WALL FOCUS-125

                                  (News collection for Management studies)

Volume: 02           Issue: 125         01-December, 2010 – Wednesday  Pages:18

Focus on Zero based Budgeting for new periods
COPYRIGHT AND INDUSTRIAL DESIGN PROTECTION - (Contributed by B. Raghavendra , 09D61E0003)

What Is A Copyright?

Copyright subsists in Canada immediately upon creation, and without registration, in every original literary, dramatic, musical and artistic work, including computer programs, databases, multimedia works, books, photographs, advertisements, logos, and sound recordings.

A copyright owner has the exclusive right to control the work's (a) reproduction, in whole or substantial part, in any material form (including electronic form), (b) public performance, (c) public telecommunication, (d) publication, (e) translation, and (f) adaptation. The owner may also prohibit the distribution of unlawful copies.

The Act also provides an author with moral rights, which enable the author to demand credit as creator of the work and to prohibit changes to the work, or its use with any product or service, that would detrimentally affect the author's reputation.

How Long Does It Last?

In North America, as a general rule, copyright expires 50 years after the year in which the last author dies. There are some exceptions, most notably copyright in photographs and sound recordings expires 50 years after the year in which those works were created. Moral rights exist for the same period of time as the copyright.

Who Owns The Copyright?

The author is generally the first owner of the copyright, but exceptions do exist. For example, copyright in works created by employees in the course of their employment are owned by the employer.

Assignments And Licensing

Copyright can be assigned or licensed, in whole or in part, and may be divided by geographic territory. Licenses may be oral, but assignments must be in writing to be valid. Assignments and license agreements should be registered in the Copyright Office. Moral rights cannot be assigned, but may be waived by the author.

Why Register A Copyright?

Although not mandatory, registering a copyright in Canada does provide advantages. The certificate is deemed presumptive evidence that the registered owner owns the copyright and that the work is protected under the Copyright Act. Furthermore, a registration gives public notice of an owner's rights and may prevent an innocent infringement defence by unauthorized users of the work. For these reasons, registration certificates are beneficial in litigation proceedings and in warranting ownership of the copyright to prospective licensees of a work.

Regardless of whether copyright is registered, a notice containing the following elements should be placed on all published copies of a work to give public notice of the rights:

"Copyright (or ©) [year of first publication] [owner's name]. All Rights Reserved".

Infringement And Remedies

Infringement occurs whenever a person exercises any of the copyright owner's exclusive rights without consent. Distributors, who did not copy the work, but who knowingly sold or imported infringing copies, can also be liable.

Infringement actions are generally brought in the Federal Court of Canada, although there is concurrent jurisdiction with provincial courts in appropriate circumstances. Remedies include damages, profits, delivery up of infringing copies and injunctions.

Defences to infringement include challenging the plaintiff's ownership, alleging that only an insubstantial amount of the work was taken, or pleading that the use constituted a "fair dealing" under the Copyright Act. The "fair dealing" exemption permits reasonable copying of a work for limited non-commercial purposes, such as private study and criticism.

It is also a criminal offence, in some circumstances, to knowingly infringe a copyright, punishable by prison terms ranging up to five years and/or fines of up to $1,000,000.

International Protection For Copyright

Canada is a member of the Berne Convention on Copyright, the Universal Copyright Convention and the recent World Trade Organization (WTO) Agreement. Generally speaking, these treaties protect copyright internationally in works created by Canadians or nationals of other member countries, and/or those first published in Canada or any other member country.

Copyright vs. Industrial Design Protection

Where an artistic design is applied to a useful article which is produced in quantities of 50 or more, the copyright becomes unenforceable. The only enforceable protection available in this situation is an industrial design registration. A "useful article" is defined by the Copyright Act as one which has a function other than merely serving as a carrier for the artistic or literary material. For example, a decorative spoon, which functions as a piece of cutlery, would be a "useful article" and reproduction of the design of the spoon, or of the spoon itself, would not constitute an infringement of the copyright in that design.

There are exceptions to this rule, however. For example, copyright remains enforceable if the design merely constitutes a graphic or photographic representation applied to the face of an article, depicts a fictional character or is a trade mark. These exceptions preserve copyright in "spin-off" merchandise from films and television shows.

What Is An Industrial Design?

Industrial designs consist of features of shape, configuration or ornament that give manufactured articles aesthetic appeal and thus contribute to their commercial value. Examples of designs can be seen in clothing, automobile bodies, furniture and appliances.

While the subject matter of industrial designs is relatively straightforward, the legal issues that come into play in protecting new designs can be complex. Industrial designs are fundamentally expressions of style or form but also incorporate functional considerations. Protecting industrial designs, therefore, generally involves both copyright and patent issues.

How Do I Protect An Industrial Design?

To protect a design in Canada under the Industrial Design Act, the design must be applied for within one year of first publication or offer for sale. Many foreign countries however require that an application be filed before any public disclosure has occurred. A design must be new to be registrable and must be sufficiently different from previously registered designs. The maximum term of protection in Canada is ten years.

The Strategic Use of Trademark & Design Protection for Trade Dress

In order to obtain immediate and comprehensive rights in 3D product and packaging shapes, one should employ a coordinated strategy that incorporates both trademark and design protection.

