The US market had its worst annual start in 24 years as a dismal set of manufacturing data tumbled out. Most Asian markets may have followed the US in a knee-jerk reaction, but such economic data is actually paving the way for more positive liquidity triggers for emerging markets, including India. The worse it gets in the US, the more desperate will the Fed be to avert a recession. Expect at least a 25 basis point rate cut from the Fed in the end of January; maybe even, 50 basis points if the economic news gets worse. And that will not be the end either. More will follow later in 2008, as the US lurches dangerously close to a recession. Wire money online to India with Xoom.com for as low as $4.99. Sitting here in India, we should not underestimate the power of these rate cuts. Remember, the big global rally in the second half of 2007 was triggered off by a surprising 50 basis point rate cut by the Fed. This, indeed, could be an overarching theme for global markets in 2008. More trouble in the US, leading to more rate cuts, creating more liquidity that chases growth where it exists–emerging markets, and within them in markets least affected directly by the US turmoil, like India. India’s recent outperformance, particularly in the face of the periodic global sell-offs, is perhaps an indication of things to come. India is in a good position: the US illness does not affect us much while the antidote helps us directly. Meanwhile, such rate cuts in the US Crude oil make the Indian interest rate scenario quite interestI here., ing, particularly in a difficult currency situation. Crude oil maybe a wild card here. If the high price of crude oil starts filtering into the economy; as it should, inflation could start climbing. That may restrict the RBI’s ability to ease interest rates as the market expects it will this year. In fact, the RBI’s job could get tougher in 2008 if things continue this way. More dollar weakness led by US economic data, more flows to cope with as rates dip overseas and higher inflation from commodities.
Archive for January 14th, 2008
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CRISIS IN PUNJAB
January 14th, 2008 
krishna Punjab is in the grip of a severe water crisis and may face the shortage of this precious natural resource in coming years. Due to the excessive use of groundwater, 103 blocks out of total138 are over exploited and 93 of them have been declared ‘dark’ and another 13 gray. Only 31 blocks are white, where the groundwater situation is comfortable. According to the Central Ground Water Board (CGWB), the annual water recharge is in Punjab is 23.78 billion cubic meters (bcm) and the net water availability is 21.4 bcm. The withdrawal, on the other hand, is 31.16 bcm annually, which is 145 per cent of the availability, causing fast decline in or the water table, which has been falling at the rate of 25 to 30 cm per annum for the last two decades. In 1973, the area where the water level was below 10m stood at mere 3 per cent. Now, it is estimated to be more than 75 per cent. The World Watch Institute has cautioned that if the water is hauled at this rate, the whole groundwater in Punjab shall be finished by 2025. The only comfortable areas, where the water level is not much lower, happens to be in the vicinity of rivers or in those districts where the canal irrigation ad network exists for agricultural purposes. The canal system, which irrigates nearly one-third of the total area in Punjab, is highly skewed and 87 per cent of its catering is just in five districts of Amritsar, Ferozepur, Faridkot, Bhatinda and Mukatsar. Further, more the area under the canal irrigation is also declining every year because of decreasing carrying capacity of canals and lesser water coming from the rivers of Sutlej, Beas and Ravi. In 1970-71, the area under canal irrigation was 12.861akh hectares, which rose to 16.6 as lakh hectares in 1990-91, but fell to 9.62 lakh hectares in 2000-01. At present, 11.01 lakh hectares are under canal irrigation, which is around 36 per cent of the total irrigated area in the state. The water availability from the three rivers has also fallen from 17.17 million acre feet (MAF) two decades ago to around 14 MAF today. The inability of canals to meet the irrigation needs of the state has led to the increase in the number of tube wells, which have led the state to the present crisis. [...]
UMPIRES ARE NOT REQUIRED IN THE GAME OF CRICKET
January 14th, 2008 krishna One interesting question that has cropped up during the ongoing Test match between India and Australia in Sydney is: do we really need umpires? Frankly, we think West Indian ‘neutral’ umpire Steve Bucknor has done a great service to cricket, not to mention mankind, by making us ask this straightforward but pertinent question. Mr. Bucknor re-enacted the apostle Peter denying to the Romans any knowledge of his master Jesus Christ by calling Andrew Symonds ‘not out’, not once, not twice, but thrice – intriguing, especially the caught-behind decision that he turned down despite an Ishant Sharma-delivered, Andrew Symonds-nicked ball clearly landing in M.S. Dhoni’s gloves. The Indian management was irked enough to contemplate lodging a complaint against Mr. Bucknor. But then, it decided against it as a complaint could be perceived as an alibi if things go awry for Kumble’s boys. But we are beyond the clash of sporting countries and the despair of getting the short end of any umpire’s stick. The Aussies have been gentlemen – Symonds stating he was “very lucky” and was “given not out” when he should have started walking at 30 (an unbeaten 162 can make a gentleman out of the worst of us); and Ricky Ponting insisting that the ball had touched the ground before it reached his hands via Rahul Dravid’s bat after a close call. But coming back to what we started with: do we need umpires? No. We suggest that we quickly cut out the middlemen and let the game flourish. Someone in the crowd could be given charge to count the end of overs, et at. Umpires can always become forensic experts. And Laxman made a glittering 109. Sorry, Mr. Bucknor.
