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Maharashtra Cooperative Bank goes bust

Asia’s largest cooperative bank, the Maharashtra State Cooperative Bank (MSCB), saw an ignominious dissolution of its Board of Directors by order of the RBI. The Board of Directors by order of the RBI. The Board of 44 directors was summarily dissolved and two IAS officers were appointed administrators for five years. The charges against the MSCB included accumulators for five years. The charges against the MSCB included accumulation of bad loans, a negative net worth, high level of NPAs, delays in loan recoveries, poor credit proposals and a lack of audit. The turmoil in the bank is nothing more than a reflection of the rot that had set in years ago and remained hidden. It also brings under scrutiny the old antagonism between the Congress and NCP in Maharashtra. Governed solely by politicians, the MSCB was controlled largely by the NCP.
            Of the bank’s 44 directors, 25 belonged to the NCP, 14 to the Congress, two each to the Bharatiya Janata Party (BJP) and the Peasants and Workers Party (PWP), and one to the Shiv Sena. MSCB is a state-level apex institution and functions as a central financing agency. Under it come the district and urban cooperative banks, sugar factories, spinning mills, processing societies and service societies. If the MSCB had fallen, these institutions would have crumbled too. This was another reason to dissolve the bank’s board. The annual inspection report by NABARD charged the bank with fiscal and administrative irregularities, including misuse of power and dodgy accounts.
            The NABARD report said the MSCB had a net NPA of 7.5 per cent and a negative net worth of 144.22 crore on March 31, 2010. The bank’s net loss in the fiscal year 2010 was 775.98 crore, with bad loans totaling 500 crore. The NABARD report gave examples of loans that were issued on grounds as flimsy as the borrowers being related to the Chairman, Manikrao Patil.
            Sugar politics can largely be held responsible for the collapse of MSCB. When it was established on October 11, 1911, the MSCB started by taking over from the govt the scheme of “taccavi” loans, which were short or long-term loans advanced in times of natural calamity at a low interest. It grew into a development bank and for many years carried out what the Gazetteer of India for Maharashtra aptly described as playing its role as a balancing agent, both in financial terms and in the matter of providing leadership to the cooperative movement. Unfortunately, over the years, sugar cooperatives and cotton spinning mills accounted for the largest chunk of the bank’s business and it neglected its primary role as a financier of district-level cooperative institutions.
            It is now revealed that close to 50 per cent of the bank’s credit went to cooperatives sugar factories. These make up 60 per cent of NPAs. The financial health of many sugar factories has been poor, often deliberately so, and they have been major defaulters. In many cases the state govt has supported sinking factories by guaranteeing the loans.

Whither IITs?

The Indian Institutes of Technology (IITs) have completed 50 years and have helped build India. They were set up for producing high-quality technical human capital for India and have met their objectives. But, as is the character with such institutions, they have not changed with the times and are not providing India with the times and are not providing India with what she now needs. They have remained largely teaching institutions, not transforming into research based, innovation-driven agents of change for the India that is now emerging. Very recently, the Union environment minister, Jairam Ramesh made a statement that IITs are known for their world-class students and their world-class alumni, but not world-class faculty.
            Party true. IITs today enjoy substantial academic autonomy but lack adequate administrative and financial autonomy. The IIT boards and the directors are unable to take any financial decision which they deem it without the approval of the govt. The demand for an IIT seat is enormous and has spawned a tutorial industry that earns more revenues than he IITs themselves. Today many bright young Indians are avoiding long-drawn cramming school’s learning process recognition and go overseas for higher education, depriving this country of much-needed resources for education and talent, adding to the wealth of those countries.
            Overall, the 15 IITs graduate 7000 undergraduates, 6000 postgraduates and about 1700 PhDs annually. Sadly only about 2% of the undergraduates go on to their masters and PhD in the IIT system. IITs hold fast to the idea that by squeezing input they can get a quality output, an idea that has been consigned to the dustbin of history. Increasing the scale and size can give them the diversity of talent, the resources, the ability to have more quality faculty and the depth and width needed for an elite educational institution. Even current increase in size was forced on them because of social initiatives.
            10 years ago, the IITs made up about 10% of India’s engineering output of human capital. Today they are less then 2% and declining further. In the meantime, the IITs will live in their ivory tower and possibly become less and less relevant to Indian’s need as neither are they meeting India’s need for more human capital nor producing the kind of PhDs India needs. What needs to be done to change this? Total autonomy to the IITs, driven by a board of governors with a new vision, accountability through public opinion and transparency. Yet there is resistance to change: from some part of academia because they become more accountable and lose the shelter of blaming the govt for all ills and for inadequate performance, and from some opinion makers who believe that the existing feudal system should continue since they have a disproportionate influence on them.
            The best solution is to open up the education system and allow competition, the dreaded word in academics, to come forth. India should the private sector to set up innovation universities. India’s further is too important to be left to the benevolence of an apathetic, insensitive government which has destroyed academic excellence over the years.

Détente in Darjeeling hills

A temporary solution to the political impasse in the Darjeeling hills of North Bengal seems to be in sight, with the Gorkha Janmukti Morcha (GJM) signing an agreement with Mamata Banerjee-led new govt. In June, it was decided that an elected body with greater administrative, executive and financial powers and more autonomy would be constituted to replace the Darjeeling Gorkha Hill Council (DGHC). The geographical area over which the new body will have jurisdiction will be determined by a nine-member committee that will be set up to delineate the preponderantly Gorkha regions in the Terai and the Doars in the foothills. The committee is expected to submit its report within six months.
A Bill will be introduced in the assembly to hold elections to the new body. Until the new body is established, a five-member committee will ensure that the development process in the region does not suffer. Chief Minister Mamata Banerjee called the occasion historic and announced that the Darjeeling matter has been settled. However, the minutes of the meeting clearly state that the establishment of the new body will not in any way dilute the main agenda of the Gorkhaland movement for a separate state.
The Darjeeling hills have been on the boil since October 2007 when the GJM, under the leadership of Bimal Gurung, evicted Subhash Ghising and the Gorkha National Liberation Front (GNLF). He led from power and established its political supremacy in the hills with a fresh cal for Gorkhaland. The subsequent three-and-a-half years saw incessant strikes and violent agitation. In the latest talks it was decided that a committee would be formed to look into the GJM’s demand for the transfer of the Tauzi department - which deals with tea-garden land - to the proposed new body. The state govt also agreed to approach the Centre over the GJM’s proposal that the new body have control of the forested areas.
GJM has been demanding the regularization of casual workers of the DGHC. It was decided in the meeting that workers who had completed 10 years of service would be made permanent with immediate effect. GJM’s decision to keep its demand for Gorkhaland in abeyance for a while is not surprising. It was clear that they would not press too much for statehood after the new government came. Locally, too, they were preparing the ground for this new strategy by telling the people that while the achievement of Gorkhaland would remain the ultimate objective, it would be prudent in the meanwhile to get whatever we can for local development.
The recent assembly elections showed that GJM had not lost its supremacy in the hills. In the three hill constituencies of Darjeeling, Kalimpong and Kurseong, GJM candidates scored thumping victories, winning around 90 per cent of the total votes polled. Earlier, the GJM had insisted that the Gorkha Regional Authority, the interim regional set-up proposed then, be a nominated one. But now, its confidence boosted by the results of the assembly elections, it has agreed that the new body should be an elected one. However, the latest development may not go down well with everyone in the Darjeeling hills. Some sections, including Tamang, the assassinated chief of the ABGL, were opposed to the GJM’s proposal for an interim set-up.

Government - Civil society deadlock on corruption

The month of June was marked by a high-voltage drama between yoga guru Baba Ramdev and the govt. Both sides must share the blame for the farce that was created out of Ramdev’s crusade against black money and corruption. But the ruling UPA - or, to be exact, the Congress - has done itself a lot more damage than it has been able to inflict on the Baba. It is no exaggeration to say that the powers-that - be swung from one extreme stupidity to another and thus fell between two stools. If the unprecedented kowtowing to the Baba by a team of ministers on his arrival at Delhi airport was a sign of weakness, the totally avoidable police action at midnight in Ramlila Ground was brutal, to say the least.
            With the passage of time, the Ramdev tragicomedy will pass. But the confusing stand of the govt has ensured that some of its harmful consequences would continue to haunt it. Gujarat’s chief minister Narendra Modi, for all the achievements he boasts of, can never live down his responsibility for the ghastly Gujarat riots in 2002. The Congress-led UPA, too, would have to pay a heavy price for its midsummer madness in Delhi for a long time. It is, of course, absurd to compare this atrocity to Jallianwala Bagh or even the Emergency. But the action taken was draconian and utterly uncalled for.
            Just look at some pointers. First, instead of being discredited, Baba Ramdev has become a hero, despite all the efforts of the govt and its spin doctors to denounce him as an “agent of the RSS”.
            Secondly, as it happened, during the last stages of the dismal drama in Delhi, the BJP was holding a conclave in Lucknow. There it was evident that the party was at sixes and sevens, devoid of any issues and more fragmented and dysfunctional than the ruling establishment in Delhi. The unspeakable high -handedness at Ramlila Ground and the Congress’ unfailing proclivity to convent every inconvenient problem into a no-holds-barred confrontation between itself and the Sang Parivar has reunited and energized the saffron party. Congress and its leadership need to be told that the massive and mounting popular anger against corruption cannot be averted or even abated by trying to communalise corruption. Those deeply committed to secularism are as fed up with this scourge as communalists or anyone else.
            Thirdly, the govt’s attempts at dividing the civil society by bringing about a discord between Anna Hazare and the Baba has boomeranged. At first inclined to distance himself from the fasting Baba, Anna has reaffirmed support to the yoga guru. Moreover, dissatisfied with the government’s stand on some issues concerning the Lok Pal Bill, Anna is withdrawing from the joint drafting committee and going on a second fast.
            Finally, there is a mystery that needs to be solved. Despite several top ministers driving to receive Baba at airport, sundry Congress leaders went on proclaiming that the whole thing was a matter for the govt and the party had nothing to do with it. But is it conceivable that Mukherjee would have traveled to the airport without Congress president Sonia Gandhi’s approval or knowledge? Furthermore, the police action took place several hours after a high-level meeting at her residence. Was the proposed operation never mentioned at it?

MF Hussain passes away

India’s most celebrated painter MF Hussain passed away in London on June 9. He was unable to return to his own country for reasons of hounding by some diehard zealots. Once in a while, it disturbed sensitive minds, but the issue had left the arena of public discourse. Our secular credentials certainly got a knock when an artist of the repute of Hussain, who, ironically, brought the Indian culture on canvas for the international community, was almost forced to leave the country, accused of polluting the Indian culture. The govt felt helpless, the artist community chose to maintain an inexplicable silence, while gallery owners had the excuse of securing their investment.
            Hussain was true to the only religion he knew-of being an artist. The world of art recognized his transcendence. He was the first Indian to have shown his works in foreign lands; he was the first whose works in foreign lands; he was the first whose works were auctioned by Christie’s. But, all this became insignificant before the militant brand of some Hindu fanatics who choose to remain ignorant about the tradition of artistic freedom enjoyed by poets like Kalidasa who wrote the highly erotic Kumarambhavam, and artisans who created Khajuraho and Konark. Hussain was punished for doing it in a modern, democratic, secular state.
            Hussain will remain a colossus of his times. Born in Pandharpur in Maharashtra in very modest circumstances, the baby Maqbool lost his father when he was barely two years old. A natural aptitude with the pain brush saw the budding artist gravitate towards NS Bendre, then teaching at the Indore School of Art. Hussain soon moved to Bombay where he began his career as a calligraphist and painter of cinema hoardings. Paid a meager four annas per square foot at the time, Hussain acquired that rare ability to fill large spaces swiftly. A fortuitous visit to Delhi in 1948, where a special exhibition was mounted at Rashtrapati Bhawan, was a major punctuation in the evolution of his artistic sensibility.
            As a founder member of the Progressive Artists Group (PAG) in Bombay in 1947, Hussain along with his peers was trying to grapple with modernity and the weight of Western art that colonial rule had imposed. His concern was to evolve not only art as a profession to make a living, but to do serious research to evolve a language for Indian contemporary art. It had to be rooted in Indian culture with modern techniques. He said there was no point in painting like Indian miniatures or like Ajanta and Ellora. Predictably, Hussain was able to distill these three influences - classical Indian sculpture, the folk and the miniature, and leaven this with the prevailing modern sensibility in the style of Picasso and the Paris School.
            Hussain was first noticed in 19455 as an artist of promise, when his painting ‘Zameen’ won the National Award which is currently held by NGMA. Over the years, Hussain’s distinctive painterliness won acclaim both in India and abroad and many awards came his way. His work spanned a wide spectrum and drew from the Indian epics, his early years, the Mother Teresa series, the famous horse paintings and various vignettes contemporary India.

Arrest of Ratko Mladic & Serbia’s candidature to EU

The “butcher of Bosnia” Ratko Mladic was ultimately arrested in the last week of May. The former chief of the Bosnian Serb army was held responsible for an incident known as the worst single atrocity in Europe Since World War II - the slaughter of 7,500 Bosnian Muslim men and boys at Srebernica in 1995. For this, he has been indicted by The Hague tribunal, an international court set up in 1993 to prosecute crimes committed during the Yugoslav wars of the 1990s. Mladic had evaded arrest since 1995, slipping into Serbia during the reign of his friend, President Slobodan Milosevic.
            The 2000 ouster of Milosevic and his subsequent extradition to The Hague laid the ground for Serbia’s agreement with the tribunal to had over war crimes suspects. But the real game-changer in its co-operation with the tribunal was the country’s growing desire to join the European Union (EU). Of the constituents of the former Yugoslavia, Slovenia was admitted to EU in 2004, while Croatia, Macedonia, and Montenegro are on the road to membership. A year after the 2008 arrest of the Bosnian Serb leader Radovan Karadzic, Serbia applied for EU membership in 2009. But its failure to hand over Mladic was a stumbling block.
            Ratko Mladic was captured in Serbia after 16 years on the run. He was handed to International War Crime Tribunal on May 31 to stand trial. The arrest of Mladic is good news for the European Union, which, despite its economic and political troubles, has shown its potential to transform even intractable Balkan disputes. EU played a big part through the power of its unique tool-enlargement. The promise of EU membership strengthened the resolve to find Mladic. The neutralizes the scathing report that Serbia’s bid for EU membership is being rejected.
            Croatia is now poised to become the 28th member of EU. With the arrest of Mladic, though, Croatia may yet become the van of a new parade of Balkan members. Even if EU says Serbia has more to do (Goran Hadzic, former leader of the Croatian Serbs, is still at large), Serbia will probably win EU candidate status this year. Whether it can start talks immediately or, more likely, be asked to do more homework first will depend on how far Tadic pushes judicial reforms and reconciliation with Kosovo.
            EU has so far made the most progress with the easier cases. Slovenia (an EU member since 2004) and Croatia are the most westernized bits of the former Yogoslavia. Enlargement is effective only if local leaders like Tadic are predisposed to integration. Extraditing Mladic is easier for Serbia than giving up on Kosovo, whose independence is recognized by only 22 of the EU’s 27 members. Tadic refused to attend a summit with President Barack Obama in Warsaw because Kosovo’s president, Atifete Jahjaga, was also invited. Balkan countries struggle with many handicaps. They must not just manage the thorough reforms that other ex-communist countries have undergone. In some cases they must embark on state building, too.

Civil uprising in Syria

Syria’s revolt against the rule of President Bashar al-Assad is turning into an armed insurrection, with previously peaceful demonstrators taking up arms to fight their own army and the ghost of Alawi militiamen who have been killing and torturing those resisting the regime’s rule. There is growing evidence that individual Syrian soldiers are revolting against his forces. The whole edifice of Assad’s Alawi dictatorship is now in the gravest of danger. In 1980, Assad’s father, Hafez, faced an armed uprising in the central city of Hama which was put down by the Special Forces of Hafez’s brother Rifaat. But the armed revolt today is now spreading across all of Syria.
            The first evidence of civilians turning to weapons came from Deraa, after intelligence officers arrested and tortured to death a 13-year-old boy. Bashar and his cynical brother Maher are now gambling on the appeal that their regime must be defended against armed Islamists supported by al-Qaeda. A few al-Qaeda cells in the Arab world may be true, but the Arab revolt is about the one phenomenon in the Middle East uncontaminated by “Islamism”.
            Al Jazeera television aired extraordinary footage of a junior Syrian officer calling upon his comrades to refuse to continue massacring civilians in Syria. He said he had joined the army to fight the Israeli enemy, but found himself witnessing a massacre of his own people. Differentiating rumours from fact in Syria is getting easier by the week. More Syrians are reaching the safety of Lebanon and Turkey to tell their individual Stories of torture and cruelty in security police barracks and in plain - clothes police cells.
            The supposedly invincible Syrian army often showed itself woefully unable to suppress Lebanese militias during the country’s 1975-90 civil war. An entire battalion of Syrian Special Forces troops was driven out of east Beirut, for example, by a ragtag group of Christian militias who would have been crushed by any serious professional army. If you wish to destroy unarmed civilians, you shoot them down in the street and then shoot down the funeral mourners and then shoot down the mourners of the dead mourners - which is exactly what Assad’s gunmen have been doing - but when the resistors shoot back, the Syrian army has shown a quite different response: torture for their prisoners and fear in the face of the enemy.
            But if the armed insurrection takes hold, then it is also the 11 per cent Alawi community-once the frontier force of the French mandate against the Sunnis and now the prop of Assad against the poorer Sunnis - which is at threat. So appalled is the Assad regime at its enemies that it has been encouraging Palestinians to try to cross the frontier wire on Israeli-occupied Golan. The Israelis say this is to divert world attention from the massacres in Syria and they are absolutely right. The Damascus govt’s Tisbrin newspaper has been suggesting that 600,000 Palestinians may soon try to “go home” to Palestine from which the Israelis drove them out in 1948, a nightmare the Israelis would prefer not to think about.

Summit of Shanghai Cooperation Organisation

The 10th anniversary summit of the Shanghai Cooperation Organisation (SCO) was held in Astana, Kazakhstan in June. It was a historic event in terms of the security group’s evolution. The leaders of the six-member SCO decided to induct Afghanistan as an observer and flag off and process of admitting India and Pakistan as full members. The moves will place Afghanistan at the top of the SCO agenda and dramatically increase the weight and reach of the organisation. It will also be a major victory for Russian diplomacy. Russia been steadily working to include Afghanistan in the SCO’s zone of responsibility.
            Moscow has consistently championed the admission of India to SCO to balance China’s dominance and strengthen the grouping’s clout. China has long resisted SCO expansion, citing lack of standards and procedures. However, fears of chaos in Afghanistan and a spill - over of instability to neighbouring regions of Central Asia and China in the wake of the planned drawdown of the US-led International Security Assistance Force (ISAF) have prompted SCO to review its unofficial moratorium on admitting new members. Last year, India registered its desire o upgrade its observer status to full membership.
            President Dmitry Medvedev publicly voiced support for Pakistan joining SCO. Moscow recently turned around on its frosty relations with Islamabad, hoping to make Pakistan play a more constructive role in Afghanistan. Moscow voiced support for Afghan-led and owned efforts towards promoting national reconciliation in Afghanistan. The lifting of the moratorium on SCO expansion is the result of a unique consensus that has emerged among its members in recent months on the role the security group should play in the region as the US-led NATO forces prepare to pull out of Afghanistan.
            Russia voiced concern that the situation in Afghanistan would deteriorate in the coming months and years. The presence of US military bases in Afghanistan on a long-term basis can greatly aggravate the situation. However, experts warned that Washington had no intention of leaving the region. Afghanistan takes a back seat in the US calculus. Washington’s main goal is to get entrenched in Central Asia under the cover of combating terrorism. US already has an airbase near the Kyrgyz capital of Bishkek in the north and plans to set up military training centres in Kyrgyzstan and Tajikistan.
            The dangers of the endgame in Afghanistan were high on the minds of SCO leaders. Russian officials admit though that SCO at this state has limited possibilities to influence the situation in Afghanistan. Russia’s traumatic experience of the 10-year war the Soviet Union waged in Afghanistan made Russia and the new Central Asian states reluctant to work on security issues in Afghanistan. SCO’s most successful project so far is the Regional Antiterrorism Structure (RATS) set up in 2004. The member-states have since conducted several major anti-terror military drills.

