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CHRONICLE
IAS ACADEMY
A CIVIL SERVICES CHRONICLE INITIATIVE
Weekly Current Affairs Bulletin

CONTENTS CONTENTS CONTENTS CONTENTS CONTENTS

TOPICS Pg. No.
National ......................................................................................................................... 4-8
International ............................................................................................................... 9-12
India and the World ............................................................................................. 13-15
Economy .................................................................................................................... 16-19
Science & Technology .......................................................................................... 20-24
Health ......................................................................................................................... 25-26
News in Brief........................................................................................................... 27-29
Editorials .................................................................................................................... 30-61
Message from Sri Lankan polls .................................................................................. 30
Maintaining the status quo.......................................................................................... 30
Poorly performing public services............................................................................. 31
The endless calamity in West Asia............................................................................ 33
Public purpose of architecture .................................................................................... 35
Voting while in the Army ........................................................................................... 35
Tax theatrics.................................................................................................................... 37
Threat of disintegration ............................................................................................... 37
US built a secret 'Cuban Twitter' to stir unrest against communist
govt, says AP .................................................................................................................. 38
A cautious beginning.................................................................................................... 39
An inclusive growth policy ......................................................................................... 39
Diplomatic gains from a strategic abstention ......................................................... 41
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Funny money.................................................................................................................. 42
The two RBIs................................................................................................................... 43
Manila peace? ................................................................................................................. 43
A bank is born................................................................................................................ 44
The wisdom of abstaining ........................................................................................... 44
Hope prevails ................................................................................................................. 45
A touch here, a tweak there......................................................................................... 46
RIP repo rate? ................................................................................................................. 47
Indias new political economy .................................................................................... 48
The ten crore question .................................................................................................. 49
Licensing for competition ............................................................................................ 51
One Inc ............................................................................................................................. 51
Coalition govt: Spokes without a hub? ..................................................................... 52
A policy with clarity of purpose................................................................................. 53
Watching the watchdogs.............................................................................................. 55
For a world of freer labour flows............................................................................... 55
Life is an injection.......................................................................................................... 56
The run of rains in Indian agriculture ...................................................................... 57
The changing face of global risk ................................................................................ 58
Election 2014: a polarized vote .................................................................................. 59
Worshipping false gods in India................................................................................ 60
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NATIONAL
40 % WOMEN AMONG NEW VOTERS
Women have historically been outsiders in
politics, legally barred from voting until the
twentieth century. From the local to the global level,
womens leadership and political participation are
restricted. Women are underrepresented as voters,
as well as in leading positions, whether in elected
office, the civil service, the private sector or
academia. Women face several obstacles to
participating in political life.
In India a look at the demographic profile of
newly-eligible voters shows that the share of
women in the electorate aged between 18 and 19
years is too low the percentage of women in the
country's total electorate.
Compared to 47.6% women in the national
electorate this year, women constitute just
41.4% of the 2.3 crore electors in the 18-19
group.
The gender gap in newly-eligible voters is
more pronounced in the 10 states and Union
territories, where women constitute less than
40% of voters in the 18-19 years age group.
As many as 15 states and UTs fall short of
the national proportion of female voters in
this category.
The worst-performing states include
Haryana, where the percentage of female
voters in the 18-19 age group is a just 28.3%,
against 45.8% women in the state's total
electorate.
Very young women voters in Maharashtra
constitute just 35.5% of the 18-19 year old
electorate, followed by Punjab, Gujarat and
Chandigarh (36.2% each), Uttarakhand
(36.4%), Odisha (37.9%), Delhi (38.9%) and
UP (39.6%).
Compared to eight states/UTs with a larger
percentage of women voters, only Nagaland
has more women electors in the 18-19 age
group.
The other states/UTs faring better in terms of
proportion of women in the 18-19 electorate
group are Mizoram (49.9%), Arunachal
(49.6%), Lakshadweep (49.1%), Meghalaya
(48%) and Goa (48.1%).
The Election Commission of India is targeting
this difficulty in voter recognition programmes as
part of a Systematic Voters Education and Electoral
Participation (SVEEP) initiative, through which the
Commission is reaching out to immature citizens in
college campuses by girl fests and campus
ambassadors.
SVEEP
The Systematic Voter Education and Electoral
Participation Wing (SVEEP)formulates policies, lays
down the framework, plans interventions and
monitors implementation besides carrying out
continuous discourse with voting publics, civil
society groups and media. It handles work related
to all aspects of Voters Awareness & Education
aimed towards improving Electoral Participation
in the country and building up a culture of
participative democracy among citizens. The
SVEEP Wing commenced work since 2009.
It promotes dissemination of knowledge,
information, materials, designed to sensitize the
voters about voting process. It initiated new
measures regarding about voter facilitation in areas
of registration, issuing voter identity cards and
suggests ways and means to make the election
process voter- friendly. ECI has developed special
strategies to encourage participation of young and
newly eligible voters bringing about a particularly
significant progress in their registration on
electoral rolls.
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ALARMING CONDITIONS OF CHILDREN IN DELHI SLUMS
The census defines a slum as residential areas
where dwellings are unfit for human habitation
because they are dilapidated, cramped, poorly
ventilated and unclean. Over 65 million people live
in slums. Slum populations have grown slower than
the average urban population. The average household
living in a slum is no larger than an average urban
Indian household, with 4.7 family members
With over 11 million of its residents in slums,
Maharashtra has the highest slum population; 4.6
million of them in identified slums. Andhra
Pradesh follows with over 10 million in slums, and
West Bengal and Uttar Pradesh have over 6 million
slum residents each.
Over 1 million of Delhis 1.7 million slum
residents live in identified slums. With an infant
mortality rate of 35.6 per 1,000 and an under five-
year-old mortality rate at 73.6 per 1,000 in slums,
Delhi has registered itself as a high-risk zone for
children.
The absence of day-care arrangement leads to
many accidents. Poor quality of schools,
anganwadis and dispensaries adversely impacted
the children. The worst hit are differently-abled
children and those whose lives have been disrupted
by relocation and slum clearances.
Gangsters roam in the areas of urban slum
clusters where both parents work and children
often go missing from these localities. Shockingly,
at least 14 children go missing every day.
Eviction from slums is another major issue and
has adverse impact on women and children due to
the absence of basic services, anganwadis, schools,
etc., in the area that they are relocated into.
More than one-third of under-five year olds
living in the Indian capital's slums are
malnourished. This is especially challenging for
newborns and infants whose health entirely
depends on the availability of the mother to
breastfeed, the ability of the caregiver and
household to provide nutritious meals, the quality
of the public healthcare system and overall
community support.
Practices such as bottle-feeding, child marriage
and discrimination against women were occurring
in slum communities with little awareness that they
were contributing to child malnutrition.
More than 50 percent of the malnourished
children did not have access to clean drinking water
and defecated in the open, leading to frequent bouts
of water-borne diseases such as diarrhoea.
CLIMATE CHANGE: DIRE CONSEQUENCES
Climate change is a fundamental threat to
development and the fight against poverty. The
grim reality of increasing food insecurity as a result
of climate change is highlighted by the United
Nations Intergovernmental Panel on Climate
Change's (IPCC) in its report. The climate disorder
can result in flooding, heat-related mortality,
droughts and food shortage. India is likely to be hit
hard by global warming. It is already one of the
most disaster-prone nations in the world and many
of its 1.2 billion people live in areas vulnerable to
hazards such as floods, cyclones and droughts.
All aspects of food security are potentially
affected by climate change including food access,
utilisation of land, and price stability and the yields
of wheat and rice have decreased due to climate
change.
MAIN POINTS:
Like other developing economies, India may
lose up to 1.7% of its Gross Domestic Product
if the annual mean temperature rises by 1
degree Celsius.
It has been predicted that extreme weather
events such as last year's flash floods in
Uttarakhand and cyclone Phailin in Odisha
would become unavoidable if steps are not
taken to control the rise in temperature.
The report has predicted a rise in global
temperatures of between 0.3 and 4.8 degrees
Celsius and a rise of up to 32 inches in sea
levels by the late 21st century due to melting
ice.
Irregular weather patterns will not only affect
agricultural output and food security, but will
also lead to water shortages and result in
outbreaks of water and mosquito-borne
diseases such as diarrhea and malaria.
India is likely to suffer loss in all major sectors
of the economy including energy, transport,
farming and tourism. India ranked as the
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most vulnerable of 51 countries in terms of
beach tourism.
Extreme weather may also harm infra-
structure such as roads, ports and airports,
impacting delivery of goods and services.
The changes taking place either in the Indus
river basin or in Brahmputra river system due
to climate change can not be ignored in the
long run.
The IPCC report mentions that in coming years
there will be extreme weather events, like floods,
cyclones, cloud bursts, unseasonal excessive rains
and drought etc in most parts of the world and
countries like the Maldives, China, India, Pakistan,
Bangladesh and Sri Lanka will be among the most
affected.Over-exploitation of fresh water resources
in South Asia and China may become a reason for
armed conflict in the region by middle of the 21st
century as climate change is likely to become a
determining factor in national security policies. It
is pointed out that some fish and other marine
animals will become extinct by 2050, adversely
affecting fishing community.
In many regions, changing precipitation or
melting snow and ice are altering hydrological
systems, affecting water resources in terms of
quantity and quality. Glaciers (including
Himalayan) continue to shrink almost worldwide
due to climate change, affecting run-off and water
resources downstream. Climate change will impact
human health mainly by exacerbating health
problems that already exist.
DEGREES FAIL TO CURB UNEMPLOYMENT
The growing level of unemployment is a much
bigger cause for concern as the rate of
unemployment has progressively increased with
rising level of education for both men and women.
The situation is more or less same for the highly
populated developing countries across the world.
There is a rise in the unemployment rate in sync
with the level of education as boys and girls without
education often belong to low income households
and hence, cannot afford to remain unemployed
for long.
According to the NSSO estimates, 16.3 % of
who are graduates or above in the age group
of up to 29 years are unemployed.
The rate of unemployment goes up by another
12.5 per cent if diploma and certificate holders
are included.
The chances of getting employment for young
men and women become less once they
acquire vocational skills or a college degree.
The situation is worse for women diploma
holders and those with graduate degrees
compared with men, in both rural and urban
areas.
Women who went for diplomas in various
trades had a higher unemployment rate of
17.3 per cent, three times the percentage for
no-jobs figures for those who had completed
only middle school, in urban areas
Broadly one in every four men with a graduate
degree or a vocational education in this age group
is likely to be unemployed in India. The highly
disturbing trend holds true for all categories,
including men in rural India and women in both
urban and rural areas.
Skill- development programmes and college
education are not creating the sort of training that
is in demand in the manufacturing and services
sector. Even though educational attainment has
risen quickly in recent years, gaining a foothold in
the labour market remains elusive for many young
Indians.
NSSO
National Sample Survey Organisation (NSSO)
which is now known as National Sample Survey
Office, is an organization under the Ministry of
Statistics of the Government of India. It was
established in 1950 and is the largest organisation
in India conducting regular socio-economic surveys.
NSSO has four divisions, namely, Survey Design
and Research Division, Field Operations Division,
Data Processing Division and the Co-ordination
and Publication Division.
The main functions of the NSSO is to conduct
large scale sample surveys on subjects like household
consumer expenditure, employment and
unemployment, health and medical services etc.
It decides the topics to be covered in a particular
survey round and also conducts annual survey of
industries every year. NSSO every year brings out
reports on status of estimation of agricultural
production in India. NSSO has the central
responsibility of coordinating the results of the crop
estimation surveys conducted by the states.
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POLITICAL EMPOWERMENT OF WOMEN: A MYTH
Indias 11.4% representation of women in the
15th Lok Sabha is lower than even the Asian
average. In a ranking of 189 countries, the worlds
largest democracy figures at a poor 111. The need
for greater representation is perhaps underscored
at a time when women voters are increasingly
turning out in larger numbers than men to cast
their ballot.
In India, states with the high sex ratios and
gender indices elect the fewest women to
Parliament while states with poorer gender indices
have the highest percentage of women Members of
Parliament.
The top five states with the highest percentage
of women MPs are, in order of ranking, Punjab,
Haryana, Madhya Pradesh, Chhattisgarh and West
Bengal.
Punjab, with a sex ratio of 893 women for
every 1,000 men, far below the national
average of 940, as per the 2011 Census, has
31% or the highest percentage of women MPs
in the country.
Haryana, with one of the countrys worst sex
ratios of 877 women for 1,000 men, has 20%
women MPs, finds the report.
states that do well on gender tend to have
poor representation of women in Parliament.
Kerala has the countrys best sex ratio of 1,084
and 91.8% female literacy, and has 20 Lok
Sabha seats. None is occupied by a woman.
The representation of women is just as dismal
in the state assemblies. None of the five states that
went to the polls last yearMadhya Pradesh,
Chhattisgarh, Rajasthan, Delhi and Mizoram
elected more than 10% women. Mizoram, in fact,
has not had a woman MLA for the past 10 years.
A large proportion of women MPs are backed
by politically well-connected families.
Jammu and Kashmir is the only exception
that fares poorly on gender indices and also
does not have a single woman MP. The state
has a sex ratio of 883, female literacy of just
58.1%.
There is no connection between development
and the growth of womens leadership. In the
backward states, men are opposed to womens
reservation and the only women who advance are
women they can control. They are mostly the
proxies for male politicians.
The conclusions are based on two parameters:
the gender development index (GDI) and the gender
empowerment measure (GEM). The GDI looks at
health, including infant mortality and life
expectancy, education and income and standard
of living among women. GEM has three
parameters: political participation and decision-
making, economic participation and decision-
making and power over economic resources.
It is observed that women are more likely to
contest elections in constituencies where the sex
ratio of electors is worse. States like Haryana and
Punjab are far more likely to see women candidates
than, say Kerala and Tamil Nadu. In states with a
higher sex ratio, women seek representation through
voting.
Moreover, women have lower chances of
winning elections in constituencies that have a low
sex ratio. So, either women dont contest in socially
advanced states or they contest from socially
backward states but dont win.
RISING INCOME-POOR SERVICES: WIDENING RIFT
Income inequality can lead to slower or less
sustainable economic growth. India is a well-
established middle-income country in terms of its
gross GDP and is the tenth richest country in the
world. The country is also macro-economically
robust, having maintained moderately stable fiscal
and monetary bases. The Indian growth-inequality
paradox is easy to pin downthe wealth that India
creates is not evenly redistributed. This lies at the
root of Indias rising inequality.
