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Current Affairs -National and International


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Draft guidelines for new bank licencesOn August 29, 2011, the Reserve Bank of India released its much-awaited draft guidelines for new banking licences, with the basic message that it is looking for companies with diversified ownership and less exposure to risky business such as broking and real estate.

The guidelines had been under discussion for more than a year. These allow business houses with successful track record and a minimum capital of Rs 500 crore to set up commercial banks. The draft also spelt out the framework for converting non-banking financial companies into banks.

The RBI has suggested a 49% limit on foreign shareholding and a two-year deadline to list shares for new banks.

According to the draft, new banks’ total exposure to their founding groups should be limited to 20%, with the exposure to a single entity capped at 10%.

Activities such as real-estate and broking, “apart from being inherently riskier, represent a business model and business culture which are quiet misaligned with a banking model,” said the central bank, which has historically been cautious about opening up the sector to more players due its apprehensions on controlling bad loans.

These conditions may make it difficult for keen aspirants such as Religare Enterprises Ltd., Indiabulls Financial Services Ltd. and Reliance Capital Ltd. to qualify, analysts said.

Companies like Larsen & Toubro Ltd., Mahindra & Mahindra Financial Services Ltd., with a reasonably diversified shareholding, have a fair chance to gain banking licenses.

The last time India issued a banking license was in 2004, to Yes Bank Ltd.

Sustainable Competitiveness Report 2011
Punjab, Himachal Pradesh and Haryana rank among the top 10 States in a report titled Sustainable Competitiveness Report 2011 for Indian States, released by Marcus Potter, executive director, developing markets, RICS. The report shows the ranking of Indian States in terms of the sustainability of their growth story.

The States have been divided into three categories based on the density of population and Delhi tops the sustainable competitiveness index in the high density States. Goa and Sikkim top the list for the medium and low population density States, respectively.

When seen as an overall ranking, the top three winners are Goa, Delhi and Sikkim, followed by Punjab, Himachal Pradesh, Haryana, Mizoram, Kerala, Gujarat and Arunachal Pradesh.

Among the laggards, West Bengal, Bihar and Jharkhand fared the worst. Heavyweight States such as Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra and Uttar Pradesh showed disappointing results.

The States sustainability competitiveness is accessed on four basic pillars, which include social inclusion, environment and climate change, economic development and resource availability and utilisation.

When seen against individual ranking parameters or categories, Delhi and Goa top the national rankings across the economic development and resource availability and utilisation categories, respectively.

On environment and climate change, it is Arunachal Pradesh that tops the national rankings, though overall the State ranks number 10. Mizoram ranks as the number one State nationally on social inclusion.

The IFC-RICS Sustainability Competitiveness Report seeks to raise awareness and promote inclusive growth amongst cities.

Growth prospects for 2011-12 subdued: RBI
While retaining economic growth estimates for 2011-12 at eight per cent, the Reserve Bank of India (RBI) has cautioned about emerging downward risks emanating from the uncertain global environment and domestic inflationary pressures. The central bank also said global commodity prices would shape its monetary policy stance in the future.

In its annual report for 2010-11, RBI had retained its growth projection at eight per cent for 2011-12 in its first quarter review in July. Overall growth in 2010-11 is estimated at 8.5 per cent, and is likely to be higher after factoring in the new index of industrial production series.

“Downside risks to growth have increased since our assessment in July. The decline in global commodity prices has not been significant, and despite all the financial market turbulence, oil prices are back to earlier levels,” RBI Deputy Governor Subir Gokarn said.

On global factors, RBI said high oil and commodity prices, even after some correction, remains high and could adversely impact growth. The central bank also painted an uncertain picture of the industrial sector, where it saw downside risks outweighing upside ones. According to RBI, the downside risks arise from falling business confidence in the wake of global uncertainties, political factors and firm commodity prices amidst high inflation and a weak response of supply side factors.

On inflation, the central bank has maintained its earlier stance that a moderation in prices can only be expected by the end of 2011-12.  RBI expects inflation to come down to seven per cent by March 2012.

