Answers to some shout-box queries – 8

26 Jun 07, 15:33

rishi: Sir can you tell me how the share prices for a company goes up and down ??

Let me try to list out some things that take a share’s price up or down:

1. Technically speaking it is pure demand supply equation.
2. Inherent strength of a company’s fundamentals leads to demand and hence the price goes up. If the demand comes down the price will come down.
3. Company or market sensitive information making its appearance in the market. This can include the sector in which the company operates. It can include the company itself. As for instance when it is the subject of a takeover attempt.
4. Manipulation by market operators. These include brokers, market makers and others.

25 Jun 07, 23:26

vinod: Why should continue with export of iron when it reserves are coming down(eventhough the reserve are estimated to be 23 bn tonnes)?

This is an issue over which the two opposing camps keep fighting vigorously. The mining companies say that what they are exporting are ‘fines’ for which there is no ready market in India. And hence they should be allowed to export the ore. The Indian steel industry says that the ore should not be exported and preserved for the fast growing domestic sector.

The country produced about 160 mn tonnes of iron ore during 2006-07. Over 95 mt of this was exported mostly to spot markets in China. More than 80% of these exports constitute iron ore fines.

I think we should look at the issue, keeping the future potential discoveries of ore also in mind. The figure of 23 bn tonnes need not and should not remain a static figure. It should ideally be growing with the passage of time. Secondly, when we are able to produce the ore, but are not able to consume it immediately in the immediate future, why should we be emotionally attached to it? It should be allowed to be exported so that the people who invest in the mining activity are able to recover their investments and also make a bit of profit. This would in turn lead to more investments in the mining sector and allow further development of the iron ore mines.

Answers to some shout-box queries – 7

27 Jun 07, 12:38

manisha: recently i read a news on govt. intends to buy the RBI stake in SBI. What is purpose after ths sir

There is an apparent conflict of interest for the RBI. It cannot own a bank while being a regulator for the banking sector. That is why based on Narasimham committee’s recommendations, the Government decided to take ownership of the SBI from RBI.

27 Jun 07, 07:31

vinod: Sir what is the central govt concept of agriclinics

Announced through the 2001-02 budget, these centres will provide a package of soil and input testing facilities and other consultancy services. They

will strengthen transfer of technology and extension services and also provide self-employment opportunities to technically trained persons.

The Scheme aims at supplementing the existing extension network to accelerate the process of technology transfer to agriculture and providing supplementary sources of input supply and services, for which, by and large, farmers presently depend upon State Agencies.

Under the Government of India scheme of Agri-Clinics and Agri-Business centres, about 2615 agriculture graduates have been trained through 58 identified training centres. After completion of the training 436 agripreneurs have already taken up 40 types of different agriventures. Details can be accessed at http://www.manage.gov.in/pvtext/agriclinic.pdf. Also have a look at www.agriclinics.net for more info on the subject.

Answers to some shout-box queries – 6

On 20^th June Sridhar was asking me about how Dutch Disease raises exchange rate. What is the process behind the rise or decline of exchange rates. A few months back the $ rate was around Rs. 45. Now it has declined to about Rs. 40. How does it depend on the economy?

Dutch disease doesn’t lead to a rising rupee. A rising rupee leads to the Dutch disease. The rise of the rupee will make the country’s exports uncompetitive. When there is more demand for the local currency, its price will go up with reference to a foreign currency. If people holding dollars want more rupees, then the rupee will appreciate against the dollar. (I have put it in a very simplistic way. It may be good enough to understand the concept.) There will be many factors beyond a mere ‘demand’ which will determine the price of the rupee vs the dollar. Yes, a few months back, the rupee was hovering around Rs. 45 a dollar, but today it is hovering around Rs. 40 a dollar. That means that our currency is strengthening against the dollar. We do not have any classic reason – an excessive natural resource find – to explain the strengthening. It arose out of the steady increase of foreign investment inflows into the country. International investors seem to believe in the India growth story. That is why they are pouring in dollars. Hence the rupee is rising. That ‘belief’ of international investors is a thing which depends on how our economy is performing. They are deriving confidence that as the country’s economy is growing, any investment made in the country, will surely yield better returns than elsewhere. The policies of the country will allow them to repatriate profits or that there won’t be any need to repatriate profits in the immediate future.

Consequences of the East Asian Currency Crisis

The crisis had significant macro-level effects, including sharp reductions in values of currencies, stock markets, and other asset prices of several Asian countries. Many businesses collapsed, and as a consequence, millions of people fell below the poverty line in 1997-1998. Indonesia, South Korea and Thailand were the countries most affected by the crisis.

The economic crisis also led to political upheaval, most notably culminating in the resignations of Suharto in Indonesia and Chavalit Yongchaiyudh in Thailand. There was a general rise in anti-Western sentiment, with George Soros and the International Monetary Fund in particular singled out as targets of criticisms. Heavy US investment in Thailand ended, replaced by mostly European investment, though Japanese investment continued. Islamic and separatist movements intensified in Indonesia as the central authority weakened.

More long-term consequences include reversal of the relative gains made in the boom years just preceding the crisis. For example, the CIA World Factbook reports that the per capita income (measured by purchasing power parity) in Thailand declined from $8,800 to $8,300 between 1997 and 2005; in Indonesia it declined from $4,600 to $3,700; in Malaysia it declined from $11,100 to $10,400. Over the same period, world per capita income rose from $6,500 to $9,300. Indeed, the CIA's analysis suggests the economy of Indonesia was still smaller in 2005 than it had been in 1997 despite a population increase of 30 million, suggesting an impact on that country similar to the Great Depression.

Within East Asia, the bulk of investment and a significant amount of economic weight shifted from Japan and ASEAN to China.

The crisis has been intensively analyzed by economists for its breadth, speed, and dynamism; it affected dozens of countries, had a direct impact on the livelihood of millions, happened within the course of a mere few months, and at each stage of the crisis leading economists, in particular the international institutions, seemed a step behind. Perhaps more interesting to economists is the speed with which it ended, leaving most of the developed economies unharmed. These curiosities have prompted an explosion of literature about financial economics and a litany of explanations why the crisis occurred. A number of criticisms have been leveled against the conduct of the International Monetary Fund in the crisis, including one by former World Bank economist Joseph Stiglitz.

Politically there were some benefits. In several countries, particularly South Korea and Indonesia, there was renewed push for corporate governance. Rampaging inflation weakened the authority of the Suharto regime and lead to its toppling in 1998, accelerating East Timor's independence.

After the Asian crisis, international investors were reluctant to lend to developing countries, leading to economic slowdowns in developing countries in many parts of the world. The powerful negative shock also sharply reduced the price of oil, which reached a low of $8/barrel towards the end of 1998, causing a financial pinch in OPEC nations and other oil exporters.