Data from the 2011-12 round of India Human
Development Survey (IHDS) conducted by the
National Council for Applied Economic Research
(NCAER) has brought to light some eye-opening points:
1. Families with an annual income of Rs 1.5
lakh are among the richest 20 per cent in the
country.
2. Incomes have grown considerably in the last
seven years but access to adequate public
services is still severely lacking, as mentioned
in the data collected from 42,000 households
across the country.
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3. For the 2011-12 IHDS, the NCAER research
team surveyed over 80 per cent of the
households to make an estimate of the change
over the last seven years.
4. In 2004-05, a family earning Rs. 70,000
annually would have been among the richest
20 per cent in the country, while in 2011-12,
the same family would find a place in the
middle of the distribution.
5. An annual household income of Rs. 25,000
placed a family in the middle of the order in
2004-05. In 2011-12, Rs. 25,000 is the annual
income of the poorest 20 per cent of Indians.
6. The situation on the public services front is
worse. Piped water available indoors has
grown by only 2% and is now available to
27% households.
7. In urban areas, piped water is available to
between half and two-thirds of families. Of
families which get piped water, less than a
third get three hours of supply a day.
8. Gujarat, Maharashtra, Goa and Delhi have
the highest coverage of families for piped
water (60%). Delhi gives its residents water
for the most number of hours in a day.
9. Flush toilets are now accessible to one-third
of all households and over two-thirds of
urban households. Toilet coverage is the
highest in Kerala (92%), Delhi (79%) and
Punjab (74%).
10. Access to electricity is inching towards
becoming universal with 83 per cent of all
households getting supply. Jammu and
Kashmir, Himachal Pradesh and Delhi have
100% access to some electricity.
11. Just 45% households with access to power
get 18 hours or more of electricity in the day.
Himachal Pradesh, Punjab, Kerala, Delhi and
Gujarat lead the country in terms of supply
of 18 hours or more.
NCAER
The NCAER is the only research organisation
with a large sample survey to estimate household
income. The governments National Sample Survey
Organisation (NSSO) collects data on consumption
expenditure, which is often used as a proxy for
income.

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INTERNATIONAL
SAUDI DECLARES ATHEISTS AS TERRORISTS
Recently, Saudi Arabia has introduced a series
of new laws which define atheists as terrorists. In
a string of royal decrees, the Saudi King Abdullah
has clamped down on all forms of political dissent
and protests that could "harm public order". The
new provisions define terrorism as calling for atheist
thought in any form, or calling into question the
fundamentals of the Islamic religion on which this
country is based.
The new laws have largely been brought in to
combat the growing number of Saudis travelling to
take part in the civil war in Syria, who have
previously returned with newfound training and
ideas about overthrowing the monarchy.
Under the new decree by King Abdullah, Saudi
Arabia will jail for up to 20 years anyone who
fights in conflicts abroad - an apparent move to
deter Saudis from joining rebels in Syria.
But the law also applies to any Saudi citizen or
a foreigner residing in the kingdom that 'calls for
atheist thought in any form or calls into question
the fundamentals of the Islamic religion on which
this country is based.
Yet last month further regulations were issued
in Saudi, identifying a broad list of groups which
the government considers to be terrorist
organisations - including the Muslim Brotherhood.
Saudi authorities have never tolerated criticism of
their policies, but these recent laws and regulations
turn almost any critical expression or independent
association into crimes of terrorism. These
regulations dash any hope that King Abdullah
intends to open a space for peaceful dissent or
independent groups.
Riyadh fears returning fighters will target the
ruling Al Saud royal family - as happened after
the wars in Afghanistan and Iraq. An appeal
contained in the counter-terrorism measures for
fighters to turn themselves in had not been
answered. Saudi authorities fear that the Muslim
Brotherhood, whose Sunni Islamist doctrines
challenge the Saudi principle of dynastic rule, has
tried to build support inside the kingdom since the
Arab Spring revolutions.
According to the Human Rights Watch, the
new regulations were also a setback to campaigns
for the protection and release of a number of
prominent human rights activists currently jailed
in Saudi Arabia. The new "terrorism" provisions
contain language that prosecutors and judges are
already using to prosecute and convict independent
activists and peaceful dissidents.
DOMESTIC WORKERS IN U.K. ENSLAVED WITH TIED VISA RULES
Migrant domestic workers accompanying their
employers to the United Kingdom are being
subjected to serious abuses including forced labor
as has been reported by the Human Rights Watch
in its report, Hidden away: migrant domestic
abuses in the U.K.. According to the report, the
UK government is not interested in safeguarding
these vulnerable workers, and recent changes to
UK immigration rules make it harder for workers
to flee abuse.
With the confiscation of the passport,
confinement to the home, physical and emotional
abuse, long working hours with no rest time, no
holidays, and low wages or non-payment of wages,
the plight of the migrant domestic workers in the
United Kingdom has worsened.
According to the Home Office, 15,000
domestic workers enter the U.K. every year.
Mainly poorly educated women, they come
from Asia and Africa with their employers
as child-minders, careers for the elderly, cooks
and cleaners.
Their lives were made considerably worse,
when in 2012, the Home Office, under
Theresa Mays drive to control immigration,
introduced a new tied visa rule.
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This disallows a domestic worker who has
been brought by an employer into the country
to change employers, thus effectively trapping
the worker in an exploitive workplace.
Thus, those who flee abusive work
environments become illegal immigrants. If
they return they must face the employers
fury.
On April 1, a campaign coalition comprising
trade union Unite, and the charities Justice for
Domestic Workers, and Kalayaan, submitted a
signed petition to Prime Minister David Cameron,
calling for scrapping of the tied visa rule, and
restoration of the1998 Overseas Domestic Workers
visa. According to this, a migrant domestic worker
need only work for an employer for a minimum
period of a year, after which she is free to change
employers.
The powerful alliance that achieved the
Overseas Domestic Workers visa in 1998 should
come together again to expose the slavery status
reintroduced by the new tied visa, which has
prevented migrant domestic workers from gaining
their rights.
Domestic workers here work up to 18 hours a
day without breaks, going hungry and have to eat
leftovers, of being not allowed to use mobile phones,
and of not being able to contact their families or
leave the homes of employers. Some received wages
as little as 100 a month.
Before the rule was changed Kalayaan was
getting from 300 350 domestic workers
approaching its centre for assistance every year.
After the introduction of the tied visa, 100 or so
less approach it, possibly because of the difficulties
workers have of getting out of the house.
TIBETAN REFUGEES UNDER
SUEVEILLANCE IN NEPAL
Nepal has long been a way station for Tibetans
fleeing China. Many continue on to India, where
the Dalai Lama lives and where they can obtain
refugee status. Still, some 20,000 Tibetans live in
Nepal. Most were born there, yet the government
of Nepal refuses, according to Human Rights
Watch, to issue at least half of them official
identification. Even those Tibetans who arrived
before a 1989 rapprochement with China have no
right to own property, or to gain official
employment or access to higher education.
Human Rights Watch has accused the Nepal
government of exerting increased surveillance and
abuse of Tibetan refugees under China pressure.
The Nepal government is accused of forcibly
returning fleeing Tibetans to China, where they
were allegedly persecuted. In effect, Nepal has
turned itself into a partner of Chinas anti-Tibetan
policies.
Tibetan refugee communities were now facing
a de facto ban on political protests, sharp
restrictions on public activities promoting Tibetan
culture and religion, and routine abuses by Nepali
security forces. These include excessive use of force,
arbitrary detention, ill-treatment in detention,
threats and intimidation, intrusive surveillance, and
arbitrary application of vaguely formulated security
offenses.
Wherever Tibetans in Nepal gather to socialize
or worship, they are likely to be spied on by
Nepalese security forces who make no secret of
their close links with Chinese authorities. Non-
governmental organizations that seek to monitor
the situation or are engaged in humanitarian work
with Tibetans in Nepal are also under surveillance
and have been accused of disloyalty.
In February, Nepals Parliament elected Sushil
Koirala Prime Minister. Nepals Constituent
Assembly is tasked with drafting a new constitution
before February 2015. Nepal now has a fresh
opportunity to reform its unjust policies toward
Tibetan residents and refugees. B
China, which was fully aware of Nepals
economic needs, invited Mr. Koirala to attend the
China-South Asia Exposition in Kunming, China,
in June and pledged to increase tourism to Nepal,
a poor country heavily dependent on Chinese help
and investment. China has also offered lawmakers
financial assistance in drafting the new constitution.
The government of Nepal has every right to
seek positive trade and diplomatic relations with
China. But it must stop allowing China to dictate
policy regarding Tibetans in Nepal.
A quick move by Koirala and Nepals
Constituent Assembly is the need of the hour to
guarantee resident Tibetans legal status that respects
their basic rights, and to treat Tibetan refugees in
accordance with Nepalese and international law,
without which, Nepals struggle to achieve lasting
democratic governance will remain incomplete.
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UKRAINE: IN NEED FOR REFORM
Through an inclusive constitutional reform,
Russia and the United States have agreed to work
for a diplomatic solution in the Ukraine crisis.
Russias Foreign Minister Sergei Lavrov and U.S.
Secretary of State John Kerry summed up their
agreement after stating that Russia and the U.S.
differed on the causes of the crisis in Ukraine.
The diplomatic solution points towards four
priority goals:
To assure minority and language rights;
To disarm irregulars and provocateurs;
To launch an inclusive constitutional reform;
To hold free and fair elections.
It is by far the most important part of the
Russian-American agreement while the
constitutional reform came closer to the end of the
announced list of priorities. It has been made clear
that nobody can impose any configuration on
Ukrainians and that federalisation was the only
way to prevent Ukraine from splitting along the
east-west fault lines.
The U.S. opposes the federal structure for
Ukraine for the same reason as Kiev does the
reform would give Russian-speaking eastern and
southern regions veto power over a possible decision
by the central government to join NATO or the
European Union (EU).
Russia Makes Gas Costly for Ukraine
Russia has scrapped the last discount on gas
price granted by Moscow to Ukraine, effectively
raising the price by $100 to $485 for every 1,000
cubic metres. Russia had granted this earlier
discount to its neighbour in exchange for keeping
its Black Sea Fleet facilities in Crimeas port of
Sevastopol.
This will result in rising the price on gas for
Ukraine automatically, going up to $485 for 1000
cm starting in April.
Ukraine is a dependent on imports from its
resource-rich former Soviet master to keep the
country running. Russia has repeatedly shown
readiness to use gas as a lever in conflicts with
Ukraine, which remains dependent on imports.
NATORUSSIA: END OF CO-OPERATION
NATO's foreign ministers have ordered an end
to civilian and military cooperation with Russia
and are searching out ways to better protect alliance
members that feel threatened by the Kremlin.
A kremlin is a major fortified central complex
found in historic Russian cities. This word is often
used to refer to the most famous one, the Moscow
Kremlin, or to the government that is based there.
The complex serves as the official residence of the
President of the Russian Federation.
The suspension of all practical civilian and
military cooperation between NATO and Russia
may result into
The possible deployment and reinforcement
of military assets in eastern NATO members,
such as Poland and the Baltic states, that feel
menaced by Moscow's latest actions.
A possible increase of readiness levels for the
NATO rapid response force.
A possible review of NATO's crisis response
plans, as well as its military training and
exercise schedules.
To reassure alliance members closest to Russia
and Ukraine, NATO already has stepped up air
patrols over the Baltic Sea and AWACS
surveillance flights over Poland and Romania.
The North Atlantic Treaty Organization (NATO)
Also called the (North) Atlantic Alliance, it
is an intergovernmental military alliance
based on the North Atlantic Treaty which
was signed on 4 April 1949.
NATO's headquarters are in Brussels,
Belgium.
It has 28 member states the newest of which,
Albania and Croatia, joined in April 2009.
The organization constitutes a system of
collective defence whereby its member states
agree to mutual defense in response to an
attack by any external party.
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PALESTINE DEFIES TO JOIN GLOBAL AGENCIES
After President Mahmoud Abbas of the
Palestinian Authority defied the United States and
Israel by taking concrete steps to join 15
international agencies the Middle East peace talks
verged on a breakdown.
The move was to gain the benefits of statehood
outside the negotiations process. In the emerging
deal, the United States would release an American
convicted of spying for Israel more than 25 years
ago, while Israel would free hundreds of Palestinian
prisoners and slow down construction of Jewish
settlements in the West Bank
Abbas had vowed not to seek membership in
international bodies because Israel had failed to
release a fourth batch of long-serving Palestinian
prisoners by the end of March, as promised.
As per Israeli officials they are not bound by
their pledge because no meaningful negotiations
have taken place since last year.
According to the American officials the
Palestinians appeared to be using leverage against
Israel rather than trying to scuttle the negotiations.
Abbas did not move toward joining the
International Criminal Court, a step Israel fears
most because the Palestinians could use the court
to contest Israels presence in the West Bank.
Mr. Abbas has argued his moves right. He has
been under pressure from other Palestinian leaders
and the public to leverage the non-member
observer-state status they won at the United
Nations in 2012 to join a total of 63 international
bodies.
Despite these events, the White House, believes
that the mediating efforts have reached their limit
and that the two sides need to work their way out
of the current impasse.
TRADE GAP WIDENS IN U.S.
U.S. exports fell in February amid weak
overseas demand resulting in the largest trade deficit
since September. The nation's exports declined 1.1%
to $190.43 billion, while imports rose 0.4% to
$232.73 billion. As a result of which, the nation's
trade gap widened 7.7% to $42.3 billion, more than
the $38.6 billion. February's export decline followed
a 0.6% gain in January. That suggests the surge in
overseas sales that helped boost economic growth
late last year was likely unsustainable.
February's meager import growth provided new
evidence of weak spending by U.S. consumers and
businesses in the early part of the year.
What are the Reasons?
Growth in China is slow while Europe's
recovery remains fragile, tempering demand
for U.S. exports.
Domestic demand looks even weaker after
adjusting the import data for inflation.
Stripping out the effect of higher prices for
petroleum and other products, imports fell
slightly.
Imports of capital goods, industrial supplies
and petroleum products all declined.
Imports of crude oil fell to $19.5 billion, the
lowest level since late 2010, a reflection of
expanded domestic energy production.
The U.S. economy trade data showed also some
signs of strengthening in March. Recent data
showed auto sales surging to one of the strongest
rates in years after weakening in January and
February, while manufacturing activity
strengthened.
A bout of financial volatility in emerging markets
early in the year has subsided, providing a more
stable outlook that should help support U.S. exports.
