Current Affairs India | Indian Current Affairs Short Notes - Sept 2011

Mark to Marketing Accounting 
Mark-to-market or fair value accounting refers to accounting for the fair value of an asset or liability based on the current market price of the asset or liability.Mark-to-market accounting can change values on the balance sheet frequently, as market conditions change.  Mark-to-market accounting can become inaccurate if market prices change unpredictably. Problems can arise when the market-based measurement does not accurately reflect the underlying asset's true value. This can occur when a company is forced to calculate the selling price of these assets or liabilities during unfavorable or volatile times, such as a financial crisis. For example, if the liquidity is low or investors are fearful, the current selling price of a bank's assets could be much lower than the actual value. The result would be a lowered shareholders' equity. This accounting is considered as one of the main reason for sub-prime crisis and it was stopped in US during 2008 recession. 

Historical cost accounting 
In contrast, historical cost accounting is based on the past transactions. It is simpler, more stable, and easier to perform, but does not reflect current fair value at all. It summarizes past transactions instead. 

Keynesian economics 
Keynesian economics is a school of macroeconomic thought based on the ideas of 20th-century English economist John Maynard Keynes. Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and, therefore, advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle 

Indian corporates and their share in GDP 
Less than 3 per cent of the citizens file income tax returns, and India has one of the lowest ratio of direct tax to GDP in the world. Indian corporates (less than 0.1 per cent of the population) control 20 per cent of the national income, much more than what the 50 per cent of the population that is dependent on agriculture make. 

Sovereign default and  Sovereign debt crisis. 
A sovereign default is a failure by the government of a sovereign state to pay back its debt in full.If potential lenders or bond purchasers begin to suspect that a government may fail to pay back its debt, they may demand a high interest rate in compensation for the risk of default. A dramatic rise in the interest rate faced by a government due to fear that it will fail to honor its debt is sometimes called a sovereign debt crisis. Normally governments rarely default on the entire value of their debt. Instead, they often enter into negotiations with their bondholders to agree on a delay or partial reduction of their debt payments, which is often called a debt restructuring or 'haircut'. 

Original sin 
It refers a situation in which "most countries are not able to borrow abroad in their domestic currency.Original sin was present in most of the developing economies and independent from histories of high inflation and currency depreciation 

A remainder of 2008 recession 
The U.S. budget deficit went from 3 per cent of GDP to 12 per cent. The same thing happened in India. China provided a $600-billion boost to infrastructure. Japan and much of Europe went in for budget deficits to boost demand in their economies. Nonetheless, unemployment rose sharply everywhere. In the U.S., it reached the level of 9.6 per cent. In India, exports which were growing at 35 per cent started plummeting at 35 per cent, leading to large-scale unemployment in labour-intensive sectors such as textiles, gem and jewellery and leather goods. Many industries and services such as transportation, finance and real estate went into a tailspin. The International Labour Organisation estimated that 60 million jobs were lost in spite of attempts by various governments to boost their economies.

Teesta River
River Teesta is said to be the lifeline of the Indian state of Sikkim, flowing for almost the entire length of the state. The emerald-coloured river then forms the border between Sikkim and West Bengal before joining the Brahmaputra as a tributary in Bangladesh. The total length of the river is 315 kilometres. New Delhi had agreed to a deal, which would have given Bangladesh 48 per cent of the Teesta's waters, setting a precedent that would have helped resolve pending disputes over 53 other rivers, including the Feni. India has proposed a series of dams within the Teesta river that should produce some 50,000 MW of electricity within the next 10 years