Such sharply reduced oil revenue in turn contributed to the Russian financial crisis in 1998. Which in turn caused Long-Term Capital Management in the United States to collapse, after losing $4.6 billion in 4 months. A wider collapse in the financial markets was avoided when Alan Greenspan and the Federal Reserve Bank of New York organized a $3.625 bn bail-out.

Major emerging economies Brazil and Argentina also fell into crisis in the late 1990s.

The crisis in general was part of a global backlash against the Washington Consensus and institutions such as the IMF and World Bank, which simultaneously became unpopular in developed countries following the rise of the anti-globalization movement in 1999. Four major rounds of world trade talks since the crisis, in Seattle, Doha, Cancun, and Hong Kong, have failed to produce a significant agreement as developing countries have become more assertive, and nations are increasingly turning toward regional or bilateral FTAs (Free Trade Agreement) as an alternative to global institutions.

Many nations learned from this, and quickly built up foreign exchange reserves as a hedge against attacks, including Japan, China, South Korea. Pan Asian currency swaps were introduced in the event of another crisis.

However, interestingly enough, such nations as Brazil, Russia, and India as well as most of East Asia began copying the Japanese model of weakening their currencies, restructuring their economies so as to create a current account surplus to build large foreign currency reserves.

This has led to ever increasing funding for US treasury bonds, allowing or aiding housing (2001-2005) and stock asset bubbles (1996-2000) to develop in the United States.

East Asian Currency Crisis of 1997-98

Sreenadh: Hi Sir, Tell sth about The East Asian financial crisis and what caused it?

In the wake of the rising rupee and a weakening dollar, there appears to be renewed interest in the East Asian Financial crisis that happened nearly a decade ago and what lessons the world could have learned from it. Because the subject is quite complex, I prefer to write in a two parts. Here we go with the first part.

What I write below is heavily borrowed from, as usual, Wikipedia. To this I add, where appropriate some other material from other sources and at times my opinion. Those of you, who have got the patience and time, are strongly recommended to reading this:

http://en.wikipedia.org/wiki/East_Asian_Financial_Crisis

The East Asian Financial Crisis was a period of economic unrest that started in July 1997 in Thailand and South Korea with the financial collapse of Kia, a South Korean car manufacturer, and affected currencies, stock markets, and other asset prices in several Asian countries. It is also commonly referred to as the East Asian currency crisis. There is consensus on the existence of a crisis and its consequences, but what are less clear are the causes of the crisis, its scope and resolution.

What exactly was this economic unrest? And how did it affect the various markets? Thailand sparked off the crisis when in July 1997, it devalued its baht in an effort to shore up its faltering economy, abandoning costly policy of pegging the currency to the US dollar. That set off a chain reaction that turned Asia’s investment and real-estate boom into a bust, leading to a stampede by foreign investors rushing to pull money out. The crisis worsened as foreign-exchange reserves proved insufficient to prevent the region’s currencies from plummeting. As investors fled Asia after this devaluation, they set off a plunge in other currencies that had previously been propped up through fixed exchange-rate regimes. Indonesia’s rupiah fell 57% against the US dollar, causing companies to buckle under the $80 bn in foreign debt and leading to riots in Jakarta. Thailand’s baht fell 45%, and its stock market fell 75%. South Korea’s won lost half of its value, and its economy collapsed. Malaysian ringitt fell 35%. The crisis eventually spread to South America and to Russia, which defaulted on $40 bn of debt.

Effects

Indonesia, South Korea and Thailand were the countries most affected by the crisis. Hong Kong, Malaysia, Laos and the Philippines were also hit by the slump. Mainland China, Taiwan, Singapore and Vietnam were relatively unaffected. Japan was not affected much by this crisis but was going through its own long-term economic difficulties. However, all nations mentioned above saw their currencies dip significantly relative to the US dollar, though the harder hit nations saw extended currency losses. Out of all the countries affected, South Korea was hit hardest.

Causes

As stated before, there is no real consensus on what caused the crisis. Economists differed on this variedly.

Until 1997, Asia attracted almost half of total capital inflow to developing countries. The economies of Southeast Asia in particular maintained high interest rates attractive to foreign investors looking for a high rate of return. As a result the region's economies received a large inflow of hot money and experienced a dramatic run-up in asset prices. At the same time, the regional economies of Thailand, Malaysia, Indonesia, the Philippines, Singapore, and South Korea experienced high growth rates, 8-12% GDP, in the late 1980s and early 1990s. So when suddenly the western investors lost confidence in securities in East Asia and began to pull money out, creating a domino effect (the consequence of one event setting off a chain of similar events), the crisis resulted.

Tomorrow, we will look at the consequences of this crisis both in Asia and elsewhere. Stay tuned…

Answers to some shout-box queries -5

19 Jun 07, 22:43

Sreenadh: Sir, what's the brouhaha over natural gas pricing?and dispute between Reliance Bros

Reliance Industries Limited has discovered lot of natural gas off the East Coast in K-G Basin. Krishna-Godavari basin. The discovery amounts to about 14 tcf – trillion cubic feet. The Reliance brothers (Mukesh Ambani and Anil Ambani) parted their ways after this discovery. So, as part of the settlement the elder brother (Mukesh Ambani) got the petroleum and natural gas business. As part of this settlement, it was agreed by the elder brother to give the younger brother (Anil Ambani) about 28 MMSCMD at a price of $2.34 per mmBtu. It appears that the original development plans of this discovery were envisaging the daily production of about 40 MMSCMD (Million Metric Standard Cubic Meters Per Day) of gas. So keeping those plans in mind they had agreed upon a share. But it appears that the elder brother (Mukesh Ambani) has decided on very aggressive development plans and hike the capacity to 80 MMSCMD. When the plans are so aggressive, obviously the interests of the younger brother do get affected. Will there be a corresponding raise in his share? That is, will his share go up from 28 MMSCMD to 56 MMSCMD? What would or should he do if the capacity goes up like that? Should he take delivery perforce? Will he be free to sell off the excess share to a third party? And so on.

The deal between the brothers envisaged this share to be given at a price of $2.34 mmBtu (Million Metric British Thermal Units). But the Government of India, being the owner of the natural resource, would be interested in getting higher profit petroleum. So it naturally wants a better price than the agreed price of $2.34 between the brothers for the quantity of gas being exchanged. But discovering market determined price of a commodity like natural gas, that too in a country like India (with is current development of natural gas markets being very nascent) is not going to be easy. There will be claims and counter-claims. So at the behest of the Government of India, Mukesh Ambani got down to the business of discovering the market price through an open bid process. The price that was discovered through this method was found to be $4.33 per mmBtu. The government seemed to have developed cold feet even with this price. So it constituted an EGoM to look into the issue. This EGoM came out with a price of $4.20 per mmBtu based on a number of factors. This is the minimum price at which the natural produced at this KG basin discovery is to be traded. Even if the actual price turns out to be lower than this, Mukesh Ambani will have to pay the Government of India profit petroleum calculated at this rate.