The Challenges:
China's growth engine is downshifting.
Economists believe Europe risks entering a
period of deflation.
Tensions with Russia over Ukraine could
further harm the global economy.
U.S. exports to the European Union in February
were down 2.5% from January, while exports to
China were 4.6% lower.
The recovery is taking hold, but is too slow.
Unless countries come together to take the right
kind of policy measures, we could be facing years
of slow and subpar growth. The report has
triggered a spate of downward revisions to first-
quarter growth estimates, which had already come
down substantially due to economic disruptions
caused by unusually cold and stormy weather.
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INDIA AND THE WORLD
INDIA-RUSSIA DEFENCE CO-OPERATION
India and Russia have signed defence deals
worth almost Rs 25,000 crore, including the ones
for 42 Sukhoi-30MKI fighters and 71 additional
Mi-17 V5 armed helicopters.The two countries
inked the over Rs 16,000 crore deal for 42 Sukhois,
which will add to the 230 Sukhois contracted in
previous years, and the one for 71 Mi-17 V5
helicopters , to add to the 80 of these choppers
already been inducted.India will not order any
more Sukhois, 272 of them come at an overall price
of over $12 billion with a bulk of them being
produced by Hindustan Aeronautics. Instead, India
is preparing a plan to upgrade them into "Super
Sukhois" in the years ahead with more advanced
avionics, weapons and AESA (active electronically
scanned array) radars.
Key Points of the Deal:
India and Russia will also ink the final design
contract for the joint development of a
futuristic stealth fifth-generation fighter at a
later stage since it is still being drafted. This
R&D contract is pegged at $11 billion, with
the two countries supposed to chip in with
$5.5 billion each.
Each 5th Gen fighter - IAF hopes to induct
around 200 of them from 2022 onwards -
will cost at least $100 million extra.
Consequently, India will eventually spend
around $35 billion on this gigantic project.
Russia has also assured India that INS
Vikramaditya, the refurbished 44,570-tonne
Admiral Gorshkov for which $2.33 billion has
been paid, will not be delayed.
The "technical problems" being faced by
India's solitary nuclear-powered submarine
INS Chakra, the Akula-II attack submarine
leased from Russia for 10 years at a cost of
around $1 billion, will also be sorted out.
India and Russia also agreed to take the first
steps towards operating a ranging station
that will help accurately fix the location of
satellites. A military side agreement on
receiving precision signals from Glonass was
signed last year, following active interest
shown by National Security Advisor Shiv
Shankar Menon.
Russia and India have agreed to further extend
their partnership in the energy sector, which has
moved beyond investment in Sakhalin-I to direct
trade (Gazprom-Gail). Both are now seemingly set
for joint investment in downstream and upstream
sectors. India put its interest areas as equity
participation through ONGC-OVL in existing and
new projects in Siberia, Russias Far East and the
Arctic Shelf, besides showing interest in acquiring
equity stake in discovered or producing assets and
in proposed Liquefied Natural Gas (LNG) projects
in Russia.
INDIAN POLICIES HAMPERING AMERICAN TRADE
A US Trade Representative (USTR) report has
mentioned that Indias policies pose barriers to
American trade and that the US will pursue India
to remove obstacles in a bid to smoothen business
relations. The US will continue to press India to
resolve these issues in 2014. The 2014 report on
Technical Barriers to Trade takes note of the talks
with India at both bilateral and the World Trade
Organization levels and listed some of the issues
obstructing trade relations. The trade barriers
highlighted were Indian policies on wholesale food
labelling, security regulations on telecom equipment,
safety testing requirements for electronics and IT
equipment, and a proposed amendment to the
Hazardous Wastes Act.
According to the report, the proposed Fifth
Amendment to the Hazardous Waste Act,
published in November 2013, but not notified to
the WTO, sets out conditions for the import and
movement of used and refurbished electrical and
electronic equipment (EEE).
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The United States fully supports the protection
of the environment and health against adverse
impacts of wastes. US industry has expressed
concerns that, under the proposed Fifth
Amendment, hazardous waste controls on imports
of used EEE for direct reuse and imports of
refurbished EEE pursuant to a service warranty,
and other similar controls on EEE, would impose
unnecessary burdens on trade that facilitates reuse
and extension of life of EEE to the benefit of the
environment. US electronics and IT goods
manufacturers have raised concerns about the
Indian Department of Electronics and Information
Technologys (DEITY) September 2012 order that
mandates compulsory registration for 15 categories
of imported electronic and IT goods.
The policy mandates exporters to register their
products with laboratories affiliated or certified by
the Bureau of Indian Standards (BIS). This is despite
the fact that all US electronic exports currently sold
in India are fully certified in internationally
recognised laboratories, and the government of
India has never articulated how such a domestic
certification requirement advances Indias legitimate
public safety objectives. Notwithstanding ongoing
efforts by global industry to engage the government
of India to resolve concerns and ambiguities in the
policy the Order entered into force in January 2014.
An important first step is to seek an exemption
for Highly Specialised Equipment (HSE), including
servers, storage, printing machines, and IT products
that are installed, operated, and maintained by
professionals who are trained to manage the
products inherent safety risks. USTR said the
United States will continue to seek clarification on
the scope and application of the revised Preferential
Market Access (PMA) policy for domestically
manufactured telecommunications equipment and
closely monitor its implementation in 2014.
The United States has detailed concerns about
India-specific labelling issues. Indias responses have
failed to provide additional or reliable information
with regard to how the elements of this measure
advances safety or efficacy or quality of the products
in question or meets the specific needs of India.
The Legal Metrology Rules create mandatory
package sizes in metric units. Highly impacted
commodities include canned and bottled drinks,
packaged biscuits and bottled vegetable oils.
Mandatory package size requirements are not
recommended by international standards. Net
weight declaration, supported by Codex and other
international bodies, protects consumers from
fraudulent packaging practices, as was mentioned
in the USTR Report.
JAPANESE LOAN FOR DELHI METRO
A loan agreement for the five projects was
signed between the Japanese Ambassador to India,
Takeshi Yagi, and Joint Secretary in the Department
of Economic Affairs, Ministry of Finance, Rajesh
Khullar, in New Delhi recently.
Japan has committed a loan of Rs.15,188 crore
to India under its Official Development Assistance
for implementation of five projects relating to
enhancement of transportation capacity of the Delhi
Metro, new and renewable energy development,
energy conservation by micro, small and medium
enterprises, upgradation of power distribution
infrastructure in Haryana, and renovation and
expansion of water supply facilities in Agra, Uttar
Pradesh.
The loan for the projects relating to new and
renewable energy development, energy
conservation by MSMEs and upgradation of power
distribution infrastructure in Haryana was pledged
by Japanese Prime Minister Shinzo Abe during his
summit meeting with Prime Minister Dr.
Manmohan Singh in January this year.
The Japanese government has granted a new
loan amounting to Rs.8,933 crore for
enhancing the transportation capacity of
Delhi Mass Rapid Transport System Project
(Phase 3)in order to enhance its trans-
portation capacity.
The objective of the project is to link the
existing 190 km radially developed network
with additional 116-km belt line including six
routes and six intervals which connect Indira
Gandhi International Airport and Noida
district and construction of a heritage line
connecting Central Secretariat, Delhi Gate,
Lal Qila and Kashmiri Gate.
The project on completion will extend the
network length to 329.4 km and transform
Delhi Metro into a global standard urban
transportation system comparable to the
Tokyo Metro.
The Japanese government has been providing
financial support amounting to Rs.30,162
crore for development of Delhi Metro.
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The agreement grants a new Rs.1,800 crore loan
to power producers through the Indian Renewable
Energy Development Agency Ltd for development
of new and renewable energy including solar and
wind power succeeding phase-I of the project.
The ongoing project includes wind power
projects to the tune of Rs.1,160 crore in
Andhra Pradesh, Gujarat, Karnataka, and
solar power projects to the tune of Rs.220
crore in Andhra Pradesh.
The MSME energy saving project aims to
enhance energy efficiency and eliminate
power shortage in the country.
Under phase-III of the project, an ODA loan
of up to Rs.1,800 crore has been granted to
2,000 small and medium-sized enterprises
through the Small Industries Development
Bank of India for investment in energy
conservation equipment.
The financing facility will enable SMEs to
utilise energy efficient equipment including
Japanese cutting-edge technology at a low cost.
The Rs.1,608 crore Haryana power distribution
system upgradation project, covered under the
ODA loan agreement, is aimed at improving power
supply in all of the 21 districts of the state.
It will increase capacity of the sub-stations
by 1,905 MVA and bring down power
distribution loss rate to 30 per cent in the
region.
The Japanese government has been providing
financial support totalling Rs.65,664 crore for
73 power projects in the country.
The Japanese ODA loan of Rs.977 crore for the
Agra water supply improvement project, which
commenced in 2007, has been granted taking into
consideration the increase in project cost due to
rise in material prices.
The ongoing project includes a loan of Rs 1,160
crore for wind power projects in Andhra Pradesh,
Gujarat and Karnataka and Rs 220 crore for solar
power project in Andhra Pradesh.
India is ranked fifth among the wind power
introducing countries in the world as of end of
2012, shows its willingness to further increase
renewable energy including solar power as
illustrated in 'Twelfth Five Year Plan (2012-2017)'.
This project reaffirms our commitment to
sustainable development of India.
FIGHT AGAINST TERRORISM
The United States has provided counter-terror
equipment to Mumbai Police in order to fight
terrorism in a better way. The explosive incident
counter measures equipment, worth $300,000,
includes explosive ordnance disposal suits, specially
designed helmets, disruptors and scanners.
The outgoing U.S. Ambassador, Nancy J. Powell
handed over the equipment to Mumbai Police
mentioning that the relationship between the U.S.
and India, the oldest and largest democracies in
the world, was very deep and strategic. The two
nations are committed to fighting terrorism and
working to make life safe for all. The explosive
incident countermeasures equipment are worth
$300,000.
The Explosive Ordnance Disposal (EOD-9) bomb
suit and helmet have been designed with direct
input from bomb disposal technicians to provide
the highest degree of modular protection and
operational flexibility, the statement said. The helmet
offers protection against fragments with velocities
of over 683 metre per second is made of high-
strength fibre and weighs only 3.6 kg with visor.
The ergonomic design allows easy movement and
good visibility without strain.
Since the first anti-terrorist assistance
programme in 1995, the U.S. State Department has
partnered with the Government of India in
delivering 113 courses to the Indian Police. More
than 2,000 officers have received training. The U.S.
has, in current year, already contributed
approximately $10 million in training and
equipment through the anti-terrorist assistance
programme.
Nancy Powell
Nancy Jo Powell is the United States
Ambassador to India. In sudden development of
events, the US ambassador resigned and will leave
her post by the end of May. The move comes after
a row between the US and India over the arrest
and brief jailing of an Indian diplomat in New
York on a visa fraud charge. The arrest of Devyani
Khobragade in December triggered a furious
response in India, exposing deep misunderstandings
between two states who were supposedly becoming
closer allies.
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ECONOMY
NOW, ROTATION OF AUDITORS COMPULSORY
The Ministry of Corporate Affairs, retros-
pectively, has made the rotation of auditors
mandatory for listed companies, unlisted companies
with a share capital for more than Rs.10 crore, all
private companies with paid-up capital of Rs.20
crore or more, and all companies with public
deposits of a minimum of Rs.50 crore.
For the first time ever, India is introducing
mandatory auditor rotation both at an individual
auditor level and at the audit firm level.
Main Features:
The rules will apply not from the date of
notification of the rules, but retrospectively
from the date the auditors were appointed
The auditor or audit firm will usually have
an extra three years as a transition period.
Prior to the new law, an auditor or an audit
firm could be appointed by shareholders for
a maximum period of one year.
The rules also rule out rotation to a network
firm or an associate or affiliate of the existing
audit firm. Several audit firms had created
such firms in anticipation of the rotation
mandated by the companies legislation.
The rules notified pertain to three more
chapters of the new companies law and
comes into force from 1 April.
The new rules also require auditors to get a
response from a companys board or the audit
committee before reporting a fraud to the
Union government which has to be reported
within 60 days.
The auditor is first required to report the fraud
to the board or audit committee seeking their
reply within a 45-day period and post receipt
of the reply, within 15-day period report the
fraud to the central government. along with
the response received from the board or audit
committee.
As of now, there is no duty cast upon the
auditors. They are not mandated to report fraud.
Auditor's early resignation and removal have
been made possible.
The provision for rotation of auditors was
approved by the Parliamentary Standing Committee
on Finance earlier. According to the Committee
instead of year-to-year basis, an auditor can be
appointment by members in general meeting for
five years. This would ensure that promoter or
company or management does not change auditor
prematurely who is doing good job.
CONSUMER PRICE INDEX TO MEASURE INFLATION
In the first bi-monthly monetary policy
statement, the Reserve Bank of India adopted the
consumer price index on April 1, 2014 as a measure
to curb inflation. Till date, the RBI was using
Wholesale price index to measure indicative
inflation projections.
It was adopted on the basis of the
recommendations of Urjit R. Patel Committee report
on revising and strengthening the monetary policy
framework.
The recommendations also include explicit
recognition of the path for disinflation, transition
to a bi-monthly monetary policy cycle, progressive
reduction in access to overnight liquidity at the
fixed repo rate, and a corresponding increase in
access to liquidity through term repos, and
introduction of longer-tenor term repos as well as,
going forward, term reverse repos.
Based on the recommendations of the high-level
advisory committee chaired by Bimal Jalan, the RBI
is all set to announce in-principle approval for new
bank licences. It will also set out categories of
differentiated bank licences that will allow a wider
pool of entrants into banking.
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In order to expand the market for corporate
bonds, banks would be allowed to offer partial
credit enhancements to them. The feasibility of
limited re-repo/re-hypothecation of government
securities is also being explored.
The RBI would be working to ease entry costs
for foreign investors. It would also strive to reduce
risk for investors and the volatility of flows.
Towards this end the modalities for allowing
foreign portfolio investors to hedge their currency
risks through exchange-traded currency futures
were being worked out in consultation with the
Securities and Exchange Board of India.
To encourage longer-term flows and reduce
volatility, FPI investments in G-Secs would be
permitted only in dated securities of maturity of
one-year and above. The existing investment in T-
bills would be allowed to taper off on maturity.
Any investment limits vacated at the shorter end
would be available at longer maturities, so that
overall FPI limits do not get diminished.