Exist of Yemen’s President

After months of dodging promises to step down, President Ali Abdullah Saleh of Yemen exited on June 4. While his departure has led to rejoicing in Yemen, the next steps in a volatile country where al - Qaeda is feared to have a significant presence are far from clear. From Jan 2011, anti-government street protests put increasing pressure on Saleh to remit office. It is unlikely that the Yemen strongman, who ruled for 33 years beginning as the President of North Yemen in 1978, will return to his country from Saudi Arabia, where he was flown for treatment. An indication of this came with the Saudi regime joining the US in the call for the swift implementation of a Gulf Cooperation Council (GCC) plan for a transition in Yemen.
            GCC plan envisages Saleh’s resignation and a caretaker govt that will hold parliamentary elections within 90 days. Three times he accepted the plan only to change his mind at the last minute, setting his forces on the protesters, raising the spectre of a civil war. It may be easier now to persuade him to sign on the dotted line. Indeed, the first step in the plan, handing over the reins of govt to the Vice-President, has already been accomplished with his exist. But Saleh’s family members remain in charge, with control of the intelligence service and the Army. Making them cede power peacefully may not be easy.
            Initially propelled by youth and ordinary people, the movement could not have survived six months but for the backing of an important opposition leader from a rival tribe, Hamid Al Ahmar, a telecom tycoon who is said to have funded the protests. His brothers are also key figures in the movement. An important military general also defected and has claimed to support the protests. What is of concern here is that their opposition to the Saleh regime is based more on tribal and personal rivalries than on any commitment to democratic values. If Yemen is at the cusp of real change, it is as yet hard to see.
            Among outsiders, the government of Saudi Arabia has the most clout to influence the further. Its main aim is to restore a measure of stability, pay Yemen’s tribes to keep quiet, and fend off all-Qaeda, which still views the Saudi kingdom as a target. But it will not be easy for the Saudis to achieve these aims. Several times in the past two months the Saudis had nearly clinched a deal that would give Saleh immunity from prosecution if he handed power to his vice-president within 30 days of signing up, to be followed by elections within another two months after that. On each occasion Saleh reneged at the last minute.
            The next step would be for a national unity government to be formed, consisting of the General People’s Congress, which has been the ruling party under Saleh, and an opposition coalition headed by the so-called Joint Meetings Party. American, British and European Union ambassadors have been working closely with their counterparts from Saudi Arabia, UAE and Oman to propose a plan for the Yemeni parties. An election deadline of two months will again be laid down, though few think it will be met.

Trial of Rana in Chicago court

The verdict in the Chicago trial holds three important lessons for India. The first lesson is that it was wrong on New Delhi’s part to expect the US to try and legally corner the ISI for its role in 26/11 or to help bring to justice the perpetrators of those ghastly attacks. The US has its own foreign-policy interests and compulsions. Since its daring raid that killed Osama bin Laden, it has sent four high-level delegations to Islamabad, including one led by Secretary of State Hillary Clinton.
            The flurry of visits has been intended to repair its relationship with Pakistan. Washington may be unhappy with Pakistan’s counterterrorism efforts. But the last thing it wants to do is to spotlight the ISI’s terrors role in a third country, India, when the CIA needs the ISI more than ever to cut a peace deal with the Afghan Taliba, whose top leadership is ensconced in Pakistan.
            The second lesson is about the Chicago trial itself. The prosecution - the FBI - had a subtle political focus. It was more interested in securing Tahawwur Hussain Rana’s conviction on the Denmark-related charge than on the more-serious 26/11 charge. Furthermore, the prosecution directly and through its star witness David Headley sought to shield the ISI brass from getting linked with 26/11.
            Although the case helped highlight the impunity with which serving and retired Pakistani military officers have been aiding Lashkar-e-Taiba, the prosecution was reluctant to go beyond the role played by Iqbal. It may be recalled that a junior ISI functionary, one Major Iqbal who served as Headley’s handler, was indicted and make the fall guy. The prosecution also declined to examine the military antecedents of a Lashkar leader, Sajid Mir, who was caught on tape directing the killings in Mumbai by phone during the terrorist strikes.
            Headley reportedly continued to work as a paid US informant even beyond 26/11 until evidence surfaced in October 2009 of his involvement in a plot to target a Danish newspaper that had published cartoons of Prophet Muhammad. It was thus no accident that the prosecution buried material evidence about Headley’s ties with US law enforcement agencies. This has left key issue hanging: Was 26/11 preventable? The verdict may reopen old wounds between India and the US over Headley, including the failure to arrest him in time or share with India sooner the intelligence the US had on him.
            Members of the jury in US trial courts are normally not barred from discussing their verdict with the media. But the jury at the Chicago court appears to have taken the unusual decision to remain anonymous and to remain silent on how it reached the verdict. This would add to India’s disappointment and uneasiness over the Jury finding Rana not guilty of facilitating the 26/11 attack on Mumbai. Though the US prosecutors deemed it fit to charge Rana and produced evidence in support, the jury apparently found the evidence weak. But then Rana himself confessed that he was aware of Headley’s links with Lashkar-e-Taiba and with Pakistan’s ISI and Army.

Current GK

  • India has also announced an Ethiopia - Dojibouti railway line at a cost of - $300 million.
  • The current bilateral trade between India and Africa is just over - $40 billion
- India declared a target of $70 billion by - 2015
  • The author of the book Close Encounter with Niira Radia, the release and circulation of which has been stayed by the Delhi High Court - RK Anand.
  • The country which will phase out unclear power by 2034 - Switzerland.
  • The former Australian Test cricketer who mentored spin-bowler Shane Warne and who died recently - Terry Jenner
  • India’s longest tunnel - Qazigund with Banihal.
-       Length of the tunnel - 11 km
-       It will be ready by - 2012
  • In its effort to bring some relief to those bank customers who face difficulty when ATM transactions go wrong, the Reserve Bank of India (RBI) has said that banks should settle such issues within-seven days.
-       At present, banks get 12 days to resolve such transactions.
-       The new timeline for reconciliation of failed ATM transactions will be effective from - July 1
·  The former all - rounder who will be bestowed the BCCI’s Col CK Nayudu Lifetime Achievement Award - Salim Durrani.
·  The winner of IPL-4- Chennai Super Kings
Runner - up - Royal Challengers Bengaluru.
·  The Irish who won the US Open golf to become the tournament’s youngest winner since 1923 - Rosy McIlroy
·  The RBI deputy governor who relinquished office on June 20 - Shyamala Gopinath
·  The two-day meeting of agriculture ministers of G-20 was held in - Paris
-       G-20 is a group of 19 countries and - EU
·  The new leader of al-Qaeda - Ayman al-Zawahiri
·  India’s next ambassador to the US- Nirupama Rao
·  The prime accused in the Chief Medical Officer’s (family welfare) murder case who was found dead under mysterious circum – stances in the Lucknow district jail hospital – YS Sachan.
·  India, on June 22, objected to letter from the Organisation of Islamic Conference that referred to Jammu and Kashmir as an – “occupied” state.
·  The former chief Justice of India against whom the Union Home Minister has asked the department of revenue to probe the allegation of disproportionate assets – KG Balakrishnan.
·  The founder, chairman and group CEO of Bharti Enterprises who has been conferred Business Leader of the World award by the leading international business school INSEAD – Sunil Mittal.
·  The UN General Assembly voted unanimously to give Ban Ki-moon a second term as – Secretary General.
·  The eminent India economist who passed away recently – Suresh Tendulkar.
·  The new captain of New Zealand cricket team in place of Daniel Vettori – Ross Taylor.

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Current Topics
ISRO launches Communication

            It was exactly 31 years ago that India emerged as a nation with an independent launch capability. On that occasion, the Indian Space Research Organisation’s (ISRO) SLV-3 rocket succeeded in putting a 35-kg Rohini satellite into orbit. Since then, India has seen 32 more launches of satellite-carrying rockets. On July 15, a Polar Satellite Launch Vehicle (PSLV), which was nearly twice the length and 18 times heavier than the SLV-3, took a 1,400-kg communications satellite into space. With 18 successful launches to its credit, the PSLV has matured into a versatile and reliable launcher.
            The PSLV has an enviable record of successfully delivering payloads in space, while its bigger version, the Geosynchronous Satellite Launch Vehicle (GSLV) has a chequered history. After the two successive failures of GSLV rockets last year, ISRO understandably decided to make modifications to the PSLV rocket and use that for the successful launch of its GSAT-12 satellite. A bigger and more powerful  satellite, GSAT-10, will be launched later in the year by an Ariane-5ECA. The satellite has lift-off mass of 3435 kg, for which GSLVs would be needed.
            But even that rocket will not be able to launch a three-tonne satellite like the GSAT-8 that was put into orbit by Europe’s Ariane 5 in May 2011. So ISRO also needs to get its next-generation launcher, the GSLV Mark-III, which will be able to carry four – tonne communication satellites, operational as soon as possible. Development of a semi-cryogenic engine, which will run on liquid oxygen and kerosene, has started. This engine will be used for a more powerful launch vehicle. ISRO’s launch vehicle programme has come a long way but faces may difficult challenges in the years ahead.
            PSLV is a less powerful rocket than its trouble-prone sibling GSLV. The latter is capable of carrying communication satellites that are about one tone heavier. For communication satellites, size matters. The bigger and heavier the satellite, the more communication capacity it is able to pack and the more economical the cost of such capacity works out to be. Globally, such satellites have grown bulkier over the years and these days can often be in the six-tonne class. Launching small communication satellites on the PSLV is very costly.
            ISRO has been making steady progress in indigenizing GSLV, but the cryogenic engines have proved to be a formidable challenge, more so because ISRO had to start on them from scratch after Russia reneged on its deal to provide hydrogen-fuelled rocket engines and technical knowhow under US pressure in 1992. While there have been failures, there is on doubt that ISRO will be able to successfully meet this challenge, as it has done in the past. The Indian space programme has been much lauded, not only for its success but also the relatively low cost at which it has been achieved.

Political avalanche in Andhra over Telangana

            Andhra Pradesh is in a state of turmoil once again. The majority of the elected representatives from Telangana, cutting across party lines, submitted their resignations to the respective presiding officers in the state and at the Centre. They include 12 Members of Parliament and 81 MLAs, all belonging to the Congress from Telangana. In a show of unity in demanding Telangana, the MLAs of the Telugu Desam Party, the CPI and the BJP also resigned. In all, 99 of the 119 MLAs from the Telangana region decided to resign.
            The Telangana agitation has assumed a more serious dimension after the resignation of parliamentarians and legislators. The Congress high command and the govt are unable to arrive at a decision. The December 9, 2009, statement by the home minister, P.Chidambaram, cannot be overlooked. The Telangana legislators are demanding the implementation of the promise made in 2009. The Justice Srikrishna Report is another major issue which has not been dealt with satisfactorily so far. Apart from the preliminary discussion with the home minister and with the party leaders from Andhra Pradesh on the various recommendations made by Justice Srikrishna, nothing has been done. It was announced that after the assembly elections in Assam, West Bengal, Tamil Nadu, Kerala and Puducherirry, a decision would be taken. However, there has been no movement on the issue.
            The Andhra crisis illustrates the ambivalence of the consecutive govts on Telangana problem. In fact, this attitude has been noticed for well over 50 years. It may be recalled that the State Re-organisation Commission of 1955 with Justice Fazal Ali as Chairman had inter alia recommended the formation of Telangana state. This recommendation was ignored by the Centre. There were indeed no valid reasons why the recommendation was not implemented. In handling the socio-political issues emanating from the Telugu-speaking district of the erstwhile Madras Presidency, the Centre had shown little understanding.
            The Andhra state, which came into being in 1953, initially had its capital in Kurnool in the Rayalaseema area. Even at that time, there were demands for Telangana as well as for a coastal state. However, the Telangana demand was consistent and this was conceded by the Fazal Ali Commission, but not implemented by the Centre. There were widespread agitations in the early 1960s. The Telangana Praja Samiti led by Dr. Channa Reddy spearheaded the agitation demanding the declaration of Telangana as a state. The agitation was revived in 2009 by K Chandrasekhara Rao, who headed the Telangana Rashtra Samiti.
            The Justice Srikrishna Committee report has been under examination by the Centre, but it has not been able to make up its mind regarding its implementation. At one stage, the Centre almost decided to reject the Telangana deman, but announced the formation of a regional council with constitutional guarantees. The present crisis, precipitated by the resignation by so many MPs and MLAs representing the Telangana region, is far more serious and cannot be ignored. Apart from the law and order problem. Which can possibly be handled with mixed results, stability in Andhra Pradesh itself is at stake.

Terror Strikes Mumbai once again

            Another reries of blasts in Mumbai in July sprang no surprise. It is not a mere coincidence that India’s commercial hub has repeatedly been struck by terrorists since 1993. Mumbai has become the favoured target because the aim of terrorists is to undermine India’s booming economy and its status as a rising power. India’s economic rise has intersected with Pakistan’s descent into chaos. Undercutting India’s strength by repeatedly targeting its economic capital is a geopolitical objective that only a state sponsor of terrorism can seek to pursue. And that sponsor is Pakistan’s notorious ISI.
            The latest explosions may have had an additional objective behind them – to blunt international pressure to bring the Pakistan-based planners of 26/11 to justice. With India now saddled with another terrorist attack to investigate, the international profile of 26/11 is bound to decline. At a time when the US has built up pressure on the Pakistani army and ISI, those behind the latest bombings may have had yet another motive – to shift the focus from the deteriorating US – Pakistan relations to the Indo-Pakistan context so as to raise concerns in Washington about potential sub-continental hostilities. But unlike the 26/11 siege by a suicide mission, the bombs in the latest attack were planted and detonated stealthily. This marks a return to an earlier pattern witnessed, for example, in the 1993 and 2006 serial blasts.
            This pattern reveals how a terrorist undertaking can be outsourced to proxy figures in the criminal or fundamentalist world in Mumbai. The latest bombings raise wrenching questions about India’s Pakistan and counter-terrorism policies. The unparalleled 26/11 siege was supposed to be India’s 9/11 and served as a tipping point in India’s forbearance with Pakistani-fomented terrorism. The latest explosions area reminder that little has changed. It is improbable that the ISI-linked Indian Mujahideen or underworld figures would have carried out the bombings without instructions from their patrons.
            It is more likely that the Lashkar-e-Taiba- a front organization for the ISI – paid criminal or extremist gangs in Mumbai to do the ISI’s dirty work. India’s decision to resume dialogue with Pakistan at all levels and on all subjects was made without having secured any anti-terror commitment. Even though the Pakistan-based mastermind of 26/11 remain untouched, New Delhi returned to square one by resuming political dialogue. After 26/11, an array of options was available to India before going to talks, such as recalling its high commissioner from Islamabad and invoking trade sanctions.
            India responded to 26/11 by fashioning a new and unique tool – dossier bombing. The dossiers, delivered at regular intervals, only persuaded Pakistan to stay its ground, with India eventually climbing down. The now-familiar India cycle of empty rhetoric is today repeating itself – ritual condemnation of the latest bombings and a worn- out promise to defeat terror. Yet the bombers have driven home a clear message: India, despite its rising international stature, is powerless to stop terror attacks. The bombings also have the potential to further undercut the flagging credibility of Prime Minister Manmohan Singh. The fundamental mistake Singh’s government has made is to separate its Pakistan policy and counterterrorism strategy and put them on separate tracks.

Spectre of worst drought in Somalia

            Somalia has been engulfed by the worst drought in two decades. According to the United Nations, the drought has claimed tens of thousands of lives. The neighbouring territory in Kenya has become the world’s biggest refugee settlement. Declaring famine in two regions of Somalia the UN sources said more than six out of every 10,0000 people are dying of hunger every day in some parts of the Bakool and Lower Shabelle regions of Somalia. It is the first time a famine has been declared here since 1992, when hundreds of thousands of Somalis starved to death, prompting an international peacekeeping intervention.
            Somalia has been hardest hit-with 3.7 million people, nearly half the population, requiring food aid. The country has lacked effective govt since before the famine of the 1990s. Most of southern Somalia is controlled by the al-Shabab Islamists, who stopped most international aid organizations, including the World Food Programme, from operating in its areas two years ago, only lifting the ban in July this year. Many people have received little or no help since the drought started to bite last year. Prices of food staples such as sorghum have increased more than threefold, due to the conflict and lack of supply. Some 2,000 Somalis have been crossing into Ethiopia each day, with a further 1,300 coming to Dadaab. Thirty thousand people arrived in June alone, and similar numbers are expected in July and August.
            The settlement, built for 90,000 people in Kenya’s arid northeast, now houses more than 370,000 Somalis. The situation is very desperate. War provided an extra push. Stories are doing the rounds about bandits preying on refugees on both sides of the border. The UN says that without immediate action the famine will spread to all eight regions of southern Somalia within two months. Oxfam, which is assisting arrivals in Dadaab, says that of $1 bn need to avert a humanitarian disaster only $200m had been pledged, and accuses several European govts, including France, Italy and Denmark, of willful neglect of a crisis that has been known about for many months.
            The world has been slow to recognize the severity of this crisis. Getting aid into Somalia is not going to be easy. The refugee agency UNHCR says it wants additional security guarantees from the rebels. The World Food Programme (WFP), which has experienced problems working with al-Shabab in the past, says it will negotiate with local drought committees in rebel areas to ensure safety for its staff. Operations in Somalia are among the highest risk in the world, and WFP has lost 14 relief workers there since 2008. It will aggressively pursue efforts to mitigate against risk, through robust assessments and monitoring. The agency is considering flying high-energy biscuits and other supplementary foods for children and pregnant mothers to locations where the needs are greatest.
            In Dadaab, aid agencies are struggling to cope with the influx of refugees. The Kenyan government, which is reluctant to host more Somalis, has yet to officially allow the opening of a new camp that has already been built close by. So where there are fresh arrivals sleeping, people are defecating in the open, raising fears of an outbreak of disease. Still, no matter how grim the conditions here, there is relief for people that help is near.

Greece on exit route of Eurozone

            A highly unpalatable austerity package that is being thrust on Greece has spawned political turmoil in that country. Even a major cabinet reshuffle did not temper the opposition to the austerity measures that prospective lenders insist Greece must adopt to qualify for a bailout package. If it eventually goes through, the reprieve will be the second in just over a year. Last year, when the debt crisis flared up, European lenders provided a bailout worth $158 billion over three years. However, since then the debt crisis has spread relentlessly across the southern and western periphery of the euro area that can threaten the foundations of the European Monetary Union.
            Along with high levels of public debt in the advanced countries an escalating oil prices, it ranks among the significant threats to global economic revival. The IMF has estimated a one per cent drop in global output if the crisis in Europe persists. Even assuming that the Greek Parliament accepts the austerity package, there would still be daunting challenges in its implementation. A very large portion of the Greek govt debt is held by private investors. European banks are said to be holding around $150 billion of Greek govt bonds. A bailout package will necessarily result in a steep reduction in the value of such holdings. These banks may have to be recapitalized.
            As large global banks take a hit, the contagion will spread to other countries to which these banks have exposures. In many countries, notably Germany and Finland, voters have generally been reluctant to share the cost of rescuing other countries. The crisis in Greece has brought into sharp focus the weakness of a stand-alone monetary union that does not have the usual fiscal and political foundations. A view is gaining ground that it will be in the best interests of everybody for Greece to exit the euro at least temporarily and then take measures that are in harmony with its own national interests.
            When the blueprint for the Euro was drawn up, leaving was not an option: there were no circumstances under which any member would ever want to leave and therefore no exit route. But the once unthinkable now looks entirely possible. Any plan to enable Greece to pull out of the Eurozone would need to include a way to nationalize its banks, new restrictions to stop money and assets leaving the country and a restructuring of the vast Greek debt pile. One key advantage of withdrawing from the single currency would be to allow a new currency, which would need a name and have to be printed, to devalue and give the country a fresh competitive impetus.
            However, it would then be essential to restructure all debts denominated in foreign currencies or those borrowers would face a huge explosion in the scale of their debt. Suggestions in early May that the Greeks were threatening to leave the euro unless they were allowed to restructure their debt sparked a rout on the foreign exchange markets. The major objection that people raise about a country leaving the Eurozone is that there is likely to be a major run on domestic banks. An additional risk could be that a black marker in euros and dollars might develop while the new currency was created. While there are no exact precedents, currency unions have fallen apart in the past – in the 1990s when the Soviet Union broke up and before the First World War when the Sweden – Denmark monetary union ended.