Trademark Protection

Trademark protection for 3D product and packaging shapes is highly desirable, since it offers potentially indefinite protection, and registration offers multiple legal grounds on which to sue a would-be infringe.

However, in order to obtain trademark protection, the shape must not be confusingly similar to a trademark that is the subject of a prior trademark application or registration, or one that has been previously used by another in Canada. (In Canada, it is possible to establish common law trademark simply by using and advertising a mark.)

Typically, one also must be able to prove that the shape: has acquired distinctiveness as a trademark through extensive use in Canada; is not primarily functional; and is not likely to unreasonably limit the development of any art or industry. The reason for this is that in Canada, 3D product and packaging shapes are likely to fall within the statutory definition of a “distinguishing guise” trademark.

Industrial Design Protection

In Canada, a design that consists of or incorporates features of shape, configuration, pattern or ornament that “appeal to and are judged solely by the eye" can be registered as an industrial design provided the following conditions are met: the design is not identical to, or so similar as to be confounded with, a registered design, and the design is original; and the design has not been publicly disclosed anywhere within one year prior to the date on which a Canadian industrial design application is filed.

Industrial design registration does not protect “features applied to a useful article that are dictated “solely” by a utilitarian function of the article,” nor “any method or principle of manufacture or construction”.

An industrial design registration is valid for 10 years, provided a maintenance fee is paid within five years of the date of registration. Importantly, recent case law has confirmed that industrial design protection does not preclude protection of the same design as a trademark.

Integrated Protection Strategies

For new 3D product and packaging shapes, one should first consider filing an industrial design application. As discussed above, the threshold for novelty is relatively low and the threshold of permitted functionality is relatively high. Moreover, successful registration will provide a ten-year monopoly, during which trademark distinctiveness can be acquired.

The second step should be to establish common law trademark rights in the 3D shape. The shape should be treated as a trademark, and appropriate marking and trademark legends and notices should be used.

Then, once trademark distinctiveness can be shown in a significant region of Canada, a distinguishing guise application should be filed.

In conclusion, by seeking both trademark and industrial design protection, it is possible to obtain immediate protection, and an overlay of rights offering multiple legal grounds on which to enforce one’s rights.

Please note that while additional protection by copyright has not been discussed in this paper, it may also be available and useful in some cases. Any reasonable steps to secure title to copyright in works embedded in the product or package are likely to be worthwhile, and registering copyright may also be considered as part of an overall strategy.

How to convert a failure into a success -                                                                   By S. JOGINDER SINGH, IPS (RETD.), Former Director,CBI

 ( Collected  by J. Deepthi, 09D61E011 )                                                                                                              Success is a magic word. Whatever we do, whether we are students, or businessmen or working for somebody else, or engaged in any other profession, we all want to be successful and outstanding in our vocation.

But the problem is that the path of life is never smooth. The room at the top is narrow and we all want to bow at the top. But everybody cannot be at the top all the time. While success is the normal expectation in life. Yet, at the same time, we have, in our journey to it. When we have failed, it is time to examine, as to what has led to it. Have we accepted one time failure as something permanent and irreversible? Are our mantel patterns attuned to more of failure, rather than of success?

One sign of our failure mentality is the low self-esteem with which some people are plagued with. If you do not believe deep down, that you will succeed in your goal, there is no power on the earth which can do it for you.

Another thing to guard against is replacing or berating yourself for the past failures or mulling on your past mistakes repeatedly in your mind or even in your conversation, with ourselves as well as with others.

The truth is that all of us are as good, as we believe to be. Before you venture, for success or retrieving any adverse situation, you should get rid of the approach of blaming yourself, as it would make you feel like a victim. A victim, any where and every where is powerless.

We must bear in mind, that failure in life are so common, that you are not likely to come across a person, to be, to others, who has never faced failure, in one or the other part of his life.

Failures are inescapable, but it lies in our power, to accept them gracefully and devise ways to convert them into successes. First step is to accept this fact, before you can triumph over them. It is exactly like this, that you can and solve a problem, only if you know what it is and what has caused it. Remember, not to look back at failures. But look to the future, as life gives everybody plenty of chances, you mend our ways and move ahead. On the contrary learn lesson from failure, to rectify, as to what went wrong.

I have known a number of people who have tried for civil service examination and failed. They kept on trying, and finally made it in the last chance. I asked one of them as to how he succeeded in the last chance. he said that except for eating food, sleeping and exercising, he spent all time in studying. He was fond seeing movies, but in the one year of preparation, he was almost a hermit and a recluse. But he was happy that finally succeeded. He said that he had learnt from his failure and he had not even a lingering doubt that he would succeed. He had believed in himself and was sure of success. He was successful, due to his unremitting self belief as well as perseverance.

When a man is willing and eager to achieve something, even the gods join to help him. If you do not advance, you fall back. Standing still and not doing your work, is the beginning of the end. You must act and work, as if it was impossible to fail.

The choices we make in life and not always our circumstances, which determine the success. We can tire our adversity and adversaries by not tiring. We must keep our motivation level high, as it is the fuel of success. The word success comes before work, only in the dictionary and not in real life.