To enlarge the base for banking correspondent
(BC) the inclusion of new entities and a relaxation
of existing distance restrictions, was being
considered.
The RBI would frame comprehensive consumer
protection regulations based on domestic experience
and global best practices. In the interest of their
consumers, banks should consider allowing their
borrowers the possibility of prepaying floating rate
term-loans without any penalty. Banks should also
not take advantage of customer difficulty and
provide and guide them with all possible help.
In order to tackle discrepancies in the system, the
comprehensive framework to help banks reduce their
non-performing assets (NPAs) even while putting
distressed projects back on track was made effective.
Adoption of CPI as a measure of inflation will help
RBI in managing the monetary policy in a better way.
A consumer price index (CPI) measures
changes in the price level of a market basket of
consumer goods and services purchased by
households. A CPI can be used to index the real
value of wages, salaries, pensions, for regulating
prices and for deflating monetary magnitudes to
show changes in real values.
Urjit Patel Committee
In September, 2013 the Reserve Bank of India
had set up an expert committee Chaired by Deputy
Governor Urjit Patel to revise and strengthen the
monetary policy framework to make it transparent
and predictable. The committee submitted its report
in January, 2014.
The main recommendations of committee are
as follows:-
(a) Inflation should be the nominal anchor of
the monetary policy framework, and it should
be defined without any ambiguity.
(b) RBI should adopt CPI (Consumer Price Index)
inflation as the new nominal anchor, as it is
the closest reflection of cost of living and
inflation expectations.
(c) It suggests adopting a longer-term target of 4
per cent for CPI inflation with a band of +/
- 2 per cent.
(d) Inflation from the current level of 10 per cent
to be brought down to 8 per cent over a
period not exceeding the next 12 months and
to 6 per cent over a period not exceeding the
next 24 month period before formally
adopting the recommended target of 4 per
cent inflation with a band of +/- 2 per cent.
(e) The committee asked the Central Government
to ensure that the fiscal deficit as a ratio to
Gross Domestic Product is brought down to
3.0 per cent by 2016-17.
(f) That the monetary policy decision-making
should be vested with a Monetary Policy
Committee (MPC). It went on to recommend
that the Governor of the RBI should be the
Chairman of the MPC. The term of office of
the MPC could be three years, without
prospect of renewal. Besides it also
recommended that MPC should also have
two external members.
(g) It suggested that dependence on market
stabilisation scheme (MSS) and cash
management bills (CMBs) may be phased out,
consistent with government debt and cash
management being taken over by the
government's Debt Management Office.
(h) All fixed income financial products should
be treated on a par with bank deposits for
the purposes of taxation and Tax Deduction
at Source.
(i) On Open Market Operations (OMOs) have
to be detached from fiscal operations and
instead linked solely to liquidity management.
Further the panel said, OMOs should not be
used for managing yields on government
securities.
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Wholesale Price Index (WPI) represents the
price of goods at a wholesale stage i.e. goods that
are sold in bulk and traded between organizations
instead of consumers. WPI is used as a measure of
inflation in some economies. WPI is used as an
important measure of inflation in India. Fiscal and
monetary policy changes are greatly influenced by
changes in WPI. In the United States, Producer
Price Index (PPI) is used to measure inflation.
GOLD GLITTERS IN CHINA
According to the World Gold Council, Chinas
gold demand has doubled from 10% to 21%. Earlier
this year, it replaced India as the worlds biggest
consumer of gold Chinese demand reached 1,189.8
tonnes last year, a 32 per cent year-on-year jump.
The frenetic buying of gold in China, which led to
a temporary shortage of physical stocks, was
sparked by the 28 per cent fall in the precious
metals price in 2013.
With 400 tonnes of domestic production and
over 600 tonnes of physical imports in 2013, Chinas
gold consumption has now exceeded a thousand
tonnes, making it the real mover and shaker of the
world gold market. Chinas hunger for gold is the
result of rising wealth among its young population,
rapid urbanisation and evolving lifestyles.
Indian consumption rose 5 per cent to 987.2
tonnes last year, but was held back by new import
tariffs and restrictions. In China there were no
brakes. Gold jewellery fabrication rose nearly a
third to 724 tonnes, surpassing India for the first
time, and the retail sector boomed. In July and
August, more than 200 gold showrooms opened in
the southern city of Shenzhen.
Because many Chinese buy jewellery for
investment reasons rather than adornment, high
purity 24 carat gold products dominated sales.
Purchases of physical bars mostly kilobars and
smaller weights rose 47 per cent to 366 tonnes, a
new record.
Chinese hold gold in the physical form; and
has a price-sensitive market too. Demand for
jewellery fabrication in China has been growing
robustly alongwith retail demand for bars and coins.
The physical demand in the form of jewellery and
coins hit a record high.
With large-scale redemptions since mid-April
2013, estimated at over 600 tonnes, after the price
meltdown from $1600 an ounce to $ 1200/oz levels,
a significant part of the outflow has reportedly
moved to China. With prices moving down, the
risk of further outflow has increased. In recent
years, Chinas gold demand growth has far
outstripped its GDP growth.
Trade data from the US, the UK and
Switzerland point to large shipments of gold to
Hong Kong from where the goods move over to
the mainland. Gold coin shipments from Switzerland
to China and Hong Kong have also increased.
Over the last five years, Chinas domestic
production of gold has been growing on an average
at eight per cent a year. These reserves were built
from domestic production rather than from imports.
Gold has always been popular in China and now
is increasingly seen as an asset class for individuals.
Greater wealth and disposable incomes created
pent-up demand when prices were high, so when
they dropped there was this phenomenal surge in
buying.
WAY TO PROGRESSIVE TAXATION
The Indian rich people may have to pay more
taxes as countrys government is mulling to propose
heavy taxes for super rich class on basis of the
recommendations in the draft Direct Taxes Code
Bill, 2013, which was put in the public domain on
April 1, 2014. The original Direct Taxes Code Bill,
2010, will lapse with the end of the 15th Lok Sabha
and the new Government will have to initiate the
process for the introduction of the Bill.
The structure of Income Tax system in the
country will not be disturbed and will remain as it
is now. However, a surcharge for income above
particular level is likely to be added. The
government needs to raise more revenues and the
people with larger incomes must be willing to
contribute more.
In India taxes on income are levied at three
rates 10 per cent, 20 per cent and 30 per cent.
These rates were fixed in 1997. With a view to
maintain overall progressivity in levy of income tax,
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the revised Code provides for a fourth slab for
individuals, Hindu Undivided Families (HUFs) and
artificial juridical persons. In their case, if the total
income exceeds Rs 10 crore, it is proposed to be
taxed at the rate of 35 per cent. There is an
additional surcharge of 10 per cent on income
exceeding Rs 1 crore.
There have been repeated calls within India that
rich people should pay more taxes. People have
been demanding that rich people should pay more
tax as they enjoy more amenities and more facilities.
The Finance Ministry has not accepted a
recommendation on revising the tax slabs as
proposed by the Standing Committee on Finance,
headed by Yashwant Sinha, as it will result in huge
revenue loss.
The Committee favoured revising the slab with
no tax on income up to Rs 3 lakh (now Rs 2 lakh),
10 per cent on income between Rs 3 lakh and Rs10
lakh (Rs 2-5 lakh), 20 per cent on Rs 10-20 lakh (Rs
5-10 lakh) and 30 per cent for income beyond Rs
20 lakh (now Rs 10 lakh and above).
There is a 10 per cent additional tax on the
recipient if the total dividend in his hand exceeds
Rs 1 crore. Under the present regime as well as the
one proposed by the original DTC in 2010, dividend
distribution tax is to be levied at the rate of 15 per
cent.
The draft has retained the dividend taxation
provision which favours high net-worth taxpayers
who only pay a fraction of their earnings as tax on
their investments in the capital market.
Now it needs to be seen whether Indian
government proposes higher taxes for rich of the
country and whether there is any resentment from
the rich or super rich class.
WORLD BANK TO CURB POVERTY
The World Bank Group (WBG) is all set to
achieve its ambitious twin goals of ending extreme
poverty by 2030 and boosting shared prosperity
for the bottom 40 percent of the population in
developing countries.
According to the World Bank president, Jim
Yong Kim, the development lender will focus on
10 countries -- including India, China, Bangladesh
and Democratic Republic of Congo -- that are home
to 80 percent of the world's extreme poor. These
residents live on less than $1.25 a day.
The World Bank is nearly doubling its lending
capacity to middle-income countries because they
can provide insight to poorer countries in solving
problems. These countries will benefit by being able
to borrow another 2.5 billion dollars a year over
and above their current limits.
The increase will boost annual lending to middle
income countries from the current 15 billion dollars
a year to 26 billion-28 billion dollars. The move
responds to demand from middle income countries
that had reached their borrowing limits. Very poor
countries will benefit from a record 52 billion
dollars in grants and loans pledged in December.
The World Bank's proposal to support the
building of the world's largest hydroelectric dam
on the Congo River - called Grand Inga Dam is an
example of the bank's bold steps on its way to
eliminating world poverty by 2030.
The bank said there will be expansions in all of
its major branches, including a $100 billion boost
in the fund for middle-income countries, known as
the International Bank for Reconstruction and
Development. The bank's private sector arm, the
International Finance Corporation, will boost
annual commitments to $26 billion a year. And the
Multilateral Investment Guarantee Agency, which
provides political risk insurance, aims to increase
its guarantees by 50 percent over four years.The
WBGs effort to shore up support for middle income
countries reflects the changing geography of
poverty, which is now home to three-quarters of
the worlds extreme poor. Middle-income countries
such as China, India and Indonesia continue to
struggle with rising inequality and deep pockets of
poverty, where large segments of the population
remain in extreme poverty or are vulnerable to
falling below the $1.25 per day line. By increasing
available funds for these countries, the Bank is
demonstrating its strong commitment to ending
poverty in all corners of the world.
The World Bank will help developing countries
end extreme poverty and boost shared prosperity,
by providing them with more financial resources,
more solutions-based knowledge, and help leverage
more private sector investment. The bank also
focuses on improving the quality of its lending
rather than just the amount thrown as loan.

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SCIENCE & TECHNOLOGY
A DROUGHT HIT PLANET BY 2100
An increase in evaporating drying means that
those regions expected to get more rain, including
the important rice, wheat and corn belts of the
American and Asian continent, will be at high risk
of drought. One third of the world may be at
increased risk of drought by 2100 as warmer
temperatures wring more moisture from the soil.
Much of concern about future drought under
global warming has focused on rainfall projections
but increasing heat is expected to extend dry
conditions to far more farmland and cities by the
end of the century than changes in rainfall alone.
The higher evaporation rates may also play an
important role as warmer temperatures wring more
moisture from the soil, even in some places where
rainfall is forecasted to increase.
It is estimated that 12 per cent of land will be
subject to drought by 2100 through rainfall changes
alone; but the drying will spread to 30 per cent of
land if higher evaporation rates from the added
energy and humidity in the atmosphere is
considered. Warmer temperatures will help to dry
things out.
The International Panel on Climate Change
(IPCC) has warned that soil moisture is expected
to decline globally and that already dry regions
will be at greater risk of agricultural drought.
Using two drought metric formulations, it has
been analysed that projections of both rainfall and
evaporative demand from the collection of climate
model simulations have led to this conclusion. Both
metrics agree that increased evaporative drying will
probably tip marginally wet regions at mid-latitudes
like the US Great Plains and a swath of southeastern
China into aridity.
The dry zones in Central America, the Amazon
and southern Africa will grow larger. In Europe,
the summer aridity of Greece, Turkey, Italy and
Spain is expected to extend farther north into
continental Europe.
If precipitation were the only consideration, the
great agricultural centres would not be considered
at risk of drought The moisture balance in the soil
is what really matters for agriculture.
If rain increases slightly alongwith increase in
temperature, drought is a potential consequence.
GETTING SOLAR CELLS FROM SUNLIGHT
In a recent advance in solar energy, researchers
have discovered a way to tap the sun to directly
produce solar energy materials. This breakthrough
could soon reduce the cost of solar energy, expedite
production processes and make the sun almost a
"one-stop shop" that produces both the materials
for solar devices and the eternal energy to power
them.
How a Solar Cell Works?
Solar cells or photovoltaic cells convert the suns
energy into electricity. Sunlight is composed of
miniscule particles called photons, which radiate
from the sun. Silicon is what is known as a semi-
conductor, meaning that it shares some of the
properties of metals and some of those of an
electrical insulator, making it a key ingredient in
solar cells. As these hit the silicon atoms of the
solar cell, they transfer their energy to loose
electrons, knocking them clean off the atoms. The
photons could be compared to the white ball in a
game of pool, which passes on its energy to the
coloured balls it strikes. Creating an electrical
imbalance within the cell, which acts a bit like a
slope down which the electrons will flow in the
same direction. As the photons smash the electrons
off the silicon atoms, this field drives them along in
an orderly manner, providing the electric current
to power calculators, satellites and everything in
between.
The Benefits:
Cheaper and slimmer than conventional
silicon cells, these could soon be used as
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coatings in buildings to produce energy.
This approach is also very environment-
friendly.
Several aspects of this system should continue
to reduce the cost of solar energy, and when
widely used, our carbon footprint.
In this process, simulated sunlight is focused
on the solar microreactor to rapidly heat it. The
work is based on the use of a "continuous flow"
microreactor to produce nanoparticle inks that
make solar cells by printing.
The solar materials were made with copper
indium diselenide, but to lower material costs it
might also be possible to use a compound such as
copper zinc tin sulfide. The chalcogenide-based, thin
film solar cells have already returned a fairly high
solar energy conversion efficiency of about 20
percent in the laboratory, researchers said, while
costing less than silicon technology.
INDIA ADDS YET ANOTHER FEATHER TO ITS CAP
IRNSS is equivalent to Global Positioning
System of the United States. India has successfully
launched its second navigational satellite IRNSS
1B onboard PSLV-C24 from the Satish Dhawan
Space Centre.
Indian Space Research Organisation's
workhorse Polar Satellite Launch Vehicle PSLV-
C24 placed the IRNSS IB in precise orbit about 19
minutes after a perfect lift-off at 5.14 pm.
The navigational system has a total budget of
around Rs 1,420 crore and will provide accurate
position information to users within the country
and up to 1,500 km from the nations boundaries.
It is similar to the global positioning system of the
US, Glonass of Russia, Galileo of Europe, China
Beidou and the Japanese Quasi Zenith Satellite System.