NSG’S new restrictions on India

            The recent decision of the Nuclear Suppliers’ Group (NSG) on additional restrictions for transfer of ENR (enrichment and reprocessing) technologies has caused huge unease in India. It negates the positive orientation with respect to ENR issues that was built into bilateral and multilateral agreements for international civil nuclear cooperation. While this does not affect the commerce related to nuclear reactors and their fuel supplies and our rights to reprocess and recycle used fuel, it appears to shut doors on commerce related to enrichment and reprocessing technologies.
            India is a responsible country with advanced nuclear technologies. Indian capability is comprehensive and covers the entire nuclear fuel cycle, including enrichment and reprocessing. At some stage, we would set up reprocessing plants to reprocess used fuel arising from reactors under IAEA safeguards. Similarly, we could set up enrichment plants for enriching imported uranium under IAEA safeguards to feed our growing programme. Such plants, if they have to be under IAEA safeguards, must have the benefits of international commerce and not denied that access. That we have our own technological capability in respect of these technologies cannot be an argument to allow others to reverse the positive and forward-looking sentiment built into our understandings.
            Reprocessing and recycle of used fuel from nuclear reactors enables extraction of several ten-folds larger carbon-dioxide-free energy from a given amount of uranium. Reprocessing is thus the key to nuclear energy, addressing the twin challenge of sustainable global energy supply as well as mitigating the threat of climate change. Claims made about the capability of available uranium to meet global energy needs for a long enough time are true only in the context of the current rate of consumption, which is primarily in rich countries. They are not true in the context of the rapidly growing energy needs of countries in the development world.
            Concerns on ENR technologies arise because they handle large quantities of weapon usable material in loose form. To meet the needs of the energy – hungry world and make the energy benefits more widely accessible, such technologies should be in responsible hands and technological solutions worked out to minimize the proliferation concerns. Simply depending on inspection and policing regimes and placing additional restrictions on ENR technologies could in fact jeopardize the larger contribution of nuclear energy to sustainable development and bring the climate change-related threat closer.
            During the Bush regime, restrictions were sought to be placed on transfer of ENR technologies to countries that do not have them already. The latest NSG decision has changed the logic completely. It essentially targets India as we are the only country outside the NPT eligible for nuclear transfers. There is also a question of supply of there hardware and equipment not specifically concerning ENR technologies to enrichment and reprocessing plants that India might set up under IAEA safeguards. Clearly, there could be a number of alternative approaches to configuring such plants. Denial of a specific hardware or equipment cannot be allowed to jeopardize a mutually satisfactory resolution between the IAEA and India to ensure the safeguard ability of such plants.

Changing power balance in Eastern Asia

            Maritime disputes in the South China Sea are once again hitting the headlines. Vietnam and China are at odds over a recent incident between a Vietnamese survey ship and Chinese patrol boats in waters off the southern coast of Vietnam, and the Philippines is protesting China’s recent unloading of building materials on Amy Douglas Bank, an area claimed by the Philippines. What the present disputes underline is, in fact, the geopolitical competition between China and the US is in full swing.
            The Obama Administration went all out to woo Beijing. Obama refused to meet the Dalai Lama, did not raise the issue of human rights while visiting China last year, postponed the decision to sell arms to Taiwan and downgraded India in America’s strategic calculus. But China read it as a symbol of US decline and saw it as an opportunity to assert itself as never before. The regional allies of the US became nervous and urged the US to restore its traditional leadership in the region. This changing Sino-US dynamic palpable on the issue of expansive claims in the South China Sea and America’s response to the challenge. The US has undertaken military exercises with South Korea to underline commitments and has even offered to mediate on dispute in the South China Sea, much to Beijing’s irritation. Beijing has claimed that the bulk of the South China Sea constitutes Chinese territorial waters.
            This came as a shock to regional states such as the Philippines, Malaysia, Vietnam and Taiwan, who also have territorial claims in the sea. This sea passage is too important to be controlled by a single country. US Secretary of State Hillary Clinton responded that the US was willing to help in mediating conflicting claims in the South China Sea, thereby drawing clear red lines for China. The US-South Korea joint air and naval exercises also irritated Beijing. The Chinese protested against the exercises.
            China has made strident claims to virtually the entire South China Sea in recent years. This has resulted in the detention of hundreds of Vietnamese fishermen, the harassment of US and other navies and threats to international oil giants aimed at ending their exploration deals with Hanoi. After being on the sidelines of the South China Sea dispute for the past two decades, the US has now decided to change its posture to reassure its allies in the region that China’s growing regional dominance would not go unchallenged. The dispute in South China Sea is not merely about resources, it is also central to China’s ambitions for a blue water navy able to operate away from its shores.
            China’s chief maritime unclear base is also what is for now her southern most point. It wants the waters around clear so that no one can track China’s submarines. China would like to extend its territorial waters, which usually run to 12 miles, to include the entire exclusive economic zone, which extends 200 miles, China is challenging the fundamental principle of free navigation. All maritime powers, including India, have a national interest in the freedom of navigation, open access to Asia’s maritime commons and respect for international law in the South China Sea. But India should also be aware of the changing balance of power dynamic between the US and China, and fashion its foreign policy accordingly.

Turkey elects Tayyip Erdogan for the third term

            Millions of Turks voted on June 12 in a crucial parliamentary election and the Prime Minister Recep Tayyip Erdogan of AKP or the Justice and Development Party was elected for the third time. Turkey is important to the rest of the world because it has been undergoing a profound transformation. Over the last 11 years, Turkey has shown that it is possible to stitch together a winning combination of democracy, Islam and capitalism. Millions have been lifted out of poverty, and a new class of businessmen and entrepreneurs has emerged in Anatolia, the once backward Asiatic part of eastern Turkey.
            Turkey’s success goes beyond demonstrating how traditional societies can engage successful in cutting-edge business in the age of globalization. Its real success may lie in its ability to define a sustainable model that promotes international security by mainly relying on soft power. Turkey has illuminated a path that the depressed youth in West Asia and beyond can now pursue. It has shown them alternative trails against the self – destructive route charted by extremist groups such as al-Qaeda.
            The example of the “Turkish model” resonated strongly during the demonstrations at the Tahrir Square in Egypt, especially among youth belonging to the Muslim Brotherhood. The Turkish experience of recent years has also struck a chord with Yemen, especially within the Islamist Islah party, which has a major Muslim Brotherhood component. In future, Turkey may well have to play a leading role in neighbouring Syria, should a transition commence from the Allawite regime of President Bashar Al Assad to a new dispensation, probably again with a strong Muslim Brotherhood core.
            Turkey’s spats with Israel over the treatment of Palestinians have been a major factor in transforming its image in the Muslim world. Taking advantage of the political space for manoeuvre in the region, Turkey has followed it up with concerted efforts to shore up commercial and political ties with neighbours, especially Syria and Iran, known for their anti-Israeli positions. The breach of its ties with Israel allowed Turkey to reposition itself advantageously in West Asia, permitting it to tap new political and economic options in the region. Simultaneously, it provided Turkey the opportunity to loosen its traditional fixation with Europe of becoming a member of the coveted European Union. Turkey has emerged as an influential player, partly on account of the surge in resources under its command. For its growing financial clout, Turkey’s leaders owe a great deal of debt to the new class of businessmen that has emerged in Anatolia.
            The wealth generated by Turkey’s new business class has galvanized an ideology and movement that has begun to touch the lives of millions across the world. The Gulen movement is rooted in the ideas of Fethullah Gulen. Gulen, who began his career in 1953 as an Islamic teacher, had to flee to the US, following the surfacing in 1999 of a video, in which he seemed to have been espousing agradual Islamic takeover of Turkey, by asking his followers to quietly infiltrate all organs of the state until their presence acquired a critical mass. His messages of moderation, inter-faith dialogue and primacy of education as a tool of liberty and economic well – being have been radiating across the globe.

South Sudan is the World’s youngest nation

            On July 9,2011 the Republic of South Sudan Joined the community of nations. A bevy of foreign dignitaries converged on its capital, Juba, to watch the new country raise its flag and inaugurate a first President, Salva Kiir Mayardit. For the more than eight million citizens of South Sudan, it was a momentous and emotional day. In January, they voted in an historic referendum to separate from the rest of Sudan. But nationhood has come at steep cost: a staggering number of lives lost and people displaced in a 21 - year civil war that ended only in 2005. A daunting task lies ahead for the leadership of this country.
            On its birth, South Sudan ranks near the bottom of all recognized human development indices. It has the world’s highest maternal mortality rate. Estimates of illiteracy among the female population exceed 80 per cent. More than half of its people must feed, clothe and shelter themselves on less than a dollar a day. Critical issues of poverty, insecurity and lack of infrastructure must all be addressed by a relatively new govt with little experience and only embryonic institutions. With substantial oil reserves, huge amounts of arable land and the Nile flowing through its centre, South Sudan could grow into a prosperous nation.
            Alone, South Sudan cannot meet these challenges nor realize its potential. Doing so will require partnership, a full engagement with the international community especially with South Sudan’s neighbours. First and foremost, the new leaders of South Sudan should reach out to their counterparts in Khartoum. Recent instability in Southern Kordofan and Abyei have strained North - South relations and heightened political rhetoric. Now is the time for both the North and the South to think of the long - term benefits of working together.
            South Sudan must also reach out to its other neighbours. Across the globe and in Africa, the trend is towards regional partnerships. South Sudan will be strengthened by becoming an active participant in the regional organizations of East Africa and developing durable trade and political ties throughout the continent. Finally, South Sudan must reach out to its own people. It must find strength in diversity and build institutions that represent the full constellation of its broad geographic and ethnic communities. In the 21st century, the international community has increasingly come to recognize the responsibilities of govts to their citizens, including the protection of political space and democratic rights. The popular uprisings in North Africa and the Middle East have shown what can happen when govts are inattentive to the needs of their people.
            The United Nations is committed to assisting the govt of South Sudan to meet its many responsibilities. That is why there have been proposals for a new United Nations mission in South Sudan: to help build the institutions that the country needs to stand on its own. United Nations is only one part of a broader set of partnerships that the govt should develop-with the North, with its neighbours in the region and beyond and, most importantly, with its own people. The last thing a new nation needs is a celebration as it springs into existence, only to then be forgotten until the next crisis.

Thailand elects first woman prime minister

            Creating history in the politics of Thailand, Yingluck Shinawatra emerged victorious in the July 3 general elections to become the first woman prime minister of the country. As the sister of former primer minister Thaksin Shinawatra, a charismatic leader now in self-imposed exile, Yingluck plunged into high-voltage Thai politics only a few weeks before the elections. Yet she hit the winning trail almost at the very start of her campaign for the top post. With the people beginning of favour her in the pre-election public opinion polls, pundits favoured her to defeat Abhisit Vejjajiva. Significantly, the politically proactive Thai military elite rooted for Abhisit.
            Her brother Thaksin gave Yingluck huge name recognition. It hardly needs to be emphasized that Thaksin, overthrown by the Army in a bloodless coup in September 2006, has remained an unsolved riddle. Viewed in this perspective, Yingluck really opened her political innings on a sticky wicket. Across a wide spectrum of Thais, Thaksin was and still is a larger than – life hero even after his removal. Given this reality, through, Yingluck did face a campaign – time challenge of convincing anti-Thaksin activists that she was a leader-in-the-making in her own right.
            The elections were a contest between two proxies: Abhisit on behalf of the military elite and Yingluck acting for Thaksin. Unsurprisingly, during the campaign, the Abhisit camp did raise the spectre of Thaksin, who was convicted and sentenced in absentia in a graft. As a result, as Thais went to the polls, Thaksin remained in voluntary exile but as a proclaimed fugitive. Throughout the campaign, Thaksin tried to stay above the controversies of his personal agenda. In this milieu of Thaksin’s protective political umbrella for Yingluck and the Thai military’s huge shadow over Abhisit, the message from the election mandate has three dimensions.
            First, the Thai people have told their military elite to stay off democratic politics. At the height of the campaign, suspicions about the Thai Army were so intense that its leaders felt compelled to disclaim any move to invade neighbouring Cambodia over the issue of ownership of a medieval Hindu temple and thereby create a pretext for canceling the general elections altogether. The second message from the elections is about the enduring image of Thaksin as a caring leader of the poor masses.
            The third message is that the agenda of a qualitatively better life for the poor and the disadvantaged is central to Thailand’s future as a unified nation. The pro-welfare manifesto of Yingluck’s Pheu Thai Party, inclusive of populist measures such as the free supply of computers and credit cards to select target groups, has won her much appreciation. In the process, Abhisit’s attempt to give his Democrat Party a caring image failed to win hearts because his supporters could not inspire the masses. Yingluck has two unique advantages. These are her lineage as a Thai-Chinese and her likely position as the first woman leader at the highest level. As Thailand’s first woman leader, the political careers of Corazon Aquino and Gloria Macapagal Arroyo in the Philippines and Megawati Sukarnoputri in Indonesia are the more obvious example that Yingluck could usefully look at. Aung San Suu Kyi in the still military – controlled Myanmar cannot be ignored.

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Current Topics
New Direct Tax Code Bill

            Taxation of income in India, till now, is governed by the fifty years old Income Tax Act (IT Act). But this Act has been criticized for being economically inefficient, incompatible with the current requirements and inequitable to all tax payers. So, in Aug 2009, the ministry of finance came out with the draft of Direct Tax Code (DTC) bill to replace the existing IT Act. Subsequently, a new revised bill, incorporating all the criticism, was presented to the cabinet in Aug, 2010. Exactly one year later, the bill has been finally approved by the Union cabinet. The new DTC will come into force from 1st April 2012.
Salaried Class
            The new revised DTC have raised and widened the income tax slabs compared to those existing under the IT Act. Nevertheless the tax rates are same, the highest marginal income tax rate being 30% for all. The cabinet has exempted incomes up to 2 lakh per annum (against the current 1.6 lack) from tax / For women and senior citizens, the exemption limit would be 2.5 lakh per annum. At present, women have to pay tax on incomes of 1.9 lakh per annum or more and senior citizens on incomes of 2.4 lakh or more. The maximum that anyone can gain from this proposal in terms of savings on the tax burden compared to the present levels is 26,000 per annum.
Exempt - Exempt - Exempt
            On the proposals of taxation of savings, the new DTC has reverted back to the existing Exempt-Exempt-Exempt (EEE) method from the earlier proposed Exempt (EEE) method from the earlier proposed Exempt-Exempt - Tax (EET scheme. In the new DTC, savings limit allowed for deduction from the taxable income has been increased from the existing limit of 1,20,000 to 1,50,000. It comprises 1,00,000 for investment in provident funds, pension funds and other approved securities; and 50,000 for child’s tuition fees, life insurance and health insurance premiums. As far as investment in housing is concerned, the new DTC has continued with the deduction owing to interest payable on a housing loan for up to 1,50,000 per annum. It will be allowed only on the interest component of the installment and not on the principal amount.
Retirement benefits
            In the case of retirement benefits, the existing rule is EET method under which any withdrawal from the Retirement benefit Account (RBA) is taxable. But the New Pension Scheme proposed under DTC suggests a completely new EEE scheme that exempts even withdrawal. The limit for employee’s contribution to his pension fund that will be deducted from his taxable income has been increased to 3,00,000 from the existing limit of 1,00,000 per annum.

External Commercial borrowings in Yuan allowed

            Corporate sector has been bearing the brunt of continued monetary tightening by the RBI. Many industry captains had been pleading for changes in the overseas borrowings policy. This could help them raise funds in overseas markets where interest rates are in low single digits while rates at home are at double-digit levels. Even on a fully-hedged basis, access to foreign borrowings will be at least 200 basis points cheaper for a top-rated company. Ultimately, the got allowed Indian companies to borrow in Chinese Yuan and refinance their rupees loans. The govt has also increased the total amount that can be borrowed under the so-called automatic route to $750 million from $500 million. It, however, kept the overall cap for ECBs at $30 billion.
            R Gopalan, the chairman of the High-Level Coordination Committee (HLCC) on ECBs approved the changes. The central theme of this policy liberalization is directed towards facilitating Indian entrepreneurs to source low-cost funding. The policy would allow industry, particularly the infrastructure sector, to access relatively cheaper funds. It expands the menu for borrowing to another currency, and Yuan is an important currency. Chinese banks would prefer to lend in Yuan instead of dollars. The decision, which is welcome, comes at a time when China’s largest bank, the Industrial and Commercial Bank of China, has opened its first branch in India. This is perhaps a coincidence, but nevertheless significant.
            The move to adds the Yuan to the list of currencies - dollar, euro, pound and yen in which Indian companies can borrow. It will help firms save on transaction costs involved in currency exchange. What would, otherwise, have been a two-stage process - raise Yuan resources, convert to dollars, and then to rupees - will now be direct. While this is a huge positive, one has to remember that managing currency risks related to the Yuan’s movement would not be as flexible as it is for other currencies. This is because the Yuan is not fully convertible. So, Indian companies raising Yuan resources will have to tread carefully in practicing currency management.
            A mechanism for hedging currency risk for the Yuan will be needed to make borrowings in Yuan will be needed to make borrowings in Yuan a success. Going forward, with increasing global pressure on China to abandon its fixed currency regime, Indian companies should also watch our for the stability of the Yuan. Corporates can borrow upto an equivalent of $1 billion in Chinese currency. This is good beginning but, going ahead, this limit will have to be increased.
            India is among China’s top 10 trading partners and, today, India imports goods worth billions of dollars from China. Even if a fraction of these imports is to be financed using credit lines from Chinese banks, then the present limit is certainly on the lower side. Finally, while this move will benefit most companies in the infrastructure sector, especially power, India must take steps to strengthen its domestic capital goods industry. These companies must be offered a level playing field as competition from Chinese firms is likely to increase now. 

Usha Thorat Committee report on NBFCs

            The RBI is on course to introduce new rules on provisioning, lending and capital for non-banking finance companies (NBFCs). It will narrow the gap between these firms and banks, further squeeze profits and reduce possible risks to the financial system. A working group constituted by the central bank and headed by its former deputy governor Usha Thorat has recommended a higher capital norm of 12% for NBFCs. It has recommended asset classification and provisioning on the lines of banks. More capital will have to be set aside by non-banking firms which are not sponsored by banks for capital market related and real estate lending. It has called for a minimum asset size of over 50 crore for registering a new NBFC.
            What the group and the Indian central bank are seeking to achieve is to close the regulatory gap between banks and are seeking to achieve is to close the regulatory gap between banks and NBFCs. They want to strengthen governance, disclosure and supervision to ensure that the proposed new rules cause minimum damage to NBFCs. Unlike banks, whose exposure to realty and stock markets are tightly regulated, NBFCs do not have similar stringent rules on Sectoral lending and group-wise exposure. It enables them to lend more liberally against shares and also for realty. In 2008, after the sub-prime crisis, Indian policy makers had to offer liquidity support to the NBFC sector. It drove home the risks inherent in the business model of some of these firms. That was also prompted by the fact that many banks lend to NBFCs. It could mean risks being transferred to banks.
            The report speaks about the issues and concerns of the NBFCs. It has recommended far-reaching changes in the regulation of NBFC sector based on perception of increased risk. So far, NBFCs’ capital adequacy requirement is at 15% wherein there is no stringent stipulation of tier I or tier II capital. If the recommendation is accepted, every NBFC has to have a minimum tier I capital or equity capital of 12%. In April 2011, RBI increased provisioning norms for banks from 10% to 15% on sub-standard assets (where interest payments have not been made for two months) while restructured assets (where concession have been given to the borrower to prevent the loan from going bad) too have to be provided at 2% as against 0.25-1% earlier. If accepted, NBFCs too have to follow this.
            RBI has recommended maintaining a liquidity ratio for 30 days. It means an NBFC has to set aside cash balance equivalent to its debt payments due every month. The measure is perceived to be important to check asset-liability mismatch of NBFCs. Risk weights for NBFCs, not sponsored by banks may be raised to 150% for market exposures and 125% for commercial real estates. This reflects RBI’s intention to bar NBFCs from taking higher exposure in capital market and real estate.
            The planned recast of rules is in tune with this thinking. In its report, the group has said liquidity reserve requirements for NBFCs should be introduced. The tier-I, or core capital of NBFCs, has been pegged at 12% from 7.5% now. The new provisioning rules will be 90 days instead of 180 days. The risk weights for NBFCs not sponsored by banks could be raised to 150% for capital market exposures and 125% for capital market exposures and 125% for commercial real estate (CRE) exposures.