In complex business transactions like this, it is very difficult for any stakeholder to understand the true import of every step of the transaction. At a given point of time, one will appear to be losing while another will appear to be gaining. A certain amount of give and take is inevitable. Now the younger brother has approached the Bombay High Court contesting the development plans of the elder brother. The Bombay High Court has asked the brothers to renegotiate the deal as it has run counter to the family settlement.

Updated on 16.10.2007.

Answers to some shout-box queries -4

18 Jun 07, 09:30

vinod: Sir..what is the difference in the working of SHCIL and SEBI?

There is a lot of difference. SEBI is a regulator while SHCIL is not. The latter is just a custodian of stocks in demat form. SHCIL can’t regulate the markets in any way. It is a mere custodian. SEBI lays down the rules and regulations governing the market. Its regulations have an impact on the business and/or conduct of the various market participants. SHCIL’s work resembling any regulatory work can at best have an impact on a single market participating entity – not a class.

19 Jun 07, 22:36

vinod: How open is the Indian Agriculture to imports and exports?

Nobody talks of ‘openness’ of exports as an issue at all. India also wants to export its agriculture products. The government has so far not found any reason to levy any export duty on agriculture exports. You might remember the export duty that is levied on iron ore exports recently. If it finds that export of agriculture is happening to the detriment of the Indian needs, it would surely levy an export duty. The fact that it has not, shows that there is very little of unwated export happening.

Coming to imports, ‘Openness’ of our imports is a relative term. What is felt ‘Open’ by one may not appear to be so for another. However, it would suffice to know that India being predominantly subsistence agriculture oriented country, can ill afford to have cheap agriculture products flooding its markets to the detriment of its own farmers. So it has always kept the duty structure on imports at a very high level. Being a developing country, it is allowed to do so also by the international trading regime. It would interesting to know that while the average import tariff India applies on farm products is around 38 per cent today, the average "bound" tariff is around 115 per cent. Bound tariff is the tariff level that India reserves the right to increase duties up to. Take a look at this excellent article that appeared in Rediff.com. It will give a very good insight into the issue.

Answers to some shout-box queries -3

Here are answers to some more of your shout-box queries.

vinod: What is the implication of nationalisation of venezuela's oil companies in the global oil prices?

What I foresee is a temporary spike in the prices. US (which sources most of the Venezeulan oil) will always find a quick substitute. This may lead to a temporary spike in international markets. But before it could do much damage on this count, either Venezuela will see the futility of losing US or it would have started pumping all that oil into international markets, which is sure to lead to a dampening effect.

So other than some temporary hickups, I can't foresee much trouble ahead on this count.

Daya: Sir... As per current definition of repo... it means injecting the liquidity... can you please explain how it inject liquidity? which rate is higher... repo or reverse rapo? And why?

Repo rate is the rate at which a loan is granted when an asset is given as collateral or security for the loan, and where the asset will be repossessed by the borrower to redeem the loan. When loan is so given by RBI (to banks and FIs) it injects money into the system. At present the repo rate is 7.75%. That means, this is the interest rate at which banks and FIs will have to borrow from RBI. If this rate is lowered, liquidity in the system will go up -- there is more money in the market. If this rate is hiked, it will drain away liquidity from the system. Because it is more costly to borrow at higher rates, banks and FIs will desist from borrowing more from RBI. This results in less availability of money in the system.

A reverse repo rate is the rate at which RBI mops up liquidity from the system by offering securities. At the moment this rate is 6%.

It is very easy to get confused with both the rates and their purposes. Actually calibrating one of these rates will result in either increase or decrease in money supply in the system. But which one to calibrate is a decision that RBI takes depending on its policy stance at that particular time.

There is nothing to show that one rate will always be higher than the other. It depends on the requirements/policy stance of the RBI at that particular point in time. At the moment the repo rate is higher than the reverse repo rate.

A look at the money market operations figures of RBI for a particular day, perhaps will give us more insight into the concept. I chose the latest one available from RBI's web site -- June 14, 2007.

Liquidity Adjustment Facility

(i) Repo ( 1 Day) 0.00 7.75

(ii) Reverse Repo ( 1 Day) 2,999.00 6.00

That statement shows that there are no repo transactions for the day. That is nobody came forward to take money from the RBI by pledging securities. But there are transactions under reverse repo. RBI has mopped up Rs. 2,999 crores from the system by taking money against its securities from the market participants. It means that banks and FIs have come forward to lend money to RBI. In other words, it has mopped up money from the system.

Hope this clarifies the concept.

deepak: sir , can you provide some insight on the topic "cblo-colletarized borrowring and lending obligation" in indian context. thankyou

Collateralised Borrowing and Lending Obligation (CBLO), is a money market instrument for the benefit of the entities who have either been phased out from inter bank call money market or have been given restricted participation in terms of ceiling on call borrowing and lending transactions and who do not have access to the call money market. CBLO is a discounted instrument available in electronic book entry form for the maturity period ranging from one day to ninety Days (can be made available up to one year as per RBI guidelines). In order to enable the market participants to borrow and lend funds, CCIL provides the Dealing System through Indian Financial Network (INFINET), a closed user group to the Members of the Negotiated Dealing System (NDS) who maintain Current account with RBI and through Internet for other entities who do not maintain Current account with RBI.

CBLO is explained as under:

• An obligation by the borrower to return the money borrowed, at a specified future date;
• An authority to the lender to receive money lent, at a specified future date with an option/privilege to transfer the authority to another person for value received;
• An underlying charge on securities held in custody (with CCIL) for the amount borrowed/lent.

Eligibility:

Membership (including Associate Membership) of CBLO segment is extended to banks, financial institutions, insurance companies, mutual funds, primary dealers, NBFCs, non-Government Provident Funds,. Corporates etc. The Members are required to open Constituent SGL (CSGL) Account with CCIL for depositing securities which are offered as collateral / margin for borrowing and lending of funds. Besides, Associate Members are required to open a current account with a Settlement Bank designated by CCIL for settlement of funds.

Eligible Securities:

Eligible securities are Central Government securities including Treasury Bills.