Parliament yields to Anna’s demands on Lokpal Bill
On August 27, 2011, the extraordinary 12th day of Anna Hazare’s anti-corruption fast, the Parliament responded with extraordinary grace to show what it could do to honour a crusader’s urge.

After over eight hours of debate around the structure of the Lokpal Bill, the Government and the Opposition in both the Lok Sabha and Rajya Sabha came together to agree “in-principle” to the three major demands the activist had raised in his letter to Prime Minister Manmohan Singh as a condition to end his protest. In doing so, the Parliament paved the way for the Gandhian to end his fast.

Earlier, the two Houses agreed that the anti-graft law, to be effective, must cover corruption by lower bureaucracy through appropriate mechanisms; must have an inbuilt grievance redress system which Anna calls the citizens’ charter and should provide for enabling laws to establish Lokayuktas in States on the lines of the Lokpal at the Centre.

The debate ended amidst members thumping their desks to applaud the agreement which Finance Minister Pranab Mukherjee summed up as “the sense of two Houses” which would now be conveyed to the Parliamentary Standing Committee on Law and Justice for its consideration. The committee is already seized of the Lokpal Bill the government had introduced in Lok Sabha on August 4 and those prepared by the National Advisory Council member Aruna Roy and Dr Jayprakash Narain.

Except on the inclusion of judiciary and MPs’ conduct inside the Parliament under the Lokpal as Anna had demanded in the Jan Lokpal Bill, the BJP-led Opposition and the Government broadly agreed on all other issues, with Leaders of Opposition in both Houses steering the consensus, especially on conditional inclusion of the PM on matters except in issues of national security, public order and foreign policy.

The “Sense of the House” resolution reads: “This House agrees ‘in principle’ on the following issues: citizen charter, lower bureaucracy under the Lokpal through an appropriate mechanism, and establishment of the Lokayukta in the States; and further resolves to forward the proceedings of the House to the Standing Committee on Law and Justice.”

Delhi, Dhaka ink strip maps to mark border
On August 20, 2011, Bangladesh and India inked strip maps to demarcate over 4,000-kilometre international border between the two neighbours, in a bid to settle the long-standing frontier-related discord.

This signing of the strip maps containing the Bangladesh-India International border boundary line coordination point will end an outstanding issue which remained unresolved since 1947.

A strip map is an un-scaled drawing of a route to include critical points along the border, roadside features and town facilities on a simple flip-over style map. The map usually incorporates distances.

US warns India of Chinese build-up
The latest US assessment of the expanding military might of China paints a scary picture of the frenetic pace at which the 2.25-million People’s Liberation Army (PLA) is being modernized, in the backdrop of uncertainty over its long-term intentions.

Though the US report holds that thwarting any American intervention in Taiwan remains PLA’s “main strategic direction”, New Delhi can ill-afford to ignore China’s increasing trans-border military capabilities, its assiduous strategic encircling of India and hardening posture in the border talks.

The report itself notes PLA has replaced its older liquid-fuelled, nuclear-capable CSS-2 intermediate range ballistic missiles with the “more advanced” solid-fuelled CSS-5 medium-range ballistic missile systems along the Line of Actual Control (LAC) to “strengthen its deterrent posture” against India.

“A high level of mistrust continues to strain the bilateral relationship...India remains concerned over China’s close military relationship with Pakistan and Beijing’s growing footprint in the Indian Ocean, Central Asia and Africa,” says the report.

All this might not startle the Indian defence establishment, which also keeps a close tab on PLA, but the fact remains that China can now move over 30 divisions (each with over 15,000 soldiers) to the LAC within a month to outnumber Indian forces by at least three-is-to-one due to the huge military infrastructure build-up in Tibet.

India has taken some steps in recent years to counter China, which range from planning a new mountain strike corps (over 35,000 combat troops) in 2012-2017, after raising two new divisions (over 15,000 soldiers each) in Nagaland and Assam, to deploying Sukhoi-30MKI fighters, missile batteries and spy drones in the North-East.

But a lot more clearly needs to be done. China, after all, is fast steaming ahead with its projects to build its first stealth fighter, the J-20, and multiple aircraft carriers after its first, the 67,500-tonne Varyag acquired surreptitiously from Ukraine, began sea trials recently.