RBI’s monetary tightening continues
            The RBI, on Sept 16, hiked the repo rate (the rate at which banks borrow from the central bank) by 25 basis points to 8.25 per cent. This is in keeping with the trend that began in March 2010 and has taken the policy rate from 3.25 per cent to 8.25 per cent in 12 does. Inflation is proving to be a worthy enemy. It rose year-on-year (y-o-y) to 9.8 per cent in August 2011, up by 60 bps in July. The plot has become tricky with the 3.14 -per - litre hike in petrol prices effective from Sept 16. Non-food credit grew at 20.1 per cent y-o-y in August above the projected 18 per cent in the July.
            Fiscal deficit at 55.4 per cent of budget estimates in the first four months of the current fiscal was significantly higher than that of 42.5 per cent during the corresponding period last year. It can only get worse. The UPA is into its second innings and anti-incumbency has set in early. With an eye on elections in 2014, it may well be tempted to go in for populist measures. It may spoil the figures further if corporate earnings take a hit and disinvestment programme remains dead.
            The RBI is clearly worried that inflation expectation will rise further as inflation remains high in coming months. This is why it considers it imperative to preserver with the current anti-inflationary stance. The base rate of banks - the rate below which banks are not allowed to loan funds - has gone up by 100 bps since the July review and now stands at 10.25 per cent. The effective rate at which many borrow is at about 16 per cent. Since May 2011, the increase in the repo rate has led to an equivalent increase in base rate, demonstrating stronger transmission. All these will obviously affect new investments and growth momentum. While RBI is not yet ready to revise down its 8 per cent growth for fiscal 2012, it is recognizing downside risks to this forecast.
            Definitely for now, RBI has chosen to ignore the clamour from industry and top govt functionaries, that it is time to pause monetary tightening. It has its reasons. Excluding capital goods, the growth in the index of industrial production is higher at 6.7% in July compared to 4.4% in June 2011. Year - on - year growth in money supply is higher than projected, as is the growth in non-food credit. Liquidity in the system is in deficit, indicating demand pressures. Inflation numbers provided scant comfort. The wholesale price index (WPI) for Aug is up almost 10% compared to the same period last year. The sharp hike in petrol prices is expected to add seven basis points o WPI inflation. It is quite possible, therefore, that the inflation number for Sept may cross double digits.
            Any premature change in the monetary policy will be counter - productive and harden inflation expectations. The clamour for halting monetary tightening is countered by the argument that while growth has decelerated it has by no means collapsed. Indeed the GDP growth during the first quarter of 2011-12 at 7.7 per cent is only marginally lower the previous quarter’s 7.8 per cent. Besides, the RBI has conceded that a portion of the growth momentum will have to be sacrificed for the sake of price stability. The central government’s finances have worsened during the first four months of the year. An even bigger worry comes from the developed world. The sovereign debt crisis in Europe is assuming menacing proportions.

Maruti worker’s struggle for trade union rights
            The auto hub of India, Manesar in Haryana, is reeling under workers’ struggle for trade union rights. This is the second time this year that workers of Maruti-Suzuki were on strike in Sept. Earlier, Maruti-Suzuki workers launched sit-in strike from June 4 demanding trade union rights. While the management sacked 11 workers, thousands of workers in Gurgaon region stood in solidarity with workers. They applied for registration of a new union, the Maruti Suzuki Employees’ Union (MSEU), at Chandigarh. Knowing workers’ initiative for a new union, the management forced and threatened workers to sign on a blank sheet allegedly to state that they will not join the new union. The company said that it has new union. The company said that it has not accepted any new union.
            According to labour experts, the issue of new union rests with the workers and the labour department. Formation of any union is worker’s rights under the relevant labour laws and in Maruti Suzuki case there is no effective role to be played by the company. The issue needs to be settled between concerned department and the workers representatives. It is significant to mention that Maruti-Suzuki has an in-house union, Maruti Udyog Kamgar Union (MUKU) at its Gurgaon Plant. Workers at the Manesar Industrial Model Township (IMT) plant feel that the MUKU is dominated by the management. It is not taking up workers’ issues such as wages, intensification of work and regularization of trainees and contract workers. However, the management has been maintaining that it will not allow the Manesar plant to have to have an independent union or a union affiliated with a political party.
            More than 2,000 workers from various factories in Gurgaon participated in a solidarity demonstration in front of the Maruti-Suzuki factory. Reacting to it, Haryana govt passed a prohibitory order to ban the strike and referred the matter to the local labour court. Unfazed by anti-labour measures of the govt, unions in Gurgaon planned to conduct gate meetings and a two-hour tool down strike in their factories to express solidarity with Maruti Suzuki workers. Subsequently, Haryana chief minister requested unions postpone the strike time and sought more time for negotiations.
            However, the management has not changed its stand and in fact retracted from its earlier position that it will accept an independent union. Currently, Maruti-Suzuki at its Manesar IMT Plant employs around 3,500 workers among which 900 are regular workers, 1,500 are trainees and 1,100 are contract workers and apprentices. The workers’ salary package, with a low basic salary and substantial amount of incentives/allowances, is designed by the management to control workers.
            Production at Maruti’s Manesar factory, where it makes its popular Swift model, had been severely hit since workers walked out on Aug 29. The company had to shut down two factories after the unrest spread to Suzuki Powertrain, which supplies around 300.000 diesel engines a year to the car maker from its India plant. Maruti vowed it would not compromise with the workers who refused to sign a “good conduct bond”. It was steadily hiring new employees to bring the factory production closer to normal.

Nuclear Safety Regulatory Authority Bill, 2011

            On Sept 7, the govt tabled in the Lok Sabha the much - awaited Nuclear Safety Regulatory Authority Bill, 2011. The Nuclear Safety Regulatory Authority (NSRA) is being created to bring about independence and transparency in administering the safety oversight of nuclear operations in India. The creation of the NSRA in its present form appears to impart only a regulatory touch to the unclear sector. The NSRA will, in fact, have fewer powers and less independence than the existing Atomic Energy Regulatory Board (AERB). The govt seeks to establish a Council of Nuclear Safety (CNS) to oversee and review nuclear and radiation safety policies and related matters. The CNS will be chaired by the Prime Minister. It will have as its members five or more cabinet ministers, the cabinet secretary, the chairman of the Atomic Energy Commission, and many nominated experts.
            Details of the functions and powers of the CNS can be gleaned from the Bill. One of its first tasks will be to constitute two search committees, one to select the chairperson and the other to select the members of the NSRA. Based on such selection, the central govt will constitute the NSRA. Another responsibility of the CNS is to create an Appellate Authority to hear appeals on any order or decision passed by the NSRA. Strangely, this Appellate Authority to be created by the CNS will also decide on appeals from the govt against the regulatory authority. Ostensibly, NSRA is not required to report to any ministry or govt official. Yet it has to mandatorily obey directions and orders of the central govt.
International obligations
            The NSRA is required to discharge its functions and powers in a manner that is consistent with the international obligations of India. This could mean, for example, that if the prime minister has promised the French Present in 2008 that India would buy six European Pressurised Reactors (EPRs), without any safety or economic evaluation, that unilateral and personal commitment given by the prime minister will now get labeled as one of India’s international obligations. Again, NSRA cannot question, even on strong safety grounds, the setting up of those six EPR units. The Bill is thus drafted to give, post-facto, govt - enforced safety approval from the NSRA.
Coercive measures
            The Bill requires that NSRA shall not act against the interest of the sovereignty and integrity of India, the security of the state, friendly relations with foreign States, etc. The govt may issue directions to the NSRA from time to time as it may deem necessary. NSRA shall be bound to comply with any such directions. After the chairperson and members of the NSRA are selected with the direct involvement of the prime minister and his cabinet, where is the need to forewarn about govt actions through an Act of Parliament? No other regulatory Act of India holds out similar forewarnings. The govt may also remove from office the chairman or any member of NSRA if he/she abuses his position.
            Moreover, if, at any time, the central government is of the opinion that circumstances exist which renders it necessary in the public interest to do so, it may, by notification, supersede the NSRA.

Palestine demands of statehood in UN

            The Palestinian Authority (PA) President, Mahmoud Abbas, has exposed a mass of contradictions in the positions taken by Israel, the US, and major European Union countries. On Sept 23, he submitted to Secretary - General Ban Ki-moon a letter requesting full UN membership for Palestine. The request is based on the Palestinian borders as they obtained on June 4, 1967. The US said it would veto the proposal in the Security Council. In that case, Abbas will request the 193-member General Assembly to recognize Palestine as an observer state. While not amounting to full membership, that would mean significant enhancement of Palestine’s current “observer entity” status.
            In reaction, Israel is maintaining its refusal to stop illegal construction in the West Bank and other occupied territories. Hardliners in Israel are calling to withhold customs revenues which it collects on behalf of the PA and passes on. The Netanyahu govt seems unable to see that Palestine as a full UN member would also be responsible for any attacks, say from Gaza, on Israel. Starving the Palestinians will only embitter them further and Hamas will grow. The US Congress has also threatened to stop aid to the Palestinians. About 140 countries in the General Assembly support the PA application to the UN.
            Abbas is of the opinion that any dilution of the Palestinian demand will deprive the Palestinians of their right to enter into negotiations with Israel as an equal member of the international community. Ultimately, their demand for a sovereign Palestinian state may get weakened. India is among the countries which support the Palestinian cause. The backing of India and other countries, however, cannot lead to the UN General Assembly accepting the Palestinian demand unless the US does not use its veto power. The US Senate has told President Barack Obama to thwart the Palestinian attempt to acquire a new status as this would affect the interests of Israel, the closest US ally in West Asia. The Senate has even threatened that the US will not release its share for funding the world body if the Palestinians succeed.
            Abbas has always avoided courting controversy or confrontation, especially with US. He was widely criticized by his people when he decided, last year, not to pursue the Goldstone report in the Human Rights Council under pressure from the Americans. He had to relent and allow the item to proceed in the Council. He cannot afford to repeat the blunder and appear to give in once again to Israeli, Western and American exhortations. He might be willing to give up the UN route if Israel commits itself to a complete freeze on settlement building in the West Bank, including East Jerusalem. Again, it would have to reopen negotiations on the basis of the 1967 borders. Netanyahu, Prime Minister of Israel, rejects both these conditions, insisting instead on an unconditional resumption of talks. This is unacceptable to Palestine.
            President Abbas seems to have no choice but to go ahead with the UN initiative. After all, even the IMF and the World Bank have declared Palestine to be ready to exercise the functions of a state. Arab foreign ministers decided on Sept 13 that the UN route must be pursued. The Americans would want to avoid having to exercise their veto since it will further inflame Arab public opinion against them.

Burhanuddin Rabbani assassinated in Afghanistan

            The assassination of former Afghanistan President Burhauddin Rabbani in Kabul in Sept is a major setback to the efforts for peace through negotiations. Rabbani, appointed a yar ago by President Hamid Karzai as the head of the High Peace Council, was working hard to broker peace between various Taliban factions and the govt in Kabul. The US-backed idea was to convince the Taliban to abandon the path of violence, join the govt and get engaged in the reconstruction of Afghanistan. This was acceptable to some Taliban groups. The macabre act has the clear signature of Pakistan’s ISI. It is currently sabotaging all peace endeavours between President Hamid Karzai and Taliban. With the US set to finally exit Afghanistan by 2014 Pakistan is striving to move into the political and strategic vacuum.
            The Haqqani Taliban faction, which is believed to be behind the assassination of Rabbani, has its own calculations like the group led by Mullah Omar. The latter headed the Taliban regime that was overthrown by the US-led Western coalition after 9/11. It wants to come back to power on its own in the absence of Western troops in Afghanistan. There appears to be another reason why Rabbani has been eliminated. He was an ethnic Tajik and headed the govt before the Taliban, composed of Pashtun extremists, took over the administration in Kabul in 1996. His absence from the scene is very demoralizing for President Karzai.
            The choice of Rabbani for the job of High Peace Council was always controversial. He was a key part of the mujahideen forces that fought the Soviets. Then, in the aftermath of the Soviet withdrawal, became the Tajik-dominated Northern Alliance’s presidential face of a Pashtun-majority state. The rise of the Taliban power in Afghanistan saw Rabbani in opposite camp to the Pakistan installed Taliban govt in Kabul. But the assassination in 2001 of Northern Alliance military leader Ahmed Shah Massoud marked the real blow to anit-Taliban was based on the former’s success in keeping regional and ethnic rivalries in check. It’s true that the former president was listened to by the various squabbling factions after Karzai started ruling Kabul. But both hard-line and moderate Taliban factions have found a common adversary in Rabbani. The signal given out by his killing is that they are not interested in negotiating with the US appointed Karzai govt. The death of Rabbani underlines the revival of the Tailban in a big way. At a time when the US in charting out its military departure policy in Afghanistan, the spectre of chaos looms large over Af-Pakistan.
            Rabbani’s death provides another advantage to Taliban, the further weakening of Karzai’s regime. For Taliban in an ever factious ethnicity in Afghanistan power staring makes little sense. It is time to recall the flawed models provided during the failed United Nations-sponsored mediations during 1996-2001. Un - sponsored schemes neglected external political and security mechanisms. It did not deal with Pakistani elements to support intra-Afghan accords. Ethnic problem of Afghanistan has to be seen in relation with Pakistan.

China opposes India’s move in South China Sea

India’s ‘Look East Policy’ has reached a defining moment. This has arisen out of India’s interests in international waters. To much of the discomfort for China, India has asserted its rights in the waters of the South China Sea. India has snubbed China and made it clear that ONGC Videsh Ltd (OVL) will continue to pursue oil and natural gas exploration in two Vietnamese block in the South China Sea. China had issued a demarche to India underlining that Beijing’s permission should be sought for exploration in Block 127 and 128. Without it, OVL’s activities would be considered illegal.
            China has asserted that it has undisputable sovereignty over the South China Sea. It is opposed to any country involving itself in oil and gas exploration there. Chinese official media has called India’s dealings with Vietnam a serious political provocation. India’s legal claims in the international waters of the South China Sea. It also wants to strengthen its relationship with Vietnam. Both moves unsettle China which views India’s growing engagement in East Asia with suspicion. With China expanding its presence in South Asia and the Indian Ocean region, India is staking its own claims in East Asia. Most significant in this regard is India’s growing engagement with Vietnam.
            Bilateral ties between India and Vietnam have got strengthened in recent years with the focus on regional security issues and trade. Traditionally, India has had a favourable presence in Vietnam with its support for Vietnames independence from France. India was also opposed to the US involvement in the Vietnam War. With the rise of China in recent years, their ties have become strategic in orientation. The two states promulgated a Joint Declaration on Comprehensive Cooperation in 2003 and have initiated a strategic dialogue since 2009. During the recent visit of Indian external affairs minister to Hanoi, the 14th India-Vietnam Join Commission Meeting on Trade, Economic, Scientific and Technological Cooperation was held.
            Bilateral trade has grown since the liberalization of India and Vietnamese economies with the trade volume now exceeding $2 billion. The signing of the India-ASEAN Free Trade Agreement and India’s recognition of Vietnam’s market economy status will further boost economic ties. Vietnam has backed a more prominent role for India in ASEAN as well as India’s bid for the permanent membership in the UN Security Council. Given that Vietnam and India use the same Russian and erstwhile Soviet platforms, there is a significant convergence between the two in the defence sector.
            India’s exploration interests near the Vietnamese coasts have been threatened by China’s diplomatic offensive. Indian strategic interests demand that Vietnam emerge as a major regional player. It has been argued that just as China has used states in India’s periphery to contain India, Delhi should build states like Vietnam as strategic pressure points against China to counter it. If the South China Sea is a disputed area for China and India should refrain from entering the fray, then India can rightfully ask China to do the same in Pakistan - occupied Kashmir. Yet China has been enlarging its military and economic presence in the region.

UNCTAD Trade and Development Report, 2011

            The United Nations Conference for Trade and Development (UNCTAD) in its Trade and Development Report 2011 (TDR) has warned that the world is going through a severe crisis and India too will bear the brunt. It finds fundamental flaw with the floating rate exchange system of currencies. It warns that developing and extreme poor economies might be hit more by the crisis than developed countries. It disagrees with US- type shift from fiscal stimulus towards fiscal tightening. It is self defeating. In such a situation, a restrictive fiscal policy may reduce GDP growth and fiscal revenues.
            Economic recovery may came to an end in developed economies. This is because private domestic demand remains weak and supportive macroeconomic policies are being replaced by austerity measures. By contract, developing economies have sustained their growth path mainly based on domestic demand. However, they face financial instability and speculative capital flows generated in developed economies. The latest warning by rating agency Fitch of a possible downgrade of Chinese and Japanese economy supports the UNCTAD contention. The Fitch says that US and European crises have hit the two large Asian economies. This might slow down the growth of China and lead Japan to a recession.
            What should concern India is the warning that uncertainty in commodity markets are increasing. It is coupled with low investment in production, infrastructure and research. Another concern is high unemployment and erosion in private investment. Private demand alone is not sufficiently strong to maintain the momentum of recovery, as unemployment remains high and wages are stagnating. Moreover, household indebtedness continues to be high and banks are reluctant to provide new financing. The shift towards fiscal and monetary policy tightening represents major risk of a prolonged period of mediocre growth in developed economies.
            In Japan, recovery has been delayed by the impact of unprecedented supply-chain. Another reason is energy disruptions due to the massive earthquake and tsunami. In EU, wage earners’ incomes remain very low, as does domestic demand. With the unresolved Euro crisis, the Eurozone will continue to act as a significant drag on global growth. In fact, recent plunges in stock markets largely reflect worsening growth perspectives.
            A major reason for speculation not only in currency but also in major commodities is based on the currency fluctuation. The report says currency exchange rates have become excessively volatile and actually disrupt the functioning of the real economy. Fundamental greater stability of real exchange rate could be achieved by a rules based manag system. It means the return to a kind of fixed rate for a given period. In other words, the report has attributed the present crisis to the speculators. Impliedly it believes that individual or groups have raked in huge profits though many national economies were devastated. The recommended system world be able to achieve sufficient stability of the real exchange rate to enhance international trade and facilitate decision - making on fixed investment in the tradable sector.

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Current Topics
Issue of 100 per cent FDI in pharmaceuticals

            While the govt is worried about the slowing foreign direct investment (FDI) in many sectors, one sector is becoming a bigger concern. The concern is that the acquisitions will lead to price hikes and make drugs unaffordable for the common man. The Department of Industrial Policy and Promotion, the government’s FDI policy wing, has argued that FDI in pharmaceutical companies should be limited to 49 per cent. Currently, 100 per cent FDI is allowed in the sector.
            There have been six big-ticket takeovers in the pharma sector since 2006. These show how desperate the multinationals are to get into the Indian market. Last year, Piramal Healthcare pocketed seven times its 2010 sales for the company’s branded generics business from Abbott Laboratories. Ranbaxy Laboratories was valued four times its sales when it was acquired by Daiichi Sankyo in 2008. While many MNCs have been present in India for a long time, they have been dormant. They were sidelined by the generic versions of the local drug makers. But now they have become aggressive. MNC pharmaceutical companies have been facing challenges such as deteriorating growth prospects in the developed markets. They want to expand their market share. Plus, there is no breakthrough innovation happening at the global level. Indian market with its low-cost advantage suits their portfolio.
            Generics, or non-patented versions of popular drugs, are the bread and butter of Indian pharma companies. Multinationals are virtually non-existent in this category. Patented drugs, their strong point, account for less than 0.5 per cent of Indian market. So, to stand any chance in the huge Indian market, they need a strong portfolio of generic drugs. The multinationals will lose patent protection for products worth $100 billion in the next three years. The patented products will account for only 10 per cent of the market in 2015.
            Another reason is the declining breakthrough drugs in MNCs’ kitty. As a result of declining research and development, the number of product launches is fast coming down. apart from acquisitions, MNCs are inking partnership deals with Indian companies to make and sell low-cost versions of their patented products to gain a foothold in the Indian market.
            There will be multiple forms of alliances and partnerships that global drug firms will look at. It will depend on the kind of product and the relationship with specialist doctors. So, if an Indian pharma company has a very good relationship with diabetic specialists across the country, the MNC would tag along rather than spending on its own on sales force. The way MNCs do business has surely undergone a change. Investments are happening in HR, sales and brand building. Over - the - counter drugs are another area where MNCs are expected to shake up the market. Since they do not require prescriptions to be sold, the market is more or less driven by marketing campaigns. With their huge marketing budgets, MNCs are better placed than local players to tap in this market.