Collateralised Borrowing and Lending Obligation (CBLO) was operationalised as a money market instrument through the CCIL on January 20, 2003. With a view to developing the market for the CBLO, it was exempted from CRR. Furthermore, securities lodged in the gilt accounts of the bank maintained with the CCIL under the Constituent`s Subsidiary General Ledger (CSGL) facility and remaining unencumbered at the end of any day can be reckoned for SLR purposes. The wider usage of the instrument is expected to receive impetus from the establishment of real time connectivity between the Public Debt Office (PDO) of the Reserve Bank and the CCIL and value-free transfer of securities between market participants and the CCIL.

The collateralised market is now the predominant segment in the money market, accounting for about 70 per cent of the total volume during 2006-07 . Mutual funds and insurance companies are the major lenders in the CBLO market with nationalised banks, primary dealers and non-financial companies being the major borrowers.

vinod: Under whose control does the CBI come?Why was it constituted and when is it called into service?

Instead of reproducing something which is already available on the web, I would prefer to point you to this. Follow this link. It was founded in 1941. Look at its history here.

rakhi: what is the difference between a council , committee and commission ?

Nothing much at all. The naming is just a matter of how and by whom they are constituted. You have religious councils, scientific councils, city councils etc. Committees are constituted to usually look into specific issues. That 'look into' may include an enquiry, deeper study, or plain and simple negotiation with somebody to solve a pending issue etc. A commission usually connotes the involvement of quasi-judicial or judicial authority or power being vested in it in deciding about the subject that it is entrusted with. There is no hard and fast rule as to the constitution or naming of these bodies anywhere to my knowledge. If there is any such thing, I would be glad if any one of you can chip in with the info.

About IIP

Index of Industrial Production is a figure that is doled out every month by the CSO (Central Statistical Organization) of the MOSPI – Ministry of Statistics and Program Implementation at the Centre. It gives us the growth rates recorded in each of the industrial activities of the economy.

It is measured in three different ways. IIP-Sectoral gives figures about Mining, Manufacturing, Electricity and General sectors. Then there is the listing of all 17 industrial groups for which growth is monitored. This is followed by use-based industries’ monitoring. Use-based industries include basic goods, capital goods, intermediate goods, consumer goods, consumer durables, consumer non-durables.

Take a look at this link. Once there, you can choose the month that you want to see it for from the drop down list available on the top right.

The base for calculating the IIP is taken 100 during 1993-94. All the industries are grouped into 17 groups based on a 1987 NIC (National Industrial Classification) classification. NIC is nothing but an organized way of listing out various industries with a two digit code. This effort is made to keep Indian classification of goods in conformity with the international best practices like ISIC (International Standard Industrial Classification). If you want to more about the NIC follow this link.

Answers to some shout-box queries

Ritu Chauhan was asking me yesterday through email as to why is car racing called Grand Prix?

In fact the word Grand Prix is applied to many other contests. Not just car races. Though we tend to associate it most with Formula 1 racing. You would be surprised to know that it is associated with as diverse a list as: music, cinema, volleyball, horse racing, dressage, videogames etc. Wait a minute what is ‘dressage’? I will explain this a minute later.

So what happens in a Grand Prix contest is that there will be many small contests, all leading up to a finale. Winners and runners up in each such small event will be awarded points. The ultimate winner is one who gets the highest score and is declared the winner of the Grand Prix.

By the way why is it called 'Grand Prix'? The phrase means "Grand Prize" in French. Hence the name!

Say in car racing, if we read something about Malaysian Grand Prix, we should understand that it is a series of races conducted in Malaysia (sometimes referred to as circuit) and that the ultimate prize will be awarded at the end of the final race. As far as car racing is concerned Formula One racing is THE COMPETITION that every racing driver and car manufacturer dreams of winning.

Now back to dressage: You would have seen in TV a particular sport wherein the jockey guides the horse into doing some seemingly effortless maneuvers like trotting, jumping, short chases etc. Though some may get easily bored after watching it for some time, it does really rivet some people to the TV. That is called dressage. Its fundamental purpose is to develop, through standardized progressive training methods, a horse's natural athletic ability and willingness to perform, thereby maximizing its potential as a riding horse. At the peak of a dressage horse's gymnastic development, it can smoothly respond to a skilled rider's minimal aids by performing the requested movement while remaining relaxed and appearing effortless. For this reason, dressage is occasionally referred to as "Horse Ballet."

Vinod was asking me to explain the advantage of reverse mortgage.

Put simply, it allows retired people with houses to have a steady stream of income in their sunset years. The word ‘income’ is actually a misnomer here. That ‘income’ is nothing but a series of payments (loan installments) made by the bank against the property that is mortgaged. The loan so advanced by the bank is recouped by the bank only after the death of the person to whom it is advanced, by selling away the property. The banker’s interest costs and principal amounts would have to be recovered through the sale proceeds of the house.

There are quite a few issues that concern this form of loan advancing. Take a look at all the bits and pieces that we noted in our blogs. Use the search term ‘reverse mortgage’ on the top navigation bar in both the blogs to get to each day of the notings.

I would suggest you to read this item that we noted on Discover It.

Answers to some of the shout-box queries

vinod: What is SLP?

A special leave petition is filed by an aggrieved party (with a High Court order) before the Supreme Court, only on the special leave granted by the High Court. If the High Court while passing its orders, does not grant that leave, the aggrieved party cannot approach the Supreme Court with an SLP. Instead it has to go with a Civil Appeal. This will take longer to get admitted and adjudicated.

rakshanda: has any male tennis player ever won the ' boxed set ' ?

No. It is a Grand Slam-related accomplishment. It is winning a "boxed set" (not seat) of Grand Slam titles – winning the singles, doubles, and mixed doubles at all four Grand Slam events.

The top men's singles players have played comparatively little doubles, and very little mixed doubles. Three women have completed the "boxed set" during their careers:

Doris Hart

Margaret Smith Court

Martina Navrátilová

rakshanda: why does our ports have greater turnaround ?

Our ports have a greater turnaround time. That is they are less efficient. Our procedures and systems are slow. It is a reflection of our laxity in work, procedures and systems.

roopa: Hi what is the meaning of seeded and unseeded in Tennis world

'Seeded' means ranking of the players within a given tournament, as opposed to ranking of players in general for a year. Players in Tennis tournaments are "seeded" to determine who plays whom in the first round of the tournament. The number 1 seed is considered the top player in a given bracket; the number 2 seed is second-best; number 3 seed is third best and so on. Seeding is based on that player's current world rank, though a "selection committee" might be used to make the actual determination of who gets what seed in a given bracket of a tournament. Once the players are all seeded, the top seed will play the last seed in the first round, the second-seed will play the second-lowest seed, and so on.