Moreover, China has a hyper-active ballistic and cruise missile programme to add to its already huge nuclear arsenal. They include missiles like the DF-21D ballistic missile to kill aircraft carriers or large ships over 1,500-km away, the road-mobile DF-31A capable of hitting targets 11,200-km away, and the JL-2 submarine-launched ballistic missile with a reach beyond 7,200-km. "China's nuclear arsenal currently consists of 55-65 ICBMs (intercontinental ballistic missiles), apart from (5-20) IRBMs, (75-100) MRBMs and (1,000-1,200) SRBMs," says the Pentagon report.

China, of course, also helps Pakistan to boost its military capabilities, with the clear intention to bog down India in South Asia. Pakistan remains China's primary customer for weapons, with sales ranging from JF-17 and F-7 fighters, F-22P frigates and early warning and control aircraft, tanks and missiles, says the report.


Bhattarai sworn-in as Prime Minister of NepalMaoist ideologue Baburam Bhattarai was sworn in as Nepal’s new Prime Minister on August 29, 2011. After taking over as the Prime Minister he said that he would work to complete the fragile peace process within six months and form a national unity government to bring political stability in the nascent republic.

The 57-year-old Jawaharlal Nehru University scholar ascends to the post at a crucial time in Nepal and faces the twin challenge of integrating and rehabilitating over 19,000 former Maoist guerrillas and preparing the first Constitution, two major conditions of a 2006 peace deal which ended a decade-long civil war that killed some 16,000 people.

Bhattarai said that he hoped to lead a consensus government to break the political deadlock that has stalled the peace process and delayed the drafting of a new constitution.

The Maoists with 236 seats are the largest party in Parliament but left power in May 2009 in a row over the dismissal of the then Nepal Army Chief Rukmangad Katawal.

Prachanda had dismissed Katawal after accusing him of undermining the civilian government. The Maoist supremo had quit after President Yadav reinstated Katawal.

London erupts over fatal police firing
London picked itself up on August 7, 2011, from some of the worst violence seen in the British capital in years, which politicians and police blamed on criminal thugs but residents attributed to local tensions and anger over rising financial hardship.

Rioters, throwing petrol bombs, rampaged overnight through an economically deprived district, setting police patrol cars, buildings and a double-decker bus on fire.

The riots erupted after a street protest over the fatal shooting of a man by armed officers.

The riots came amid deepening gloom in Britain with the economy struggling to grow amid deep public spending cuts and tax rises brought into help eliminate a budget deficit, which peaked at more than 10 per cent of the GDP.

Japan unveils $100-billion package to cope with Yen
On August 24, 2011, Japan unveiled a $100-billion effort to help companies cope with a surging yen, signalling that officials may be resigned to the currency remaining high. The government will release foreign-exchange reserves to the Japan Bank for International Cooperation for funding to aid exporters and spur purchases overseas, Finance Minister Yoshihiko Noda told reporters in Tokyo today. JBIC, as the lender is known, is a state-run export credit agency.

Japan has amassed $1.07 trillion in foreign-exchange reserves, the world’s largest after China. The yen touched a post-war high of 75.95 per dollar on August 19 in New York.

The one-year funding program through the export credit agency is intended to encourage the private sector to exchange yen-denominated funds to foreign currencies by supporting exports by small and mid-sized companies, securing energy resources and helping Japanese companies to purchase foreign businesses.

The Bank of Japan applauded the finance ministry’s announcement, saying in a statement that the measures would “contribute to the stability” of currency markets.

Japan’s debt rating was lowered by Moody’s Investors Service, which cited “weak” prospects for economic growth that will make it difficult for the government to rein in the world’s largest public debt burden. The advancing yen is a “headwind against export competitiveness,” Moody’s said.

China blames Pak-trained militants for Xinjiang violence
On August 1, 2011, for the first time, China blamed Uyghur “militants” trained in Pakistan for the deadly violence in its restive Xinjiang province which left at least 20 persons dead in two days.

“The initial probe found that the group’s leaders had learned how to make explosives and firearms in overseas camps of the terrorist group, the East Turkmenistan Islamic Movement (ETIM) in Pakistan before entering Xinjiang to organise terrorist activities,” an official statement said.