The draft National Policy on Information Technology, 2011

            The draft National Policy on IT has laid out India’s vision of how the telephony business will shape up over the next 10 years. At its core is a one-market, one-platform view that does away with area - and service - specific permits. Combining data and voice traffic makes sense because telecommunications technology has blurred the distinction. The industry expects one in five Indians will be surfing a high-speed network for business or pleasure by 2015. Number portability, spectrum trading, internet telephony, infrastructure status for the industry and an exit option for telecom companies are other features of the draft policy.
            In a way, the writing has been on the wall for some time now. The money in emerging telecom markets remains in voice traffic. But mature network must seek extra rupees from data. Indian mobile telecom companies are signing up 15 million customers every month. But the easy money is behind them. Every new subscriber brings less than Rs.250 of business a month. With cellphones getting smarter and cheaper, data services could emerge as the digital gateway for millions of Indians. Sales of smartphones are forecast to grow 40% a year till 2015 by when close to 200 million people ought to be on data networks.
            All this, however, comes at a cost. The extra revenue telecom companies are eyeing may not materialize in the hypercompetitive Indian market. Operators cannot afford a deadly price war after having paid hefty sums to get more frequency. Consolidation in the industry may be misleading when seven companies control nearly all of the market. It is imperative that the telecommunications industry prices data services right. Companies cannot take too much pain, yet they cannot afford to price in all the costs because their future is tied to the growth of the data business.
            Telecom operators are bound to protest as national roaming charges garner as much as $600 million for them annually. It is expected that some of them might raise their charges to offset this loss. As in any course correction, there are bound to be challenges that such a course will entail. As the world moves to adopting smart-phones, data forms a significant part of the telecommunicating experience.
            One key objective of draft National Policy on Information Technology is to incentivize the software industry to boost exports, expand IT education, and generate ten million new jobs. It can be assumed that economic imperatives will lend fresh dynamism to the high - performing software industry, but the same cannot be said of public services. Take the key areas under the national e-governance plan. Income Tax, passport, visa, land records, property registration, pensions, road transport, police, municipalities, panchayats, and employment exchanges are all priority services. But these are not ready for electronic service provision even after years. The situation is not very different in other government services.
SBI’s rating downgraded

            The State Bank of India (SBI) paid the price for the Centre’s dithering over its capital needs. The rating agency Moody’s has downgraded its financial strength rating to D+ from C - and its hybrid debt to Ba3 from Ba2. It points to SBI’s low capital adequacy, failure to raise capital and falling asset quality.
            It has been evident for some time that SBI would hit an air pocket if it did not get the nod for its 20,000-crore rights issue to shore up its tier-1 capital adequacy ration. At June end, this ratio stood at 7.60 per cent. Moody’s acknowledged that SBI will be able to get funds from the government soon enough. But it said SBI’s efforts to secure this capital for the better part of the year demonstrated the bank’s limited ability to manage its capital.
            A banking panel in Britain has suggested a higher capital adequacy ratio for large banks like SBI, at say 17 per cent. Of course, Indian banks need not have such a capital adequacy ratio as they have a high statutory liquidity ratio (SLR) at 24 per cent. A quarter of a bank’s deposits are to be mandatorily invested in government paper. It does not take away from the fact that Centre cannot continue to hold large stakes in banks and infuse funds as and when needed. It just does not have the funds. And we are not even talking about Basel 3 norms under which the funds required will be much higher.
            While the minimum capital adequacy ratio remains at 8 per cent, the equity component has been raised to 4.5 per cent from 2 per cent. In addition, there is a capital conservation buffer of 2.5 per cent equity. Effectively, therefore, the equity component in capital stands raised to 7 per cent from 2 per cent. The Reserve Bank of India (RBI) and banks will estimate the capital needs under Basel 3 soon. It will be a huge number. Investors will eventually recognize that well capitalized banks are less risky. In effect, capital will the key going ahead if banks are to keep the momentum going.
            The downgrade of SBI’s standalone rating of creditworthiness needs to be understood in its proper perspective. SBI is by far the biggest commercial bank in the country. While it is easy to exaggerate the significance of the downgrade, a few facts need to be borne in mind. the downgrading will indeed affect SBI’s standing in global financial markets. But almost 95 per cent of SBI’s business is within India. Given that, SBI will be able to provide foreign currency support to its clients at competitive rates. Moreover, the revised rating is still of investment grade, and is no worse than that of other public sector banks.
            Several banks in US and Europe have faced downgrades recently as they reel under the European debt crisis. Yet that is small comfort for SBI simply because the reasons here are very different. SBI is government-owned to an extent of almost 60 per cent. It has been contemplating a rights share issue of about 23,000 crore to shore up its capital base for the last one year. It is stalled by the govt’s inability to find money to put up its share of the rights issue. It is also because SBI’s tier-I capital has fallen below the regulatory norm of 8 per cent, to which the government is committed.

Obituary of Steve Jobs

            Iconic Steve Jobs, the former CEO of Apple, is no more. Nobody else in the computer industry could put on a show like Steve Jobs. His product launches were the performances of a master showman. He has been among the first, way back in 1970s, to see the potential that lay in the idea of selling computers to ordinary people. In those days, the notion that computers might soon become ubiquitous seemed fanciful. But Jobs was one of a handful of pioneers who saw what was coming.
            Jobs caught the computing bug while growing up in Silicon Valley. As a teenager in the late 1960s, by virtue of his role model Bill Hewlett, he took up a summer job at Hewlett-Packard. Soon the dropped out of college, traveled to India and became a Buddhist. Jobs returned to California to co-found Apple, in his parents’ garage in 1976. Under his stewardship, Apple launched Macintosh, the pioneering mouse-driven graphical computer in 1984. Having made a fortune from Apple’s initial success, Jobs expected to sell millions of his new machines. But the Mac was not the mass-market success Jobs had hoped for, and he was ousted from Apple by its board. Yet this apparently disastrous turn of events turned out to be a blessing. He co-founded a new firm, Pixar, which specialized in computer graphics, and NeXT, another computer - maker.
            His remarkable second act began in 1996. Apple, having lost its way, acquired NeXT, and Jobs returned to put its technology at the heart of a new range of Apple products. And the rest is history. Apple launched the iMac, the iPod, the iPhone and the iPad, and became the world’s most valuable listed company. When his failing health forced him to step down as Apple’s boss in August this year, he was hailed as the greatest chief executive in history. Pixar, his side project, produced a string of hugely successful animated movies. In retrospect, Jobs was a man ahead of his time during his first stint at Apple. Computing in early years was dominated by technical types. But his emphasis design and ease of use gave him the edge later on.
            His interdisciplinary approach was backed up by an obsessive attention to detail. A carpenter making a fine chest of drawers will not use plywood on the back, even though nobody will see it, he said, and he applied the same approach to his products. He insisted that the first Macintosh should have no internal cooling fan, so that it would be silent - putting user needs above engineering convenience. He called an engineer at Google one weekend with an urgent request: the colour of one letter of Google’s on-screen logo on the iPhone was no quite the right shade of yellow. He often wrote or rewrote the text of Apple’s advertisements himself.
            His on - stage persona as a Zen-like mystic notwithstanding, Jobs was an autocratic manager with a fierce temper. But his egomania was largely justified. He eschewed market researchers and focus groups, preferring to trust his own instincts when evaluating potential new products. A lot of times, people don’t know what they want until you show it to them, he once said. His judgment proved uncannily accurate. By the end of his career the hits far outweighed the misses. He channelised the magic of computing into products that reshaped music, telecoms and media.

Wave of changes in Myanmar

Pulse seems to be changing in Myanmar. Democracy leader Aung San Suu Kyi and the new civilian President, Thein Sein, have established a framework for national reconciliation and graduated democratic reform. A political amnesty is on the anvil. Moves are also afoot to liberalise trade and investment regimes. The new govt has invited Burmese refugees who fled the country after the military takeover to return. Work on the $3.6-b 3600 MW Myitsone dam on the upper Irrawaddy, under construction with Chinese assistance, has been suspended. The decision suggests that the Burmese leadership is not going to kowtow to its giant neighbour. China has established a major presence in the country during the past 30 years of isolation and sanctions.
            This does not bring Chinese collaboration to an end by any means. Numerous other large hydroelectric, hydrocarbon, port and other infrastructure projects are moving forward. It does, however, suggest that the new regime is mindful of ethnic minority and ecological sensitivities. The Myanmar regime sought to integrate ethnic nationality armies into the national armed forces on the eve of the last elections. Most refused, and four insurgencies have resumed in consequence. The ethnic resolution will determine whether Burma is to be a truly federal state. The question is whether ethnic nationalities will enjoy considerable autonomy, or remain a largely centralized polity at war with itself. Suu Kyi’s father General Aung San, the Father of the Nation and first Prime Minister, had negotiated the Panglong agreement with the minorities in 1948. The agreement broke on future shape of the federal arrangement. It was on the identical issue that the Naga leader, Phizo, broke with the Indian state.
            The Thein Sein govt is seeking foreign investment and collaboration in every field. It is a country with enormous land and natural resources. But it is currently lacking in human capital - administrative, entrepreneurial, institutional, scientific - after 30 years of military rule. It is because of this that it has farmed out major development projects, including plantations, to China, its ASEAN neighbours, Japan, India and others. Only a small fraction of its 39,000 MW hydro-potential has been harnessed. With little domestic demand as yet, most of this power will be exported to China, Thailand and the ASEAN grid. Nagaland can be benefited from surplus electricity of Myanmar if the 1200-MW Tamanthi project comes to fruition with Indian assistance.
            India’s major project so far has been the Kalewa/Kalemayo - Tamu (Moreh) highway. An even larger project under implementation is the multi-modal Southern Mizoram-Kaladan River-Sitwe Port corridor. It will provide India’s Northeast an ocean outlet. The Kaladan Corridor may also go the way of the Kalewa -  Tamu Road unless concurrent steps are taken by both India and Myanmar. Besides, all other concerned actors - transporters, entrepreneurs, bankers, freight forwarders, hoteliers and others - would have to get their act together. Around 1998, Myanmar had offered extensive wastelands to India to grow rice, pulse and palm oil on renewable 30-year leases. Thailand and Malaysia signed up. India was unresponsive.

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India emerges as most trusted ally of Afghanistan

            The Afghan President, Hamid Karzai’s visit to India in the first week of October has added a new chapter in Indo-Afghan relations. In Afghanistan’s first strategic pact with any country, Kabul and New Delhi signed a landmark strategic partnership agreement. As part of the new pact, bilateral dialogue at the level of National Security Adviser has been institutionalized to focus on enhancing cooperation on security issues. The two nations agreed to enhance political cooperation and institutionalize regular bilateral political and foreign office consultations.
            The strategic pact that commits India to training, equipping and capacity building of the Afghan National Security Services will certainly raise eye brows, especially in Pakistan. Not surprisingly, Islamabad was quick to remind the Karzai govt that it should behave responsibly. For a long time, India had been rather cautious in taking a leap into this realm so as not to offend so-called Pakistani sensitivities. The West further supported this posture by encouraging India to be a player in Afghan reconstruction efforts.
            As NATO forces leave Afghanistan over the course of next few years, no one expects the Afghan security forces to be able to face the challenge of the Taliban and other extremists on their own. Indian training would be very influential in this regard. And India cannot be expected to ignore its genuine interests in Afghanistan just to keep Pakistan in good humour. So, the plan to train Afghan forces that was first mooted six years back by Kabul has become a reality.
            Karzai’s position has changed significantly in recent months. He is encouraging the Taliban to reconcile with the Afghanistan govt and has become more practical labour the Taliban and its sponsors in Pakistan. The Afghan President has now suggested that peace talks with he Taliban are futile unless they involve the Pakistani authorities who are the real masters of these insurgent groups. Karzai’s attitude has been particularly affected by the killing last month of former Afghan President Burhanuddin Rabbani by the Taliban. Kabul has been categorical that this assassination was plotted in Pakistani with the active support from the ISI.
            Ever since the death of Osama bin Laden in May, the US-Pakistan ties have been in disarray. The security establishment in Pakistan wants to retain its central role in the negotiations with the Taliban. It also wants to prevent the US from having any long-term military presence in Afghanistan. Meanwhile, Washington has been signaling that it would not tolerate the continuing use of terrorist groups, aided and abetted by the ISI, to kill Americans and their allies in Afghanistan. The US has described the Haqqani network as a “veritable arm” of Pakistan’s ISI. The Haqqanis have been responsible for some of the most murderous assaults on Indian and Western presence in Afghanistan. The US was reluctant to take on Pakistan on this issue till such time as their interest did not come under direct attack.

Women get voting right in Saudi Arabia

Saudi Arabia has stirred interest with its recent announcement that women would have the right to vote in future municipal elections. They would be able to contest as well. Women are also to have seats in the Majlis Al-Shura, the body consulted by the King on a range of public policy issues. The new law is to take effect in the 2015 municipal polls. Campaigners have attributed King Abdulla’s move to the courage of Saudi women themselves, to Saudi social media, and to the effect of the continuing popular uprisings across West Asia and North Africa. In fact, this modest extension of the franchise to women will be in accordance with a law made in 2005 but never implemented. One of the stated reasons for non-implementation was that there would be problems in running segregated polling booths. In any case, the 2008 elections were postponed to 2009 and then did not take place at all.
            This time, the Majlis itself seems to have played a part by reviving the issue of women’s suffrage. It has always been able to summon officials and request access to official documents. However, its powers have been gradually extended. It can now propose and amend legislation without the rule’s prior approval. The King’s announcement might be viewed as an overdue recognition of what should be treated as an inalienable human right. The hardline Salafist clergy who form the country’s ulema have endorsed this limited from of women’s suffrage. The clerics have little to fear at present. The municipal councils are virtually powerless. Even if women can stand for office they will find it extremely difficult to campaign or even to get to the polling stations. They are banned from driving, not by any written law but by a fatwa.
            As for the Majlis, it is in no sense a representative assembly. It is appointed by the King. In contrast, challenges to the driving ban have provoked far stronger reactions. Thousands of women have been stopped and questioned and some have signed promises not to drive again. The clergy’s differing reactions to the issues expose the mutual dependence of the hard-boiled clerics and the royal family. The former, who are suspicious of the more liberal royals, provide the House of Saud with spiritual legitimation in a deeply conservative society. The latter ruthlessly suppress any expression of ideas that implies a departure from Salafist orthodoxy. The two dominant Saudi Arabian institutions evidently fear democracy and equality even more than they fear women at the wheel.
            Perhaps, women are being told indirectly that they should not get impatient as they may get more rights in days to come. The government has been under tremendous pressure from women’s rights groups in Saudi Arabia. In fact, the very existence of women’s rights activists in the conservative kingdom shows that the mindset in the country is changing for the better. For the past few years the thinking that appears to be gaining ground is that women will have to be involved in every walk of life in view of the changing reality in the Arab world. This is reflected in the victory of women on different fronts in Saudi Arabia. Saudi women lawyers can now argue cases in courts. Recently the kingdom got a state-of the -art women’s university, claimed to be the biggest institution of its kind in the world.
Indo-Nepalese ties

            Nepal Prime Minister Babu Ram Bhattarai was on a three - day official visit to India in Oct. He met Prime Minister Manmohan Singh at the UN and the latter had reportedly expressed India’s support for completing the peace process in Nepal. Bhattarai had both economic and political agenda. The peace process and India’s support for its successful completion were top on the agenda. A politically stable Nepal is in the interest of both Nepal and India, the South Asian region as a whole, and China. On the economic side, there are two major issues that are of concern to Nepal. First, the rising imbalance in trade between Nepal and India. The other major issue pertains to the Nepal - India trade arrangements.
Harnessing Himalayan waters
            There is the need for a medium - term to long-term perspective for India and Nepal to work out a new model of sharing of prosperity. In this context, the India-Nepal trade treaty, signed in the mid-1990s, could be the model. The two govts should jointly discuss ways and means of reviving the liberal trade and investment regime of the mid-nineties. Proper harnessing and utilisation of Himalayan water resources will be to the benefit of people in both countries. Economic growth in the Gangetic plain of India with over 400 million people will require an increasing volume of water for irrigation and power, and for industrial and urban use. Himalayan waters must be tapped for energy, irrigation, navigation and flood control.
Flood Control
            Flood-control measures in the border areas have to be taken under an agreed formula. Water resource utilisation models of the 1950s are no longer relevant. An independent non-governmental agency, with participation from the apex organisations in both Nepal and India, could be set up to look at the issues of trade and water resources in a holistic framework. In a study of this kind, the necessity of involving Indian states of Bihar and UP should be given due consideration.
Security concern
            One important issue that has been of concern to India is security. The two countries have not been on the same wave-length in their perceptions of the term “security”. Misunderstandings persist in this regard. Another ground reality is that Nepal’s long border with India is an open one. There have been cases of infiltration of undesirable elements that have carried out activities against the national interests of both nations. There was also the high-jacking of an Indian plane from Kathmandu airport by terrorists.
            In a fast-changing world, it is incumbent on the leaders of the two countries to start a new era of understanding and cooperation. Adjustments are needed in the perceptions and thought process of both countries. India should re-examine the existing assumptions defining its unbalanced economic relationship with Nepal. At the same time, the latter’s political elite should shed the “small nation psychology”. It will help define Nepal’s national interests with clarity and vision.

IBSA summit in South Africa

The Prime Minister attended the fifth India-Brazil-South Africa in Oct. Of all the foreign policy endeavours India has embarked upon in the last decade, the trans-continental partnership with Brazil and South Africa is surely one of the most innovative. IBSA is unique because the link between the three countries is not geographical but situational. As large developing nations with dynamic, multi-branched economies, the IBSA trio has emerged as key players at the international level. They share not just the goal of democratizing bodies like the United Nations Security Council (UNSC), World Bank IMF but also an approach to international politics based on dialogue and diplomacy.
            IBSA forum has slowly expanded its agenda and sphere of activities. The Tshwane declaration issued at the recent summit in Pretoria offers a good indication of where the grouping is headed. Apart from the issues of global governance, development, and climate change, the document deals with diverse subject like intellectual property rights, interne governance, and gender. It also refers to regional problems from Afghanistan and Syria to Somalia, Haiti, and Sri Lanka. The three also agreed jointly to push for expansion of the UNSC. However, one irritant is South Africa’s inability to get the African Union to endorse the draft resolution being prepared by India, Brazil, Germany, and Japan - the G-4.
            Apart from resolving this disconnect, IBSA need to deal with two other structural weaknesses. The level of intra-group economic and business relations is relatively low. Secondly, civil society and people-to-people interaction is negligible. The lack of transportation links speaks volumes for the absence of demand within the triangle. Some headway has been made at the level of trade and investment but not enough. The government can do only so much. It is for the private sector to realize the enormous opportunities that closer relations with Brazil and South Africa bring.
            IBSA is gradually getting recognized as a major player in he emerging global scenario. IBSA like BRICS (Brazil, Russia, India, China, South Africa) has come up as an effective grouping capable of influencing the course of events at the world level. It is not without reason that the IBSA Fund has been given the UN Millennium Development Goal award. IBSA plus Russia and China, which constitute BRICS, together carry considerable weight. This, however, does not mean that IBSA should function only as part of BRICS. Both has their own significance.
            The greatest worry for the world today is the economic slowdown in the West. It must be reversed as soon as possible to prevent the scenario from getting worse. The Barack Obama administration is working overtime to successfully handle the economic woes of the US. The European Union, too, is using all the resources at its command to bail out the European economies in trouble like those of Greece, Spain and Portugal. But all eyes are fixed on India and China, the two key members of BRICS, which may have to play a more aggressive role for stabilizing the global economy. India also needs to get IBSA’s support for the new role that India has got to play in the peace process in Afghanistan.

