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Current Affairs--May 17 to 23, 2011


MAY 17 TO 23, 2011

Tax exemption of E.P.F.(Employees Provident Fund)

Giving relief to 4.71-crore subscribers of the EPFO, the government has allowed tax exemption on the 9.5 per cent interest income on PF deposits for 2010-11.


The scheme of free distribution of 20 kg rice to beneficiaries under the public distribution system (PDS) will come into force on June 1.
At present, rice is given at Re. 1 a kg to those who are entitled to receive the commodity. As per the existing norms, rice of four kg per adult and two kg per child is supplied subject to a minimum of 12 kg and a maximum of 20 kg per month per card except in the Nilgiris where the minimum will be 16 kg and the maximum 24 kg.
According to a government order issued on mAY 17, 2011, the existing norms will continue.
In the case of Antodaya Anna Yojana (AAY) beneficiaries, rice of 35 kg will be given free.
The government order follows the announcement of Chief Minister Jayalalithaa on Monday on her first visit to the Secretariat. Her party, the All India Anna Dravida Munnetra Kazhagam, had made an electoral promise regarding the provision of rice free.
Sources say that the latest decision of the government will cover 18.62 lakh AAY beneficiaries and 1.83 crore card holders who are entitled to rice. This will result in an increase of the food subsidy by Rs.500 crore.


Sujana passes away

Noted litterateur S.J. Narayana Shetty, popularly known as Sujana, passed away here on May 15, 2011.. He was 81.
Sujana retired as professor of Kannada from the University of Mysore here. The well-known litterateur had won several awards, including the Kendra Sahitya Akademi award.

USA government hits its 14.3 trillion debt ceiling

The U.S. government hit its $14.3-trillion debt ceiling on May 16,2011, triggering a series of “extraordinary measures” to stave off a default while politicians argue over raising the borrowing limit.
Treasury Secretary Tim Geithner announced he was suspending payments into two federal pension funds, after the government reached its maximum legal borrowing limit. Mr. Geithner said the suspension should allow the U.S. to avoid a default before August 2 and urged Congress to agree to raise the debt ceiling before this 11-week deadline expires.

Mr.OOmmen Chandy, new Kerala Chief Minister
Congress Legislature Party leader Oommen Chandy was sworn in as Kerala's 21st Chief Minister on May 18, 2011.
Governor R.S. Gavai administered him the oath of office and secrecy, in the presence of several political personalities, including senior Opposition leaders.
Mr. Gavai also administered the oath to six leaders of various constituents of the United Democratic Front. The oaths were administered according to the pecking order in the UDF, on the basis of the strengths of the coalition partners.


25 paise coin out of circulation

The Reserve Bank of India on May 18, 2011 asked the public to exchange 25 paise coins and those with lower denominations with banks before June 30, the day from which they would be demonetised or cease to be a legal tender for payment.
“Coins of denomination of 25 paise and below will cease to be legal tender from June 30, 2011. These will not be accepted for exchange at bank branches from July 1, 2011 onward,” it said.
“The RBI has, therefore, appealed to the members of public to exchange these coins at the branches of banks maintaining small coin depots or at the offices of the Reserve Bank.”
The exchange facility at specified bank branches or the Reserve Bank offices will be available till the close of business on June 29, 2011
Expert panel studying Cauvery Basin

Eighteen representatives of Nile Basin Initiative (NBI) on May 20, 2011 visited Cauvery Basin in Namakkal as part of a five-day study of water and agricultural resource management in the basin.
Klas Sandstrom, who leads the technical committee of the Initiative, said the study of the Cauvery Basin made the members aware of the need to save nearly 6,000-kilometre long Nile River from pollution when 10 countries in East Africa, through which the river flowed, developed industrially. Mr. Sandstrom was part of the 18-member team from nine East African countries that came to Namakkal .


U.S.way ahead – Chinese Geneal

A top Chinese General visiting Washington this week has said Chinese military capacity does not match up to the sophistication of the United States' military equipment.
Possibly seeking to water down recent calls in the U.S. for more transparency in Chinese military capabilities, Chief of General Staff of the People's Liberation Army General Chen Bingde said American claims of Chinese military capabilities were exaggerated.
No challenge
“I can tell you that China does not have the capability to challenge the U.S.,” said General Chen, adding that China's efforts to enhance its national defence and military capabilities after rapid growth in economic power was “compensatory in nature”.
The General also said “China's efforts to enhance... military capabilities is mainly targeted at separatist forces ... who have attempted to split Taiwan away from China.” General Chen said he was surprised by the sophistication of U.S. military equipment, the AFPS reported, while his counterpart here, U.S. Chairman of the Joint Chiefs of Staff Admiral Mike Mullen, said maintaining senior military-to-military relations would help shed light on mutual capabilities.