The reason for seeding is to keep the top players in each bracket from meeting each other as long as possible, so that a Number 1 Seed can never defeat a Number 2 seed in the early rounds of a tournament. Likewise the third and fourth seeds will have to go through several rounds against lesser opponents to meet the top-seeded players. This keeps the big names in a tournament as long as possible, as well as ensuring that matches near the end of the tournament will be as exciting and evenly matched as possible.

Strategic Petroleum Reserves

What are strategic reserves of oil? Do we have any plans afoot on this front?

The crude oil prices are again soaring. Rumours of an imminent attack on Iran by the US are also doing rounds. In such a situation, if and when such an attack happens, our country which is heavily dependent on oil imports will be adversely affected. Do you remember that we consume about 2.5 mn barrels of crude oil per day and that of this about 73% is met through imports?

What do countries like the US do to face such a situation? They have what are called strategic reserves. Look at what the Wikipedia says on strategic reserves:

Strategic petroleum reserves ("SPR") refer to crude oil inventories held by the government of a particular country, as well as private industry, for the purpose of providing economic and national security during an energy crisis. According to the United States Energy Information Administration, approximately 4.1 billion barrels of oil are held in strategic reserves, of which 1.4 billion is government-controlled. The remainder is held by private industry. At the moment the US Strategic Petroleum Reserve is one of the largest strategic reserves, with much of the remainder held by the other 25 members of the International Energy Agency. Recently, other non-IEA countries have begun creating their own strategic petroleum reserves, with China being the largest of these new reserves.

According to a March 2001 agreement, all 26 members of the International Energy Agency must have a strategic petroleum reserve equal to 90 days of oil imports for their respective country. Only net-exporter members of the IEA are exempt from the reserve requirement. The exempt countries are Canada, Denmark, Norway, and the United Kingdom. Denmark and the U.K. have both recently created strategic reserves due to their requirements as European Union members.

Where do we stand as against the 90 day strategic reserve requirement? India is implementing a two pronged action in building up strategic reserves. One for the crude and another for LPG. Hindustan Petroleum Corporation in association with Total of France is constructing an underground LPG cavern storage facility at Vizag. It is one of the first of its kind in south and sout-east Asia. It is expected to be ready by end 2007. It has a 60,000 tonne capacity. Its capacity will be just enough to support the country’s requirement for a mere 2.5 days.

The government has also approved last year a funding mechanism for setting up strategic crude oil storage of 5 MT at various locations. This project is being implemented through a subsidiary of OIDB – Oil Industry Development Board.

Climate change without sacrificing growth

We all know that it is the US’ obstinacy alone, which has been the reason for the failure of the world countries in agreeing for the extension of Kyoto protocol or in coming out with a new protocol, on facing the challenges of climate change.

The US has been using India as its crutch for inaction on the global climate change front. Look at these figures: India has 400 mn people who are not even connected to the physical infrastructure of energy supply networks, an equal number who are served for less than 20% of their time and the balance who pay energy prices that are comparable with most developed countries – even without adjusting for purchasing power parity! About 90% of India’s rural population still uses biomass fuels for cooking. Its HDI (Human Development Index) rank in 2005 was a low 127 and it is struggling to manage its fiscal deficits.

But any reader of today’s article in ET by its ambassador to India, David C. Mulford would surely mistakenly believe that the US is doing far more than what it is actually doing. This is what the developing world has to learn from the developed world – very good presentation abilities and a very well planned campaign of (mis)information dissemination. As future Civil servants of the country, most of you would have to perfect this fine art.

The byline of his article reads “President Bush’s proposal addresses the challenge of climate change while not sacrificing the imperative of economic growth.” This very clearly reflects what our own PM has been quoted as saying – that India cannot afford to take measures to contain climate change at the cost of its growth.

He lists out quite a few initiatives where India and US are partnering in multilateral efforts. Let’s look at a couple of them which are worth noting:

1. APPCDC: Asia Pacific Partnership on Clean Development and Climate. It is a group of six nations committed to leveraging commercially viable clean technology to promote sustainable development and poverty reduction. It was established in 2005 and has US, China, Australia, India, Korea and Japan.
2. FutureGen project: India has joined the US, China and Australia in this. It is a public private partnership project on fusion energy, a multilateral initiative of the US, the EU, Japan, China, South Korea and Russia to demonstrate the scientific and technological capability of fusion power.

Any reader of his article would be left in doubt. That is the persuasive ability of his article. If you know how to present your point of view across in a very sophisticated manner, you can make the impossible appear possible. Frankly, I can’t see how or why India and China should do more than what they are already doing to climate change. These are economies which perforce have to guzzle up more energy during their taking-off phase, which is now. Expecting them to do on par with the other developed countries (basically this is what the US says) is nothing but an act of inequity.

Curing the reservation system

In today’s ET I found a very good article written by Mythili Bhusnurmath on the subject.

While suggesting that unless all political parties come together and work out a solution that addresses genuine deprivation regardless of caste, creed or religion, it is only a matter of time before we see a repeat of the anger of castes clamouring for downward mobility in the social pecking order to garner reservation status.

In today’s world where mobility is easy, poverty, rather than caste, is the single biggest handicap. A beginning has been made with the suggestion that reservation be extended to poorer sections among the forward communities by the newly elected Chief Minister of UP, Ms. Mayawati. Can the political parties take a cue from this and act on it before it is too late?

I doubt it. Mayawati may be articulating an idea whose time has come. But can Mayawati herself be trusted to act upon what she has said on this? What all would be needed for her to go back on her words would be a single defeat in yet another election. I agree fully with Mythili Bhusnurmath in holding the view that as long as we have the first-past-the-post system of winning elections there will always be a tendency for political parties to play the caste card. In this system, we should note the fact that people with less than 51% of the votes polled get elected. Assuming that a candidate has garnered 49% vote, even though he may be the winner in the election, does it not signify that 51% of the people have in fact rejected him? So, what is the solution for this?

First of all make affirmative action more focused as a delivery vehicle of social justice by calculating the ‘disadvantage index’. This index can identify potential quota beneficiaries not on caste alone, but on various other criteria including gender, education, geographical location and family income.

Then switch over to a proportional system of elections. This idea is explained in detail in today’s Times of India. Though a complex process to administer in a country like India, with the entry of electronic voting machines and its success seen in the recently concluded MLC elections in Andhra Pradesh, it is not all that difficult to implement. A modified proportional system of representation could run something like this. Voters could be asked to cast their ballots for not just one candidate but to give their preferences, in order of priority, for two or more contestants. Assume that they would have preferred their own caste candidate as the first preference. The winning candidate can still be somebody different, who totals up the maximum number of aggregate points. The second and third preferences would surely take non-caste considerations (gender, reputation for honesty etc) into account, and so loosen the stranglehold of caste on the electoral process.

