India may boast widespread mobile phone coverage but the advent of advanced communication technology has not necessarily rid its users of superstition. Just ahead of the new year, a rumour did the rounds of a UP town to the effect that anyone who went to sleep on the night of January 1 would be turned to stone. As a result, people stayed awake all night and phoned their relatives in order to wake them up. People are still trying to find out who started the rumour. One theory is that it&rsquo;s the mobile companies and another is that it&rsquo;s the TV channels since the TRP ratings for the cricket in Australia were low because of the time differences and so they hoped to get a good story.

Stone age

Business Standard

Farmers in Punjab, Uttar Pradesh and West Bengal, hurt by crashing prices, have taken to dumping their potatoes on the roads. This dramatic but little-watched series of events should be a warning: what hurts growers in the short run winds up hurting consumers in the longer run, as the iron laws of supply and demand act to discourage production. The price crash the farmers were protesting is not limited to potatoes; it cuts across commodities, affecting almost all those crops whose prices are not supported through government procurement. The exceptions, therefore, are wheat and rice. Vegetables like onions, tomato, ginger, and garlic have become significantly cheaper, as have plantation products &mdash; notably pepper &mdash; and fibres like cotton and silk. Costs, too have gone up, driven by higher labour and input costs.

Tears over spilt onions

Apropos Mihir Sharma&rsquo;s column &ldquo;Sense and censorship&rdquo; (Ticker, January 21), Facebook and Google have become part of our lives and imposing any kind of restriction on these sites is not advisable. Their significance as a platform to express one&rsquo;s ideas can&rsquo;t be questioned. Indeed, the importance of the internet and the media in a democratic set-up cannot be underlined more. However, censoring the internet for security reasons is understandable and while the government may monitor the Web to keep certain sensitive issues like defence out of the public domain, any attempt to gag the internet in the name of national security is not desirable.

Letters: Don't gag the internet

I, 23, am working for the last eight months. I earn Rs 22,000 a month and have saved Rs 60,000. Our HR executive says I need to show investments worth another Rs 15,000 to avail tax benefits. What kind of instruments should I invest in and in what proportion to avail benefit? I have invested Rs 12,000 in public provident fund over the last three months.

Financial Planning: Malhar Majumder

The Securities and Exchange Board of India&rsquo;s (Sebi&rsquo;s) new steps to counter price volatility on the day of listing are welcome. These steps, however, might not address the bigger problem of inappropriate pricing of initial public offers (IPOs). Investment banks play an important role in advising the issuer on the price band, apart from preparing documents and disclosures. We can incentivise investment banks to do a more careful job of this by paying a percentage of their fees with shares issued at the IPO price. These shares can be made non-alienable for one year after listing.

Letters: Incentivise I-banks

Apropos the report &ldquo;Cyber crime is now a booming industry&rdquo;(January 23), the Reserve Bank of India recently published data on retail electronic payments in 2010-11 that show that the total value of electronic transactions almost doubled that of the previous year. Electronic transactions, especially in the banking space, have increased owing to the changing banking habits of Indians. The convenience and ease that come with it have motivated customers to increasingly resort to electronic banking.

Letters: No safety Net

This refers to the edit &ldquo;Licence permit raj&rdquo; (January 20). In the context of Lok Pal, many people, especially from the establishment or those who are pro-establishment, raised the spectre of it becoming too powerful and unanswerable to anyone.

Letters: Lok Pal can be kept in check

What&rsquo;s the connection between a ban on arrack and jewellery from some homes in remote rural India? Answer: hard liquor. With arrack banned, habitual drinkers have to pay more to access their daily fix via costlier hard liquor. The result: the gold bangles, nose rings, and rings worn by their womenfolk have begun to vanish from their homes and find their way into the hands to pawn brokers, according to an economist.

Drain of wealth

The Noida land acquisition case has enabled many hitherto unknown people to hog the limelight. One of them is a high court lawyer who fought on behalf of the farmers. Now that the case is in the Supreme Court, he has little opportunity to gain the kind of media coverage he enjoyed before. So he has decided to take matters into this own hands and phones journalists to comment on every small development. Nor does he let those who ignore him off the hook. &ldquo;Your reporting has become weak, you did not call for my quote yesterday,&rdquo; he admonished our reporter the other day.

Please quote me

Which is the world&rsquo;s best tax haven? Mauritius, Cayman Islands? It&rsquo;s New York City, according to Vodafone counsel Harish Salve, who was in form after winning the case in the Supreme Court last Friday. Replying to a question, Salve said mere low tax doesn&rsquo;t make a place a tax haven, they are black holes where all kinds of money is parked, and no information goes out. In that sense, he added, the world&rsquo;s most effective tax haven is the Island of Manhattan. New York banks will not give any information about anybody who is not an American citizen, Salve said, setting everyone laughing.

New York, haven on earth

Here&rsquo;s an internet joke doing the rounds on the controversy over the Army Chief&rsquo;s date of birth. In India, it read, the government decides the age of the Army Chief. In Pakistan, the Army Chief decides the age of the government.

Reverse swing

Harish Salve, the counsel for Vodafone, took time to explain what the judgment means for business. &ldquo;What&rsquo;s most positive about the verdict is the rule of law would prevail, irrespective of the zeroes involved,&rdquo; he said.

This is a first: Harish Salve

West Bengal Finance Minister Amit Mitra has something in common with Union Finance Minister Pranab Mukherjee. When Mukherjee refused to speak to reporters after a pre-Budget meeting with state finance ministers, Mitra said he faced a similar issue because people asked why the state finance minister was not seen on television in West Bengal. To this, Mukherjee said from January onwards the finance minister does not speak, he only listens.

