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CURRENT AFFAIRS --December 2012


RBI inks currency swap agreement with Bank of JapanThe Reserve Bank of India (RBI) and the Bank of Japan (BoJ) have concluded a three-year Bilateral Swap Arrangement (BSA) between India and Japan.The BSA, which was signed by RBI Governor D. Subbarao and BoJ Governor Masaaki Shirakawa, became effective as of December 4, 2012.

The arrangement aims at addressing short-term liquidity difficulties and supplementing the existing international financial arrangements, as one of the efforts in strengthening mutual cooperation between Japan and India.

The BSA will enable both countries to swap their local currencies (i.e., either Japanese yen or Indian rupee) against US dollar for an amount up to $15 billion.

In the past, both the countries had a similar arrangement for an amount up to $3 billion for a period of three years from June 2008 to June 2011.

The enhancement of the BSA will further strengthen economic and financial cooperation between the two countries and accordingly contribute to ensuring financial market stability.

State Elections
Himachal Pradesh:  Congress bounced back to power in the hill State, winning 36 out of the total 68 seats, while the ruling BJP had to contend with 26. As expected, the Independents put up a good show to bag five seats. The BJP breakaway group Himachal Lokhit Party, which had floated the Third Front with the CPM and the CPI, could just muster a solitary seat.

The Congress, which had 23 members in the outgoing House, improved its tally by 13 seats, while the BJP’s score came down to 26 from 41. The margin of victory was not very big but it was a creditable performance by the Congress, keeping in view the prevailing anti-party sentiment at the national level due to unfolding of various scams and measures like reduction in number of subsidised LPG cylinders.

The political aware electorate maintained the three-decade old tradition of voting out the incumbent government and gave a clear verdict in favour of the Congress, throwing aside all the predictions of a hung House. The strong anti-incumbency factor against the Dhumal government more than neutralised the impact of national issues such as price rise, corruption and FDI on which the BJP was banking on.

Gujarat:  Gujarat Chief Minister Narendra Modi led the Bharatiya Janata Party to a third consecutive win in the State Assembly elections, capturing 115 seats in the 182-member House, short by two seats from his 2007 performance of 117 seats

While it was a hat-trick for Modi, a record by any Chief Minister in the State so far, for the BJP it was the fifth straight win since 1995. The Congress which again failed to dislodge the BJP, ended with 61 seats along with its ally, the Nationalist Congress Party, two better than 59 it won in the last elections.

The Gujarat Parivartan Party floated by the former Chief Minister Keshubhai Patel with the support of the disgruntled elements of the BJP to show Modi the “exit door,” ended up a cropper with only two seats.

Doha Climate talks: India takes firm stand
Indian delegation for the Doha Climate talks, led by special secretary M. Mehrishi, got the nod from the Union Cabinet to draw its strong red-lines at the Doha round of UN negotiations. The government ordered the Indian delegation at Doha to not enhance its pledge of reducing emissions intensity at Doha and reiterated that the three critical issues of equity, intellectual property and unilateral actions by governments remain steadfast on the table.

The Cabinet has also approved the note which criticized EU for shifting the goal post yet again and resell the commitment to operationalise the Kyoto Protocol’s second commitment period. The delegates have been empowered to negotiate an unconditional approval of the protocol’s second phase starting 2013.

The formal approval from the government came at a time that the Doha talks had got log-jammed with the developed countries refusing to even discuss issues of value to the developing world, such as a timeline for delivering finance, adaptation, equity and unilateral actions under what is called the Long Term Cooperation Action (LCA) track. The track is to shut down in 2012 and the developing countries want to move the unresolved issues from the track to the future talks which the rich nations have blocked so far.

The Cabinet orders, unlike previous years, came with no caveat or space for flexibility for the Indian delegation at Doha. They commanded the delegation to ensure the pending issues find homes in future negotiations.

The Cabinet has also decided that any new obligation to reduce emissions through ‘supplementary actions’ should only be undertaken in adherence to the existing UN climate conventions and on availability of funds and technologies.

On the Durban Platform negotiations, the cabinet has approved that the Indian team secure a plan of work guided by the fifth IPCC review, the review of the convention itself, international consultation and analysis, international consultations, the biennial reports and updates and the national communications.

Cheque signature mismatch may lead to criminal proceedings
A person may face criminal proceedings if a cheque issued by him gets dishonoured on the ground that his signature does not match the specimen signature available with the bank.