Do I see anybody saying ‘aye’? I hear only ‘nays’!!! From the political class that is. But nothing wrong in dreaming. At least nobody has taken away my right to dream. Not yet.

Israel Palestinian Conflict

It is one of those issues for which the world community has not been able to find a solution over decades. I would dare say that civilizations have fought over this issue, though they would have called it with a different name during their respective heydays.

As you would have by now noticed, while relying heavily on Wikipedia, I would also chip in with my own perspectives, edits and additions to gather what we need to understand the issue. Have the patience to go through the whole maze of the issue on Wikipedia? Go ahead here:

http://en.wikipedia.org/wiki/Israeli-Palestine_conflict

Be warned though that it is very easy to get lost in the maze of links that they provide. For those of you who don’t have the patience or time; or perhaps rely on my abilities to present you with something useful, read on…

It would be unnecessary for us to go into the disputes between civilizations regarding this issue. If you understand basically three landmark events relating to it, that should suffice. Other current developments always get reflected in daily news and our updates. In fact the current developments have become routine and not worthy of reporting any longer. People kill each other; that’s it. That is what it has been reduced to. The three landmark events include:

1. Arab-Israeli War

2. Six Day War

3. Oslo peace process

The Conflict

The Israeli-Palestinian conflict, which is at the heart of the Arab-Israeli conflict, is an ongoing dispute between two peoples, Jewish Israelis and Arab Palestinians, that both claim the right to sovereignty over the Land of Israel/Palestine in whole or in part. Throughout history, there have been many conflicts in this area between peoples inhabiting it. This particular conflict can be traced to the late 19th century, when Zionist Jews expressed their desire to create a modern state in their ancient homeland. The Zionist Organization sought to realize this goal by encouraging immigration thither, and purchasing land in the region, then controlled by the Ottoman Empire.

The central contentious issue of who controls the land remains the same. The State of Israel, established control over the West Bank and Gaza Strip by defeating surrounding Arab armies in the 1948 Arab-Israeli War and the 1967 Six Day War. When the Palestine Liberation Organization controlled the Palestinian Authority, it sought to establish an independent, viable, and sovereign state on this land. Hamas, now the majority party in the Palestinian Authority, calls for the destruction of Israel, and seeks to create a Palestinian state encompassing all of Israel, the West Bank, and Gaza Strip.

Most Palestinians accept the West Bank and Gaza Strip as at least a part of the territory of their future state. Most Israelis also accept this solution. An attempt to achieve this solution was seen in the Oslo peace process, where Israel and the PLO negotiated, unsuccessfully, to come to a mutual agreement. Vocal minorities on both sides advocate other solutions, most of which contradict the goal of 'two states for two peoples.' In both communities, some individuals and groups advocate total removal or transfer of the other community. A small minority advocates a one state solution, where all of Israel/Palestine would become a bi-national state, providing equal citizenship to all of its current residents.

The 1948 Arab Israeli war

The 1948 Arab-Israeli War, also known as the Israeli War of Independence, was the first in a series of wars fought between the State of Israel and its Arab neighbors in the long-running Arab-Israeli conflict. For Israeli Jews, the war marks the successful establishment of the Israeli state, but for Palestinian Arabs, it signifies the beginning of the events referred to as "al Nakba" (meaning "the Catastrophe"), a term used to describe the fleeing or expulsion of hundreds of thousands of Palestinian residents from the newly created state of Israel, and the subsequent Israeli ban on their return.

In 1947, the United Nations had recommended partitioning Palestine into Jewish and Arab states, a plan which Arab leaders rejected. The British mandate over Palestine was due to expire on 15 May 1948, but the Jewish leadership, led by future Prime Minister David Ben-Gurion, declared independence on 14 May. The State of Israel declared itself as an independent nation, and was quickly recognized by the Soviet Union, the United States, and many other countries.

By the end of May, approximately 6,000 Syrian, 4,500 Iraqi, between 6,000 and 9,000 Transjordanian, 1,000 Lebanese and 5,500 Egyptian troops had invaded the territory of the former British mandate, joining the Palestinian irregulars. The Transjordanians fought only in the areas alloted to the Arab state and to the corpus seperatum of Jerusalem, while the Syrians, Egyptians, Iraqis and Lebanese invaded the territory alloted to the newly-created State of Israel. By the end of the war Israel had repulsed them, held the territory designated for it and captured about half of the territory designated for the Arab state, as well as part of Jerusalem. The war and the armistice agreements between Israel and its neighbors resulted in the division of the former British mandate into Israel, the Gaza strip held by Egypt and the West Bank held by Jordan.

The six day war

The Six-Day War, also known as the 1967 Arab-Israeli War, the Third Arab-Israeli War, Six Days' War, an Naksah (The Setback), or the June War, was fought between Israel and its Arab neighbours Egypt, Jordan, and Syria. Iraq, Saudi Arabia, Kuwait, and Algeria also contributed troops and arms to the Arab forces. In the months before June 1967, Egypt expelled the United Nations Emergency Force from the Sinai Peninsula, increased its military activity near the border, blockaded the Straits of Tiran to Israeli ships, and called for unified Arab action against Israel. In June 1967, Israel launched a pre-emptive attack on Egypt's airforce fearing an imminent invasion by Egypt. Jordan then attacked western Jerusalem and Netanya. At the war's end, Israel had gained control of eastern Jerusalem, the Gaza Strip, the Sinai Peninsula, the West Bank, and the Golan Heights. The results of the war affect the geopolitics of the region to this day.

The Oslo Peace Process 1993

The Oslo Accords, Officially called the Declaration of Principles on Interim Self-Government Arrangements or Declaration of Principles (DOP), were finalized in Oslo, Norway on August 20, 1993, and subsequently officially signed at a public ceremony in Washington D.C. on September 13, 1993, with Mahmoud Abbas signing for the Palestine Liberation Organization and Shimon Peres signing for the State of Israel.

In essence, the accords called for the withdrawal of Israeli forces from parts of the Gaza Strip and West Bank and affirmed a Palestinian right of self-government within those areas through the creation of a Palestinian Authority. Palestinian rule would last for a five year interim period during which a permanent agreement would be negotiated (beginning no later than May 1996). Permanent issues such as Jerusalem, refugees, Israeli settlements in the area, security and borders were deliberately excluded from the Accords and left to be decided. The interim self-government was to be granted in phases. Until a final status accord was established, West Bank and Gaza would be divided into three zones:

* Area A - full control of the Palestinian Authority.