While, it was no secret that China has been pressing Pakistan to crackdown on ETIM militants for a long time, but perhaps this was the first time that it chose to openly point finger at it, when Islamabad is reeling under pressure being exhorted by the US to carry out operations against Al-Qaida and Taliban.

The Xinjiang region remained a hot bed for extremism after massive riots by Muslim Uyghurs in the provincial capital Urmuqi in 2009 against the Chinese mainland Hans who settled down in the region in large numbers over the years. In Xinjiang, Uygurs constitute 41.5 per cent of its population, while Hans are about 40 per cent. The province borders eight countries, many of which, including PoK and Afghanistan, have been plagued by terrorism and targeted by the “East Turkistan” separatist forces.

Business News

The Union government 
has given its nod to Reliance Industries Ltd (RIL) for stake sale to British Petroleum (BP) for US$7.2 billion.

Bharti Airtel has joined hands with the Formula 1 Group Companies to become the title sponsor of the Indian leg of the race, which will be called the “Airtel Grand Prix of India”.

Force Motors has launched its first sports utility vehicle (SUV), ‘Force One’. The company, known for its light commercial vehicle brands like Tempo, Matador and Traveller, has invested around Rs 150 crore in developing the SUV.

Google Inc. has decided to buy Motorola Mobility Holdings for US$12.5 billion, in an attempt to buy insurance against increasingly aggressive legal attacks from rivals such as Apple Inc.

K.V. Kamath has taken charge as the first non-founder chairman of INFOSYS in its three-decade history. Kris Gopalakrishnan has been appointed as executive co-chairman, making way for another co-founder, S.D. Shibulal, as MD and CEO.

Deven Sharma, President of Standard & Poor’s (S&P), has resigned, capping two weeks of controversy following the rating agency’s downgrade of US government debt on August 5, 2011, that sparked a row with the Treasury.

“Future is Me” is the tag line of advertisement campaign by AMD India, the world’s second-largest chip-maker.

On August 25, 2011, Steve Jobs resigned as CEO of Apple Inc and passed the reigns to his right-hand man Tim Cook

Actor-producer Shah Rukh Khan’s latest offering Ra.One has roped in UTV Indiagames to design a social game based on the film. This is the first time in India that a social game would be based a film character, G.One, and would have its own identity.


The Parliament has permitted the government to mint coins of Rs 1,000 denomination. The Coinage Bill, 2009, passed by Rajya Sabha in August 2011, limits payment through coins up to Rs 1,000. The Lok Sabha had passed the Bill without discussion in March.

It has been proposed to change the name of West Bengal to Paschimbanga. The name change will become official after it is cleared by the Parliament.

Innovation in Science Pursuit for Inspired Research (INSPIRE) is a national programme implemented by the Union Ministry of Science and Technology to attract talent amongst students to study science and pursue career with research. INSPIRE programme  covers students in the age group 10-32 years and has five components: INSPIRE Awards (for 10-15 age group), INSPIRE Internship (for 16-17 age group), INSPIRE Scholarship for Higher Education (for 17-22 age group), INSPIRE Fellowship (for 22-27 age group) for doctoral research, and INSPIRE Faculty (for 27-32 age group) for assured career opportunity.

Pandit K. Santanam was the man who first bared the horrors of Jallianwala Bagh massacre to the world. He was a conservative Iyengar from Tamil Nadu but chose to make Lahore his permanent home. On August 25, 2011, the Department of Posts released a commemorative stamp in Santanam’s memory, 62 years after he passed away.

The Reserve Bank of India’s gross income for 2010-11 rose by 12.73 per cent to Rs 37,070.12 crore, from Rs 32,884.14 crore a year ago, due to increase in earnings from domestic assets.

India and South Africa have decided to increase two-way trade between both the countries to $15 billion by 2014, from $10.64 billion now. The decision was taken at the India-South Africa CEOs Forum, held in New Delhi in August 2011.

Current Affairs -National and International Reviewed by sambasivan srinivasan on 5:36:00 AM Rating: 5

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