A Supreme Court bench of Justices T.S. Thakur and Gyan Sudha Mishra set aside the verdict of Gujarat High Court which had held that criminal proceedings for dishonouring of cheque can be initiated only when the cheque is dishonoured because of lack of sufficient amount in the bank account and not in case where a cheque is returned due to mismatch of signature of account holder.

“Just as dishonour of a cheque on the ground that the account has been closed is a dishonour falling in the first contingency referred to in Section 138 of Negotiable Instrument Act, so also dishonour on the ground that the ‘signatures do not match’ or that the ‘image is not found’, which too implies that the specimen signatures do not match the signatures on the cheque would constitute a dishonour within the meaning of Section 138 of the Act,” the bench said.

The Supreme Court, however, said that in such cases of dishonouring of cheques, the account holder must be given a notice and an opportunity to arrange the payments before initiation of criminal proceedings against him.

Amendment to Competition Act
On December 10, 2012, the Union government introduced a Bill in Parliament to amend the Competition Act that would confer powers on fair trade regulator—Competition Commission of India (CCI)—to vet all Merger and Acquisition deals and also authorise its Director General to carry out search and seizure activities.

The DG is the investigating arm of the CCI that keeps a tab on anti-competitive practices in the marketplace. Currently, DG can ‘search and seize’ only after authorisation from the Chief Metropolitan Magistrate, Delhi. This is under Section 41(3) of the Competition Act, 2002.

Other amendments include change in the definition of terms like turnover and group in competition related matter.

The amendments also aim to bring down the time for the Commission to decide on combinations (M&A deals) to 180 days from the present 210 days.

In a move to bring all voluntary mergers and acquisitions (M&As) under the CCI purview, changes as well as a new clause have been proposed in the Act.

Constitution (117th Amendment) Bill
On December 17, 2012, the Rajya Sabha passed with two-thirds majority the Constitution (117th Amendment) Bill to provide for reservation in promotions to the Scheduled Castes (SCs) and the Scheduled Tribes (STs). The historic legislation was adopted after a two-day debate with 194 members voting for it and 10 voting against it.

The Bill, a major demand of the Bahujan Samaj Party (BSP), was opposed by its main political rival, the Samajwadi Party (SP). Nine SP members and one Independent voted against the legislation. Forty members, including four Shiv Sena members, did not vote.

Since the Bill sought to amend the Constitution, it needed to be passed with a two-thirds majority. However, in the end, it was a no contest, since the main Opposition party—the BJP—agreed to support the Bill with some amendments.

The Bill de-links the term “efficiency of administration” from the claims of SCs/STs for jobs and promotions, mentioned in Article 335. It seeks to amend at least four articles of the Constitution to enable the government to provide quotas in promotions to SCs and STs, who constitute about 25 per cent of the country’s population.

Article 335 of the Constitution states that the claims of SCs and STs must be balanced with maintaining efficiency in the administration. The Bill states the amendment will override the provision of Article 355.

Companies Bill passed
On December 18, 2012, Lok Sabha voted to replace India’s 56-year-old omnibus Companies Act with the Companies Bill, 2011, that brings the management of the corporate sector in line with global norms. It introduces concepts like responsible self-regulation with adequate disclosure and accountability, ushers in enhanced shareholders’ participation and provides for a single forum to approve mergers and acquisitions.

The Bill further says that companies must “ensure” they spend at least 2 per cent of their net profit towards corporate social responsibility (CSR) activities, a move that has drawn both criticism and appreciation from the stakeholders but one that promises to change the way CSR has been perceived so far.

Apart from introducing concepts like one person company and making independent directors and company auditors more accountable, the Bill also seeks to keep a tab on remunerations for the board of directors and other executives of the companies to protect the interest of shareholders and workmen.

The new legislation, which is a much shorter than the earlier one has also harmonised the company law framework with sectoral regulations. It has 480 sections compared to over 600 sections in the 1956 Act.

The Unlawful Activities (Prevention) Amendment Bill, 2012
On December 20, 2012, Parliament passed the The Unlawful Activities (Prevention) Amendment Bill, 2012, seeking to expand the definition of “terrorist act” to include offences like counterfeiting of currency that threatens the country's economic security.