Most failure would attribute success to luck, but in reality, it is something to do. Many would rather die, than think. One important key to success is confidence and confidence can come only by preparation and hard work, directed at a specific purpose. You have to focus on your task, to the exclusion of everything else. While writing this piece, my phone kept on ringing all the time. I had resolved not to do anything, till I had finished this piece. I was clear in my mind that I have to give all the attention to my work.

I admit, that it is tough and again. But it is better to believe in yourself, than in expecting failure again and again in your venture. You can be anything, you wont to be, if you believe in yourself and keep on trying again and again, till you success. One failure is not the end of the world. You should treat failure as simply a delayed success. You do not fail till you have finally given up trying. Do not allow yourself to hold you back.

We must always in mind, that ups and downs are a part of life. There is nothing we can do about it. But it is up to each one of us to discover as to what and where went wrong and then take steps to improve upon the situation. If necessary, we should change our approach, and the steps we have been taking to attain our goals. If we fall down or fail, the only way we to get up and being again and not to succumb to any adverse circumstances.

Do not fall into the trap of blaming yourself, which is easy. Rather than that pinpoint as to what led to your failure. Follow it by avoiding the steps, which led to your failure.

Change your approach to an entirely new direction. It may take time as all scientific discoveries and inventions involve.

Henry ford once said “life is a series of experiences, each one of which, makes us bigger, even though sometime it is hard to realize this. For the world was built to develop character, and we must learn that the setbacks and grief, which we endure, help us in our marching onward”.

SPECIAL FOCUS

Obama’s Visit  : ( Contributed by  K. Bhanu Teja  ,09D61E0013 )

 When Obama won over the Indian Parliament

As expected, Obama's maiden visit to India this weekend has been a success. President Obama struck all the right notes, and the First Lady charmed India as she danced with children. The highlight of the visit was Obama's address to the joint session of the Indian Parliament on Monday where he endorsed India's permanent membership of the United Nations Security Council, and took a tough stance on Pakistan and said that terrorist safe-havens within its borders were unacceptable.

Even before the President arrived in India, there was speculation about whether he would call out Pakistan for harboring terrorists within its borders, terrorists that have been shown to carry out attacks on India. During the first two days of his trips, Obama was hesitant and the Indians seemed disappointed with his Pakistan attitude. India’s skepticism about the Obama administration, in particular due to its constant appeasement of Pakistan and their “efforts” in fighting terrorists within their borders, was evident in the build up to the visit. However, Obama choose the right place to confirm his support for India’s concerns about Pakistani terrorism - the grand halls of the Indian democracy. It is no wonder then that Obama received one of the largest and longest applauses of the evening when he said,

“And we will continue to insist to Pakistan’s leaders that terrorist safe-havens within their borders are unacceptable, and that the terrorists behind the Mumbai attacks be brought to justice. We must also recognize that all of us have an interest in both an Afghanistan and a Pakistan that is stable, prosperous and democratic—and none more so than India.”

But the home-run of the evening was his endorsement of India for the permanent membership of the UN Security Council. Indian leaders across party lines have demanded a permanent seat for India at the UNSC on the basis of India’s nuclear prowess, economic growth and regional eminence. The U.S. on its part has evaded the endorsement for an equally long time. Monday’s endorsement was open-ended, dependent upon overall reforms of the UNSC which might take a number of years to be implemented. But India can hope that the endorsement from the U.S. would help initiate reforms to the UNSC sooner. The support by John McCain brings hope that the support would become a permanent part of U.S. foreign policy.

Addressing the Parliament Obama said,

“And as two global leaders, the United States and India can partner for global security—especially as India serves on the Security Council over the next two years.  Indeed, the just and sustainable international order that America seeks includes a United Nations that is efficient, effective, credible and legitimate.  That is why I can say today—in the years ahead, I look forward to a reformed U.N. Security Council that includes India as a permanent member.”  

The announcement was at best a shrewd high impact low risk diplomatic gesture, an opportunity to surpass Bush’s Nuclear Deal moment and ensure reciprocal support from India on issues such as human rights in Myanmar or tougher sanctions on Iran. Obama’s support was followed by a call to India to take up more responsibility and reprimand for not speaking out against and condemning human right abuses. He said,

“Faced with such gross violations of human rights, it is the responsibility of the international community—especially leaders like the United States and India—to condemn it.  If I can be frank, in international fora, India has often avoided these issues.  But speaking up for those who cannot do so for themselves is not interfering in the affairs of other countries.  It’s not violating the rights of sovereign nations.  It’s staying true to our democratic principles.”

So far there have not been disapproving voices in the media or the Indian polity about Obama preaching India how to conduct itself in the world. And it would be in Indian interests not to take offense. The U.S. has played its superpower role for a long time and with considerable success. There have been strategic miscalculations that caused pain to many innocents, but its intentions have been largely humane. Obama and Singh may have declared that the two countries would work as equal partner, but India has a lot to learn when it comes to playing superpower.

