Wednesday, June 26, 2013

UNESCO allows 19 new additions to World Heritage List

RBI auctions Inflation Indexed Bonds

Tuesday, June 25, 2013

‘Diaspora Bonds’

‘Diaspora Bonds’

June 25th, 2013
India thinks over ‘Diaspora Bonds’
India is examining to introduce “Diaspora Bonds” to attract investment from NRIs (Non-Resident Indians), to facilitate greater inflow of funds in the infrastructure sector. The government is examining longer-term investment instruments for overseas Indians so that the NRI community could participate and benefit from India’s growth.
Current Status: At present most of the diaspora investments are in portfolio investments of a short-term nature.
Plan of Govt: The government is considering the option of ‘diaspora bonds’ for longer-term investment instruments to provide opportunities for overseas Indians and thus facilitate greater inflow of funds in the infrastructure sector.
What are Diaspora Bonds (DBs)?
  • A sovereign bond that targets investors that have emmigrated to other countries and the relatives of those emmigrants. For example, the Government of India tries to sell a government bond to Americans of Indian origin. Diaspora bonds are marketed to members of the diaspora.
Attraction for issuing countries:
  • “Patriotic discount” - Diaspora investors sometimes offer what is called a “patriotic” discount to governments in their country of origin/ancestry. As per George Washington University’s Liesl Riddle, when diaspora members invest in their homelands, they are motivated by more than just profit: “Social and emotional motivations also play a role.”
  • Stable source of finance, especially in bad times
  • Support to sovereign credit rating
  • Diaspora investors might be willing to accept a lower rate of return and have a greater tolerance for uncertainty when buying diaspora bonds than a mainstream investment.
  • Diaspora investors might partially view the purchase of a diaspora bond as an act of charity and might also have a greater understanding of a country’s level of risk than other foreign investors.
Attraction for investors:
  • Patriotism & desire to do “good” in the country of origin
  • Risk management – Diaspora investors are likely to view the risk of receiving debt service in local currency with much less apprehensions.
What is difference b/w Foreign Currency Deposits (FCDs) and  DBs ?
Foreign Currency Deposits (FCDs) are also used by countries to attract foreign currency inflows.
  • But, Diaspora bonds are typically long-dated securities to be redeemed only upon maturity. FCDs, in contrast, can be withdrawn at any time.
  • FCDs are likely to be much more volatile, requiring banks to hold much larger reserves against their FCD liabilities, thus decreasing their ability to fund investments. Diaspora bonds, on the other hand are a source of foreign financing that is long-term in nature.
What is India’s Experience in DBs?
Diaspora bonds are not yet widely used as a development financing instrument. Diaspora bonds issued by the government-owned State Bank of India (SBI) have raised over $11 billion to date.
3 separate occasions on which the Indian government has tapped its diaspora base of non-resident Indians (NRIs) for funding on –
  1. India Development Bonds (IDBs) following the balance of payments crisis in 1991 ($1.6 billion)
  2. Resurgent India Bonds (RIBs) following the imposition of sanctions in the wake of the nuclear explosions in 1998 ($4.2 billion)
  3. India Millennium Deposits (IMDs) in 2000 ($5.5 billion).
Features of the IDBs, RIBs and IMDs:
  • Opportunistic issuance in 1991, 1998 and 2000
  • Balance of payments support
  • Fixed rate bonds
  • Maturitiy: 5 year bullet maturity
  • Limited to diaspora
  • No SEC registration
  • Non-negotiable
  • SBI distribution in conjunction with international banks. The conduit for these transactions was the government-owned State Bank of India (SBI). Thus, the proceeds from such bonds can be used to finance investment.
  • Issues were done  in multiple currencies – US dollar, British pound, Deutsche Mark/Euro.