There will be multiple uses of the system,
including for terrestrial, aerial and marine
navigation, disaster management, vehicle tracking
and fleet management. It can also be integrated
with mobile phones and mapping.
About IRNSS-1B :
IRNSS-1B is the second dedicated navigation
satellite of India.
It is one of the seven satellites constituting
the IRNSS space segment.
Its predecessor, IRNSS-1A, was launched by
PSLV-C22 in July 2013.
IRNSS-1B has a lift-off mass of 1432 kg.
The configuration of IRNSS-1B is similar to
that of IRNSS-1A
IRNSS -1B carries two types of payloads -
navigation payload and ranging payload.The
navigation payload of IRNSS-1B will transmit
navigation service signals to the users.
This payload will be operating in L5 band
(1176.45 MHz) and S band (2492.028 MHz).
The ranging payload of IRNSS-1B consists of
a C-band transponder which facilitates
accurate determination of the range of the
satellite.
IRNSS-1B also carries Corner Cube Retro
Reflectors for laser ranging.
The design of the payload makes the IRNSS
system interoperable and compatible with
Global Positioning System (GPS) and Galileo.
The satellite is powered by two solar arrays,
which generate power up to 1,660 watts, and
has a life-time of ten years.
INDIAS OWN GPS: THE KARGIL FACTOR
Geopolitical needs can very much be a factor
for making advanced developments in R&D, at least
in case of India. When Pakistani troops took
positions in Kargil in 1999, the Indian military
sought GPS data for the region but the space-
based navigation system maintained by the US
government denied it to India. The Kargil
experience made the nation realise the inevitability
of having for an indigenous satellite navigation
system. Indian Space Research Organisation took
the nation closer to the goal, which it would achieve
in less than two years. By making reality the Indian
Regional Navigation Satellite System (IRNSS) which
works on a combination of seven satellites which
would 'look' at the region from different angles,
and, in the process, helps calculate from relative
data, real-time movement of objects by as less as
10m. Isro launched the first of the satellites in the
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group, IRNSS-1A, in July 2013. By mid-2015, it
plans to have all the seven in place. Three of the
seven satellites will be in geostationary orbits and
the other four in inclined geosynchronous orbits.
Apart from navigation, the system will help in
precise time keeping, disaster management, fleet
management and mapping.
The IRNSS will be offering two types of
services: the first is called Standard Positioning
Service (SPS) which is for civilian use while the
second is called Restricted Services (RS), which can
detect movement of objects by less than 10m. It
will put India in the company of select nations
which have their own positioning systems.
INDIA GETTING HIGH ON SOLAR CAPACITY
The solar market potential remains as large as
ever. As power shortfalls continue, peak shortage
is a critical problem that has stifled industrial
growth, and back-up generation is becoming
increasingly expensive. The total grid-connected
solar capacity, commissioned under the National
Solar Mission, crossed the 2,500-MW mark and
stood at 2,632 MW as on March 31, 2014.
In January 2014 , Indias total grid-interactive
renewable energy capacity crossed 30,000
MW and the total installed capacity of wind
segment crossed 20,000 MW.
State-policy driven contributions stand tallest
at 1,322 MW, followed by MNRE projects at
688 MW, REC Scheme at 491 MW, with the
rest coming from renewable purchase
obligation private sector rooftop and central
government organisations.
Gujarat (916 MW) is on the top of the list
with Rajasthan (730 MW), Madhya Pradesh
(347 MW) and Maharashtra (249 MW)
following it among others.
During fiscal 2013-14, a total capacity of 947
MW was commissioned of which MP added
the highest capacity of 310 MW.
Hikes in diesel prices have made solar a very
attractive option thereby increasing its potential
even in a slower-growing economy. With continued
power shortfalls, peak shortage becomes a critical
problem and increases the costs involved in back
up generation thereby stifling industrial growth.
The Jawaharlal Nehru National Solar Mission
was launched on the 11th January, 2010 by the
Prime Minister. Also known as the National Solar
Mission is a major initiative of the Government of
India and State Governments to promote
ecologically sustainable growth while addressing
Indias energy security challenges. The Mission has
set the ambitious target of deploying 20,000 MW
of grid connected solar power by 2022. It is aimed
at reducing the cost of solar power generation in
the country through (i) long term policy; (ii) large
scale deployment goals; (iii) aggressive R&D; and
(iv) domestic production of critical raw materials,
components and products, as a result to achieve
grid tariff parity by 2022.
INSAT 3E DECOMMISSIONED
INSAT-3E is a third-generation communication
satellite which was launched in September 2003
with 36 transponders 24 C-band and 12
extended C-band transponders, out of which only
25 of them have been working since 2009. The
satellite has completed its life and gone out of
service. Built to last 15 years, it has completed ten-
and-a-half years in orbit.
Few days back, it ran out of the on-board
oxidiser, which, along with fuel, keeps it Earth-
locked or fixed over the Indian sub-continent and
runs its daily functions. The ISRO had apparently
expected that the satellite, positioned at 55 degrees
E longitude, would last a few more months and
that it would be smoothly replaced with GSAT-16.
Now the space agency is getting set to launch
IRNSS-1B, second of its seven regional navigation
satellites.
A start has been made of shifting users of
INSAT-3E on to standby capacities on some of the
other satellites. The spare capacity includes the
three-month-old GSAT-14.
INSAT-3Es 10 extended C-band transponders
supported VSAT operators; its C-band supported
BSNL and captive communication networks of the
National Thermal Power Corporation and the Oil
and Natural Gas Corporation, among others.
The ISRO is now left with 189 transponders on
its INSAT/GSAT fleet and 91 additional
transponders leased on foreign satellites.
INSAT-3E had briefly blinked and disrupted
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services for almost a day in September 2012 and
was restored. The Master Control Facility at Hassan
is due to move the expired satellite into a higher
IS BUREAUCRACY DOMINATING SCIENCE IN INDIA?
INSAT 3E was launched on September 28, 2003
from the European Space Agency's spaceport in
French Guiana on board the Ariane rocket.
Currently it has become defunct.
The satellite had a launch mass of 2750
kilograms.
It is the 4th satellite launched in the INSAT-
3 series of ISRO.
It was designed for providing high-speed
communication, Television, VSAT & Tele-
education services.
In April 2014, almost eleven years after being
launched, the satellite ran out of oxidizer and a
few days later, was decommissioned by the ISRO.
K. Radhakrishnan is the Chairman of the Indian
Space Research Organisation.
graveyard orbit and keep it out of the way of
many working spacecraft of other countries.
Though R&D spending is less than 1 per cent
of Indias GDP, there is no dearth of funds for
research in India, because there is no competition
here. The only negative point is that money comes
with the same bureaucratic restrictions that apply
to all government expenditure.
A case can be taken of the research students
who get no funding support to travel abroad to
participate in conferences, scientists are constrained
by limited foreign travel. These restrictions on
foreign travel prevent students and scientists from
gaining in terms of networking, exchanging ideas
and being exposed to the kind of work being done
by their peers in other countries.
The systematic undermining of scientific
enterprise started way back in the mid 1950s. The
fact that scientific departments are modelled on
the rest of the bureaucracy has turned out to be a
big mistake. Thats because bureaucracy is not
designed to encourage innovation. DAE and the
department of space are the only institutions that
undertake developments in-house. Others like the
Department of Biotechnology do not.
By being a part of the bureaucracy, even those
scientists in India who do remarkable research
cannot be rewarded with promotion or pay hike,
so there is no motivation, so scientists are not willing
to take up novel scientific challenges. The malaise
of promotion based on years of service, and not by
achievement has spread to institutions at the
national level too.
Indian science has for too long been hamstrung
by bureaucratic mentality that values
administrative power over scientific achievements.
It is pertinent to note that the department of space
stands out from the rest. Younger people have been
put in charge of important programmes, and they
have succeeded.
These factors essentially explain the reason as
to why prior to the 1950s important contributions
from people like Jagadish Chandra Bose, Satyendra
Nath Bose and Srinivasa Ramanujan came from
within the country.
Another problem is the lack of lateral movement
from one institution to another. While collaborating
with scientists from other institutions would go a
long way in putting to test the usefulness of ones
expertise without actually moving to another
institution, one ends up gaining more by moving
out.
Even collaborating with scientists from other
institutions is rarely seen in India. Adding worse
to it, even the funding agencies do not insist on
this. Funding is rather provided for collaboration
within the institution than across institutions. This
is true even in the case of the Nano mission which
was launched in 2007. The Nano mission has
funded 150 individual projects, 11 centres of
excellence and six industry-linked projects. But the
mission has required no collaboration between
institutions.
There are very few national frameworks for
collaboration that would work towards a common
goal. Collaboration becomes all the more important
as the size of the groups in any area is small in
India.
There is an inherent resistance to collaboration
across institutions in other countries as well.
Programmes like ESPRIT [European Strategic
Programme on Research in Information
Technology] insist on collaboration across
institutions and countries for funding.
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How to overcome this ailment?
Changes that need to be urgently initiated to
reinvigorate research is to decouple funding
and government control.
Indian science needs public funding, but not
government control.
There are numerous examples in other
countries and in Europe where such a system
has been operating successfully.
The tenure of heads of institutions should also
be limited and they should be encouraged to
return to active research.
The rotation should be every five years.

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HEALTH
GENES RESPONSIBLE FOR OBESITY
People who have fewer copies of a gene AMY
1 that helps the body digest carbohydrates are at
a greater risk of obesity. Obesity may be genetically
linked to how our bodies digest the starch found in
carbohydrate-rich foods like bread, rice and
potatoes.
The scientific study investigated the relationship
between body weight and the gene AMY1, which
is responsible for an enzyme present in our saliva
known as salivary amylase. This enzyme is the first
to be encountered by food when it enters the
mouth, and it begins the process of starch digestion
that then continues in the gut. When we eat, an
enzyme in saliva called salivary amylase kick-starts
digestion by breaking down some of the starch
found in carbohydrates into sugars. This enzyme is
produced by the gene AMY1.
It's an unusual gene, in that people can have
multiple copies of it, unlike most genes where there
are just two. The more copies one has, the more
enzyme he produces. It is believed that humans
evolved to carry more copies of the gene as our
diets shifted towards carbohydrate-rich foods.
The number of copies of AMY1 can be highly
variable between people, and it is believed that
higher numbers of copies of the salivary amylase
gene have evolved in response to a shift towards
diets containing more starch since prehistoric times.
Researchers looked at the number of copies of
the gene AMY1 present in the DNA of thousands
of people from the UK, France, Sweden and
Singapore.They found that people who carried a
low number of copies of the salivary amylase gene
were at greater risk of obesity. The chance of being
obese for people with less than four copies of the
AMY1 gene was approximately eight times higher
than in those with more than nine copies of this
gene.
The researchers estimated that with every
additional copy of the salivary amylase gene there
was approximately a 20 per cent decrease in the
odds of becoming obese.
This is discovery is important because it
suggests that how we digest starch and how the
end products from the digestion of complex
carbohydrates behave in the gut could be important
factors in the risk of obesity. The number of copies
of a gene that a person carries can vary throughout
their DNA, although people usually have two copies
of each gene. The researchers found that the
number of copies of AMY1, however, can vary
wildly between people. The study found that people
with a low number of copies of AMY1 were most
likely to become obese.
The researchers examined the number of copies
of AMY1 present in the DNA of more than 6,000
people from the UK, France, Sweden and
Singapore. According to the results of the study,
people with a low number of copies of AMY1 were
most likely to become obese. From this data, they
found that AMY1 was the gene that had the
greatest influence on body weight. Also, the
number of copies of the salivary amylase gene is
highly variable between people, and so, given this
finding, can potentially have a large impact on our
individual risk of obesity.
NO SMOKING BENEFICIAL
The number of premature births and children
visiting hospitals for asthma has dropped
significantly in parts of the US, Canada, and Europe
barely a year after they enacted smoking bans.
The new analysis combined the results of 11
studies encompassing more than 2.5 million births
and nearly 250,000 asthma attacks. Experts called
it the best evidence to date that legislation creating
smoke-free public places and workplaces improves
childrens health, even in the womb. There are over
a million babies dying of being born preterm every
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year in the world which can be saved by making

major strides in decreasing that with smoking bans.
The investigators have also pooled data and found
a 5 per cent reduction in the number of children
born very small for their gestational age after the
introduction of smoke-free laws.
An earlier analysis of the effect of smoking bans
on adult health demonstrated a 15 per cent
reduction in cardiovascular events. Only 16 per
cent of the worlds population is covered by
comprehensive smoke-free laws, and 40 per cent
of children worldwide are routinely exposed to
secondhand smoke. Strong smoke-free laws change
social norms about smoking, and consequently
people implement smoke-free policies in their own
homes as well. Smoke-free policies have a direct
impact on child health.
It is held that any amount of secondhand smoke
is dangerous. But still enough efforts are being taken
to protect children from secondhand smoke. About
half of Americans are protected by complete smoke-
free policies in workplaces, restaurants and bars.
The analysis did not prove that smoke-free laws
caused the improvements in childrens health. And
the researchers did not evaluate other factors, like
taxation of tobacco products and advertisement
bans, which could have contributed in reducing
smoking. Further studies are needed to estimate
the effect of smoke-free laws on respiratory tract
infections in children, a major problem of
secondhand smoke. There is also a pressing need
for studies of tobacco control laws in low- to middle-
income countries. This kind of work will catalyse
the introduction of smoke-free laws, and as that is
done, the opportunity is taken to evaluate their
impact and strengthen the evidence. It is now
evident that early-life protection from involuntary
secondhand smoke exposure, holds great potential
to reduce the consequential disease burden like
asthma and other serious lung diseases.
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NEWS IN BRIEF
NEWSMAKERS
Parvez Musharraf
Parvez Musharraf, former chief of army staff
and the President of Pakistan, for the first time,
under Article 6 of the Constitution indicted by a
special court for high treason for imposing
emergency and subverting the Constitution. Under
Article 6 of the Constitution, "Any person who
abrogates or subverts or suspends or holds in
abeyance, or attempts or conspires to abrogate or
subvert or suspend or hold in abeyance, the
Constitution by use of force or show of force or by
any other unconstitutional means shall be guilty of
high treason." Justice Faisal Arab who heads the
special court said it is punishable with death under
the law.
The former military dictator was charged with
issuing an unconstitutional and unlawful order in
2007 at Rawalpindi as Chief of the Army Staff,
called the "Proclamation of Emergency Order,
2007" which held the Constitution in abeyance. He
subverted the Constitution and committed the
offence of high treason.