The Bill also extends the period of ban on an organisation from two years to five years for which an association involved in terrorist acts, including terror financing, would be declared unlawful. The scope of punishment has been enlarged for raising funds likely to be used (in full or in part) to commit a terrorist act or for the benefit of terrorists—the offence is now punishable irrespective of whether the funds have been raised from legitimate or illegitimate sources.

Banking Bill passed by Lok Sabha
On December 18, 2012, the Lok Sabha passed the Banking (Amendment) Bill, aimed at attracting more foreign investment into the banking industry in yet another move by Prime Minister Manmohan Singh to open up Asia's third-largest economy.

The Bill was passed after the government agreed to drop the contentious Forwards Markets Contract Clause, which proposed permitting banks to enter commodity futures trading. The Opposition had claimed that allowing banks to trade in commodity futures would lead to high-risk speculative trading, adding that the futures trading watchdog—Forward Markets Commission (FMC)—lacks teeth to take action on a potential substantial loss for investors.

The passage of the Bill was critical to the government as it paves the way for the Reserve Bank of India (RBI) to issue new banking licenses to the private sector.

The Competition Commission clause in the Banking Bill has also been modified. This allows the RBI to remain the banking regulator, while the Competition Commission of India (CCI) will regulate mergers and acquisitions. CCI will have the power to investigate and clear mergers and acquisitions in the banking sector, the Finance Minister said.

The Bill also gives the RBI the power to supersede bank boards as well as to inspect the books of associates of banking company. It also provides for voting rights to investors in private sector banks commensurate with their shareholding. The cap on voting rights for investors in private sector lenders, such as HDFC Bank and ICICI Bank, will now rise to 26 per cent from 10 per cent, and to 10 per cent for government banks, such as State Bank of India, from just 1 per cent.

The Bill also allows foreign banks to convert their Indian operations into local subsidiaries or transfer shareholding to a holding company of the bank without paying stamp duty. Foreign banks have long sought these changes which they say will encourage them to expand their operations in India. Under the current laws, overseas lenders, such as Citibank and Standard Chartered, have to pay 20-30 per cent tax as capital gains and stamp duty when transferring branches to a new legal entity.

India-ASEAN Strategic Partnership
The two-day India-ASEAN summit was held on December 20-21, 2012 at New Delhi. The “ASEAN-India Vision Statement 2020”, which commits both sides to great security cooperation, was adopted.

Southeast Asian nations and India vowed to step up cooperation on maritime security, a move that comes amid tension with China in the potentially oil- and gas-rich South China Sea.

In the vision statement, India and the 10-member Association of Southeast Asian Nations (ASEAN) set their sights on a new “strategic partnership” that would bring closer political, security and economic cooperation. Significantly, they underlined the need for freedom of navigation, a contentious issue because of competing claims with Beijing over parts of the South China Sea, though there was no mention of China in their statement.

The South China Sea has become Asia’s biggest potential military flashpoint as Beijing’s sovereignty claim over a huge, looping area has set it against Vietnam and the Philippines as the three countries race to tap possibly huge oil reserves. Malaysia and Brunei, also members of ASEAN, as well as Taiwan also claim parts of the sea.

The vision statement comprises of three pillars, namely the ASEAN Political Security Community, the ASEAN Economic Community and the ASEAN Socio Cultural Community. The two sides also resolved to achieve a bilateral trade target of $100 billion by 2015.

They also reaffirmed their commitment to complete the India-Myanmar-Thailand trilateral highway and its extension to Laos and Cambodia and a new highway project connecting India-Myanmar-Laos-Vietnam-Cambodia as well as developing the Mekong-India economic corridor connecting Southeast Asia to South Asia.

Although India has no territorial claim in the region, it is hungry for energy and is exploring for oil and gas with Vietnam in an area contested by China. In future, it is expected to ship liquefied natural gas from Russia through the Malacca Straits.

Twenty years after India launched a ‘Look East’ diplomatic push to promote trade with a neglected neighbouring region, the relationship is finally beginning to gain traction. Annual trade has nearly doubled in four years and India’s growing economic clout makes it appealing as a balance to other Asian powers.

Visit of Russian President
Setting aside their differences over civil nuclear cooperation and Russian telecom giant Sistema’s investment, India and Russia, on December 24, 2012, signed two key defence deals worth about Rs 25,000 crore for the supply of 42 new Su-30 MKI combat aircraft and 71 Mi-17V5 helicopters to this country.

