed, or because the respective Central Assistant Public Information Officer or State Assistant Public Information Officer refused to receive the application for information under the RTI Act. Chief Information Commissioner Satyananda Mishra

RTI Act - The Right to Information Act (RTI) is an Act of the Parliament of India "to provide for setting out the practical regime of right to information for citizens" and replaces the erstwhile Freedom of Information Act, 2002. The Act applies to all States and Union Territories of India except the State of Jammu and Kashmir. Jammu and Kashmir has its own act called Jammu & Kashmir Right to Information Act, 2009. Under the provisions of the Act, any citizen may request information from a "public authority" (a body of Government or "instrumentality of State") which is required to reply expeditiously or within thirty days. The Act also requires every public authority to computerize their records for wide dissemination and to pro-actively publish certain categories of information so that the citizens need minimum recourse to request for information formally. This law was passed by Parliament on 15 June 2005 and came fully into force on 13 October 2005. Information disclosure in India was hitherto restricted by the Official Secrets Act 1923 and various other special laws, which the new RTI Act now relaxes.

The Reserve Bank of India has asked banks in Andhra Pradesh to extend loans to companies which were hit by shortage of power. The direction follows a recent meeting with bankers conducted by RBI after a request referred to it by the Union Ministry of Commerce and Industry.

Deloitte Touche Tohmatsu 2013 Oil and Gas Reality Check report - focuses on the five of the primary challenges impacting the oil and gas sector globally, and provides our view of the direction which these trends will follow. Issues covered in the report:

  • Shale gas – a global or regional resource?
  • LNG pricing – the end of oil indexation?
  • Resource nationalism – entering a period of low tide?
  • NOCs – capturing the playing field
  • Managing market complexity

Non-ferrous metal industry is bracing for challenges such as rapid capacity expansion of input minerals, developing indigenous technological expertise and cost reduction, among others, pointed out in a joint study by Indian Chamber of Commerce and Deloitte.At present, aluminium is the fastest growing non-ferrous metal and its production volume is next only to steel. Domestically, the demand and consumption of aluminium is projected to rise to about three million tonnes by 2017 from nearly 1.71 million tonnes now. By 2030, aluminium consumption growth will be driven by China and India, said a Deloitte study.Also, copper is accounts for third in consumption after steel and aluminium. India is also among the top five zinc mining countries globally.For global players, India is a big market for mineral resources, as metals and power demand is expected to have robust growth in long term.

Civil Aviation Minister Ajit Singh

Market regulator SEBI.

The National Optical Fibre Project is being implemented by a newly created entity called Bharat Broadband Networks Ltd (BBNL). The total cost of the project is around Rs 20,000 crore. 

India has been ranked as the second most risk prone location for hosting Data Centre Operations according to the annual ‘Datacenter Risk Index 2013’ survey by Cushman & Wakefield in association with hurleypalmerflatt and Source8. The survey was conducted in 30 of the most important global markets.
India, a world leader in mass IT processes with presence of most major IT and ITeS companies, has remained at the bottom of the list of preferred Data Centre Location, for the second year, beating only Brazil which ranked the lowest.While India ranked high on parameters like Cost of Labour (4th) and Sustainability (6th), it emerged 13th on Political Stability and 16th on International Bandwidth. But it failed to score high on crucial parameters with higher weightage in the survey, scoring low on key factors such as Energy Cost (25th) and lying last (30th) on the parameters of Ease of Doing Business, Inflation and GDP per capita. It also ranked 28th of Natural Disasters, Energy Security, Corporation Tax and Education Level.The USA maintains its place at the top of the DCRI and is considered the lowest-risk location for building and operating a data centre in the world. Specifically, it maintains a top-three position across the primary factors of energy cost, international bandwidth and ease of doing business. UK remains second globally in this year’s ranking. 

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