Musharraf seized power in a coup in 1999
and remained President until 2008.
Manuel Carlos Valls
Manuel Carlos Valls is the newly appointed
prime minister of France. He is a French Socialist
Party politician. He was previously the Minister of
the Interior from 2012 to 2014, the Mayor of vry
from 2001 to 2012 and has also been a Member of
the National Assembly since 2002. He is a member
of the Socialist Party and is regarded as the "right
wing" of the Socialist Party. In March 2014,
following major losses to centre-right and extreme-
right political parties in French municipal elections,
President Francois Hollande appointed Valls to the
post of Prime Minister. He replaced Jean-Marc Ayrault.
Marie-Louise Coleiro Preca
Marie-Louise Coleiro Preca was sworn in as
the president of Malta. She became the countrys
ninth president and is the second woman to be
appointed head of state in the European Union
country. Coleiro Preca, a notary by profession, was
previously minister for social policy after the Labour
party returned to power following March 2013
elections. She is the second female president of
Malta and was previously general secretary of
Labour. She takes over from George Abela, who
was appointed in 2009.
OBITUARIES
Kumba Yala
Former Guinea Bissau President Kumba Yala,
who ruled the West African nation from 2000 to
2003, died at the age of 61.Yala came to power in
2000 after the country's second multi-party election
following a brief civil war in 1999. Some of Yala's
policies began to cause political and social turmoil.
Three years after his election, the military removed
him from office in a bloodless coup. Later in life,
he ran twice in polls to regain the presidency but
was unsuccessful.
AWARDS/PRIZES
Padma Awards presented
President Pranab Mukherjee conferred Padma
awards, announced on the eve of 65th Republic
Day, in New Delhi. The list comprises two Padma
Vibhushan, 12 Padma Bhushan and 53 Padma Shri
Awardees.
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The list of the awardees are:
Padma Vibhushan: Dr. Raghunath A.
Mashelkar, Science and Engineering (Maharashtra)
Padma Bhushan: Shri Pullela Gopichand, Sports
Badminton (Andhra Pradesh), Prof.
Anisuzzaman, Literature and Education
(Bangladesh), Shri Kamal Haasan, Art-Cinema
(Tamil Nadu), Prof. Jyeshtharaj Joshi, Science and
Engineering (Maharashtra), Shri Vijayendra Nath
Kaul, Civil Service (Delhi), Dr. (Smt.) Neelam Kler,
Medicine Neonatology (Delhi), Late Dr. Anumolu
Ramakrishna, Science and Engineering (Andhra
Pradesh), Prof. Lloyd I. Rudolph, and Prof. Susanne
H. Rudolph, Literature and Education (USA),
Begum Parveen Sultana, Art - Classical Singing
(Maharashtra), Shri T.H. Vinayakram, Art -
Ghatam Artist (Tamil Nadu), Shri Vairamuthu
Ramasamy Thevar, Literature and Education (Tamil
Nadu),
Padma Shri: Dr Naheed Abidi, Dr Kiritkumar
Mansukhlal Acharya, Dr Subrat Kumar Acharya,
Vidya Balan, Sekhar Basu, Prof (Dr) Balram
Bhargava, Sabitri Chatterjee, Prof Ashok
Chakradhar, Prof Biman Bihari Das, Dr Sunil
Dabas, Chhakchhuak Chhuanvawra, Dr Ramakant
Krishnaji Deshpande, Elam Endira Devi, Prof G.N.
Devy, Dr Brahma Dutt, Prof Kolakaluri Enoch, Prof
Ved Kumari Ghai, Prof (Dr) Pawan Raj Goyal, Ravi
Bhushan Grover, Ramaswamy R Iyer, Prof (Dr)
Daya Kishore Hazra, Prof Eluvathingal Devassy
Jemmis, Prof (Dr) Shashank R Joshi, Naina Apte
Joshi, Bansi Kaul, J L Kaul, Ustad Moinuddin Khan,
Prof Rehana Khatoon, Dr P.Kilemsungla, Dr Milind
Vasant Kirtane, Ashok Kumar Mago, Geeta
Mahalik, Paresh Maity, Dr Mohan Mishra, Prof
Vamsi Krishna Mootha, Prof Vishnu Narayan
Namboodiri, Ravi Kumar Narra, Dipika Rebecca
Pallikal, Dr Ashok Panagariya, Sudarsan Pattnaik,
Dr Sunil Pradhan, Pratap Govindrao Pawar,
Wendell Augustine Rodricks, Dr Sarbeswar
Sahariah, Rajesh Saraiya, Alur Seelin Kiran Kumar,
Shri Anuj (Ramanuj) Sharma, Sooni Taraporevala,
Prof Vinod Kumar Singh, Tashi Tondup, Waikhom
Gojen Meetei, Prof (Dr) Jeewan Singh Titiyal, Prof
Om Prakash Upadhyaya.
Padma Awards, the countrys highest civilian
awards, are conferred in three categories, namely,
Padma Vibhushan, Padma Bhushan and Padma
Shri. The Awards are given in various disciplines/
fields of activities, viz- art, social work, public
affairs, science and engineering, trade and industry,
medicine, literature and education, sports, civil
service, etc. Padma Vibhushan is awarded for
exceptional and distinguished service; Padma
Bhushan for distinguished service of high order
and Padma Shri for distinguished service in any
field. The awards are announced on the occasion
of Republic Day every year. The awards are
conferred by the President of India at a function
held at Rashtrapati Bhawan sometime around
March/ April.
KOYAL RANA
Koyal Rana was crowned Femina Miss India
2014. She will represent India at Miss World 2014.
Jaipur born Rana had to compete with the 23 other
models at Yash Raj Studio, Mumbai for the top
honour, the fbb Femina Miss India World 2014 Title.
Koyal completed her schooling from St. Thomas'
School, Delhi. She is currently doing her
undergraduate programme in Bachelor of Business
Studies from Deen Dayal Upadhyaya College,
University of Delhi. She represented India at Miss
Teen International in Chicago and won the Miss
Universal Teen 2009 Title. She also won Femina
Miss India Delhi 2014 title.
TERMINOLOGIES
I RNSS-1B
India successfully launched its second
navigational satellite IRNSS-1B onboard PSLV C-
24 on April 4, 2014. IRNSS-1B is the second of the
seven satellites planned under the Indian Regional
Navigation Satellite System (IRNSS). PSLV C24
successfully placed the 1,432 kg IRNSS 1B in the
intended orbit above the Earth. IRNSS would help
in terrestrial, aerial and marine navigation, disaster
management, vehicle tracking and fleet management,
integration with mobile phones, mapping
and geodetic data capture and others. Once
completed, the IRNSS system will offer navigational
services, for both civilian and defense purposes, in
India and also 1,500 km beyond its borders.
Pink Revolution
Pink Revolution refers to Indian Meat Industry
Perspective of setting up state of the art meat
processing plants; developing technologies to raise
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male buffalo calves for meat production; increasing
the number of farmers rearing buffalo under
contractual farming; and establishing disease-free
zones for rearing animals. Pink Revolution refers
to the slaughter of animals. When animals are
slaughtered, the colour of their flesh is pink.
MISCELLANEOUS
Enceladus
NASAs Cassini spacecraft has made repeated
flybys of Enceladus, one of Saturns moon, by
photographing the fissures, nicknamed tiger stripes,
where the geysers originate, measuring
temperatures and identifying carbon-based organic
molecules that could serve as building blocks for
life. Using data from NASAs Cassini spacecraft,
they have found gravitational evidence that a vast
sea the size of Lake Superior could extend out from
around the southern pole. The sea is at freezing
temperature and in continual darkness. And the
water may have been liquid only in the recent past,
a few tens of millions of years. Enceladus has been
shown to have sodium and potassium salts as well
as ammonia and methane in the plume of water
vapor being spit out of its south pole. If it has
organic molecules in its layer of liquid water, its a
candidate for habitable environments in our own
solar system.
SPORTS
Anjus record ratified by IAAF
Anju Bobby George became the first Indian
athlete to win a gold medal in the World Athletics
Final. The International Association of Athletics
Federations (IAAF) has ratified the gold medal for
long jumper Anju Bobby George at the IAAF World
Athletics Final in Monte Carlo in 2005 after the
disqualification of Russias Tatyana Kotova. Kotova
finished ahead of the Anju in the meet but later
failed to clear a dope test.
Indian athlete star Anju had previously won a
bronze medal in the 2003 World Championship,
gold in the Asian Games and Asian Championship,
besides a bronze in the Commonwealth Games.
Barcelona banned from signing
FIFA, the ruling body of world football, has
banned Spanish football giants FC Barcelona from
signing any new players until the summer of 2015
as both Barcelona and the Spanish Football
Federation (RFEF) had "violated several provisions
concerning the international transfer and first
registration of non-Spanish minors with the club,"
over the period 2009 to 2013. Barcelona will be
fined 450,000 Swiss francs ($509,000, 369,027
euros) and banned from signing any players for
two complete and consecutive transfer periods. The
ban could impact on the club's reported plans to
bring in Gladbach's German goalie Marc-Andre ter
Stegen.
National games to be held in 2015
The National Games would be held in 2015
and the dates would be decided in consultation
with the various national federations as has been
announced by Indian Olympic Association (IOA)
president N. Ramachandran. The National Games
of India is a sporting event and it comprises various
disciplines in which sportsmen from the different
states of India participate against each other.

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EDITORIALS
MESSAGE FROM SRI LANKAN POLLS
The elections to the Western and Southern
provincial councils in Sri Lanka, home to a third of
the countrys voters, was expected to be a walkover
for the Mahinda Rajapakasa-led United Peoples
Freedom Alliance. After all, the government had
fought bravely against foreign conspirators at the
25th session of the United Nations Human Rights
Council in Geneva barely days ahead of the well-
timed polling. In fact, much of the election
campaign made it appear as if Sri Lanka was under
siege and no one other than President Rajapaksas
UPFA was capable of saving the nation. But the
electorate did not buy the whole story, the voter
turnout was low, and the results appeared
puzzling. Local elections may be fought on
immediately relevant issues and the outcome of a
national poll may well be decided on larger
considerations; still, the latest results provide an
idea of the country's mood. The UPFA did win a
majority in Mr. Rajapaksas home province, the
Southern Province, and emerged the biggest party
in the Western Province that has Colombo as its
headquarters. But a point of concern for the ruling
combine was the numbers: the UPFA won 33 of 55
seats in the South down from 38 in 2009 and
managed 56 of the 104 in the West where it had
68 in 2009. More worrisome for the UPFA is the
fact that it lost votes in the Presidents hometown,
Hambantota represented in Parliament by his
son Namal Rajapaksa. Clearly, people of the port-
town prefer their district MP, Sajith Premadasa,
son of former President Ranasinghe Premadasa. Mr.
Sajith Premadasa has fought both the Rajapaksas
and has a running battle going in his own United
National Party. This is the last round of polls in Sri
Lanka ahead of the parliamentary and presidential
elections scheduled for 2016.
Though the losses do not appear massive, the
message behind it cannot be wished away. The
UPFAs loss did not result in its main rival, the
UNP, gaining votes. In fact, there appears to be
serious confusion among people: they voted for
former General Sarath Fonsekas Democratic
National Alliance, which is now emerging as the
third force in the country, and also the JVP, which
is re-grouping under a new leader, Anura Kumara
Dissanayake. The UNPs vote share declined in
Colombo Central, its biggest stronghold, and it will
have to double its vote share if it has to emerge on
top in a future election. Ranil Wickremasinghe, the
UNP chief who survived many bids to unseat him,
does not seem to be the leader who can carry the
UNP into an election victory. With Sarath Fonsekas
fate already sealed following the deal he struck to
be released from prison, people are clearly looking
for a new leader. And there appears no one in
sight. That might be Mr.Rajapaksas biggest trump
card yet.
Source: The Hindu
MAINTAINING THE STATUS QUO
The Reserve Bank of Indias first bi-monthly
monetary policy statement is the last such before
national elections and the formation of a new
government. Obviously, monetary policy will have
to be dovetailed with the new governments
policies, especially fiscal policy. The interregnum is
not particularly conducive to major monetary policy
announcements. However, even while playing it
safe on certain key ongoing initiatives for
instance, the award of new bank licences has been
referred to the Election Commission by way of
abundant caution the central bank has perforce
to address monetary policy issues that cannot be
postponed. The policy statement, it has been
emphasised, is an economic and regulatory
statement and ought not to be viewed through the
prism of contemporary politics. The decision to hold
policy rates was widely anticipated and, as is to be
expected, based on a critical assessment of
macroeconomic factors, both within India and
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outside. Since January, economic growth in the
developed economies has moderated. For India and
a number of developing economies, renewed
volatility of capital flows and tightening of external
financing conditions are the biggest threats. While
sticking to its inflation and GDP growth forecasts,
the RBI has warned of upside risks to inflation and
downward risks to growth.
On inflation, the risks to the central forecast of
8 per cent CPI inflation by January 2015 stem from
a less-than-normal monsoon, uncertainty in the
setting of minimum support prices, the outlook for
fiscal policy and the possibility of higher commodity
prices. The monetary policy stance will be firmly
focussed on keeping the economy in a
disinflationary path towards a CPI inflation of 6
per cent by January 2016. GDP growth is projected
to pick up from a little below 5 per cent in 2013-
14 to the central estimate of 5.5 per cent, in a range
of 5 to 6 per cent in 2014-15. However, there are
no tangible signs of a sustained revival in industry
and services as yet. Clearing of stalled projects and
a pick-up in export growth as the world economy
gains traction should brighten the outlook.
Elaborating on the developmental and regulatory
policies outlined earlier, the key recommendations
of the Urjit Patel Committees report that have been
implemented include the adoption of the new CPI
as the key inflation measure, and a transition to a
bi-monthly policy cycle. For banks, the transitional
period for full implementation of Basel III capital
regulations has been extended by a year to March
31, 2019. It is proposed to make inflation-linked
savings bonds more investor-friendly. A wealth of
information on non-monetary policy measures are
found in this bi-monthly monetary policy statement,
and hopefully that will become the norm.
Source: The Hindu
POORLY PERFORMING PUBLIC SERVICES
There is something ironic about politicians
making announcements about the Right to
Education or the Right to Health when the only
thing they can ensure is allocation of funds. Their
control over the usage of these funds is somewhat
weak; the overall quality of services is even weaker;
their control over actual health or educational
outcomes is the weakest.