The two countries also inked other agreements in fields, such as space, trade and investment, science and technology, education and culture, reinforcing the strong dynamics of their time-tested friendship.

The pacts were concluded following the 13th annual India-Russia Summit between Prime Minister Manmohan Singh and Russian President Vladimir Putin, during which the two leaders discussed the entire gamut of bilateral ties as well as global developments.

Negotiations for the construction of Units 3 and 4 at Kudankulam also made good progress.

Under one of the defence contracts, said to be worth around Rs 16,000 crores, for licence production of 42 Su-30 MKIs, Russia will deliver technical kits to the Hindustan Aeronautics Limited (HAL) to assemble the fighter jets. With this contract, the number of Su-30MKIs in the IAF would go up to 272 in next four-five years, with 170 of them already at present in the force. These multi-role frontline aircraft could also be equipped with Indo-Russian joint venture BrahMos supersonic cruise missiles.

Under the contract for 71 Mi-17V5 choppers, the IAF would get 59 helicopters from Russia while the remaining would be provided to paramilitary forces.

Another significant pact was for a joint venture between Elcom Systems Private Ltd. and OAO “Vertoleti Rassi” of Russia for setting up a modern industrial facility for manufacturing of Russian models of helicopters (Ka- and Mi- brands). The Joint venture will serve as an industrial base for hi-tech rotorcraft products from Russia to India and shall contribute to the development of the domestic aerospace industry.

On the trade front, the two countries expressed satisfaction at the substantial increase during 2011 and 2012 in bilateral trade and agreed to enhance efforts to achieve the target of $ 20 billion bilateral trade by 2015.


Five new species 
of freshwater fish called darters have been discovered in river drainages in eastern North America and named after four US Presidents (Including President Obama) and a Vice-President. Darters are the smallest members of the perch family, and are named after their ability to zip around, under and into rocks and sediment on the beds of clean, fast-moving waterways.

In just 48 hours, an entrepreneur has constructed a 10-floor building in Mohali, near Chandigarh.  The work on the building’s construction started around 4.30pm on November29, 2012, and by Friday evening the building saw seven floors in place. The building has been named Instacon.  The building used pre-fabricated material, including 200 tonnes of steel.  The material used was manufactured in the past two months in a nearby factory.

Austria’s capital Vienna offers its residents the best quality of life of any city in the world, and Baghdad the worst, according to the latest global survey from consultant group Mercer. Canadian cities dominated rankings in the Americas region, with Vancouver at number five retaining the top spot and Honolulu at 28 the most pleasant U.S. urban centre. New Zealand’s Auckland at number three is still atop the Asia Pacific region’s charts, while Dubai at 73 gets best marks in the Middle East and Africa.

Bangalore ranks better than New Delhi, Mumbai, Chennai and Kolkata amongst Indian cities in overall global quality of living index, according to a Mercer 2012 Quality of Living Survey. Mercer conducts this survey annually to help multinational companies and other organisations compensate employees fairly when placing them on international assignments.

According to global ranking of best cities by infrastructure survey, conducted by Mercer, Singapore is at the top of the index, followed by Frankfurt and Munich. Copenhagen (4) and Dusseldorf (5) fill the next two slots, while Hong Kong and London share sixth place. Port-au-Prince (221) ranks at the bottom of the list.

The cost of aviation turbine fuel (ATF) across the country is likely to come down by up to 25 per cent as the Union government has decided to bring it under the purview of the Petroleum and Natural Gas Regulatory Board (PNGRB). Bringing it under PNGRB will make the pricing of jet fuel transparent and also check cartelisation by oil companies. This will bring ATF prices in India at par with airports such as Bangkok, Hong Kong and Singapore among others. The government has also decided to push for bringing ATF under declared goods, which will bring down the sales tax on ATF immediately to 4 per cent from as high as 33 per cent.