“Occupy Wall Street” campaign in US

            Just three years ago, Barack Obama won the US presidential election on the back of incredible popular mobilization. In a country often divided on major issues, there seemed to be something transcendent and epochal about his rise. But after three year of disillusionment, a more organic movement has taken root in the US. The “Occupy Wall Street” protests began innocuously one month ago, but now claim public space and public attention. They reached new heights of spectacle on October 22 when thousands flooded Times Square in New York City as part of a wider “global day of rage” against the West’s crumbling economic systems.
            Ironically, the American protesters come from many of the groups who rallied to Obama in 2008. They include young people, students, urban middle classes, union members, the working poor, the underemployed, and the unemployed. They denounce he growth of stark inequality and the erosion of social mobility in America. They decry what they see as the collusion of the state with corporate and financial interests. They subscribe to the widely-shared belief that the bankers, speculators, and traders responsible for the economic recession have escaped the financial crisis unscathed. But it left behind a vast hinterland of despair and struggle.
Post - 2008
            This anger can be traced to he hardships that descended on many Americans following he 2008 economic collapse. The ranks of the unemployed have swollen. Jobs are harder to come by for both the under and over-educated. Students graduate with unpayable debts. Once free-flowing credit has dried up. Prudent savers have seen their pensions vanish into thin air. Government austerity measures threaten public sector jobs and what remains of America’s social safety net. Protesters can summon an army of statistics to show how inequality in America has spiraled after three decades of intensifying deregulation.
            There have been murmurs that the US is in the midst of its own “Anna Hazare movement”. But the comparison doesn’t hold water. “Occupy Wall Street” has no figurehead and only the faintest tracing of a leadership structure. Where Anna’s followers demanded concrete legislative action in the Jan Lokpal bill, “Occupy Wall Street” activists maintain a long, pious list of causes. These range from the reform of the financial system to stopping house foreclosures o ending US involvement in Iraq and Afghanistan. This series of grievances can seem exhaustively idealistic or worse, vague and impractical. But its role is not to serve as some blueprint for actual legislative reform. Instead, it allows the movement to remain open and inclusive to its growing number of sympathizers.
            At its simplest level, “Occupy Wall Street” hopes to change American discourse. This is a battle to be waged as much in front of cameras as it is in the finer points of political debates. Already, segments of the Democratic Party have taken notice of the movement. When asked for his own opinion about “Occupy Wall Street,” Obama has equivocated, stopping short of offering a full endorsement. One suspects that eh longer the protests last, the more Obama will have to consider bending to its sentiments.

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Indian Economy
Interaction With The World
Fake currency circulation in India goes down marginally: According to data released by the Reserve Bank of India (RBI) on August 26, 2011, counterfeit notes in circulation in India marginally declined from eight out of every 10,000 currency notes two years ago to less than seven per 10,000 currency notes in the 2010-11 financial year. In the number of fake notes seized, there was a rise of 8.5 percent to 4.36 lakh notes in 2010-11 compared to just a little over 4 lakh in the previous year (2009-10). Nearly 90 percent of these notes were detected in bank branches using special machines.
            In recent years, the flow of counterfeit notes has increased in India. As a result, the government, the RBI and banks have launched special drives to check the menace. The RBI said that various measures had been initiated to check the circulation of fake currency. Besides, the reporting system for fake notes is also being updated.
            India’s foreign exchange status: As per the Reserve Bank of India’s Weekly Statistical Supplement released on August 26, 2011, India’s foreign exchange reserves rose by $1.62 billion to $318.23 billion for the week ended August 19, 2011. The reserves had fallen by $616 million to $316.61 billion for the week ended August 12. For the week ended August 5, the forex reserves had declined by $1.9 billion to $317 billion. Earlier, for the week ended July 29, he reserves had risen by $2.29 billion to $319.09 billion.
            Report puts India’s requirement of additional jobs at 55 million by 2015: As per a report released by premier research body CRISIL on August 16, 2011, India needs at least 55 million more jobs by 2015 to maintain the current ratio of employed people to total population, which is 39 percent. This would be nearly twice the number of jobs created during 2005-2010. The research is based on recently released National Sample Survey Organisation (NSSO) data on employment in India.
            Total employment is the sum of people in jobs and self-employed. Between 2005 and 2010, the net additional in jobs was 27.7 million but he number of self - employed people decreased to 25.5 million. This restricted the increase in number of employed people to around two million. The pace of job creation left much to be desired. The report said that the employment potential emanating from faster growth in manufacturing and services could not be fully exploited due to lack of policy support. For example, in manufacturing, employment declined by 7 percent, despite a faster growth in manufacturing output. In services, employment growth slowed in financial intermediation and business services - a key source of jobs. In contrast, employment grew by almost 70 percent in the construction sector.
            According to the CRISIL study, the trends and pattern of employment offer two specific insights for accelerating job creation in India. Firs, high economic growth alone is not sufficient for creating jobs as was evident in the last decade. Second, appropriate policies will have to complement high growth for facilitating the creation of more jobs in the manufacturing and services sectors.
            Net direct tax collections down by 8.14 percent in April - July 2011-12: The Central Board of Direct Taxes (CBDT) said on August 12, 2011 that hefty refunds pulled down India’s net direct tax collections by 8.14 percent to Rs.78,679 crore during the April-July period of the current (2011-12) fiscal. In the comparable period of the previous fiscal, net collections had stood at Rs.85,647 crore.
            Tax refunds rose by a robust 181.18 percent to Rs.53,863 crore during April-July 2011-12, leading to the slump in net direct tax collections. However, gross direct tax collections during the four-month period were up by 26.63 percent at Rs.1,32,542 crore as against Rs.1,04,668 crore a year ago.
            Gross collections of corporate taxes surged 29.56 percent at Rs.85,222 crore against Rs.65,776 crore during the corresponding period of 2010-11. Gross collection of personal income tax was up by 21.64 percent at Rs.47,214 crore in April - July 2011-12 from Rs.38,816 crore in April-July 2010-11. The growth in wealth tax collection was up by 38.67 percent in the four months at Rs.104 crore.
            India’s trade deficit with China increases to $14 billion: As per figures made available on August 12, 2011, India’s trade deficit with China widened to $14 billion in the first seven months (January-July) of calendar year 2011. While bilateral trade reached $41.5 billion in July 2011, rising by 17 percent and poised to surpass 2010’s record figure of $61.7 billion, China’s imports from India during the period showed only a 5.8-percent year-on-year growth. Following this, the trade deficit with China is now likely to exceed the 2010’s record figure of $20 billion.
            According to India officials, China’s weak import figures were a result of falling iron ore exports from India, which in turn were a result of the mining ban in Karnataka, coupled with little progress in addressing long persisting difficulties in diversifying exports in information technology, pharmaceuticals and engineering sectors. It is worth mentioning here that China’s imports of iron ore, India’s biggest export to that country, rose by 6.8 percent overall in July 2011, but largely on the back of increased orders for the same from Brazil and Australia.
            India, China’s FDI inflows surge during first half of 2011: According to figures released on August 17, 2011, Asian giants India and China saw their foreign direct investments (FDI) surge in the first half of 2011 amidst global uncertainties, indicating the stable growth in these countries that continued to attract foreign investments. India’s FDI surged by 53.8 percent to Rs.75,506 crore ($16.68 billion) during January-June 2011, while China’s FDI rose by 18.57 percent year-on-year to $69.19 billion (Rs.3,13,349 crore) in the first six months of 2011. The surge in India and China’s FDI has come at a time of global economic uncertainties in Europe and the US, the biggest sources of investments overseas.
            In a written reply to the Rajya Sabha, Minister of State for Finance Mr.Namo Narain Meena said that the FDI inflows into India had stood at Rs.49,099 crore during the comparable period of 2010. The Minister said that under the government approval route, FDI up to Rs.1,200-crore limit is cleared by the Finance Minister on recommendations of the Foreign Investment Promotion Board (FIPB). On the other hand, investments above the abovementioned limit are sent to the Cabinet Committee on Economic Affairs for approval. That is why the automatic path has become the more preferred mode nowadays, as investments coming under the automatic route do not require multiple approvals.
            India’s exports rise by 81.8-percent in July 2011: As per data made available by the Commerce Ministry on August 11, 2011, India’s exports registered a steep 81.8-percent year-on-year growth in July 2011 at $29.3 billion. The rise was mainly due to the sterling performance of sectors such as engineering, petrochemical products and gems and jewellery. Imports, too, rose by 51.1 percent to $40.4 billion, leaving a trade deficit of $11.1 billion.
            During the month under review, engineering, petroleum products, and gems and jewellery exports were worth $8.7 billion, $4.6 billion and $3.5 billion, respectively. Imports of petroleum and oil lubricants stood at $11.45 billion. Imports of pearls and semi-precious stones, gold and silver stood at $3.7 billion.
            During the first four months (April-July) of the current (2011-12) fiscal, shipments of products grew by 54 percent to $108.3 billion. During the same period, imports grew by 40 percent to $151 billion, led by inbound shipments of petroleum products worth $42 billion, an increase of 23 percent year-on-year. The trade deficit during these four months stood at $42.7 billion.
            India’s exposure to the US debt at $41 billion: According to data released by the US Treasury Department on August 7, 2011, India’s exposure to USA’s ballooning debts is estimated at $41 billion (Rs.1,83,000 crore). India is currently the 14th largest foreign creditor to the US. These figures were released in the backdrop of the unprecedented debt downgrade of the US from the top-notch ‘AAA’ level to ‘AA+’ by rating firm S&P’s. It is worth mentioning here that the overall national debt of the US is moving nearer to $15 trillion, out of which it owes over $4.5 trillion to foreign countries holding the US government debt securities.
            As per the data, while a majority of the $41-billion portfolio is owned by the RBI itself, some other Indian banks also might have some amount of exposure. The Indian holding has grown by about $10 billion over the last one year. The RBI holds the US Treasury securities as part of its foreign exchange reserves and the dollar holdings account for about 10 percent of its total portfolio. While an exposure of $41 billion is a substantial figure from the Indian context, this accounts for less than 0.3 percent of the US’s total debt and just about one percent of its total foreign debts.
            Unclaimed deposits worth Rs.1,723.24 crore lying in banks: In a report released on August 5, 2011, the Centre said that a substantial amount of depositors’ money is lying unclaimed with banks in India. As per the data, as of December 31, 2010, a total amount of around Rs.1,723.24 crore, parked in 1.03 crore accounts, was lying as unclaimed deposits with the scheduled commercial banks. Of the total amount, Rs.1,467 crore is lying with the public sector banks and the rest is with private and foreign banks.
            Private banks were sitting on unclaimed amount of Rs.195.0 core and foreign banks had around Rs.60 crore till December 2010. State Bank of India and its associates have unclaimed deposits worth Rs.279.7 crore, followed by Canara Bank at Rs.274.6 crore and Union Bank of India at Rs.163.6 crore. Among private sector banks, ICICI Bank has Rs.74.2 crore and ING Vysya Bank has Rs.30.12 crore as unclaimed deposits.

India’s Economy Grows 7.7 Percent In April - June 2011-12
            Data released by the Central Statistics Organisation (CSO) on August 30, 2011 showed that India’s gross domestic product (GDP) growth during the first quarter (April-June) of the current (2011-12) fiscal slipped to 7.7 percent from 8.8 percent registered in the comparable quarter of 2010-11. It is the slowest pace of quarterly growth in the last six quarters.
            As per the data, overall economic growth during the period under consideration was pulled down primarily by the manufacturing sector which grew by a paltry 7.2 percent as compared to 10.6 percent as compared to 10.6 percent notched up during the same quarter of 2010-11. Also the mining and quarrying sector posted a dismal 1.8 percent growth as compared to 7.4 percent in the same quarter of 12 turned out to be the lower after the 7.3 percent increase recorded in the October - December quarter of 2009-10.
            The economic activities which registered significant growth in the first quarter of 2011-12 included electricity, gas and water supply (7.9 percent); trade, hotels transport and communication (12.8 percent); and financing insurance, real estate and business services (9.1 percent). The farm sector growth also showed an improvement, expanding by 3.9 percent compared to 2.4 percent in the corresponding quarter of the 2010-11 fiscal.
            During the quarter under review, the country’s gross domestic product at factor cost at constant (2004-05) prices stood at Rs.12,26,339 crore, as against Rs.11,38,286 crore in the same quarter of the previous fiscal.
Economy Indicators
Bank Rate                     :           6.0%
Repo Rate                     :           8.0%
Reverse Repo Rate        :           7.0%
Cash Reserve Ratio       :           6.0%
Statutory Liquidity Ratio :           25%
Prime Lending Rate        :           12.25-12.5%
Savings Bank Rate        :           4%
(As on August 30, 2011)
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Indian Economy
Interaction with the World

FDI up 50 percent at $20.76 billion in January-August 2011: According to data made available on October 28, 2011, despite the uncertain global economic environment, foreign direct investment (FDI) in India surged 50 percent to $20.76 billion during January-August 2011. During the comparable period of 2010, the comparable period of 2010, the country had attracted FDI worth $13.85 billion. The sectors that attracted maximum FDI during the first eight months of 2011 include services (financial and non-financial), telecom, housing and real estate, construction and power.
            Mauritius, Singapore, the US, the UK, the Netherlands, Japan, Germany and the UAE, among other countries, are the major investors in India. It may be mentioned here that FDI inflows into India had totaled $19.42 billion in the 2010-11 fiscal, down from $25.83 billion in 2009-11.
            India’s foreign exchange status: As per the Reserve Bank of India’s Weekly Statistical Supplement released on October 28, 2011, India’s foreign exchange reserves grew by $858 million to $318.4 billion during the week ended October 21, 2011. The reserves had shot up by a steep $5.269 billion to $317.5 billion during the week ended October 14. The reserves had risen by $749 million to $312.231 billion for the week ended October 7. Earlier, for the week ended September 30, 2011, the reserves had declined by $1.225 billion to # 311.482 billion.
            RBI hikes repo, deregulates savings interest rate: The Reserve Bank of India on October 25, 2011 increased the short-term indicative policy rate (repo rate) by 25 basis points from 8.25 percent to 8.5 percent with immediate effect. Consequently, the reverse repo rate stood automatically adjusted at 7.5 percent and the marginal standing facility (MSF) rate at 9.5 percent. It is worth mentioning here that repo rate is the rate at which banks borrow funds from the central bank. On the other hand, reverse repo is the rate at which banks park their funds with the RBI.
            Simultaneously, the central bank also deregulated the savings bank deposit interest rate with immediate effect. Until now, the savings rate fetched account holders a measly 4 percent. The new system replaced the existing one which had been in place since 1978. With the decision on deregulating, banks are now free to determine their rates. The RBI however said that banks would have to offer a uniform interest rate on savings bank deposits up to Rs.1 lakh, irrespective of the amount within this limit. For deposits over Rs.1 lakh, a bank can provide differential rates of interest, if it so chooses.
            Centre approves hike in India’s IMF quota: The Union Cabinet on October 25, 2011 approved a proposal to increase India’s contribution to the International Monetary Fund (IMF) from 2.44 percent to 2.75 percent. The increase will make India the eighth biggest shareholder in the multilateral lending agency. India’s gain in terms of quota share was the seventh largest in the 14th round of quota review. In absolute terms, it will mean an increase from SDR (special drawing rights) 5,821.5 million to SDR 13,114.4 million.
            In keeping with the demand of emerging nations, including India, for a greater say following their increased economic clout after the global meltdown in 2008, all the BRIC (Brazil, Russia, India and China) nations will now figure among the 10 larges quota shareholders in the IMF.
            Exports up 52 percent in first half of 2011-12: The Ministry of Commerce and Industry said on October 12, 2011 that India’s exports during the first half (April-September) of the current (2011-12) fiscal expanded by 52 percent to $160 billion. Imports, on the other hand, rose by 32.4 percent to $233.50 billion. leaving the trade gap at $73.50 billion.
            During the first half, the sector that registered healthy growth in exports included engineering (103 percent). petroleum and oil lubricants (53 percent), gems & jewellery (23 percent), ready-made garments (32 percent), marine products (48 percent) and drugs (33 percent).
            In September 2011, exports grew by 36.3 percent at $24.80 billion. Imports during the month grew 17.2 percent at $34.60 billion, leading to a trade deficit of $9.80 billion. Exports, however, slowed down during the month under review when compared to the 44.2 percent growth registered in the previous month, i.e. August 2011. The main reason was the downturn in the US and the eurozone - the two biggest markets for Indian merchandise, accounting for about 30 percent of India’s total shipments.
            In August 2011, India’s exports had continued its upward trend, posting a 44.2 percent year-on-year growth at $24.3 billion. Imports during the month had grown by 41.8 percent to $38.4 billion, translating into a trade deficit of $14 billion. Oil imports during the month under review were valued at $10.3 billion, reflecting a growth of 48.7 percent compared to the corresponding month of 2010. Non-oil imports in August 2011 had risen to $28 billion, a year-on-year expansion of 39.4 percent.
            Gross direct tax collection rise 23 percent in H1 of 2011-12: According to figures released by the Central Board of Direct Taxes on October 7, 2011, the gross direct tax mop-up was 23 percent higher at Rs.2,57,042 crore in the first half (April-September) of the 2011-12 financial year. In the comparable half of 2010-11, the collection had stood at Rs.2,08,971 crore. The rise was attributed to higher corporate tax realization during the first quarter (April-June) of the half under review. However, after refunds, the net direct tax collection was only about 7 percent higher at Rs.1,94,812 crore during the April-September 2011-12 period as compared to Rs.1,81,758 crore mopped up during the up same six months of 2010-11.
            The total indirect tax collection during the first six months of the current fiscal added up to Rs.1.69 lakh crore, which is about 20.8 percent more than the mop-up in the same period of the previous financial year. While customs duty collection during the half was 20 percent higher at Rs.73,247 crore, the revenue realization through excise was 14 percent more at Rs.58,964 crore. Service tax collection totaled Rs.36,459 crore, marking a hefty increase of 35.6 percent.
            The gross mop-up through corporate taxes was Rs.1,75,360 crore during the first half of 2011-12. It represented an increase of 23.17 percent when compared with Rs.1,42,368 crore garnered during the same period of 2010-11. Likewise, personal income tax collection was 22.65 percent higher at Rs.81,353 crore, against Rs.66,330 crore in the same period of the previous fiscal.
            As for the month of September 2011, the indirect tax collection was 1.2 percent higher at Rs.28,510 crore. During the month, while the revenue mop-up through customs duty slipped by 10.9 percent to Rs.10,126 crore, excise duty collection eased marginally by 0.3 percent to Rs.11,417 crore. The slide in these two segments was offset by the rising service tax mop-up, which went up by 29.6 percent to Rs.6.967 crore from Rs.5,374 crore garnered during September 2010.
            India’s current account deficit at 3.1 percent in Q1 of 2011-12: According to data made available on October 1, 2011, India’s current account deficit (CAD) hit 3.1 percent of gross domestic product (GDP) in the first quarter (April-June of the 2011-12 fiscal. The Prime Minister’s Economic Advisory Council (PMEAC) had pegged it at 2.7 percent for 2011-12. It is worth mentioning here that the deficit was 2.6 percent in 2010-11. Economists claimed that the rise in deficit was manageable, as the size of the economy is expanding.
            In the quarter under consideration, the CAD rose to $14.5 billion from #12 billion in the same quarter of 2010-11, due to increase in the trade deficit and continued net outflow on investment income. It was much higher than the $5.4 billion reported for the preceding quarter (January - March 2010-11.
            The Primary income account (investment income) continued to show net outflow. The receipts on account of investment income recorded a decline of 28.4 percent, as compared to a decline of 3.5 percent in the first quarter of 2010-11. The main reason was persisting lower interest rates abroad. On the other hand, net secondary income (private transfers) - reflecting mainly the remittances from Indians aboard-rose 4.6 percent to $13.7 billion. It had clocked a growth of 1.3 percent in the first quarter of 2010-11.
            The growth in services receipts and payments remained moderate during the first quarter of 2011-12, lower than the preceding one. Services exports rose 15.7 percent (18.3 percent in the first quarter of 2010-11), led mainly by transportation, software and business services. The net outflow on account of primary income was higher than that recorded during the first quarter of 2010-11. Investment income payments recorded an increase of 17.3 percent (8.6 percent in Q1 of 2010-11)
            Small saving register a fall in Q1 of 2011-12: The Centre said in a report released on October 1, 2011 that deposits under the National Small Savings Fund (NSSF) during the first quarter (April-June) of the current (2011-12) fiscal fell by Rs.26,546 crore. It had increased by Rs.13,250 crore in the same quarter of 2010-11.
            During the last (2010-11) fiscal, net accretion under NSSF decreased by Rs.20,000 crore. Within NSSF, collections under small savings declined by over Rs.3,000 crore to Rs.36,190 crore. It may be mentioned here that small savings schemes include post office deposits, national savings certificates, Indira Vikas Patras, Kisan Vikas patras, monthly income scheme and senior citizen scheme.
            Indian’s external debt up by $10.5 billion in Q1 of 2011-12: Data released by the Reserve Bank of India on October 1, 2011 revealed that India’s external debt increased by $10.5 billion in the April - June quarter of the current (2011-12) financial year. The main reasons for this were cited as higher external commercial borrowings and short-term debt. The country’s external debt stood at $317 billion as on June 30, 2011, up by 3.4 percent from #306 billion as on March 31, 2011.
            The share of commercial borrowings in total external debt continued to be the highest at 29.4 percent at end June 2011. It was followed by short-term debt at 21.6 percent, NRI deposits at 16.7 percent, multilateral debt at 15.6 percent and bilateral debt at 8.3 percent. Rest of the debt includes India’s position at the International Monetary Fund (IMF), trade credit and rupee debt.
            Dollar - dominated debt formed the major chunk of the external liability pie that stood at 54.2 percent. Debt in rupee and yen dominated liabilities took the second and third positions with a share of 19.2 percent and 11.1 percent, respectively, in the pie. In terms of maturity, long-term debt stood at $248.5 billion and short-term debt was $68.5 billion. Although the share of long-term debt was more, in term of residual maturity short-term debt at 43.3 percent occupied a major portion of the external debt. NRI deposits formed 32 percent of this short-term debt.
            Centres external borrowings in the first quarter of 2011-12 grew by $500 million to $78.7 billion over the previous quarter (January - March 2010-11). Non-governmental borrowing in April-June 2011-12 was $23.8 billion, up $1 billion over the previous quarter.
Economy Indicators
Bank Rate                     :           6.0%
Repo Rate                     :           8.5%
Reverse Repo Rate        :           7.5%
Cash Reserve Ratio       :           6.0%
Statutory Liquidity Ratio :           25%
Prime Lending Rate        :           12.25-12.5%
(As on August 30, 2011)