Centre decides to sell entire stake in Scooters India Limited

The Union Government on 19th May 2011 decided to revive the sick public sector undertaking Scooters India Limited (SIL), Lucknow, by selling its entire stake and its take-over through a joint venture.
Pressing with its Uttar Pradesh-centric approach what with the elections knowing the doors, the congress-led UPA government approved the proposal to induct a strategic partner by offloading the entire government equity of around 95 per cent with the balance remaining with banks, financial institutions, corporate bodies and others. The transfer of government equity would be done through the Department of Disinvestment after obtaining Parliament's nod to identify and induct a strategic partner.
Manufacturing three-wheelers under the brand name of Vikram, SIL has been recording operational losses since 2002-03 and net losses since 2006-07 due to inherent inefficiency and low productivity and inability to match the highly competitive market.
Net worth
With its net worth eroded at the end of the closure of audited accounts on March 31, 2008, the Board for Reconstruction of Public Sector Enterprise recommended the induction of a joint venture partner as the only way out to revive the unit.

Tatas welcome to set up factory at Singur – Mrs. Mamata Banerjee, C.M. West Bengal
In her first major announcement after being sworn in as Chief Minister on May 20, 2011, Mamata Banerjee said the West Bengal government would return the 400 acres of land acquired for the subsequently re-located Tata Motors' small car project at Singur to farmers who were unwilling to part with it.
The Tatas are welcome to set up industry on the remaining portion of the total land that had been acquired for the project (997.11 acres), she told journalists after holding her first meeting with the new Cabinet within an hour of taking charge.
Her government is open to holding negotiations to solve the problem in the Jangal Mahal area. “We want peace in West Bengal. There can be no compromise on that. Health care and quality education are two priority areas,” she said, adding that “restoration of Bengal” was her biggest challenge.
“It has been decided to return 400 acres to unwilling Singur farmers. The Tatas could set up a factory on 600 acres if they are willing to do so,” she said.
Asked whether her government would invite the Tatas, she said: “Tatas will invite themselves, everyone is welcome.”

J.Jayalalitha justifies working from Fort St. George

Chief Minister Jayalalithaa on May 20, 2011 said she had decided to work from Fort St. George, [which houses the Assembly and Secretariat], in view of administrative considerations.
Dismissing criticism in certain quarters that she did not want to function from the new Secretariat-Assembly complex because it was mooted by the Dravida Munnetra Kazhagam government, Ms. Jayalalithaa, in a three-page statement, stated that “neutral persons know that I do not take any decision due to political malice”.
She alleged that during her previous spell as Chief Minister, the then Union Environment Minister T. R. Baalu had created hurdles to her project of the new Secretariat at the behest of Dravida Munnetra Kazhagam president M. Karunanidhi.

Bina Refinery in M.P. Dedicated to nation

Prime Minister Manmohan Singh, who is on a day's visit to Madhya Pradesh, dedicated the world-class, 6 million tonnes per annum Bina refinery to the nation here on May 20, 2011 and said the country would increase its refining capacity to 23.80 million tonnes by 2012.
“I am happy that our refining capacity, which was 620 lakh tonnes in 1998, has now become 1,870 lakh tonnes. By 2012, we are working toward enhancing this capacity to 2,380 lakh tonnes,” the Prime Minister said, formally declaring the refinery here, in Sagar district of Madhya Pradesh, open.
The refinery was set up by Bharat Oman Refineries Limited (BORL), which is promoted by Bharat Petroleum Corporation Ltd, with equity participation of 26 per cent by Oman Oil Company and about one per cent by the Madhya Pradesh Government.
33 ministers get cabinet rank in Mamata ministry
The new West Bengal Chief Minister Mamata Banerjee has allocated portfolios to her newly sworn-in ministers in right earnest, keeping for herself nine departments, including Home, Health and Land Reforms.
In an official announcement made around midnight on May 20th night, 33 Ministers were given Cabinet rank portfolios and four others were made Ministers of State with independent charge. Two Congress MLAs — Manas Bhunia and Abu Hena — are among the Cabinet Ministers.
The departments held by Ms. Banerjee include Agriculture, Power, Hill Affairs, Information & Cultural Affairs, Minority Affairs & Madrasa Education and Personnel and Administrative Reforms.
Ms. Banerjee entrusted the Finance and Excise departments to renowned economist and former Federation of Indian Chambers of Commerce and Industry secretary-general Amit Mitra who has considerable experience in financial policy-making and is expected to revive the State government's ailing financial health.
PMK to lose recognition as a state party—DMDK to be recognised asa state party

The Pattali Makkal Katchi (PMK), which bagged just three seats in the Assembly elections, will, in all likelihood, lose its recognition as a State party.
In contrast, the Desiya Murpokku Dravida Kazhagam (DMDK), which was struggling to have a symbol of its own, will be recognised as a State party.
The PMK, one of the recognised State parties, contested from 30 constituencies as part of the Dravida Munnetra Kazhagam-led front. It got 19,27,783 votes, 5.23 per cent of the valid votes polled.
The DMDK, the second major party in the All India Anna Dravida Munnetra Kazhagam-led front, captured 29 seats out of 41 constituencies it contested. It netted 29,03,828 votes with a vote share of 7.88 per cent.
Eligibility norms
Quoting the 1968 Election Symbols (Reservation and Allotment) Order, a senior official of the Elections Department says for an organisation to be recognised as a State party, it should have got not less than six per cent of the total valid votes polled in the State in the last elections to the Lok Sabha or Assembly and returned at least two members to the Assembly.
Alternatively, the party should have won in at least three per cent of the total number of seats in the Assembly of the State or at least three seats in the Assembly, whichever is more.