Prime Minister Manmohan Singh and Congress President Sonia Gandhi have been named among the top 20 most powerful persons in the world by Forbes magazine in its annual power rankings which placed US President Barack Obama as number one for a second year in a row. India’s richest businessman Reliance Industries Chairman Mukesh Ambani and Arcelor Mittal CEO Lakshmi Mittal also feature in the list that comprises 71 mighty heads of state, CEOs, entrepreneurs and philanthropists who “truly run and shape the world of 7.1 billion people.” The second most powerful person in the world also happens to be the most powerful woman, German chancellor 58-year-old Angela Merkel. The list also includes Russian President Vladimir Putin at number three, Microsoft co-founder Bill Gates (4), General-Secretary of the Chinese Communist Party Xi Jinping (9), Google co-founders Larry Page and Sergey Brin (20), Iran’s Supreme leader Ali Khamenei (21) UN chief Ban Ki-moon (30), North Korean leader Kim Jong-un (44) and former US President Bill Clinton (50).

Ada Lovelace was called as the “enchantress of numbers” and is credited with creating the first ever program for an Analytical Engine. Her 197th birth anniversary was celebrated on December 10, 2012. She was the daughter of the famous poet Lord Byron. Her original name was Augusta Ada Byron, and on her marriage to William King she became Ada King. Later, her husband became an Earl and she became the Countess of Lovelace. Even though scholars are divided over her contribution to early computing, a computer language, Ada, is named after her. A medal is also awarded in her name by the British Computer Society.

The Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2011, which was approved by the Lok Sabha on December 10, 2012, seeks to convert any part of debt into shares of defaulting company by the asset reconstruction Company (ARC).

The Union Cabinet has approved the proposal to set up a National Investment Board (NIB) that would monitor and advise ministries on expediting projects with investments of Rs 1,000 crore. The NIB has been renamed and would formally be known as the Cabinet Committee on Investments (CCI). It will be chaired by Prime Minister Manmohan Singh.

A pair of NASA moon-mapping probes,Ebb and Flow, smashed themselves into a lunar mountain on December 18, 2012, ending a year-long mission. NASA has named the site where twin spacecraft impacted the moon in honour of late astronaut Sally K. Ride, first US woman in space.

India is ranked as the decade’s 8th largest victim of illicit capital flight behind China, Mexico, Malaysia, Saudi Arabia, Russia, the Philippines, and Nigeria, respectively, in the report by Global Financial Integrity, a Washington-based research and advocacy organisation.

Time magazine has named Barack Obama, President of USA, as Person of the Year.

Foreign investment ceiling in Asset Reconstruction Companies (ARCs) has been increased to 74 percent from 49 percent, a move aimed at bringing more foreign expertise in the segment. However, the foreign investment in ARCs would need to comply with the FDI policy, including the one related with sectoral caps. Also, the total shareholding of an individual FII shall not exceed 10 percent of the total paid-up capital. Further, foreign investment limit of 74 percent in ARC would be a combined limit of FDI and FII. With this change in the policy, the prohibition on investment by FII in ARCs has been removed.

On December 26, 2012, China opened world’s longest high-speed rail line. Trains will travel the 2,298 km route from Beijing to Canton at over 300 kph.

The Banking Laws (Amendment) Bill is aimed at strengthening the regulatory powers of Reserve Bank of India (RBI) and to further develop the banking sector in India. It is also aimed to enable the nationalized banks to raise capital by issue of preference shares/rights issue/issue of bonus shares. 


LDP is voted back to power in JapanThe Liberal Democratic Party, which led Japan for most of the post-World War II era until it was dumped as the economy fizzled in 2009, won 294 seats in the 480-seat lower house of Parliament in December 16, 2012 elections.

Shinzo Abe, who was Prime Minister from 2006-2007 has been elected as the new Prime Minister.

Outgoing Prime Minister Yoshihiko Noda announced his resignation, calling the election results “severe” and acknowledging his party failed to live up to the nation’s high expectations.

Economic issues, including plans to raise taxes and other measures to bolster Japan’s under-performing economy, were the top concerns among voters.

Abe and his party stressed national security amid an ongoing dispute with China over a group of small uninhabited islands that both nations claim. That kind of tough talk resonated with some voters who feared their country is falling too far behind China’s rising economic and military clout. This, however, could also deepen a rift between Tokyo and Beijing that has already begun to sour diplomatic ties and trade.

Abe is known as a hawk on China relations—which could mean more friction with Japan’s giant neighbour and key trading partner.

During his previous tenure as Prime Minister, Abe had pursued a nationalistic agenda, pressing for more patriotic education and upgrading the defence agency to ministry status. The LDP wants to revise Japan’s pacifist constitution to strengthen its Self-Defence Forces and, breaching a post-war taboo, designate them as a “military”.