Looking at education and health behaviours
and outcomes using data from the India Human
Development Survey (IHDS) of 2004-05 and 2011-
12 paints a picture of striking dissonance between
government programmes and experiences at the
ground level. The period between 2004-05 and
2011-12 saw initiation of several new programmes.
The Right to Education Act (RTE) was implemented
in 2010; the National Rural Health Mission
(NRHM) began in 2005; the Janani Suraksha
Yojana (JSY) began in 2005, to be implemented
alongside the NRHM. Substantial expenditure was
incurred in each of these centrally-sponsored
programmes. Below we look at changes in
education and health to see how these programmes
line up with outcomes.
Privatisation
The implementation of the RTE should, in
theory, lead to higher enrolment in government
schools and better educational outcomes. Ironically
we see the reverse. Private school enrolment
increased from 28 to 35 per cent between 2005
and 2012 for children of 6-14 years, even before
poor students in private schools were reimbursed.
At the same time, in keeping with the findings of
various Annual Status of Education Report surveys,
the IHDS also found a small decline in reading
and writing skills among children of 8-11 years.
While 54 per cent of children could read a simple
paragraph in 2005, there was a modest decline to
52 per cent in 2012. A similar decline was observed
for basic arithmetic skills like two digit subtraction,
from 48 per cent to 45 per cent. For government
schools the decline was higher nearly 5
percentage points for both outcomes, but a shift
from government to slightly better performing
private schools limits the overall decline in skill
levels.
This growing privatisation of education was
matched by continued and slightly increased
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privatisation of health care. The NRHM is supposed
to strengthen preventive and curative care,
particularly in rural areas and in States with poor
health infrastructure such as Uttar Pradesh, Bihar,
Rajasthan, Madhya Pradesh. However, a very small
proportion of the Indian population relies on public
facilities. About 70 per cent of patients visit private
providers either as their first choice or once they
are frustrated with public services.
Between 2005 and 2012, years when the NRHM
was implemented, instead of increased usage of
government services, we see a modest growth in
the use of private services for minor illnesses such
as cough, cold and fever (from 69 per cent to 73
per cent) as well as for treatment of major illnesses
like diabetes, cancer and heart problems (from 67
per cent to 72 per cent). Ironically the greatest
increase in the use of private services is in high-
focus large States like U.P., Bihar, Rajasthan, M.P.
and Orissa. Here the proportion of patients going
to private providers increased by nearly 5
percentage points.
The disenchantment of parents and patients
with government services is widespread. When
asked in 2012 about their confidence in government
and private schools and medical facilities, 53 per
cent of the respondents expressed confidence in
government schools compared to 72 per cent for
private schools. Similar differences are observed for
confidence in government doctors vis--vis private
doctors. What explains this? There is no reason to
believe that private doctors and teachers are more
qualified than government doctors and teachers.
Typically government recruitment standards are
more stringent about training and qualifications
while there is little control over the private sector.
It is hard to imagine that anyone would prefer a
self-styled private doctor in a distant village to
an MBBS doctor in a Primary Health Centre (PHC).
Yet, this is exactly what we see around us.
The reasons for these preferences are myriad.
Parents and patients feel disrespected by
government service providers and may find they
get better service if they pay. For example, about 6
per cent of the patients see a government doctor or
nurse in their private practice rather than in the
government dispensary where the same services
could be practically free. Government facilities are
often irregular in their opening times and teacher
and doctor absenteeism adds to the disenchant-
ment. The classroom environment is often not
friendly and supportive. The IHDS finds that
children are scolded and physically punished in
both government and private schools. Indeed, our
qualitative interviews suggest that parents consider
this to be a sign that the teachers care about
students. But this scolding is not balanced by
positive reinforcement in government schools. Only
about 33 per cent parents of 8-11-year-olds in
government schools claim that their children
received any praise in the school in the prior month;
this proportion is about 55 per cent for private
schools.
These observations reflect our pessimism about
the potential for improving government health and
educational services, regardless of the rights that
get enshrined in the Constitution. Any service
delivery system that insists that a doctor live in a
remote village is doomed to failure since doctors
must also think of their childrens education. But
instead of focussing mainly on village-based sub
centres which patients rarely seem to use
enhancing PHCs which are located in slightly larger
and perhaps better connected towns may have a
greater potential for improving the quality of
services. Thoughtful organisation of services has a
far greater potential for enhancing health and
educational outcomes than ideologically influenced
discussions of rights.
Some good news
The success of the JSY in increasing hospital
deliveries is heartening. The years following the
initiation of the JSY document a striking increase
in hospital deliveries. This increase is greatest in
large focus States. Here the hospital delivery rate
has jumped from 25 per cent to 56 per cent between
2005 and 2012. Most of this improvement is in
government hospitals from 14 per cent to 40 per
cent. This success may be due to the efforts made
by medical personnel in response to cash incentives
they receive, and the fact that hurdles to hospital
delivery like transportation have received
consideration in programme design. Although the
quality of maternity care remains a concern,
increasing utilisation certainly points to the success
of the programme. This suggests that focussing on
smarter organisation of public services that aligns
with provider incentives, and enhances efficiency,
offers potential.
Source: The Hindu
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THE ENDLESS CALAMITY IN WEST ASIA
Palestine that once was is no more, and what
is no more strives to be reborn. When new nations
were to be born in the dawn of decolonisation,
Palestine vanished from the world map. In its place
came Israel, hastily welcomed into the newly
created United Nations, which played a part in its
formation. Since 1948 the U.N. has attempted in
so many ways to atone for Resolution 181, which
delivered the land to Israel. Its relief organisation,
the United Nations Relief and Works Agency for
Palestine Refugees in the Near East (UNRWA) tends
to the needs of the Palestinian refugees and its other
agencies attempt to document Israels routine
violation of international law and U.N. resolutions.
Each year on the day that Resolution 181 passed,
November 29, the U.N. celebrates a Day of
Solidarity with the Palestinian People. The day
passes with modest programmes at the local U.N.
offices; 2014 is the U.N.s Year of Solidarity with
the Palestinian People, although the planet can be
forgiven for its ignorance. No celebrities have lined
up to take selfies with signs that proclaim their
solidarity, and no news organisations have devoted
any time for a discussion of this endless calamity
in West Asia. Matters are so grave indeed that the
Palestinians are no longer sure that they will retain
the 22 per cent of historical Palestine that had been
promised to them by the 1993 Oslo Accords, what
Edward Said called the Palestinian Versailles. The
U.N., as midwife, stands aside as Israel prevents
the birth of even this moth-eaten state.
If not for the blind support by the United States,
Israel would be considered one of the planets most
undesirable states. Israel has disregarded more U.N.
Security Council resolutions that sanction its
behaviour than any other state. But with U.S.
protection, these resolutions come without any
pressure no sanctions, no retribution, and
certainly no threat of humanitarian intervention.
The U.N. Special Rapporteur on Human Rights in
the Palestinian Territories, Richard Falk writes in
his December 2013 report that Israeli policy
amounts to segregation and apartheid, including
continuing excessive use of force by Israeli security
forces, extra-judicial killings that are part of acts
carried out in order to maintain dominance over
Palestinians and a blockade of the Palestinian
economy by the use of checkpoints and walls. The
most striking part of Mr. Falks report is his assertion
that Israel is conducting ethnic cleansing in the
region. The combined effect of the measures
designed to ensure security for Israeli citizens, to
facilitate and expand settlements, and it would
appear, to annex land, he writes, is hafrada (the
Hebrew word for separation), discrimination and
systematic oppression of, and domination over, the
Palestinian people.
The Jewish State
On March 24, Mr. Falk delivered his report to
the U.N. Human Rights Council, which is in the
process of debating five resolutions that stem from
it. One of them the one the Israelis have taken
most seriously is on the call for member states
to urge businesses to take all necessary steps
including terminating all their business interests in
the settlements. Due to a labour strike by Israeli
diplomats, none of its representatives took their seats
in the Council. The U.N. resolution is non-binding,
although it would still dent the reputation of Israel.
Israeli Prime Minister Benjamin Netanyahu avoided
all talk of Israeli policy and U.N. resolution. He
has taken refuge in the charge that all critics of
Israel are anti-Semites. In the past, anti-Semites
boycotted Jewish businesses, he said in February.
Today, they call for the boycott of the Jewish State,
and by the way, only the Jewish State.
Use of the term Jewish State has itself come
under criticism from another U.N. agency, the
Economic and Social Commission for Western Asia
(ESCWA). In its new report, Arab Integration: A
21st Century Development Imperative (2014), the
Commission notes, Israel insists on being
recognized by the world and the Arabs as an
exclusively Jewish State. It imposes this recognition
as a condition for reaching a settlement with the
Palestinians. This policy is based on the concept of
the religious or ethnic purity of States, which
brought to humanity the worst crimes and atrocities
of the twentieth century. It is this idea of the
Jewish State that fuels the toxic right-wing in Israel
they will not tolerate the return of Palestinian
refugees or deliver full rights to Arab Israelis largely
because they fear that this would demographically
challenge their ability to create a Jewish democracy.
In 2003, Mr. Netanyahu said that the Wall built to
encage the West Bank would prevent a
demographic spillover into Israel. The collapse
of the peace process to deliver a two-state solution
threatens to leave the Israelis with only two options
expel the Palestinians to Jordan and Egypt to
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liquidate the Palestinian question, or absorb the
Palestinians into a non-racial one-state of Israel-
Palestine. Israeli policy leans toward the former,
with the latter its nightmare. On March 26, the
Arab League following ESCWAs
recommendation passed a resolution that rejected
the call to consider Israel as a Jewish State.
Reminding Israel that its definition of statehood
has immense racial connotations has been a salutary
task of the U.N. it has also led to a backlash
from the Netanyahu government, unwilling as it is
to allow any criticism.
India and Israeli commerce
As U.N. criticism of Israel deepens, and as Israel
begins to feel pressure from the European Union
and other Arab states for its illegal settlement
activity, India has decided to extend its ties to Israel.
Ever since India and Israel established full
diplomatic ties in 1992, India has cooled its political
support for the Palestinians and heated up its
imports of Israeli arms. Currently, according to
Israeli Defense Ministry data, India imports more
than $1.5 billion of the $7 billion of weaponry that
Israel exports. It is Israels most important customer.
India is currently looking at a bid from the Israeli
firm Rafael for its Spike anti-tank guided missile.
This contract will alone be worth $1 billion.
The arms deals themselves are not always
advantageous to India. A list of corruption scandals
litters the court records in both Israel and India. A
senior Indian diplomat told this writer what an
Israeli arms dealer once said, I cannot believe you
Indians. We quote you a price and you make the
deal. You dont insist on bargaining for a better
price or demanding technology transfer. Indias
domestic arms industry has not lived up to its
promises, with the possible exception of the Tejas
fighter jet (whose journey began in 1983 and is
only now ready to take flight). India has exchanged
its dependency on Russian military technology for
a new dependency on U.S. and Israeli arms. This
should be worrying by itself, aside from the moral
question of being one of the major underwriters
for the Israeli occupation of the Palestinian lands.
Indias relations with Israel are cemented
around commerce, with arms deals at the forefront.
Of the two major political parties, the Bharatiya
Janata Party (BJP) is far closer to Israel with its
hopes for a civilisational and a strategic deal
between the countries. The Congress is more
pragmatic in its deal-making, although no less
committed to a special relationship with Israel. Its
opportunism is tempered by Indias reliance upon
the Gulf Arabs for its oil. In March 2013, Prime
Minister Manmohan Singh told the Shura Council
in Saudi Arabia, There is no issue more important
for peace and stability in the region than the
question of Palestine. Far too long the brave people
of Palestine have been denied their just, legitimate
and inalienable rights, including most of all the
establishment of a sovereign, independent and
viable Palestinian state. If these are not mere words,
the Indian government might be asked to reconsider
its arms purchases from Israel, which pays for the
very occupation that Dr. Singh decries. Alone
among all the parties is the CPI(M), whose 2014
election manifesto seeks to extend full support to
the cause of a Palestinian state; sever military and
security ties with Israel. The CPI(M) is in line with
the mood of the United Nations agencies, although
it is not clear how close this is to the national
temper. Does the public even care any longer about
the Palestinians?
It is to stem this doubt about the relevance of
the Palestinian cause that the U.N. has declared
this the Year of Solidarity. There are two reasons
why the current U.N. attempt is already more
promising than earlier attempts. For one, the U.N.
agencies themselves are much more aggressive about
Israeli violations of U.N. resolutions and
international law than previously. The tone of the
reports and the statements by people like the U.N.
High Commissioner for Human Rights, Navi Pillay
suggest that U.S. protection notwithstanding, Israel
is no longer to get preferential treatment. What is
good for the goose will have to be good for the
gander. Second, a new public awareness of Israeli
policies fuels the Boycott, Divestment and Sanctions
(BDS) movement, whose Indian branch has begun
to protest the participation of Indian artists in Israeli
cultural fairs and Indo-Israeli business deals. The
BDS movement pushed Oxfam to break its ties with
film star Scarlett Johansson for her role to also
represent SodaStream, an Israeli firm that is based
on seized, settlement land. These protests have
begun to assume the kind of force that once
propelled the movement against South African
apartheid. When they will take on that kind of
moral charge, Israel will be in trouble. It will have
to cease its occupation and reconsider its treatment
of the Palestinians. That is an end that no one
wants more than the Palestinians themselves.
Source: The Hindu
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PUBLIC PURPOSE OF ARCHITECTURE
The Pritzker Architecture Prize, the most
distinguished and celebrated award in architecture,
is given to a professional in the field who has
contributed substantially to humanity and displayed
excellence in built work. Awarded this year to
Shigeru Ban, the 56-year-old Japanese architect, the
Prize has truly met its objective after a long time.
Mr. Ban has built inexpensive, easily transportable
and recyclable disaster relief structures across the
world for two decades. His ingenious designs have
converted cardboard, paper and other relatively
inexpensive materials into useful and reliable
building components. He has utilised them in
challenging situations ranging from earthquake-
disaster relief work in Bhuj to refugee structures in
Rwanda. Not many architects commit their skills
and resources to design for the needy. Their
preoccupation has been with creating expensive,
glitzy and monumental structures, and major
awards, including the Pritzker Prize, thus far have
favoured such less socially relevant projects. This
recognition of Mr. Bans contributions probably
marks the beginning of a rethink. In a way it tries
to make up for the failure to recognise his illustrious
predecessors, such as Hassan Fathy and Laurie
Baker, who were prolific in designing delightful
buildings for the poor.