Listening post

The Securities and Exchange Board of India&rsquo;s (Sebi&rsquo;s) proposal to ask merchant bankers to monitor the end-use of funds after listing is not at all practical (&ldquo;Sebi may ask merchant bankers to monitor end-use of IPO money,&rdquo; January 17). The contract between an issuer and a merchant banker is till the time of listing and release of public issue funds. Tracking the utilisation of funds would not be possible for merchant bankers since, unlike bankers to the company, the management of the issuer would not provide merchant bankers with access to management decisions. In order to implement Sebi&rsquo;s proposal, merchant bankers will have to be given special authority for a certain period after listing to monitor the issue proceeds and access various internal records, including the release and deployment of funds from the public issue. The conflict of interest is quite apparent here.

Letters: Sebi's impractical proposal

Sebi&rsquo;s plan to ask merchant bankers to monitor the end-use of IPO money makes me wonder whether the board has run out of ideas for reviving the dormant primary market. Thrusting meaningless responsibilities on merchant bankers or asking them to monitor the IPO proceeds will not help. We need to bring back the concept of asking merchant bankers to underwrite the issue. If they are convinced, if the issue is good enough for them to underwrite, then the issue is good for investors. We should scrap the concept of book building and bring back the fixed price issue and give time to retail investors to respond. Though it is very easy to copy western practices, we must realise that the Indian market has its own nuances and a wholesale transformation of an institutional-driven framework will not work.

Letters: ..and why we need brokers

The results of the Indian software leaders, Tata Consultancy Services (TCS) and Infosys Technologies (Cognizant, which is now number three, does not publish comparable Indian GAAP figures), in the last quarter have been boosted by the recent depreciation of the rupee. But under active policy intervention by the central bank, the rupee has started to rise again. On present reckoning, the conversion rate used by Infosys for the third-quarter results for the US dollar, Rs 52, is unlikely to rule at the end of this financial year. So the sharply improved performance may be a bit transient in nature, due to exogenous factors. But still, the recovery from the trough created by the global financial crisis is nothing short of spectacular. In the third quarter of 2009-10, Infosys&rsquo; topline fell by 0.8 per cent. Precisely two years on, it has grown by 30.8 per cent. Over the same period, TCS&rsquo; topline growth has transited from 2.9 per cent to 36.8 per cent.

Depreciation has helped

When Reliance Industries Limited (RIL) announced its buyback recently, the stock price soared even before the details were made public. The buyback will &ldquo;retire&rdquo; a maximum of 120 million shares at a price of Rs 870, for a maximum cost of Rs 10,440 crore. That&rsquo;s equivalent to 3.7 per cent of equity, at a premium of about 10 per cent over the last quoted price on Friday. Many implications could be drawn from the buyback offer. The normal justification for a buyback is that a cash-rich business cannot see an obvious way to deploy its resources profitably. A buyback boosts returns to shareholders who don&rsquo;t opt for the offer, by shrinking the equity base. Assuming the bigger shareholders don&rsquo;t sell, it also helps them consolidate holdings, which may have control implications. While the buyback is &ldquo;live&rdquo;, there&rsquo;s a floor on the price.

Decoding the buyback

The Human Resource Development Ministry&rsquo;s project, a low-cost tablet computer meant for students, has been plagued with problems since it was first announced. In early 2009, what was supposed to be a &ldquo;ten-dollar laptop&rdquo; was unveiled, produced jointly by the Vellore Institute of Technology, the Indian Institute of Science, and IIT Chennai, with some private-sector effort in the mix. This followed the ministry's hubristic decision to decline collaboration with the longstanding project at the Massachusetts Institute of Technology called &ldquo;One Laptop Per Child&rdquo;, which had produced a rugged, durable, low-cost laptop &mdash; but one which a Ministry statement called &ldquo;pedagogically suspect&rdquo;.

Tablet of errors 

The Communist party of India (Marxist) is in cost control mode, having lost power in West Bengal and Kerala. As a result, no foreign delegations will be attending the next party congress scheduled in March in Kozhikode. In the past, huge contingents from fraternal organisations from Cuba, Vietnam, China, Greece and even the United States have attended party congresses.

Time to cost cut 

Whatever happened to the &ldquo;biggest shuffle in the ambassadors/high commissioners in the recent history of the Pakistan foreign office&rdquo;? Prime Minister Yusuf Raza Gilani, as reported, had approved the appointment of the new envoys at the end of last year. Apart from new ambassadors in Russia, Holland, Brazil, Germany, Egypt, Algeria, Cuba, Nepal, Kenya, Yemen, Tunisia, Chile and Serbia, the ambassador to India, Shahid Malik, was to be replaced by Foreign Secretary Salman Bashir. We are happy to report that Malik continues to be the Pakistani envoy in New Delhi &mdash; where he is a popular figure in the social circuit &mdash; and denies all knowledge that he is to be replaced.

Staying around yet

Upset with the recent statements of Bharatiya Janata Party&rsquo;s firebrand leader Uma Bharati against UPA chairperson Sonia Gandhi that she is of foreign origin, Janata Dal (United) leader Sharad Yadav decided to defend Gandhi. &ldquo;India has been an open country for many centuries. People of different countries have come and started living in India. Sonia Gandhi is fair, but there are many Indians, who are as fair as foreigners. There should be a genetic test of all Indians who have a fair complexion, so that we can know from where and when did they come to India,&rdquo; Yadav said.

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