Obama’s address to the Indian Parliament was also unique in that it touched upon not only the usual suspects – Gandhi, great civilization, diversity, contributions to medicine and science, economic growth – but also talked about Dr Babasaheb Ambedkar (a lower caste leader who rose to be the chief architect of the Indian Constitution), the Panchatantra (a collection of stories that reflect the moral framework of the Indian civilization), Swami Vivekananda (who preached equality of religions in Chicago) and increasing engagement with East Asia.

What was conspicuously missing though is a reference to China in relation to India. While the India-China rivalry might not be as evident to the world as the India-Pakistan rivalry, it exists and poses a serious concern to India’s aspirations. China is one of Pakistan’s closest allies and will soon begin construction of two new nuclear reactors in Pakistan among other things. The two countries have festering border issues in the North-East as well as the Jammu & Kashmir region where Pakistan has handed over a part of the territory to China. The Dalai Lama finds refuge in India, and Chinese influence is growing among India’s neighbors such as Nepal, Sri Lanka, Myanmar, Bangladesh etc. The economic competition between the two countries is well-known.

The missing reference to China is important because India featured prominently when Obama visited China last year. He had irked India by suggesting that China help India and Pakistan resolve their issues. However, while in India, Obama did not mention China even in reference to the nuclear reactor agreement between China and Pakistan which would only add to the nuclear capability of Pakistan and consequentially the instability in the region. The Pakistan and UNSC mentions seem to have sidelined the thoughts about China.

 Overall, the Obama visit and his speech before the Indian Parliament was a step forward for U.S-India bilateral relations. President Obama also managed to quell apprehensions in India about his administration’s pro-India attitude. The discontent and fear in India due to the Democratic Party’s protectionist attitude in response to the economic recession, continuing appeasement of Pakistan (as evident in the new $2 billion aid package) and uncertainty about the estimation of India’s role in Afghanistan is sure to have been reduced by the Obamas’ charm offensive over the last weekend. India has become an important economic partner for the U.S., and the relationship is sure to grow stronger in days to come.

 Obama’s visit To India.

Earlier, the US President Obama had recognized an inter-relationship between war against terrorism in Afghanistan, issue of Kashmir and arms race between Pakistan and India. No doubt, he wanted to increase troops in Afghanistan for combating terrorism, but had repeatedly said that the United States should help in resolving the Kashmir dispute between Pakistan and India to deal with the problem of militancy in the region. In this context, on September 25, 2008, Obama, while accusing President Bush’s policies in the region, offered it as part of his policy to encourage India and Pakistan to ratify the Comprehensive Test Ban Treaty (CTBT) and resolve the Kashmir problem to reduce nuclear dangers in South Asia. On a number of occasions, he had re-affirmed the solution of Kashmir as one of his key priorities. In this regard, even after his election as the President of the sole superpower, his aides have also expressed similar thoughts. For example, Mr Riedel had disclosed that settling the Kashmir issue “is essential for fighting terrorism.”

While on the other hand, President Obama’s recent visit to India has left a negative impact on whole the region. On November 6, this year, he announced $10 billion in trade deals with New Delhi to create more than 50,000 US jobs, declared the measures, America would take regarding removal of Indian space and defence companies from a restricted “entities list”, and supported Indian demand for a permanent seat in the UN Security Council including membership of four key global nuclear nonproliferation regimes, paid a tribute to victims of the Mumbai attacks. Owing to various agreements with New Delhi, India is likely to purchase C-17 and F35 aircrafts along with latest defence-related equipments from Washington. America which signed a nuclear deal with India in 2008, intends to make India a great power of Asia to contain China and destablise Pakistan as well as Iran. While Pakistan’s province, Balochistan where China has invested billion of dollars to develop Gwadar seaport which could link Central Asian trade with rest of the world, irritates both Washington and New Delhi. On the other hand, China has signed a number of agreements with Pakistan to help the latter in diverse sectors. In these terms, one of the alarming implications is that Obama’s irresponsible approach to boast Indian defence is likely to initiate a new, but dangerous arms race between Pakistan and India—and between China and  India.                                                                                                                               

However, South Asian countries which have been facing acute poverty, hunger, unemployment, political instability and terrorism had hoped that the President Obama would help them in resolving their old problems and issues. But surprisingly, Obama’s ill-conceived approach is likely to bring about more poverty and related problems in South Asia. Another consequence of his trip to India is that quite contrary to his earlier statements; President Obama flatly refused to resolve the Kashmir issue, while saying that both India and Pakistan, themselves, can settle this dispute. Nevertheless, exclusion of Kashmir from Obama’s policy is likely to become a basic obstacle to South Asian peace, connecting other concerned disputes between Islamabad and New Delhi including regional terrorism in wake of New Delhi’s blame game against Islamabad in the post-Mumbai terror attacks. In this respect, Indian continued intransigence to disallow the Kashmiris their right of self-determination and suppression of their war of liberation through brutal tactics of state terrorism since partition have motivated Afghans and Pakistan’s tribal militants to resist the American policies. On the one hand, Indians are secretly manipulating US-led fruitless military strategy in Afghanistan and Pakistan’s FATA regions, while one the other, they are perpetrating every technique of military terrorism in the Indian-held Kashmir which is the root cause of militancy in the region. While taking cognizance of the Kashmir dimension in relation to regional terrorism, even, former British Foreign Secretary David Miliband who had visited New Delhi and Islamabad in the post-Mumbai carnage had recognised that complete de-escalation of situation between Pakistan and India was fully linked to resolution of Kashmir issue, saying that India should cooperate with Pakistan in this context. While describing “win-win” relationship with India, Obama’s main focus was Indo-US united front against terrorism, which relates to the Islamic militancy in the region, but he totally neglected Hindu terrorism. During his whole trip, President Obama did not take cognizance of the misdeeds of Hindu fundamentalist parties like the BJP, RSS, VHP, Shiv Sina and Bajrang Dal which have missed no opportunity to communalise national politics of India even under the Congress rule. With the backing of Indian officials, these parties have intensified anti-Christian and anti-Muslim bloodshed coupled with the dissemination of Hindutva (Hindu nationalism). Attack by the Hindu terrorists on the Muslims, Christians and their property have become a routine matter in India.