It also proposes increasing Japan’s defence budget and allow Japanese troops to engage in “collective self-defence” operations with allies that are not directly related to Japan’s own defence.

A dizzying array of more than 12 parties, including several news ones, contested, some with vague policy goals. The most significant new force is the right-leaning, populist Japan Restoration Party, which won 54 seats. The party is led by the bombastic nationalist former Tokyo Governor Shintaro Ishihara and lawyer-turned Osaka Mayor Toru Hashimoto—polarizing figures with forceful leadership styles. Ishihara is another hawk on China, having stirred up the latest dispute with Beijing by proposing Tokyo buy the islands from their private Japanese owners and develop them.

Deal with Senate in US “fiscal cliff” crisis
On December 31, 2012, the White House reached an eleventh hour, New Year’s Eve accord with Senate Republicans to neutralize across-the-board tax increases and spending cuts in government programs that were due to take effect at midnight.

The Senate moved the US economy back from the edge of a “fiscal cliff” on January 1, voting to avoid imminent tax hikes and spending cuts in a bipartisan deal that could still face stiff challenges in the House of Representatives.

In a rare New Year's session, senators voted 89-8 to raise some taxes on the wealthy while making permanent low tax rates on the middle class that have been in place for a decade. But the measure did little to rein in huge annual budget deficits that have helped push the US debt to $16.4 trillion.

Without legislation, economists in and out of government had warned of a possible new recession and spike in unemployment if the economy were allowed to fall over the so-called fiscal cliff of tax increases and spending cuts.

Under the deal, taxes would remain steady for the middle class and rise at incomes over $400,000 for individuals and $450,000 for couples—levels higher than President Barack Obama had campaigned for in his successful drive for a second term in office.

Spending cuts totalling $24 billion over two months, aimed at the Pentagon and domestic programs, would be deferred. That would allow the White House and lawmakers time to regroup before plunging very quickly into a new round of budget brinkmanship, certain to revolve around Republican calls to rein in the cost of the Medicare health program for the elderly and other government benefit programs.

Officials also decided at the last minute to use the measure to prevent a $900 pay raise for lawmakers.

If President Obama and Congress had failed to act, about $536 billion in tax increases, touching nearly all American workers, and about $110 billion in spending cuts, about 8 percent of the annual budgets for most federal departments, were scheduled to go into effect beginning in January.

Much or all of the revenue to be raised through higher taxes on the wealthy would help hold down the amount paid to the Internal Revenue Service by the middle class.
In addition to preventing higher rates for most, the agreement would retain existing breaks for families with children, for low-earning taxpayers and for those with a child in college. Also, the two sides agreed to prevent the alternative minimum tax from expanding to affect an estimated 28 million households for the first time in 2013, with an average increase of more than $3,000. The law originally was designed to make sure millionaires did not escape taxes, but inflation has gradually exposed more and more households with lower earnings to its impact.

Rich nations alone cannot stop global warming: Report
A report published by the Grantham Research Institute on Climate Change and the Environment and the Centre for Climate Change Economics and Policy, co-authored by former World Bank chief economist Nicholas Stern, has warned that the poor nations must make haste to curb greenhouse gas emissions as even an impossible zero-percent pollution target for the developed world by 2030 won’t stop calamitous climate change.

The report was issued on the sidelines of UN climate talks in Doha, Qatar.

The document says that while rich countries are responsible for the bulk of earth-warming gas emissions since the industrial age, the world could not afford to play the blame-game. All countries, rich and poor, were moving “recklessly slow” on reducing emissions.

The latest round of notoriously tough UN climate talks has seen negotiators bickering in Doha over cash and commitments needed to curb greenhouse gas emissions even as the alarm is being raised anew about the perils the planet faces.

Poor countries insist that Western nations sign up to deeper, more urgent cuts and commit to a new funding package from 2013 to help them cope with worsening drought, flood, storms and rising seas.

For a reasonable chance at making the 2 degree Celsius target, greenhouse gas emissions must fall from about 50 billion tonnes per year now to less than 35 billion tonnes in 2030. Yet on current patterns, developing countries would probably spew out 37-38 billion tonnes in 2030, compared to rich country emissions of about 11-14 billion tonnes—about two thirds of the total.