Monday, June 24, 2013

UNESCO world heritage status to Mount Fuji and Mount Etna

Sunday, June 23, 2013

India far behind in cyber security compared to US and China

India far behind in cyber security compared to US and China

June 23rd, 2013
Despite being world-known as an Information Technology superpower, India, lags far behind when it comes to official cyber security workforce which comprises a mere 556 experts deployed in various government agencies. If we compare the figures with China, the US and Russia, China has 1.25 lakh experts, the U.S. 91,080 and Russia 7,300.
As per National Security Council Secretariat (NSCS), the current strength of cyber experts in India is grossly inadequate to handle cyber security activities in a meaningful and effective manner. To strengthen the sector the government has decided to recruit 4,446 experts to be deployed in six organisations that would take care of India’s cyber security infrastructure.
What are the major organizations which constitute India’ cyber security infrastructure?
These are the Department of Electronics and Information Technology (DEITy), which includes Indian-Computer Emergency Response Team (CERT-In) and the National Informatics Centre (NIC); the Department of Telecom (DoT); the National Technical Research Organisation (NTRO); the Ministry of Defence; the Intelligence Bureau (IB); and the Defence Research and Development Organisation (DRDO).
What is the status of cyber security in China and the US?
China:
China has “Information Support and Safeguarding Base” to serve as People’s Liberation Army cyber command to address potential cyber threats and safeguard national security. China also has hackers who work for the government. Its cyber workforce is composed of various components of military, national security, public security, propaganda militia and academia. It now has an estimated strength of 1.25-lakh personnel which includes regular troops (30,000), specialists from various universities, research institutes and states enterprises (60,000), and militia (35,000).
The U.S.:
It has 91,080 experts in its cyber security workforce, of whom 88,169 are in the Department of Defense alone. The recent revelations has shown that how the US has been carrying out its clandestine electronic surveillance world over including, India, through its PRISM programme being run by the National Security Agency (NSA) of the US.
The U.S. has also established a 24×7 National Cyber Security and Communications Integration Centre (NCCIC)that is responsible for generating a common operating picture for cyber and communications across the federal, state and local governments, intelligence and law enforcement communities and the private sector. In the event of a cyber or communications incident, the NCCIC functions as the national response centre able to bring to bear the full capabilities of the federal government in a coordinated manner.
What is India doing to address its cyber security concerns?
As per a study conducted by NSCS, all major countries have set up mechanism and organizations dedicated to cyber security, a field where India has performed poorly. To address this concern, India has decided to establish its own ‘cyber security architecture’ that will comprise the National Cyber Coordination Centre (NCCC) for threat assessment and information sharing among stakeholders, the Cyber Operation Centre that will be jointly run by the NTRO and the armed forces for threat management and mitigation for identified critical sectors and defence, and the National Critical Information Infrastructure Protection Centre (NCIIPC) under the NTRO for providing cover to ‘critical information infrastructure’. The government is also coming up with a legal framework to deal with cyber security.

Commodities Transaction Tax (CTT) on non-farm products

Commodities Transaction Tax (CTT) on non-farm products

June 23rd, 2013
Commodities Transaction Tax (CTT) on non-farm products from July 1, 2013
As per an announcement made by the Central Board of Direct Taxes (CBDT), from July 1, 2013, the Commodities Transaction Tax (CTT) shall be levied on the derivative contracts of non-agricultural commodities which are transacted via recognized commodity bourses.
What is Commodities Transaction Tax (CTT)?
  • Proposed in Finance Bill, 2013 for enhancing financial resources.
  • A tax which shall be levied on non-agricultural commodities futures contracts at the same rate as on equity futures that is at 0.01% of the price of the trade.
  • CTT would tax trading of non-farm commodities like gold, silver and non-ferrous metals such as copper and energy products like crude oil and natural gas in India.
  • CTT exempts 23 specified agricultural commodities which include wheat, turmeric, soya bean, red chilli, mustard seed, potato, pepper, cotton, cotton seed, coriander, copra, channa, castor seed, cardamom, barley and almond.

  • All the processed agricultural items such as guar gum, soya oil and sugar are subject to the CTT on future contracts.
  • Here both parties—buyer & seller of contract—will be taxed depending on the amount of contract size.
  • Similar to the Securities Transaction Tax (STT) levied on the purchase and sale of equities in the stock market.
  • So far, commodity transactions have been exempted from any levy.
What are the Advantages of levying CTT?
  • It will open up new resources for the augmentation of government finances.
  • CTT would generate revenues of around Rs.45 billion to government.
  • It is also aimed at bringing transparency in the commodity exchange market.
What could be the disadvantages of CTT?
  • CTT has been opposed by the experts and the PMEAC had also suggested against levying such a tax.
  • CTT will increase the transaction cost because traders already pay brokerage, deposit margin, brokerage, stamp duty and transaction charges.

VMS system for security inspection in State