Obama should know that besides previous genocide of Muslims and destruction of the Babri Mosque, more than 2500 Muslims were massacred in 2002 in the BJP-ruled Indian state of Gujarat. Regarding that massive genocide, both Human Rights Watch in 2002 and Amnesty International in 2003 charged the “Gujarat state administration” for involvement in “a massive cover-up of the state’s role in that massacre” and pointed out numerous police officials—specifically ministers, high officials and leaders of the VHP, BJP and Bajrang Dal as participants. It is mentionable that ideology of Hindu nationalism prevails in every field at the cost of other minorities. It is even supported by Indian defence forces clandestinely. This fact could be judged from the recent past, when on April 6, 2008 in the house of Bajrang Dal fundamentalists in Nanded, a bomb went off. The investigations proved that the militants belonging to the Bajrang Dal were found in the bomb-making and attack on a mosque in Parbhani in 2003. Anti-Terrorism Squad (ATS) of the Maharashtra arrested a serving Lt. Col. Srikant Purohit along with other army officials, indicating that they were helping in training the Hindu terrorists, providing them with the military-grade explosive RDX, used in the Malegaon bombings and terrorist attacks in other Indian cities. ATS further disclosed that Lt. Col. Purohit confessed that in 2007, he was involved in bombing of Samjhota express, which brunt alive 69 Pakistanis. Leaders of the Indian extremist parties, Shiv Sena, BJP, VHP and RSS are now pressurising the Congress regime to release the culprits.

Nonetheless, it is due to the ignorance of the US Administration that New Delhi which has been using Hindu terrorists to create frenzy against the other religious communities has further been encouraged by President Obama who is silent over Hindu terrorism.

Without any doubt, Obama’s visit to India has left a deep impact in the region as he has further emboldened India, directly or indirectly, to keep on going with human rights violations in India and the occupied Kashmir—to continue its anti-Pakistan and anti-China designs, to create instability in other regional countries like Bangladesh, Nepal, Sri Lanka, Maldives etc. Setting aside nuclear war in the Sub-continent, India which is already dreaming to become the superpower of Asia has been encouraged by President Obama to destabilise the whole region in wake of the modern world trends like renunciation of war, peaceful settlement of disputes and economic development in cooperation with the neighbouring States.

An Untold Story of US-India Relations

My belief and experience is that the U.S. and India have a great deal in common, both as people and as nations. Some of these commonalities are rather obvious such as the democracies in the two countries, and the multi-racial, multi-cultural and multi-religious societies. People in both nations cherish their diversity. Both nations have taken practical steps to build institutional safeguards to protect the freedoms of minorities. They are welcoming of immigrants such that the U.S. is even recognized as the land of immigrants. Maybe very few people know though that India has been for centuries the land of immigrants.

As the world gets more complex, both nations are discovering that they have a similar view towards major geo-strategic issues facing the world. Both view China as their major economic partner and a potential adversary. India and the U.S are interested in a stable Afghanistan with strong institutions even if not fully democratic one. Both nations have tremendous stake in protecting maritime links and freedom of navigation. Both are victims of Islamic terrorism and face the prospects of constant terrorist attacks.

These factors make India and the U.S. natural allies in today’s world. There is therefore also a bipartisan support for President Obama’s initiatives for a broader India-U.S. interaction and partnership.

However, one area has escaped attention, and could very well be the most relevant area of U.S.-India congruence. It is a shared view of economic and monetary policy. The United States is an open economy, an economy that has invited companies from other countries to export their goods and services to America. This posture of the United States has benefited the U.S. consumer by bringing goods to them at a lower price, and it has benefited the exporting countries by increasing their prosperity. Threatened by neo-mercantile countries, America has begun to feel that it is the only country with such an open-minded posture.

At this time, it is important to note that India shares this American vision. India is increasingly open to trade and to foreign companies exporting their goods and services to India. A quick visit to India confirms this. American and European companies are increasing their presence in India and, unlike in China, these companies are making money.

Both the U.S and India are principally domestic consumption economies. This may not be obvious to many. India is now anchored in people’s minds as a technology outsourcing economy and the global success of U.S. brands makes America appear intent on dominating the world. But under this imagery lies the reality of domestic consumption as the principal driver of American and Indian economies. Both countries have physically large and deep markets with the capacity to absorb foreign goods and foreign capital. Perhaps because of this, both the U.S. and India have large current account deficits and trade deficits. These two countries are also dependent on foreign capital to sustain their growth.