In 1990, the baseline from which the UN has set emission cuts for about 40 rich nations and the European Union, developing nations’ contribution was only about one third. China has since 1990 become the world’s biggest emitter of carbon dioxide, while India moved ahead of Russia in 2011 to become the world’s fourth-biggest polluter.

Kyoto protocol extended at UN Climate talks
On December 8, 2012, the two week long climate talks in Doha came to a close with 194 countries agreeing to implement a second phase of the Kyoto Protocol, from 2013 through 2020. The Doha round of talks mark the beginning of a transition to a new global climate change regime that will come into effect from 2020 and include within its ambit all countries.

The outcome “Doha Climate Gateway” described as “historic” by the United Nations Framework Convention on Climate Change executive secretary Christiana Figueres came 24 hours after the negotiations were supposed to come to a close. The delay was on account of countries like Poland, Russia, Ukraine and Belarus demanding use of the extra credit or assigned amount units commonly known as “hot air” that had been given to them in the first phase of the Protocol, to deal with the breakdown of their industrial structure due to the collapse of the Soviet Union.

The hard decisions were put off, including how many major developing countries such as China and India will commit to cutting their greenhouse gas emissions, and to what extent the richest nations will assist vulnerable ones over the next decade.

European Commissioner for Climate Action Connie Hedegaard hailed the fact that nearly 200 countries agreed on a framework for negotiating a pact over the next three years, which will take effect in 2020.

Rebecca Lefton, an international climate policy analyst at the Centre for American Progress, said the modest result of the talks meant countries would have to work in the near term to cut emissions in other ways, such as curbing methane, black carbon and other contributors to climate change.

Developing countries pushed for the establishment of a “loss and damage” fund that would compensate them for the impact of extreme weather events. The United States resisted this idea, and in the end delegates called for “institutional arrangements, such as an international mechanism” to address the issue.

On December 9, 2012, the last day of the Doha conference, poor countries won a historic recognition of the plight they face from the ravages of climate change, wringing a pledge from rich nations that they will receive funds to repair the “loss and damage” incurred.

This was the first time developing countries received such assurances, and the first time the phrase “loss and damage from climate change” was enshrined in an international legal document.

The US had strongly opposed the initial “loss and damage” proposals, which would have set up a new international institution to collect and disperse funds to vulnerable countries. US negotiators made certain that neither the word “compensation”, nor any other term connoting legal liability, was used, to avoid opening the floodgates to litigation–instead, the money will be judged as aid.

Key questions remain unanswered, including whether funds devoted to “loss and damage” will come from existing humanitarian aid and disaster relief budgets. The US is one of the world’s biggest donor of humanitarian aid and disaster relief, from both public and private sources. It will be difficult to disentangle damage inflicted by climate change from other natural disasters.

Another question is how the funds will be disbursed. Developing countries wanted a new institution, like a bank, but the US is set against that, preferring to use existing international institutions. These issues will have to be sorted out at 2013 climate conference, in Warsaw, where they will be bitterly contested.

Governments also rescued the Kyoto protocol, the initial targets of which run out at the end 2012. The EU, Australia, Norway and a handful of other developed countries have agreed to take on new carbon-cutting targets under the treaty, running to 2020.

A separate strand of the negotiations, set up to accommodate the US because of its refusal to ratify Kyoto, was closed. This will allow unified discussions to begin on a global climate treaty that would require both developed and developing countries to cut their emissions. The treaty is supposed to be signed in 2015, at a conference in Paris, and come into effect in 2020.

The next three years of negotiations on the treaty will be the hardest in the 20-year history of climate change talks because the world has changed enormously since 1992, when the UN convention on climate change was signed, and 1997, when the Kyoto protocol enshrined a stark division between developed countries –which were required to cut emission–and developing countries, which were not.

China was classed then as a developing country, and although it still has about 60 million people living in dire poverty, it is now the world’s biggest emitter and will soon overtake the US as the biggest economy. It has made clear its determination to hang on to its developing country status, and that the countries classed as developed in 1997 must continue to bear most of the burden for emissions cuts, and for providing funds to poor countries to help them cut emissions and cope with climate change.

Tension escalates between China and Japan over Diaoyu/Senkaku Islands 
On December 13, 2012, flexing its muscles, China, for the first time, sent a marine surveillance plane to join its warships to monitor the disputed islands with Japan, forcing Tokyo to scramble eight F-15 fighter jets.