2.5 lakh students to be recruited by IT firms this year

A whopping 2.5 lakh students are expected to be recruited by Information Technology companies in the country this year, as opposed to the 1.6 lakh last year. Though the requirement is huge, it is very focussed, said K. Purushothaman, Regional Director, TN & Kerala, NASSCOM atThe HinduEducation Plus Career Fair 2011 on Saturday.
“Familiarity with cloud computing, Green IT and Remote Infrastructure Management will enhance the industrial needs, but these are not taught in colleges. Therefore, it is the duty of students to keep their eyes and ears open to understand these requirements and equip themselves,” he advised students.
Infosys to start new campus in Shanghai

Infosys Technologies on Saturday laid the foundation for a new campus in Shanghai, China, and planned to invest between $125 million and $150 million in the new campus, reports PTI from New Delhi.
Bats for financial inclusion

Union Finance Minister Pranab Mukherjee said on May 21, 2011 that one of the challenges in the financial sector that India faces today is the limited reach of financial services among the poor and vulnerable sections of the society.
“Financial inclusion is a key determinant of sustainable and inclusive growth, which in turn is essential for building an equitable society. Financial inclusion is important as it provides an avenue to the poor to bring their savings into the organised financial system. It gives them an avenue to remit money to their families in villages, besides weaning them away from the clutches of the exploitative money lenders. It is essential to extend banking services to the rural hinterland at the earliest, so as to integrate those regions with the growing India,” said Mr. Mukherjee while launching social banking initiatives of Union Bank of India here.
The Government has asked banks to provide banking facilities to habitations having a population of over 2,000 by March 2012. Banks have identified about 73,000 such habitations for providing banking facilities using appropriate technologies. A multi-media campaign, “Swabhimaan”, has been launched to inform, educate and motivate people to open bank accounts. During 2010-11, banks have covered about 29,000 villages. The remaining villages are to be covered during 2011-12.
Many a time lack of communication, awareness and language barriers creates a demand and supply gap for the financial services.

Union government rejects the recommendations of Karnataka Governor.
The United Progressive Alliance government decided late on May 22nd night to reject Karnataka Governor H. R. Bhardwaj's report recommending dismissal of the Yeddyurappa-led Bharatiya Janata Party government in that State.
This decision was taken by the Cabinet Committee on Political Affairs (CCPA), which met immediately after the UPA celebrated the second year of its second consecutive term in power.
However, the CCPA has asked the Home Ministry to send an advisory to the Karnataka government, bringing to its notice the issues that had been mentioned by the Governor , in the hope that it will take note of the comments. The Governor's report had followed a Supreme Court order, reversing the Karnataka High Court's decision of disqualifying 11 BJP rebel legislators and five independents, ahead of a trust vote in the Assembly.

Wake-up call to the Centre from RBI

The latest review of interest rates of banks announced by the Reserve Bank of India on May 3 included an increase in short-term lending rate by 50 basis points to 7.5 per cent and short-term borrowing rate by 50 basis points to 6.25 per cent. The RBI Governor, D. Subbarao, has justified this as necessary to moderate inflation even if it means a slowing down of growth in the short run. The gross domestic product (GDP) expectation for 2011-12 has been lowered to 8 per cent. The RBI Governor has warned that high and persistent inflation undermines growth by creating uncertainty for investors and driving up inflation expectations. He has called for an increase in prices of petrol and diesel.

The control of fiscal deficit also presents a poor track record. The Fiscal Responsibility and Budget Management (FRBM) Act 2003 has not helped in tackling the root of the problem. There has been obsession with showing compliance with quantitative deficit targets .This has been based on revenue buoyancy and one-time receipts like spectrum auctions. The resulting complacency has sidetracked major fiscal issues and problems. The so called medium-term road map for achieving fiscal consolidation is not based on any time-bound action to identify and reform these problems. The list is substantial covering revenue and expenditure.

The current inflation in food prices deserves a special mention. This seems to be a supply-side problem. The aspects needing consideration and action are modern methods in farming, supply of improved seeds, useful extension service, proper storage for grains, rural loans and improved irrigation and water supply to reduce dependence on rain fed crops. Output and outcome budgeting can be useful in ensuring proper use of irrigation dams and reservoirs to improve efficiency in water use and evolving suitable crop pattern. As a medium-term agenda the Central Government can take action to amend the constitution to make agriculture, water and irrigation a concurrent subject instead of a purely state subject. Interlinking of rivers and canals can also be a long-term project.
In conclusion, what is needed is urgent and time-bound action plan to reform all these issues and not mere promises and studies. For better coordination of fiscal and monetary policies a parliamentary committee can call the Finance Secretary and the Governor of RBI for a joint hearing.
Current Affairs--May 17 to 23, 2011 Reviewed by sambasivan srinivasan on 9:06:00 PM Rating: 5

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