This makes the U.S.-India pair relatively unique in the G-20. China, Germany, Japan and Brazil are export dynamos. Most of the Asian countries are semi-mercantile exporting economies. They depend on weak currencies to make their products less expensive. They have gathered a huge hoard of foreign exchange reserves in the past 10 years. These forex reserves are now approaching $6 trillion and have grown ten-fold in the past 10 years. The principal beneficiary is, of course, China that has accumulated about $2.5 trillion in reserves, almost 50% of the total growth in the past decade.

These neo-mercantile countries are engaged in exporting their capital to domestic consumption countries like America and India in addition to their products. They need domestic consumption countries to increase spending and consumption, increase imports and maintain strong currency levels.

This is where the global battle lines are being drawn today. The U.S. and India find themselves on the same side & as partners in this battle. This is why Prime Minister Singh seconded President Obama’s strong partnership mantra and said, “A strong, robust, fast-growing United States is in the interests of the world.”

FDI policy needs some more weeding

(Collected by P. Manohar-09D61E0027)

On March 31, 2010, for the first time, the department of industrial policy and promotion (DIPP) in the ministry of commerce and industry put out a Consolidated FDI Policy: Circular 1 of 2010 overriding the entire heap of press notes, circulars and clarifications issued earlier in connection with foreign direct investment (FDI). The DIPP’s efforts in preparing Circular 1, which became effective from April 1, 2010, earned plaudits from the industry at first, but on a closer look, left India Inc and foreign investors high and dry, especially on issues relating to upfront determination of price for capital instruments and non-inclusion of partly-paid shares and warrants within the definition of ‘capital’.

To its credit, however, the DIPP has issued Consolidated FDI Policy: Circular 2 of 2010 within six months of Circular 1 and lived up to its promise by clarifying issues that had ruffled feathers in the FDI space. We highlight a few key clarifications made in Circular 2. Death to warrants and life again: Circular 1 created an impression that there was a complete embargo on issuance of warrants and partly-paid capital instruments to non-residents even if the Foreign Investment Promotion Board (FIPB) approved it. On the contrary, as a matter of practice, the FIPB was considering such proposals and granting approvals after factoring in the time limit for conversion of the warrants and quantum of upfront consideration.

The DIPP clarified the matter in a note to the definition of ‘capital’ in Circular 2 by stating that instruments other than equity shares and fully, compulsorily and mandatorily convertible preference shares and debentures may be issued after obtaining prior government approval. This change will ensure that, on one hand, there is some elbow room for mature foreign financial investors to structure their investments and, on the other, domestic undertakings need not hand over a pie of their business at a price that could potentially be higher at a future point. Soothing NBFCs: Circular 2 also partly settles the dust over downstream investment by foreign owned and controlled (FOCC) non-banking financial companies (NBFCs). Reading the relevant provisions of Circular 1 (reiterating what had been stated in press note 4 issued in February, 2009) led one to conclude that 100% wholly owned subsidiaries of the FOCC NBFCs must also meet the minimum capitalisation requirements of NBFCs. This would have made it commercially difficult for FOCC NBFCs to set up and operate different subsidiaries for separate activities like stock broking, housing finance etc. Much to the relief of 100% FOCC NBFCs, however, Circular 2 has explicitly stated that they will not be required to meet minimum capitalisation requirements. Speaking of downstream investments, there were concerns after the release of Circular 1 that downstream investment by a FOCC could be done only through funds from abroad and not by leveraging funds from India. Fortunately, Circular 2 has stated with well clarified that investment by internal accruals is permitted as long as other conditions laid down in the policy on downstream investments are fulfilled. Breather to retailers too: Since FDI in multi brand retail is prohibited, players in this market have often been in the news for the wrong reasons, trying to use the wholesale cash-and-carry route, where100% FDI is permitted, as a backdoor to enter the multi brand retail sector.

In Circular 1, the government had come down heavily on FDI in multi brand retail sector structure — where the ownership structure of the retail entity and the wholesale entity were kept distinct but within the same group companies/promoters and exclusive arrangements were made between the two companies to realise commercial value — by stating that only 25% of the total turnover could be traded by the wholesale entity amongst the same group companies and for ‘internal use’ only. However, after much cajoling, the government has provided a breather to the infamous indirect structures by getting rid of the ‘internal use’ rule. Conclusion: The DIPP deserves a pat on its back for its exemplary efforts, some of which we have discussed above. In recent months, the DIPP has published a few discussion papers on opening up prohibited sectors such as multi-brand retail and defence to FDI. A paper has also been put up for discussion on issue of shares for consideration other than cash, so far permitted in certain cases such as conversion of external commercial borrowings or royalty payments). There are, nevertheless, other ambiguities in the FDI policy requiring the DIPP’s attention — the important ones being upfront determination of price of capital instruments at the time of issuance and treatment of FOCC Indian companies as non-resident entities, given the guiding principle in the FDI policy that downstream investment by FOCC Indian companies are required to follow the same norms as a direct foreign investment. These issues have been the bones of contention in boardrooms and we can only hope that they can grab the DIPP’s attention at the earliest.