* Area B - Palestinian civil control and Israeli security control.

* Area C - full Israeli control, except over Palestinian civilians. These areas were Israeli settlements and security zones without a significant Palestinian population.

Together with the principles the two groups signed Letters of Mutual Recognition - The Israeli government recognized the PLO as the legitimate representative of the Palestinian people while the PLO recognized the right of the state of Israel to exist and renounced terrorism, violence and its desire for the destruction of Israel.

The aim of Israeli-Palestinian negotiations was to establish a Palestinian Interim Self-Government Authority, an elected Council, for the Palestinian people in the West Bank and the Gaza Strip, for a transitional period not exceeding five years, leading to a permanent settlement based on Resolution 242 and Resolution 338, an integral part of the whole peace process.

In order that the Palestinians should govern themselves according to democratic principles, free and general political elections would be held for the Council.

Jurisdiction of the Palestinian Council would cover the West Bank and Gaza Strip, except for issues that would be negotiated in the permanent status negotiations. The two sides viewed the West Bank and the Gaza Strip as a single territorial unit.

The five-year transitional period would commence with the withdrawal from the Gaza Strip and Jericho area. Permanent status negotiations would begin as soon as possible between Israel and the Palestinians. The negotiations would cover remaining issues, including: Jerusalem, refugees, settlements, security arrangements, borders, relations and cooperation with other neighbors, and other issues of common interest.

There would be a transfer of authority from the IDF to the authorized Palestinians, concerning education and culture, health, social welfare, direct taxation, and tourism.

The Council would establish a strong police force, while Israel would continue to carry the responsibility for defending against external threats.

An Israeli-Palestinian Economic Cooperation Committee would be established in order to develop and implement in a cooperative manner the programs identified in the protocols.

A redeployment of Israeli military forces in the West Bank and the Gaza Strip would take place.

The Declaration of Principles would enter into force one month after its signing. All protocols annexed to the Declaration of Principles and the Agreed Minutes pertaining to it, should be regarded as part of it.

Concluding remarks:

It is a geopolitical reality that we are living in a unipolar world with the US as the leader. It is also equally a reality that Israel has tremendous influence over US. This is believed to emanate from the fact that a large part of US business is controlled by Israelis or people of Israeli origin. It is also a reality that Arabs, in spite of their oil power are not able to hold any sway over the US, the largest consumer and importer of oil from the Middle East. As long as the geopolitical realities remain like this, there is no solution to this problem. Israel will keep on suppressing the Palestinian Intifada with an iron hand. Palestinians will never give up their fight. There will be casualties on both sides.

I may look cynical; but the fact is that in spite of following this issue closely for more than two decades, I have not been able to see anything other than intransigence on the part of the parties to the conflict.

So many other conflicts appeared on the world horizon and disappeared after some time; but not this one.

Doha round of WTO talks

Recently I was asked to explain the recent issues relating to Doha Round of WTO talks and how it will affect the global trade.

Well, I excerpt below what the Wikipedia says (interspersed with some of my own observations) about the subject. You will get a thorough background about the Doha round with the information from Wikipedia. Then I follow it up with the latest happenings that have occurred since the notings in Wikipedia. It will be followed by my take on the topic.

What Wikipedia says about them?

The Doha Development Round of World Trade Organization negotiations aims to lower trade barriers around the world, permitting free trade between countries of varying prosperity. As of 2006, talks have stalled over a divide between the developed nations led by the European Union, the United States and Japan and the major developing countries (represented by the G20 developing nations), led and represented mainly by India, Brazil, China and South Africa.

The Doha round began with a ministerial-level meeting in Doha, Qatar in 2001, with subsequent ministerials in Cancún, Mexico (2003), and Hong Kong, China (2005). Related negotiations have taken place in: Geneva, Switzerland; Paris, France; and again Geneva.

The Doha round of WTO negotiations began in November 2001. This round was to have begun at the WTO Ministerial Conference of 1999 in Seattle, and was to have been called "The Seattle Round" but some developing countries refused to launch the second round by blocking the 'explicit consensus' needed at the final Heads of Delegation meeting. Severe demonstrations distracted attention from the refusal of developing nations to expand the WTO after having been devastated by the Uruguay Round. The new round could only be launched at a meeting in Doha, Qatar. The new trade agenda of the developed world was dubbed the Doha Development Agenda, and from there all countries were committed to negotiations opening agricultural and manufacturing markets, as well as services negotiations and expanded intellectual property regulation. The intent of the round, according to its proponents, was to make trade rules fairer for developing countries. Opponents charged that the round would expand a system of trade rules that were bad for development and interfered excessively with countries' domestic "policy space".

The round was set to be concluded in four years (December 2006)- after two more Ministerial Conferences had produced a final draft declaration. The WTO pushed back its self imposed deadline to slightly precede the expiration of the US President's Congressional Fast Track Trade Promotion Authority. Any declaration of the WTO must ultimately be confirmed by the US Congress. Trade Promotion Authority prevents Congressmen from amending the draft. It expires on June 30, 2007.

Cancún, 2003

The 2003 Cancún talks — intended to forge concrete agreement on the Doha round objectives — collapsed after four days during which the members could not agree on farm subsidies and access to markets. Negotiations focused upon four key areas: agriculture, industrial goods, trade in services, and updated customs codes. The collapse seemed like a victory for the developing countries. But unlike Seattle, which prevented the commencement of the second round of negotiations, Cancun resulted in continued negotiating.

South Korean Farmers and Fisheries President Lee Kyung Hai committed suicide on the first day of the conference in protest of the price distorting agricultural subsidies of the EU and US. The North-South divide was most prominent on issues of agriculture. Rich countries’ farm subsidies (both the EU’s Common Agricultural Policy and the U.S. government agro-subsidies) became a major sticking point. The developing countries were seen as finally having the confidence to reject a deal that they viewed as unfavorable. This is reflected by the new trade bloc of developing and industrialized nations: the G20. Since its creation, the G20 has had fluctuating membership, but is spearheaded by the G4 (People's Republic of China, India, Brazil & South Africa) While the G20 presumes to negotiate on behalf of all of the developing world, many of the poorest nations continue to have little influence over the emerging WTO proposals.

The contentious Singapore issues – investment, government procurement and competition policy – were removed from the negotiating table.

Geneva, 2004

The August 2004 Geneva talks achieved a framework agreement on opening global trade. The U.S., EU, Japan and Brazil agreed to end export subsidies, reduce agricultural subsidies and lower tariff barriers. Developing nations agreed to reduce tariffs on manufactured goods, but gain the right to specially protect key industries. The agreement also provides for simplified customs, and stricter rules for rural development aid.