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How to Crack Competitive Exams with Memory Improvement Technique

Competitive examinations are very crucial for students. They do everything to crack the examinations and achieve their goals. So, Competitive examinations are gate way to students’ lives.
            The need to win or succeed is a must to have a successful career in developing countries like India. The competition is intense for exams like UPSC, IIT, business management, marketing, medicine (MBBS), engg, MCA etc. Some crack these exams with confidence and ease. But to many success even after several trials attended with hard preparation is not guaranteed. This indicates more emphasis towards the mindset besides hard work required. We also need a proper approach and strategy for the preparation.
            Now the key point is how to crack the Competitive examinations. There may be various methods, but to do so with memory improvement technique will be more convenient and scientific.
            Memory is very basic to education as well as examinations. The person having poor memory can not rise to very high level as he or she can not manage daily routine properly and if daily routine is not managed properly, person can not do anything special. So, it is the pivotal point that memory power should be improved. Memory can be short-term or long term.
            Memory Improvement Techniques Mnemonics: It aids to memory such as acronyms, rhymes, linking information by creating visual images or making up a story, are called mnemonics.
            There are different branches of Mnemonics and we start from the most important of it that is Association. Association is the method of remembering information by linking it with the way of memorizing it. This can be done by merging and crashing things into each other. Imagination is used for strengthening and creating the associations which are required for creating memory mnemonics. We will understand this by working on an exercise on Association. Let us assume you want to memorize these ten every-day, unrelated items, in sequence: banana, car, newspaper, sausage, pen, tree, watch, tie, television, football. In order to do this, you are going o consciously apply the basic memory rule defined in the Introduction, but with and important addition.
            What you need to do is select one of these pictures, or a crazy image you thought of yourself, and see it your mind for just a fraction of a second. Be careful not to picture the words banana and car. You need to see the action you’ve selected - the huge banana driving the car, or the mountain of bananas tumbling out of a car, or whichever image you’ve decided on. See that picture in your mind’s eye for just an instant, right now.
            Now that you’ve been introduced to the principle of association, spend some time practicing those mental pictures. Make up a list of times, then form associations between those items in your mind. Remember that your mental images should always be as illogical, crazy, and far-fetched as possible.
            The items you associate can be any everyday, ordinary things that you think of. They don’t have to be logically connected in any way. Start with a list often items, then increase the list to twenty, or as many as you feel you can handle at this stage. If you can associate a list of twenty items and then recall the list both backwards and forwards, you are doing very well.
            You can practice your association skills anywhere - on a train or bus, or while out walking, or during commercial breaks on television, or during your lunch break at work or school… any time you have a few spare moments.
            Association forms the basic building block around which all the Memory improvement courses are built. The more time you spend practicing the creation of those ludicrous mental pictures now, the easier you will find the rest of the systems to learn.
            When you feel confident with your new found memory skills, get a friend or relative to call out twenty items to you, or as many as you feel comfortable with. Let him write down the items as he call them, so that he can check you later. If he doesn’t write the items down, he calls out the list, you associate each item in turn to the last one, using the techniques you have just learned. When he’s called out all the items, you can repeat them straight back to him. If you miss an item., simply ask him what the item was, strengthen that particular association, and call the list out in reverse!
            To make sure you remember the first items in the list, simply associate it to your friend’s head. If the first item was banana, see billions of bananas come tumbling out of your friend’s mouth.
            Each time you try this exercise you will gain confidence in the Principle of Association, and see that the system really does work!
            The Link System: In the exercise, you just finished, you were introduced to the concept of consciously associating items together in your mind. In doing this, you were applying a small part of the ‘Link’ or ‘Chain’ Memory System. You were forming he links of a memory chain, by systematically linking one item to another. If you make the associations strong enough in your mind, then one item in the chain must lead you on to the next item.
            Once the Link system has been applied to a list, you can retain that list for as long as you wish. But when you begin to apply the Link System for practical reasons, you will be memorizing lists because you intend to make use of those lists. The practical use will provide the motivation to remember it in the first place.
            The Link System can be used to memorise any information which has to be learned in sequence. Speeches, presentations, stories, jokes, recipes, and formulas are all examples of things which must be learned in sequence.
            The most common problem experience by people trying to learn the Link System is how to make their mental pictures sufficiently ludicrous to make strong associations. It does take a certain amount of imagination to form ridiculous pictures in your mind. Children have no trouble in forming silly or ludicrous pictures - they do it naturally.
            Unfortunately, as we grow up, most of us tend to use our imagination less and less, and so it becomes a little rusty. However, than capacity for imagination we had when we were children is still there - it just needs a little oiling.
            So don’t worry if at first you have to apply some effort to create those ludicrous mental pictures. After a bit of practice, you’ll find that you can do it quickly and easily.
            There are five basic principles you can apply in forming your mental pictures which will help to make your associations strong and long lasting.
            (1) Out of Proportion: In all your images, try to distort size and shape. In Tutorial I, you were told to picture a ‘Huge’ sausage or a ‘Gigantic’ tie. Conversely, you can make things microscopically small.
            (2) Substitution: Tutorial I suggested that you visualize footballers kicking a television around a footballers kicking a television around a football pitch instead of a football, or pens growing on a tree instead of leaves. Substituting an out of place item in an image increases the probability of recall.
            (3) Exaggeration: Try to picture vast quantities in your images. For example, Tutorial 1 used the word ‘billion’ (of bananas).
            (4) Movement: Any movement or action is always easy to remember. For example, Tutorial 1 suggested that you see yourself cutting into a sausage and gallons of ink squirting out and hitting you in the face.
            (5) Humour: The funnier, more absurd and zany you can make your images, the more memorable they will be.
            Applying any combination of these five principles when forming your images will help make your mental associations truly outstanding and memorable.
            At first you may find that you need to consciously apply one or more of the five principles in order to make your pictures sufficiently ludicrous. After a little practice however, you should find that applying the principles becomes an automatic and natural process.
            This phenomenon of link method is very important indeed, and when it is performed ‘consciously’, it can greatly improve an individual’s capacity for recollection.
            Making Chart L: Making chart is vary helpful in memory improvement. If you make chart or table of your news or matters and see it regularly, these things will get automatically memorized. Take paper and pen, note down all important things. Put the chart on wall-and see it regularly in morning and evening. After a week, you find that now all these things are in your memory and can do better in your examinations.
            Besides these techniques, there are some other important techniques which can help you crack the competitive examinations.
            You need to be active: This applies to all things you do, or hear or think or read. Try to keep notes or make sure you heard and understood what someone else tells you. When you are passive, your brain gets carried away and you loose your concentration and ability to memorize things. Be active, so that the brain can record what was said. This helps remembering the information easily in the future.
            Focus: Focus and give attention to details as well. Everyday, we receive a huge amount of information, but we only remember what we consider important. A good trick to help you remember everything is thinking that everything is vital. Pretend, for example, that you are investigating a murder and that everything happening around you is very important for your case and you need to remember it.
            Repetition: Repetition helps your memory. It “forces” something we want to remember to be “printed” in our brain. When you meet someone for the first time, immediately repeat his/her name several times, or when you are given a telephone number, write it down and repeat it aloud. If you need to always remember something, write it a few times on a piece of paper and make sure that your are concentrated and focused when you do that.
            Combinations: Combine the names of the persons you cannot remember easily with someone who looks like them or with a word that describes them most. Play with their names and get a visual picture in your mind.
            Analyze new information: Always we tend to remember what interests us and to forget things we do not like. If you hate maths, it will be extremely difficult for you to remember complex theorems. But if you look into the matter deeply and understand how much difficulty was for the scientists to come up with this theory, you will remember it much more easily. The same holds for other cases as well. There is a reason why you can remember the phone of your favourite pizzeria and not the phone of your dentist.
            Be patient - Improving your memory needs time: The memory is not instantaneous. You must give yourself time to “digest” the information. There are things that you can remember more quickly than others, so do not put yourself in trying to memorize everything if it is not fast enough. When you try to remember something, it is essential to keep your energy high and accrue.
            Relax: the pressure is effective for some people, but most operate better when they are relaxed and de-stressed. When we are pressed and stressed, we cannot remember anything. Can you recall a case where you are asked for the name of a signer you know and at that moment you could not remember it and then suddenly you remember it at some irrelevant phase. Take a deep breath. Do not get stressed if you cannot remember something, its no big deal. The relaxation will enhance the thinking and your memory.
            Keep your mind alert: The apathy is good when you want to relax, but this should not be your way of living. The more you keep your memory vigilant, the better it works. This becomes even more important as it grows. Do crossword solving, learning new words everyday and read constantly. You need to continually exercise your memory and your intelligence.
            Exercise: The brain is closely connected with the body. You need to exercise daily so as to have a good blood circulation and rejuvenate your lungs. Eat those foods that can give your body the nutrients and vitamins needed. The overdose of alcohol and drugs can impair your memory.
            Make sure that you include magnesium in your daily diet: The lack of magnesium in the body may reduce memory and learning opportunities.
            Unlike, the abundance of magnesium may improve memory and cognitive functions.
            The magnesium regulates a receptor in the brain that has a key role in memory and learning. Maintaining a normal concentration of magnesium in the cerebrospinal fluid, is essential for the functioning of the central nervous system that controls our memory.
            Conclusion: Thus you can crack the competitive examinations by using the above mentioned techniques, and achieve your goods successfully.

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Development Update

FCI Plans Record Rice Procurement
Rice production in India is a significant part of the national economy. It is, thus, very important for the government to introduce policies to boost the production of rice in the country. The Food Corporation of India (FCI), the central agency for grain procurement and distribution, aims to procure a record 35.30 million tones (mt) of rice in 2011-12, anticipating a bumper paddy crop. During the previous financial year (2010-11), it had procured 32.70 mt of rice.
            The Agriculture Ministry is expecting a record 102 mt rice production in the 2011-12 crop year, against 95.32 mt in 2010-11. If the Food Ministry achieves the procurement target, this would help the Government meet the requirement under the proposed National Food Security Act.
            As far as the current procurement season is concerned, FCI and state agencies have so far procured 3.52 mt of paddy, out of the total arrival of 3.78 mt. Last year, during the same period, FCI and state agencies had procured 3.35 mt of paddy, out of the total arrival of 3.53 mt.
            The current procurement is being dominated by Punjab, which the contributed almost 60-65 percent to the central pool, followed by other State like Haryana. Out of the total procurement of 2.38 mt of paddy in all the procurement centres of Punjab, Government agencies procured 2.22 mt of paddy (93.2 percent), whereas private traders procured 162,000 tonnes. The Central Government agency, FCI, had been able to procure 26,336 tonnes.
            The Government has decided to give bonus to farmers for rice procurement. It will increase the price it pays to the farmers. The Government’s nodal procurement agency, FCI, currently pays local farmers Rs.1,080 a quintal for paddy (common) and Rs.1,110 a quintal for paddy (grade A). Last year, the price was Rs.1,000 a quintal for common variety and Rs.1,030 for grade A variety.
            The Government has also introduced inter-State movement of rice, under which large quantities of rice are moved out from the FCI godowns for the public distribution system. All these measures, together with increased production, will help bring relief to Asian importers trying to combat food inflation.
National Land Acquisition And Rehabilitation And Resettlement Bill 2011
            Land is the basis of all economic activity. From agriculture to industrialization, or urbanization, or even to the expansion of infrastructure, land is an essential requirement for all these processes. Government also needs to acquire land for a variety of public purposes. In every case, land acquisition must take place in a manner that fully protects the interests of land-owners and also of those whose livelihoods depend on the land being acquired. There is asymmetry of power (and information) between those wanting to acquire the land and those whose lands are being acquired. It is for this reason that the Government must put in place a transparent and flexible set of rules and regulations and ensure its enforcement.
            The National Land Acquisition and Rehabilitation and Resettlement Bill (LARR), 2011, as recommended by the National Advisory Council under the United Progressive Alliance Government, addresses the burning issues of land acquisition as well as rehabilitation and resettlement (R&R). Under the proposed law, the R&R package would necessarily have to be executed for land acquisitions in excess of 100 acres by private companies. Both the land owners and livelihood losers will have to be paid compensation. Scheduled Castes and Scheduled Tribes would get a special package, wherein each family would be entitled to one acre of land in every project. They will also have preference in relocation and resettlement in an area in the same compact block, and free land for community and social gatherings.
            The law also prohibits private companies from purchasing any multi-cropped irrigated land for public purposes. If the acquired land is not put to use within five years of the acquisition, it would be returned to the original owner. The Bill also makes it mandatory that gram sabhas are consulted and the R&R package is executed before the acquired land is transferred.
            The LARR Bill is expected to remove the imperfections of the land markets in India and bring about more equitable distribution of land.
            The Hindi Film Industry is the world’s biggest film-producing Industry spread across the country, with over 1,000 films produced every year. Its movies are watched by almost 14 million Indians everyday. It has today grown into more than a $2-billion industry, but ironically it still does not have the required policy framework to guide its course. While commercial cinema has been thriving, meaningful, aesthetic, and regional cinema has been pushed to the fringes. The Ministry of Information and Broadcasting is in the process of formulating a National Film Policy for the country. The aim of the policy will be to draw the contours of Government intervention in an industry that works largely unfettered, besides to reposition India as a global superpower-as films have been the best ambassadors for the country.
            The Ministry has set up a 25-member working sub-group in pursuance of the recommendation of the Conference of State Ministers of Information and after consultation with the State Governments/Union Territories. According to the Government Resolution, the general purpose of appointing the recent working group is to study the present state of the film industry in areas such as production, distribution, exhibition and taxation, and to suggest a National Film Policy which would help the growth of Indian Cinema. The group will also prepare a 12th Five – Year Plan roadmap for the industry entering its 100th year in 2013. The mandate of the group would be to leverage the existing Government film institutions to encourage meaningful film culture in the country and make films as a viable career option.
            The suggestions floated in formulating the policy include supporting regional cinema, incentivising the digitalization of the entire value chain-film production, distribution and exhibition; revising courses of film production, distribution and exhibition; revising courses of film schools and bring them on a par with the best in the world; viewing censorship issues, technological advancements in film making; labour and trade practices; import and export, and film equipment.
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Current Topics
Rapid downslide of rupee

            The Indian currency rupees has been on a rapid downslide. It is 18% down since this August. It breached Rs.52 mark in late Nov. The home currency’s fall is mirrored by the sharp drop in the benchmark stock indices, the Sensex and the Nifty. Both lost more than 5 per cent. According to SEBI, there was an outflow of $254 million from the domestic equity and debt markets, attributable to concerted selling by FIIs. A combination of domestic and global factors is behind the rupee’s fall.
            The widening current account deficit and the critical reliance on short-term capital flows to bridge it are adding to the pressure on he rupee. Recent export figures have dashed hopes that exporters would continue their sterling performance of the first seven months and help in containing the merchandise trade deficit. The sharp demand contraction in the traditional export markets – he US and Europe – has begun to take a toll. A depreciating rupee makes India’s imports costlier. Many items, notably petroleum, have an inelastic demand. The import bill is bound to go up steeply. Moreover, the falling rupees has offset the recent declines in the prices of certain imported commodities. On the other side, exporters who normally stand to gain say that they did not quite expect the rupee to slide so precipitously. Anticipating a further decline, many exporter are holding on to their proceeds, while importers have been rushing to buy dollars to cover their imports.
Role of RBI
            What is intriguing is the RBI’s rather passive stance in the face of such large declines in the home currency. It is possible that, in its assessment, the size of forex reserves is not large enough to defend the rupee. Or else it wants to conserve its fire-power for future contingencies that may warrant aggressive intervention. Either way there is a strong case for the RBI to communicate its stance to the markets proactively. The expectation is that debt flows to India will increase and that would relieve the pressure on the rupee to some extent.
No room for panic
            The rapid movement in the Indian currency’s exchange rate against the dollar has led many people to raise an alarm. In fact there is neither room for panic nor any need for the central bank to intervene. The RBI’s data for the rupee’s trade-weighted real effective exchange rate against a basket of six currencies show an appreciation, by end – October, of 8.5% over the average for 2004-05 and 6.65% over the average for 2009-10. This real appreciation took place even as the nominal effective rate was falling. The trend is similar for the index that measures he real purchasing power of the rupee against a basket of 36 currencies. The rupee is stronger than it was in 2004-05, and has been rising. This has consequences for a country’s overall balance of payments, ability to inspire investor confidence, attract capital and overall competitiveness.

Pension Fund Regulatory and Development Authority Bill

FDI norm
            The Union cabinet cleared the Pension Fund Regulatory and Development Authority (PFRDA) Bill in Nov. There are two key features of the Bill. One, the new pension system, introduced in 2004, has been opened to 26 per cent foreign investment. This will provide additional financial muscle to a pension fund. When first introduced in 2005, the Bill was opposed by the Left and got shelved. It was reintroduced in March 2010 and referred to a parliamentary standing committee. The Bill has ignored the committee’s idea of making the FDI cap a part of the proposed law. The govt wants freedom to raise or lower FDI cap without going through amendment process.
No guaranteed return
            Two, the new pension system, which has a corpus of 9,900 crore and 23.56 lakh subscribers, will not provide guaranteed returns. The standing committee had favoured assured returns of not less than those given by the state-run Employees’ Provident Fund Scheme. The Govt has taken the view that such a move would limit returns. At the same time, it would defeat the purpose of having a pension system with defined contributions but undefined benefits. Since part of the money will be invested in equities, returns can be uncertain. But there are various schemes with varying levels of risk.
            In the short span the new pension scheme has delivered attractive returns. It is managed by professional players and is open to non-govt salaried employees too. But it is mandatory for those joining Central govt service after Jan 1, 2004. Some 27 states have opted for the new pension system. Central and state governments found it difficult to bear the rising burden of social security since life expectancy and the cost of living are going up. Given their limited resources, govts have thought it prudent to pass on the responsibility of providing social security to citizens to pension funds as is done in Western countries.
            That it has taken seven years for the govt to take the step does not in any way diminish the importance of the reform itself. The measure will enable millions of people, who are now without a worth while security net in the form of retirement savings options, to get the benefit of a regulated pension. The govt has drawn flak for rejecting two of the recommendations made by the parliamentary standing committee. While the govt gave its nod for 26 per cent FDI in the pension sector, he bill makes no mention of the sectoral cap.
Implicit market risk
            Obviously, the govt’s experience with the insurance sector has weighed with it in going for this hassle – free non-legislative route. The govt is on an even stronger ground in not accepting the recommendation for a guaranteed minimum return to pension fund subscribers. The standing committee had wanted pension fund managers to be appointed on the basis of their commitment to generate minimum returns. No prudent investment policy would insist on guaranteed returns from stock market investments. Mutual fund subscribers are warned that investments in stock market instruments are subject to market risk. For pension fund subscribers, the time horizon is even longer.