INDIA HIT BY BANKING SCANDAL, SHARE FALL (Contributed by C. Shruthi Bhat, 09D61E0005)

Finance Ministry explored the possibility of instituting a departmental inquiry into the housing finance racket that led to arrest of senior officials of the LIC Housing Finance and public sector banks. .he official was responding to a query on the possibility of the Finance Ministry instituting an inquiry to look into the housing finance racket. Describing the episode of arrests of bankers as incident of "bribery", the official said, it will not have any impact on the asset quality of the banks.

Central Bureau of Investigation (CBI) arrested CEO of LIC Housing Finance Ramachandran Nair and seven others senior bankers in connection with a housing finance racket. Apart from Nair, those arrested are Naresh K Chopra, Secretary (Investment), LIC, R N Tayal, General Manager of Bank of India (Delhi), Maninder Singh Johar, Director (Chartered Accountant) of Central Bank of India, Venkoba Gujjal and Dy.General Manager of Punjab National Bank (Delhi).

The bank officials allegedly colluded with the firm to sanction large scale corporate loans, overriding mandatory conditions for such approvals along with other irregularities.

"These are cases of bribery. These are cases of corruption. Bribery by public officials, by people working in public sector organisations and facilitating and sanctioning loans by taking money"

Effects of Sandal 

 Shares in state-run financial firms named in a bribery scandal fell sharply, a day after eight top officials were arrested in India's third biggest corruption scandal in the past few months.

Shares in LIC Housing Finance fell more than 10 percent, while Punjab National Bank and Bank of India were down 3 percent and 2.3 percent respectively. Stocks later rebounded.

Government officials contacted by Reuters said there were no special meetings planned to discuss the bribery case. The officials, who asked to remain anonymous, said the federal investigative agency CBI would be handling the case.

The individuals under arrest received bribes from private finance firm Money Matters Financial Services, which acted as a "mediator and facilitator" of corporate loans and other facilities, the CBI said on Wednesday.

The CBI did not provide financial details of the charges. Analysts said many corporate houses could also be probed for possible involvement.

The Human Resource Information System –HRIS  ( Contributed by  K.Mounika 09D61E0030)

The Human Resource Information System (HRIS) is a software or online solution for the data entry, data tracking, and data information needs of the Human Resources, payroll, management, and accounting functions within a business. Normally packaged as a data base, hundreds of companies sell some form of HRIS and every HRIS has different capabilities. Pick your HRIS carefully based on the capabilities you need in your company.

Typically, the better The Human Resource Information Systems (HRIS) provide overall:

• Management of all employee information.
• Reporting and analysis of employee information.
• Company-related documents such as employee handbooks, emergency evacuation procedures, and safety guidelines.
• Benefits administration including enrollment, status changes, and personal information updating.
• Complete integration with payroll and other company financial software and accounting systems.
• Applicant tracking and resume management.

The HRIS that most effectively serves companies tracks:

• attendance and PTO use,
• pay raises and history,
• pay grades and positions held,
• performance development plans,
• training received,
• disciplinary action received,
• personal employee information, and occasionally,
• management and key employee succession plans,
• high potential employee identification, and
• applicant tracking, interviewing, and selection.

An effective HRIS provides information on just about anything the company needs to track and analyze about employees, former employees, and applicants. Your company will need to select a Human Resources Information System and customize it to meet your needs.

With an appropriate HRIS, Human Resources staff enables employees to do their own benefits updates and address changes, thus freeing HR staff for more strategic functions. Additionally, data necessary for employee management, knowledge development, career growth and development, and equal treatment is facilitated. Finally, managers can access the information they need to legally, ethically, and effectively support the success of their reporting employees.

DAY FOCUS  ( Collected  by J. Deepthi, 09D61E0011)

Economic Offences -Opinion - Politics
Columns - T.C.A. Srinivasa-Raghavan
Columns - OKONOMOSA tutorial for the PMO

T.C.A. SRINIVASARAGHAVAN

Oscar Wilde is believed to have said that economists know the price of everything and the value of nothing. That is perhaps why they tend to analyse corruption in a way that strips it of its moral content. Fresh proof of this very practical but slightly abhorrent approach comes from a recently published paper “Embezzlement Versus Bribery” by economists C. Simon Fan, Chen Lin and Daniel Treisman, who have analysed corruption with sophisticated mathematical tools (NBER Working Paper No. 16542).

A summary of their findings is presented below to help the pristine Congress party in its current campaign to catch the corrupt in all other parties. So here goes.

The authors say that we must distinguish between two types of corruption. One type loots the exchequer, that is, embezzlement; the other type loots the citizen and the corporate sector — that is, bribery.

Which is worse? Don't say both are bad because that gives no policy guidance. Governments, if they have to act, must prioritise their actions to make their efforts effective.

So, say the authors, “in many circumstances, embezzlement is less distortionary than bribery.” Good old China, it appears, takes this view.

Two kinds of corruption

Taking it from there, they have analysed the trade-off between these two kinds of corruption and conclude that “when bribery is more costly to economic development, governments may tolerate some embezzlement in order to reduce the extent of bribery — even though embezzlement is generally easier to detect.”