Paris, 2005

Trade negotiators wanted to make tangible progress before the December 2005 WTO meeting in Hong Kong, and hoped to agree to the deal before 2007 when U.S. fast-track legislation expires. Without fast-track, it will be much harder to get a ratification from the U.S. Senate.

Paris talks were hanging over a few issues: France protested moves to cut subsidies to farmers, while the U.S., Australia, the EU, Brazil and India failed to agree on issues relating to chicken, beef and rice. Most of the sticking points were small technical issues, making trade negotiators fear that agreement on large politically risky issues will be substantially harder.

By July-August an agreement was needed in order to finalize negotiations for agreement in Hong Kong. Oxfam charged the EU with "delaying tactics" which have threatened to spoil the round.

Hong Kong, 2005

The Sixth WTO Ministerial Conference took place in Hong Kong, December 13 to 18, 2005.

Trade ministers representing most of the world's governments reached a deal that sets a deadline for eliminating subsidies of agricultural exports by 2013. The final declaration from the talks, which resolved several issues that have stood in the way of a global trade agreement, also requires industrialized countries to open their markets to goods from the world's poorest nations, a goal of the United Nations for many years. The declaration gave fresh impetus for negotiators to try to finish a comprehensive set of global free trade rules by the end of 2006. Pascal Lamy, Director General of the WTO, said, "I now believe it is possible, which I did not a month ago."

As many as 2000 protesters demonstrated outside the Hong Kong Convention and Exhibition Centre, the location of the talks. Clashes with the police left at least 116 people injured, including 56 officers, although there were no critical injuries according to the authorities.

Geneva, 2006

The July 2006 talks in Geneva failed to reach an agreement about reducing farming subsidies and lowering import taxes, and continuation of the negotiations will take months to resume. A successful outcome of the Doha round has become increasingly unlikely, because the broad trade authority granted under the Trade Act of 2002 to U.S. president George W. Bush expires in 2007. Any trade pact will then have to be approved by the U.S. Congress with the possibility of amendments, which creates an additional burden on the U.S. negotiators and decreases the willingness of other countries to participate.

Hong Kong offered to mediate the collapsed trade liberalisation talks. Director-General of Trade and Industry, Raymond Young, says the territory, which hosted the last round of Doha negotiations, has a "moral high-ground" on free trade that allows it to play the role of "honest broker".

Subsequent developments: Unofficial plurilateral talks

These talks were conducted during May 2007 to narrow their differences. The major participants of the talks were US, India, Brazil and the EU.

Talks were stuck over issues such as

1. Levels of reduction of agriculture subsidies;
2. Paring of industrial and farm tariffs; and
3. Movement of workers between countries.

The main bone of contention is about agriculture subsidies being extended by the US and the EU to their farmers. These subsidies are highly trade distorting in nature, as is perceived by the developing world. The other two issues appear to be capable of being resolved. How do these subsidies hurt? These subsidies hurt the developing country farmers because they lead to higher output in developed countries – and lower global prices. When subsidies lead to increase in production with little increase in consumption, as is typical with agricultural commodities, higher output translates directly into higher exports, which translate directly into lower prices for producers, lower income for farmers, and more poverty in the Third World.

The US tried its best to let the world know that its President’s fast track authority is expiring by June 2007 and that unless an agreement is reached before June 30^th, any agreements reached in the negotiations will not have any assured chance of approval by the US Congress. Under this fast track authority, any trade deal struck in the Doha Development Round does not run the risk of being amended by the US Congress. Though the EU appeared to be in favour of reaching a deal before the fast track authority expires, the developing world led by India and Brazil did not appear to be too enamoured of this.

One recent development that cannot be ignored is the capitulation of the US administration to the long-standing demand by the US labour lobbies that future US trade deals required adherence to the five basic ‘internationally recognized’ labour principles, as stated in the 1998 ILO Declaration on Fundamental Principles and Rights at Work. Violations that harm the US trade or investment interests are to be punished by fines or trade sanctions. The developing countries have been opposed to the inclusion of labour standards in trade agreements ever since they began negotiating such agreements. The developing countries see the capitulation of the US administration to its labour unions as a case of raising labour costs abroad via higher labour standards, when it itself cannot control them within its borders.

What needs to be kept in mind is the fact that America and the developed world are the real losers in the demise of the Doha round. Examine the following statements made by a renowned Economist:

1. Had the Bush administration fulfilled its commitments, American taxpayers would have benefited from the elimination of huge agricultural subsidies – a real boon in this era of yawning budget deficits.

2. Americans would have been better off as consumers too, with increased access to a variety of low cost goods from poor countries.

3. Migration pressure would have reduced, because it is the huge disparity in incomes more than anything else that leads people to leave their homes and families to migrate to the US.

4. A more prosperous globe is in the interest of the rich developed world – as a less poor world would lead to less despair and thereby less political instability across the world.

Because the US played only a lip service to free market principles, favouring Washington lobbyists and campaign contributors who demand just the opposite, the Bush administration doubled the level of agricultural subsidies in the US. It is this which led to the failure of the Doha round.

How will the failure affect the world?

While I do not disagree with the assessment give above, what I see clearly emerging is that failure or success, whatever may the outcome, it is for certain that the World will keep seeing more of regional FTA (Free Trade Area) agreements taking shape. More and more regional blocks will start getting formed and they will start gaining more negotiating power than what is available with them at present. Their presence also will acquire a kind of institutional status within the WTO framework. Remember the EU? How it has become the sole representative or arbitrator of European interests! A similar thing will happen in the years to come for all regional trade blocks that are going to become more powerful.

Secondly, it is no longer possible for anybody to ignore the BRIC or IBSA countries. These developing countries are gaining a faster mind share, in the public consciousness of the policy makers in the developed countries. As long as that is so, and that is bound to be so for years to come, the developing countries’ interests are going to be articulated reasonably well by these five countries. But how far they will be able to hold their ground and not yield to undue pressure from the developed world, will always be open to question.

Lastly, a weekening dollar may pose unforeseen situations before the world. My take on that is, the emerging economies may no longer be interested in financing the current account deficits of a consuming economy. They may instead start pumping their surpluses into regional development. Look at the way the Chinese are wooing the African countries! They may finance the African deficits in return for a greater share of natural resources of Africa and/or for their markets – be it consumption driven markets or defence driven markets. The emerging economies also need mind-boggling amounts of investments into their own infrastructure. If their surpluses start flowing into these projects, unimaginable consequences may follow in the US economy. Its primacy may dwindle in unforeseen ways. Nobody could have believed the kind of soft-power that India is today. The next two to three decade timeframe would be very interesting to watch on this count. We may well see the rules of the world trade being totally re-written.