Small Savings Schemes Policy recast

Linking to benchmarks
            The recent changes in Small Saving Schemes prove that the govt wants to make them more popular. These changes are based on the recommendations of an expert group, headed by RBI Deputy Governor Shyamala Gopinath. The move is for giving a market orientation to these schemes. Interest rates on these schemes are sought be linked to some well-known benchmarks such as yields from govt securities of comparable maturities. The change has become necessary because and administered interest rates applicable to these schemes have lagged behind the deposit interest rates offered by the banking system. Though similar to bank deposits in their structure, they have interest rates not set on commercial considerations.
Post office savings
            There has been a decline in small savings in India. The govt wants to curb this trend. The changing official attitude towards small savings was marked by RBI’s move to free banks to fix their own rates on all their deposit schemes. The last bastion of administered interest rates in banks fell recently with the RBI freeing the savings bank deposit rates. In contrast, the interest rate on post office savings will continue to be administered. They will, however, pay 4 per cent as against 3.5 per cent earlier.
Panel’s approach
            The Shyamala Gopinath Committee was set up at the instance of the 13th Finance Commission. Its approach to small saving has been from the angle of public finance. It was asked to review the various small savings schemes in operation with a view to making them more flexible and market-oriented. The committee was also asked to look at the entire mechanism of the National Small Savings Fund (NSSF), especially its role in financing the Centre and the states.
Financing fiscal deficit
            Net accretions through small savings finance a part of the fiscal deficit. This has been coming down. The govt recently announced an extra borrowing of 53,000 crore from the market to make up for the shortfall in small savings. With the implementation of the key recommendations of the committee, the process of fixing interest rates on small savings schemes will become transparent. That should help in a more cost-effective management of public finances at the Centre and the States. However, it would be naïve to assume the a mere tinkering with the interest rates is enough to check the falling collections under small savings. Basically, small savings schemes ranging from the highly liquid post office SB deposits to the long-dated Public Provident Fund (PPF) confer outstanding tax advantages.
            A tax payer can invest up to 1 lakh (70,000 now) and claim tax benefits under Sec 80 C of the Income Tax Act. There are a large number of schemes that come under the category of small savings, These serve the thrift needs of various sections of the population. Realising this, the committee has recommended for the closure of Kisan Vikas Patra. This scheme, however, accounts for a large share of small savings. The reason is that it is in the nature of bearer bond and hence prone to be used for tax evasion.

Draft National Pharmaceutical Policy

A revised NLEM
            After two unsuccessful attempts in 2002 and 2006, the govt has come out with a new draft National Pharmaceutical Policy. It aims at balancing the twin concerns of making medicines affordable for consumers without hurting the industry’s ability to continue manufacturing drugs. The govt’s new draft has sought to bring all 348 drugs covered in the revised National List of Essential Medicines (NLEM) under price control. Currently, there are only 74 drugs under price control. Moreover, even formulations containing combinations of NLEM drugs will come under the price net. As a result, the scope of price control would increase from a fifth of the industry’s current estimated domestic sales to about 60 per cent.
Trade margins
            But all these miss out a key element relating to the hefty trade margins in the pharma business. These margins push up the final price of medicines at the consumer’s end, without necessarily benefiting the manufacturer. The draft is, in fact, totally silent on this. Even in so called price-controlled medicines, the margins add up to 24 per cent (16 for the retailer and 8 for the wholesaler). For decontrolled drugs, there is a minimum 30 per cent margin that accrues to distribution network, with 20 per cent for the retailer alone. Then there are ‘below – the – line’ promotion costs that drug manufactures feel compelled to bear. That explains why a 100ml bottle of cough syrup retails upwards of 60, when it costs hardly 10 to manufacture.
Other issue areas
            Neither the govt nor the pharma companies have tried to take on the distribution chain. This chain – along with the medical practitioner as the final leg-virtually decides the maximum retail price for any drug sold in the market. Besides addressing trade margins, the govt should seek to set right other chinks in the chain to nail the problem of making healthcare, and not just drugs, affordable. This would mean enhancing competition in areas such as doctor’s fees, diagnostic charges, and hospital and treatment costs. Merely focusing on price controls, to the exclusion of other costs that add to the healthcare bill for a patient, could be counterproductive.
Sectional losses
            The Proposed drug pricing policy will cost drug makers close to 1,500 crores. Similarly, stockists and traders will collectively lose over 2,500 core. The ceiling price of newly listed 348 drugs both imported and local – will have to be the average price of the three top-selling brands in the segment. The move seeks to plug a loophole in the country’s drug laws that allow foreign drug makers to arbitrarily fix prices. Global drug makers say the proposal to have the same pricing criteria for imported drugs is unfair as the cost of production outside India is higher.
            Stockists and pharmacies say their margins will be squeezed further as the share of medicines under price control, which offer less profit, has increased by five times. At present, stockists get 8% and retailers 16% on medicines under control, compared with 10% and 20% for those that are not.

Union cabinet clears FDI in retail sector

With the Union cabinet deciding to allow 51 per cent foreign direct investment (FDI) in multi-brand retail on Nov 24 the way has been cleared for the entry of global supermarket giants in India. There are doubts and fears amid hopes for long-term gains. One of the conditions for 51% FDI in multi-brand retail proposed is that the players will source at least 60% of their farm produce requirements from small farmers. A small farmer is defined as one with up to 10 hectares.
Small farmers may not gain
            The operations of domestic fresh food supermarkets in India have not made any difference to he producer’s share in the consumer’s rupee so far. It has only lowered the cost of marketing of the producers as supermarkets have collection centres in producing areas, unlike the Agricultural Produce Market Committee (APMC) markets (mandis) which are in distant cities. But these supermarkets will buy only ‘A grade produce. Obviously, they will buy only a part of the output of farmers. The chains procure from “contact” farmers without any commitment to buy regularly as they do not want to share the risk of growers. Thus, the involvement of supermarket chains with producers is minimal.
            The noise about benefits to small holders in high-value crops (fruits and vegetables) due to supermarket linkages is exaggerated. This is because these crops account for only 2% of the gross cropped area, and the direct linkage is either absent or pretty weak. This is not likely to change even with FDI in retail. Further, due o the sheer size and buying power of foreign supermarkets, the producer prices may be depressed. The limit of 10 hectares is laughable as there are hardly 1% farmers who have more than 10 hectares of land.
Small retailers to be hit
            The supermarket expansion also leads to employment loss in the value chains as compared to jobs created by traditional retailers. The spread of supermarkets led to 14% reduction in the share of “mom and pop” stores in Thailand within four years of FDI permission. In India, after the spread of supermarket chains, 33-60% of the traditional fruit an vegetable retailers reported 15-30% decline in footfalls, 10-30% decline in sale and 20-30% decline in incomes across various cities. Another proposed condition is that FDI in retail will be permitted in all cities with a population of more than one million. The question to be asked is: How many cites in India are really below one million population?
Impact on food inflation
            So far as the role of FDI- driven food supermarkets in containing food inflation is concerned, the evidence from across the world shows that the supermarket price for fruits and vegetable and other basic foods were higher than those in traditional markets. Also, the lower procurement prices through direct procurement from farmers need not lead to lower consumer price in supermarket chains. The reason is procurement prices are more about the bargaining power of buyers and suppliers. Thus, there is no direct correspondence between modern retail and lower food prices.

Agni-IV successfully test – fired

Agni journey
            In May 1989, the Agni technology demonstrator was successfully launched with around 1,000km range. In two decades, the technology demonstrator has transformed into a large programme. The programme has seen the successful development and launch of four versions of the missile – Agni I to the latest Agni-IV. This ambitious journey –begun by APJ Abdul Kalam and led now by ‘missile woman’, Tessy Thomas – is marked by indigenous technology efforts. In the face of stiff technology denials, the country’s missile scientists have made some significant indigenous contributions in technology.
            After 23 years, Agni-I (700 km) and Agni-II (1500 km) have been inducted into the armed forces. While Agni-III (255 km) is in an advanced stage, Agni-IV (3500 km) has been successfully test fired on Nov 15. Agni-IV is not just India’s longest – range missile, but is lighter and manoeuvrable. It has established a wide range of indigenous technologies.
Indigenous elements
            The most important and visible indigenous contribution to the Agni missile are the composite materials that are used in its fabrication. Composites are lightweight, non-corrosive, tough materials. Composites are used in most of the Agni-IV missile beginning with the critical nose tip of the missile (which is crucial as the missile reenters the earth’s atmosphere at around 3000 degrees C) to nearly 60 per cent of the 20-metre – tall, 17-tonne-heavy structure. This makes the missile lighter, manoeuvrable, easy to operate and launch. Moreover, the higher the composites, the lesser the cost of manufacturing the missile. All this means a cost-effective missile with a longer reach and destructive ability.
Technology tie-ups
            The synergy between the DRDO labs, Indian industry and the user (armed forces) has resulted in the successful march of the missile programme in the last decade. The missile system is homegrown. The defence scientists also came up with a technology hat help increase the range of missiles as well as satellite launch vehicles by approximately 40 per cent. Giants like L&T to Tatas and Godrej, PSUs, like BDL, HAL, BEL, Keltech, ECIL to a number of private industries like Data Patterns, Sameer, Vem Tech, SEC Industries, Astra Microwave, Resins Allied Products and Walchandnagar all have played a big role. There are collaborations with Israel and France in the area of radars.
            With technology denials still not eased on India, it is vital to acquire the technology in these areas for the acceleration and reliability of the missile armoury. It can also help in cutting down the time of design to delivery, which is around 10 years, to a more desirable five or seven years. The stage is now set for Agni-V. The platform is ready and efforts are geared up to be test-fired in February 2012. All that is required is to scale up Agni-IV. With an expected distance of over 5,000 km to be traversed by the three-stage missile, on trial will be the quality and robustness of components and critical technologies indigenously developed by the scientists. 

Safety issues in Kudankulam Nuclear Power Project

            Jawaharlal Nehru compared the “Atomic Revolution” to the “Industrial Revolution,” arguing that “either you go ahead with it or …. Others go ahead.” But after half a century, there have been put question marks on it. While the two units of Kudankulam Nuclear Power Project (KKNPP) are underway, sections of the public have expressed apprehension about the safety of these reactors. Lack of understanding, misconceptions and misinformation contribute to this. Apparently, the Fukushima accident and other issues influence them.
Safety concerns
            There is very little commonality between the Fukushima reactors and the Kudankulam power project. Kudankulam nuclear power units belong to the third generation of reactor design evolution. But the Fukushima reactors belong to the first generation. This specially applies to safety parameters. The safety factor in Kudankulam reactor design is many stages superior to the first – generation reactors. There are multiple for the release of radioactivity to the environment – fuel matrix, fuel cladding, the piping system, besides the hermetically sealed containment building. The aim is to separate the reactor from the environment, and the environment from the reactor.
            Secondly, it is dangerous to mix up geographical locations. Japan stands on the tip of the so-called “Pacific Ring of Fire”. Some 1500 earthquakes are recorded there annually. The March 11 earthquake of magnitude 9 was the biggest ever in Japan, with the epicenter some 130 km from the coast. The resulting tsunami was more than 7 metres high. As against this, India is relatively stable, with seismic activity confined to the Himalayan regions. The southern plateau is relatively more stable.
Four-tier cooling
            The only striking commonality between the Kudankulam and Fukushima reactors is a sea-coast location. For decades, all these sea-coast reactors have been operating without any risk or damage to coastal marine life. For the purpose of cooling nuclear fuel when the reactor is shut down, there are now four independent systems. Each of them has its own 8-MW diesel generator, so that if the first or second systems malfunction, there are two more as a back-up arrangement. Besides, for the first time at Kudankulam reactors, a passive heat removal system has been installed.
Core catcher
            A further feature added to the Kudankulam design is called the “core catcher”. In the event of an accident, if the molten nuclear fuel were to breach the reactor pressure vessel, it falls on to a matrix containing a large amount of neutron-absorbing substances (such as boron). On mixing with this material, the nuclear fuel is rendered incapable of starting a nuclear chain reaction. Only the latest design provides for this safety back-up. In fact, post-Fukushima apprehensions had a worldwide impact on the nuclear industry. It’s especially severe for countries such as France, the United States, China and Russia, where nuclear energy plays a significant role in electricity generation.

National Manufacturing Policy
            The clearance of the National Manufacturing Policy (NMP) by the Union Cabinet could not have come at a better time. Following robust growth before the onset of the global economic crisis, anaemic growth in the Indian manufacturing sector has persisted since the last quarter of 2010. In April-Aug 2011, The manufacturing index expanded by 6% as compared to a robust 9.2% in 2010-11. Performance has been further adversely impacted by continuous interest rate hike to tackle high inflation. Resultantly investor sentiments have been dampened and business confidence is at a low.
Six-fold goal
            At 16% of the GDP, the contribution of the manufacturing sector is well below other economies at similar stages of development. The NMP proposes to increase manufacturing growth to 12-14% so that the sector can contribute 25% to GDP by 2022. The imperative of employment generation can only be met through large-scale manufacturing across sectors and scale. This has been given centrality in the final policy. Other issues addressed relate to skill development, technology upgradation, global competitiveness, clean and green manufacturing, etc. The stated objectives of the NMP are six-fold. These include faster growth, skill development, increasing domestic value addition and technological depth, enhancing global competitiveness and ensuring sustainability.
100 million new jobs
            National Investment & Manufacturing Zones (NIMZs) can now be speedily established all over the country as new industrial townships. They will offer integrated manufacturing services and world – class infrastructure. These would be set up through special purpose vehicles (SPVs), including Central and State governments and other stakeholders. The most important pillar of the policy is the intention to create 100 million new jobs. This is not an easy task since it requires both supply-side and demand – side measures.
Major challenges
            Govt will also provide a weighted standard deduction of 150% on skill-development project that would incentivize public – private partnerships. Together with skill development, exit policy has received high attention in NMP. A sensible policy has been put in place that includes a job-loss policy to pay compensation in the event of units having to shutdown. This would be financed either through insurance of sinking fund or a combination. Another important challenge addressed in the NMP is that of land acquisition. It has emerged as a major issue. The NIMZ must be a minimum of 5,000 hectares in size with preference to wastelands and lands not suitable for cultivation.
Stress on SMEs
            Among other positive features of the NMP is the stress on SMEs. It includes access to finance and lower compliance burden. The cluster approach also augurs well for promoting SMEs. The NMP additionally gives special attention to focus sectors that it identifies as employment generating sectors, capital goods, strategic industries and sectors where India enjoys comparative advantages such as automotives and pharma.

Pakistan’s nod for MFN status to India

            The grant of the much-awaited Most Favoured National (MFN) status to India by Pakistan may transform economic as well as socio-political climate in South Asia. It is bound to push up bilateral trade between the two neighbours. Direct annual bilateral trade, which stands at $2 billion at present, will jump to over $4 billion. It is because indirect export and import between India and Pakistan (via Dubai, Singapore, etc.) will disappear. The availability of a large number of Indian goods in Pakistan and vice versa will definitely sharpen the competition on both sides, and the ultimate beneficiaries will be the consumers.
Linked to Kashmir
            India had granted the MFN status to Pakistan in 1996 as required under the WTO regime. But Islamabad took such a long time to take the decision mainly because of the influence of extremists on the Pakistan establishment. Pakistan linked it to the Kashmir question. Now it seems there is some change in the thinking in Pakistan.
            An upswing in business activity between India and Pakistan can prove to be the most powerful confidence – building measure. People will get more opportunities to interact with one another. This may send a new and positive signal to the other South Asian countries, leading to the drawn of a new era in the region. One obvious question arises why Islamabad has decided to grant MFN status at this point. There seems to be a combination of political and economic reasons. The first, and most encouraging, is that the Pakistani leadership’s worldview no longer begins and ends with Kashmir.
Pragmatism prevails
            There is evidence that its fractious relationship with the US, its obsession with Afghanistan and the simple acceptance that India is too powerful to be coerced into surrendering Kashmir have tempered the original opposition to granting MFN status. The second is that Pakistan’s economic situation has made is business interests more supportive of the idea of trade with India. Pakistan’s larges goods export is textiles. It is easily more competitive in this area than India’s moribund garments sector. On the other hand, India’s strong software and services are sectors that barley exist in Pakistan. There are weaknesses in Pakistan’s economy that make trade with India more attractive. Pakistan’s battered public finances remain strongly dependent on customs duties. It has found it harder to find new markets for its relatively narrow band of exportable goods – mainly grain, cotton and textiles.
            When India and Pakistan gained independence, 56% of Pakistan’s trade was with India. Within a decade, this figure was less than 5%. It is useful to remember that it was not Kashmir but exchange rate squabbles that did the most damage. Which is why it is important to not assume that MFN status will automatically mean a revolution in political relations. Germany and Britain had excellent trade relations each time they went to war with each other. However, trade does create interest that are supportive of good relations. It also furthers mutual understanding. And, in the case of Pakistan, it will provide a fillip to a civil society which is under siege from home bred militants and its own military.

Breakthrough in Nepal

New beginning
            The recent breakthrough in the five year deadlock over the peace process in Nepal has taken the outside world by surprise. I was way back in November 2006 that the historic 12-point agreement on the return of peace was signed. It marked the end of a decade-old Maoist violence. Everyone expected further progress to be reasonably speedy. None knew that it would take another five years before the next major step became a reality.
Political vilification
            In the intervening five years, all political parties vilified one another. Their differences were acute. Matters came to such a passé that Dahal, as Prime Minister, dismissed the Army chief. Other political parties protested and President Ram Baran Yadav, as Supreme Commander, overruled the Prime Minister. Dahal resigned and thereafter govts were cobbled together with great difficulty and brought down with the greatest ease within a short period. At one time as many as 16 attempts to form a govt failed before a short-lived compromise was reached. It was only at the end of August 2011 with the election as Prime Minister of Baburam Bhattarai that a semblance of stability returned to Nepal. Meanwhile, since there was absolutely no meeting ground on the shape of the Construction, the deadline for its adoption had to be extended from time to time. the latest one expired on November 30.
Military settlement
            The major highlight of the peace accord signed on November 1 is the most contentious and divisive issue of integration of Maoist comabatants into the Nepali Army. Those opting for voluntary retirement would be compensated generously.
            Amidst all allegations and counter allegations, it is almost certain that the present agreement would be carried to its logical conclusion. The reason is that no political party has an alternative. The Maoists can neither go back to the jungle nor impose the classic single-part rule. Nor can other major parties wish away the Maoists from the national scene. Moreover, Dahal and Bhattarai are at one in their determination to see the peace and democraisation process through. What distinguishes the Maoist party from all other is that none of its members wants the party to be split. By common consent, and with the approval of the highest judiciary, a last six-month extension has been given to the Constituent Assembly. It is also agreed that as soon as the Constituent Assembly. It is also agreed that as soon as the Constitution is adopted, Bhattarai would resign and the Nepali Congress’ nominee would head the government that would hold elections.
Biggest hurdle removed
            Now the govt headed by Baburam Bhattarai has to concentrate on the task of Constitution – writing quickly so that the much-awaited general election can be held. The Constituent Assembly will have to be given one more extension. There is an informal understanding that once the peace process commence, opposition parties would join the present govt to give it an inclusive character. The pact has removed the single biggest obstacle in the process of Constitution writing – settlement of Maoist militia.

1 comment:

  1. this is very useful......
    keep it up......
    thank u.....


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