Here, we get into some heavy economics, namely, utility theory which divides things into substitutes and complementary goods. It turns out that government officials, lucky fellows, tend to view bribery and embezzlement as substitutes. If you can't rip the citizen or the firm off, the government is always there to be ripped off.

Each type of corruption, say the authors, entails different costs for society. On the whole, they seem to suggest “bribe-extraction, if it targets firms, as usually assumed, and if the bribe is charged on top of official taxes and levies, increases the cost of doing business. Embezzlement — unless it prompts politicians to increase the tax rate to make up for embezzled revenues — does not increase companies' costs directly.” Ergo, it is better to prevent bribery and allow embezzlement.

Like an efficiency wage

Why? “Since one of the most significant costs of corruption is the waste of resources spent by officials in concealing their corrupt activities, politicians should tolerate this embezzlement even when it is quite open. The level of tolerated embezzlement is analogous to an efficiency wage.” The rest of their paper is devoted to proving this proposition.

If one were to suspend moral judgement, the argument, I must say, is very persuasive and the PMO, at any rate, must read it because private investment has now replaced public investment as the engine of growth.

But does that mean we should allow the fisc to be raided at will by corrupt officials? Not necessarily. That part of it can be taken care of by the RTI Act and the NGOs. Indeed, it is already happening.

Shipping/Ports -Logistics - EnvironmentPanel seeks more information from Posco on captive port

The Environment Ministry's Expert Appraisal Committee (EAC) has sought additional information from South Korean steel-maker, Posco, on its captive port near its proposed integrated steel plant in Orissa. The EAC on Coastal Zone Regulation felt the need to study the environmental impact of the proposed port on the coastal marine life, and has sought additional information from the company, sources said.

This would mean that Posco may have to wait for some more time to get the clearance from the Environment Ministry.

Recently, the Environment Minister, Mr Jairam Ramesh, said that his Ministry would decide on clearance to Posco within a few weeks. “It is a complex issue and facts are being considered. We will take an integrated call and final view on it which will be fair and balanced,” Mr Ramesh had said, stating that the recommendations of the Forest Advisory Committee, the Expert Appraisal Committee and the Coastal Regulation Zone have to be reviewed.

The FAC had recently recommended to the Ministry against issuing clearance to the integrated steel project citing violation of the Forest Rights Act by the Orissa Government at the site.

Economy - Industry & Economy - EconomyFarm sector powers 8.9% GDP growth in Q2

The Indian economy has registered an annual growth of 8.9 per cent for the quarter ended September 30.

The 8.9 per cent year-on-year increase in the country's real gross domestic product (GDP) during July-September comes on top of a corresponding 8.7 per cent figure for the same quarter of the previous year, lending credibility to the latest growth number.

Moreover, all the three sectors – agriculture, industry and services – have shown robust growth during the quarter.

While industry and services have grown by 9 per cent and 9.6 per cent, respectively, (and within them, manufacturing by 9.8 per cent and trade, hotels, transport and communications by 12.1 per cent), agriculture production has recorded a 4.4 per cent year-on-year rise on the back of a reasonably good, monsoon-aided kharif harvest.

The picture is equally encouraging on the ‘demand' side of the GDP equation, with private final consumption expenditure during July-September being 9.3 per cent higher than the same quarter of 2009-10 and gross fixed capital formation also growing by 11.1 per cent. Government consumption expenditure, too, rose 9.2 per cent in real terms.

First-half growth

For the first half of this fiscal, the overall GDP growth worked out to 8.9 per cent, which was better than the 7.5 per cent for April-September 2009-10.

Amidst all the depressing news, this is one good news, said the Finance Minister, Mr Pranab Mukherjee, reacting to the estimates put out by the Central Statistics Office here on Tuesday.

While Mr Mukherjee expressed confidence that the GDP growth for the entire fiscal could touch 8.75 per cent “and maybe more”, his Chief Economic Advisor, Prof Kaushik Basu, declared that even 9 per cent may not be impossible.

Inflation impact

The other notable feature of the latest GDP data is the impact of inflation. This is reflected in the GDP growth expressed in current prices, which, at 19.8 per cent during April-September, has far outpaced the 9.4 per cent figure for the first half of 2009-10.

Agricultural output, in particular, has seen a 26.1 per cent year-on-year increase in the current value during the first half of this fiscal.

Thus, while farm production per se may have risen by 4.4 per cent, farm incomes have, however, risen by over a quarter.

CASE STUDY – MARKETING MANAGEMENT

The Indian pen market is around Rs. 600 crores and 80% of the market belongs to ball pens, with a growth of 20% every year. Reynolds, Rotamic and cello brand are the players in this market. Reynolds is the leader among these.

This Reynold.s has created a revolution of offering the pens priced higher than a number of brands which existed at that time and also offered reliability and flow much superior to its computing brands. The Rotamic was a follower brand priced below Reynolds and has also provided a .secondary. differentiation by introducing a number of colours.

Explain the pricing strategy of Ratamic and its relevance to this situation.

Focus – Day Tip Men are more important than all the wealth in the world