In the East China Sea, these islands are claimed by China, Japan and Taiwan. Currently, these are being administered by Tokyo. The islands are known as Diaoyu in China and Senkaku by Japan. Ownership of these islands allows exclusive oil, mineral, and fishing rights.

Till date, China had not seriously challenged Japan's administrative hold on the islands, though it all along claimed sovereignty over them.

China termed Japan’s move provocative and said it would continue to make its presence felt around the islands.

Besides Diaoyu/Senkaku islands, China has dispute on ownership of following islands in the South China sea:

Dokdo/Takeshima: To the sea east of the Korean peninsula. Known as Dokdo in South Korea and Takeshima in Japan. The islets—inhabited by only three residents—lie within rich fishing grounds with possible natural gas deposits.

Paracel Islands: A group of small islands on reefs in the South China Sea. The Paracels are surrounded by lucrative fishing grounds, as well as potential oil and gas reserves. China, Vietnam and Taiwan all have sovereignty claims. Beijing has occupied the islands since 1974.

Spratly Islands: Located off the southern coast of the Philippines in the South China Sea. The Spratly Islands are occupied or claimed by China, Vietnam, Taiwan, Malaysia, the Philippines and Brunei.

Scarborough Shoal: Claimed by China, Taiwan and the Philippines. Scarborough Shoal is a tiny rock outcrop some 200 km from the Philippine island of Luzon.

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Care and Lightning (WCCL) has acquired the Singapore-based FMCG company LD Waxson for $144 million (approximately Rs 790 crore). This is WCCL’s second largest acquisition; it had acquired Unza, another Singapore-based FMCG brand, in 2007 for $246 million. WCCL’s portfolio of national and international brands includes Santoor, Chandrika, Aramusk, Enchanteur, Yardley, and Woods of Windsor.

The US-headquartered Sutherland Global Services, an international provider of business process and technology management services, has piped Genpact and others to the post to ink a Rs.1,000-crore all-cash deal to acquire Apollo Health Street Limited (AHS). An associate company of Apollo Hospitals Enterprises Ltd, AHS is a leading provider of healthcare business services and world-class health information technology (HIT)-based solutions.

Buoyed by a strong participation from foreign investors, the Union government managed to mop up Rs 6,000 crore from the sale of its 10% stake in the iron ore miner NMDC. Unlike the past two auctions—ONGC in March and Hindustan Copper in November 2012—State-run banks and LIC did not play a dominant role. Foreign Institutional Investors (FIIs) bid for half the issue.

Anil Ambani’s Reliance Group and China’s Dalian Wanda Group have announced a tie-up to develop real estate and movie theatre projects. The deal makes the company India’s largest trading partner with China.

Tata Motors has appointed Cyrus P. Mistry as its Chairman with effect from December 28, 2012, after retirement of group chief Ratan N. Tata.

K.P. Singh-led real estate major DLF has signed an agreement for effecting a sale of the luxury hotel chain Aman resorts to the hospitality property’s founder and Chairman Adrian Zecha for about USD 300 million (over Rs 1,600 crore).

In an ASSOCHAM survey, CEOs of the world have rated the $100-billion Tata Group as India’s best-known global brand within and outside the country.

Eight Indian CEOs have made it to the list of 100 global chief executives, compiled by Harvard Business Review (HBR), with ITC’s Y.C. Deveshwar and the late Subir Raha of ONGC finding a place in the top 20. Deveshwar was first among the Indian CEOs featured in this list, and cornered the seventh place overall. The other Indians on the list include Raha at 13th place, ahead of Reliance Industries’ Mukesh Ambani who was ranked 28th. Larsen & Toubro’s A.M. Naik was ranked 32nd, followed by BHEL’s A.K. Puri (38), Bharti Airtel’s Sunil Bharti Mittal (65), Jindal Steel & Power’s Naveen Jindal (87) and Steel Authority of India’s V.S. Jain (89). The best-performing CEO over the past 17 years globally was Steve Jobs of Apple.  Jeff Bezos of was at the second place.

According to Grant Thornton's Global Dynamism Index (GDI), India is ranked at a low position of 40 among 50 economies in the world in terms of “dynamism”. The list is topped by Singapore, followed by Finland in the list, Sweden was ranked third, Israel (fourth), Austria (fifth), Australia (sixth), Switzerland (seventh), South Korea (eighth), Germany (ninth) and the United States (10th).

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