This years Pritzker Prize raises a key question
for Indian architects and policymakers to reflect
on: if good design brings in innovation and adds
value, why are they not increasingly deployed to
serve the public good? Organisations such as the
Design Council of the U.K., which advises the
government on matters of design, have repeatedly
demonstrated that creative solutions can improve
the quality of everyday life and deliver public
services efficiently. They have also shown that funds
invested in design fetch profits and social value.
Such savings are critical for fund-starved projects
such as low-cost housing. The New York City
Department of Housing and Preservation
Development has taken up collaborative work with
designers to create a better liveable environment in
their affordable housing projects. In contrast, State
departments in India pay hardly any attention to
design. As a result, low-income housing projects
impose unliveable environments on the poor, and
cities are yet to see well-designed bus stops, easily
maintainable public toilets and user-friendly civic
buildings. Even the National Design Policy,
announced in 2007, has not sufficiently focussed
on socially useful products. Architecture has to
rediscover its social purpose to stay relevant.
Professional education and public policy must
enable it to serve those in need than just those who
can pay for it.
Source: The Hindu
VOTING WHILE IN THE ARMY
As a larger number of service personnel would
be in the many cantonments in Haryana and
Punjab, competitive canvassing there can introduce
problems.
Vote bank politics is a commonly bandied about
expression in the election season, which is no
surprise. But a new vote bank of Armed Forces
personnel is now looking a step closer to reality
with the Supreme Court directing the Election
Commission (EC) to allow defence personnel to vote
as general voters in peace stations. This is somewhat
unusual. The Supreme Court merely reiterated the
law it laid down in an earlier judgment in 1971,
though the circumstances of that case were
somewhat different. The Representation of the
People Act, 1950 defines the term ordinarily
resident in Section 20, a qualification required to
get registered as a voter. Armed forces personnel
are among the few categories of people defined as
persons with service qualification in Section 20(8)
and are given a special dispensation in Section 20(3)
and Section 20(5). This category can declare while
living at a place ordinarily resident status at
another place where they would have normally
lived, if it were not for the exigencies of service.
Implicit faith was to be placed on their declaration
and they would be registered at the place they
indicated as their place of ordinary residence, most
likely their native place, and as a corollary the place
of their posting could not be their ordinary place
of residence.
Place of posting vs residence
In a matter arising from the Nagaland Assembly
Election in 1969, the court did not accept the
argument that for service personnel, the place of
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posting cannot ipso facto be the place of residence.
Instead, the declaration of the Assam Rifles
personnel, who had spent 10 years in one location
claiming it as a place of ordinary residence under
Section 20(5), wherein but for their service
qualification also they would have been ordinarily
resident and not merely because of it, found favour
with the Court. The Court declared that the
statutory fiction in Section 20(3) gave the right to
the personnel to claim registration at their home
town or village but the fiction cannot take away
the right of persons possessing service qualification
to get themselves registered at a constituency in
which they are actually residing though such place
happens to be their place of service.
The law gave a special dispensation to a service
voter in that his declaration designating a place as
his place of ordinary residence and certified by his
organisation was not to be questioned by the
Electoral Registration Officer (ERO) but simply
accepted. It was intended to avoid the delay in
registration if an enquiry were to be done
independently by the ERO as in the case of ordinary
voters.
Interpreting that judgment as mandating the
registration of a service voter at the place of his
posting and by cleverly using the provision u/s
20(5), a campaign was mounted in the run-up to
the Punjab Assembly election in 2007 by Brig. H.S.
Ghuman (retd.) and his All India Veterans Core
Group (AIVCG) to have service personnel posted
in several cantonment towns in Punjab to register
as ordinary voters there. A total of 7,274 service
personnel were registered as voters, of whom 850
were from towns and villages of Punjab and 6,424
from other States. All applications were in
Gurumukhi script, but most of the signatures were
not in that language, therefore providing a clue to
what really went on. The highest registration was
in Kahnuwan constituency in Gurdaspur district
with an Army cantonment, where 3,488 personnel
registered. Of them, 70 were from Punjab and the
rest from other States. It was alleged by the Akali
opposition candidate that the Congress candidate
P. S. Bajwas relative, a retired Brigadier, was the
prime mover for this large-scale registration. The
formation commander was accused of collusion.
Mr. Bajwa won that contest with a margin of 5,288
votes. Evidently Mr. Bajwa used the tactics more
effectively in the 2009 Parliament election. He seems
to have won the Gurdaspur seat by a margin of
8,000 votes, with 11,000 votes from the cantonment
cast in his favour against the 13,345 votes polled
by servicemen.
Since then, retired service officers and others
including a Member of Parliament have lent their
support to this campaign culminating in the latest
verdict of the Supreme Court. But as a note of
caution that was sounded in many border States
that the local voter population may be small
and can be outnumbered by the service personnel
the Court restricted the applicability of the order
only to peace stations. In other words, only in peace
stations can service persons claim they are ordinary
residents and vote locally. If their units move out
to non-peace stations, they cannot register
themselves there. Imagine a serviceman who hails
from Odisha and is posted in Jalandhar and gets
himself registered there. He can vote in the Lok
Sabha election but cannot vote for the Odisha
Assembly election being held simultaneously. If his
unit moves to a non-peace station, he can neither
register himself there nor can he vote in the next
Parliament or Assembly election unless he is
registered again at some other place.
If peace stations are defined in a location-
specific manner, this can lead to anomalies. If
Itanagar or Leh are defined as peace stations but
not Tawang or Nubra, it may be kosher for vote
bank politics but it will create disaffection among
the local population in both places, given the small-
sized constituencies and the thin margins of victory.
Distinctions based on unit-specific roles in the same
station will entitle men of the non-operational unit
to register as voters and of the operational unit
ineligible. So States have to be in either category to
avoid anomalies.
More problems
As a larger number of service personnel would
be in the many cantonments in Haryana and
Punjab, competitive canvassing by politicians there
can bring in its wake other problems. A normal
movement of a unit can be questioned by rival
politicians as favouring one or the other candidate
or party. The formation commanders can be accused
of favouritism as happened in the Punjab Assembly
election in 2007. Will the Election Commissioner be
petitioned to effect the transfer of a formation
commander because of his perceived partiality as
is done in the case of Collectors, Superintendents
of Police, Deputy Inspector Generals of Police, etc.?
Only time can tell. But if a perfectly routine exercise
by a detachment of the Army can be hyped to
raise fears of a coup, pre-election movement of
Army units and posting of formation commanders
can become the subjects of political mudslinging
with obvious adverse consequences.
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Since the new dispensation would not extend
to all the defence personnel and since many service
personnel may still remain registered in their native
towns and villages by choice, the postal ballot
system or its alternative the proxy voting facility
would still be relevant. A study done at the
behest of the EC by the Collector of Thanjavur
district in 2007 showed that only 34.54 per cent of
the postal ballot papers issued to service personnel
returned in time to be included in counting. A
significant 12.63 per cent of the ballot papers which
were received late missed the counting. Worse, 25.39
per cent of ballot papers were returned undelivered,
which meant that their addresses were not updated
by the Record Office.
Transmission time can be cut down if blank
ballot papers are sent electronically, providing more
time for their return. Better still would be to develop
online voting and what better way than to provide
it to the group that deserves it the most? We
certainly owe it to our Armed forces personnel to
do all that is possible to enable them to exercise
their franchise.
Source: The Hindu
TAX THEATRICS
The finance ministry proposed significant
changes to the Direct Taxes Code recently. But the
Lok Sabha is set to be dissolved and with that the
DTC Bill, 2010, is set to lapse. Apart from the optics,
the ministrys move is entirely pointless given
that the incoming government will have to start
the whole process afresh and introduce a new bill
in Parliament.
The changes proposed in this futile exercise are
also of little merit. Not only have some sensible
suggestions of the parliamentary standing
committee been ignored, but other changes such
as the introduction of a super-rich tax bracket of
35 per cent for individuals earning above Rs 10
crore and an additional tax of 10 per cent on
dividends above Rs 1 crore seem aimed at pre-
election signalling rather than reforming the system
to maximise tax collection and compliance.
The fact of the matter is that the soak-the-rich
school of taxation doesnt work. If it did, the days
of 90 per cent-plus personal income tax rates
wouldnt have generated the kind evasion they did.
As a result of a moderation in tax rates, the
proportion of black money in the economy came
down from 30 per cent of the GDP during the
1970s to 17 per cent now. And while proponents
of enhancing the top-bracket tax rate cite
convenient figures comparing Indias tax to GDP
ratio with those of Scandinavian and western
European countries, the fact remains that Indias
effective (adjusting for the number of people below
the poverty line) tax to GDP ratio, at 28.3 per cent,
is greater than that of the US, and other countries
in its peer group such as China, Mexico and
Malaysia.
Rather than focusing on the imagined
dereliction of the rich, it would be better to try
and encourage better compliance among the middle
classes. Those earning between Rs 10 and 20 lakh
on average paid Rs 1.3 lakh, or 8.6 per cent of
average income, as income tax in 2011-12. In
contrast, assuming that the average income in the
Rs 20 lakh-plus bracket is Rs 1 crore, the tax
incidence was 23 per cent. Some estimate that only
20 per cent of people who actually earn between
Rs 10 and 20 lakh actually pay any tax at all,
compared with 45 per cent in the Rs 20 lakh-plus
bracket.
Better compliance, particularly among the
middle classes, is clearly the need of the hour. And
this is exactly what the parliamentary committee
sought to encourage when it suggested that the
personal income tax exemption limit be raised from
Rs 2 to 3 lakh. Similarly, it suggested the widening
of slabs so that the 20 and 30 per cent rate would
only kick in if one earned between Rs 10 and 20
lakh, and above Rs 20 lakh, respectively.
Unfortunately, the finance ministry rejected these
suggestions and chose to strike poses instead.
Source: I ndian Express
THREAT OF DISINTEGRATION
The fragile Libyan constitutional arrangement,
reached after the dictator Muammar Qadhafi was
overthrown in a regime-change operation instigated
by NATO governments under cover of a United
Nations no-fly resolution in 2011, is disintegrating.
Prime Minister Ali Zeidan, who was kidnapped on
October 10, 2013 and released within a few hours,
fled the country in March 2014 after the General
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National Congress (GNC) passed a vote of no-
confidence in him. Secondly, in December 2013 the
GNC voted to extend its own mandate for another
year, thereby violating the transitional constitutional
plan, which gave it a mandate only until February
7. Various GNC factions have their own agendas
too; the Justice and Construction Party, the Muslim
Brotherhoods Libyan branch, leads a bloc with 34
of the 80 party-allocated seats in the 200-seat
Congress, and may well be spreading hardline
Islamist influence. Furthermore, the eastern
province of Cyrenaica (Barqa in Arabic) accuses
Tripoli of not sharing oil revenues, and Barqa
leaders based in Benghazi now demand a federal
constitution. On March 10, a Barqa militia group
blockaded Es Sidr, ensuring that a tanker of
uncertain origin and ownership loaded an
estimated $36 million worth of crude oil and put
out to sea; the U.S. sent Navy SEALS to capture
the ship. A wider blockade that started in August
2013 has already cost the country $8 billion.
Other tensions are causing yet more fighting.
Early in March, Misrata-based militants exploded
a bomb at a military base in Benghazi, killing five
persons and injuring 14; moreover, the 225,000
Libyans registered as members of militias are paid
by the state but remain under their own local or
political commanders. Meanwhile, Human Rights
Watch and other observers have criticised western
governments and sections of the international
media for credulously accepting the rebel factions
claims that the Qadhafi regime had engaged in
genocide and had inflicted mass civilian casualties
in the western-backed uprising. None of the claims
has been substantiated, and foreign military
intervention will almost certainly worsen matters,
as it did during the uprising, when it enabled rebel
groups to reject deals and escalate violence. In
October 2013, U.S. commandos arrested an al-
Qaeda suspect on Libyan soil, causing fury against
Tripoli for collaborating with Washington, but the
U.S. failure to create functioning public institutions
in Iraq and Afghanistan may mean it will consider
only military intervention in Libya, with or without
U.N. legitimation. As Libyans face a new civil war
and possible partition, unsurprisingly many of them
are reportedly nostalgic about the Qadhafi era.
Source: The Hindu
US BUILT A SECRET 'CUBAN TWITTER' TO STIR UNREST AGAINST
COMMUNIST GOVT, SAYS AP
A US agency created a 'Cuban Twitter' to
undermine Cuba's communist government and get
around its strict Internet prohibitions, using secret
shell companies financed through foreign banks,
The Associated Press reported.
The two-year project drew 40,000 users who
did not know the communications network was
devised by a U.S. agency and designed to push
them toward political dissent, according to the AP.
They also did not know their personal information
was being gathered.
The report identified the US Agency for
International Development, which delivers aid to
the world's poor, as being behind the project.
The communications network was called
"ZunZuneo," Cuban slang for a hummingbird's
tweet, and the AP said its goal was to build an
audience of young users.
The plan for the social network was to draw in
a certain number of users with messages on sports,
music, weather and other noncontroversial topics.
Then the operators would introduce political
content to try to inspire spontaneous demons-
trations, the AP reported. One USAID document
cited by the AP said the goal was to "renegotiate
the balance of power between the state and society."
It was not clear if the program was illegal.
USAID spokesman Matt Herrick told AP that U.S.
congressional investigators reviewed their programs
last year and found them to be legal.
Interviews and more than 1,000 pages of
documents obtained by the AP showed USAID was
careful to hide Washington's ties to the project, the
report said. It used companies in Spain and the
Cayman Islands to conceal the money trail.
"There will be absolutely no mention of United
States government involvement," read a 2010 memo
from Mobile Accord Inc., one of the project's
creators, published by AP. "This is absolutely crucial
for the long-term success of the service and to
ensure the success of the Mission."
ZunZuneo began shortly after Cuba's arrest of
American contractor Alan Gross, 63, in Cuba in
December 2009, the AP said. Gross was sentenced
to 15 years in prison for installing Internet networks
under a secretive U.S. program the Cuban
government considers subversive.
USAID said ZunZuneo ended in September
2012, the AP reported.
Source: I ndian Express
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A CAUTIOUS BEGINNING
The Reserve Bank of Indias in-principle
approval to two applicants, IDFC Limited and
Bandhan Financial Services Ltd., to set up banks
comes four years after the then Finance Minister,
Pranab Mukherjee, in a budget speech mooted the
idea of licensing a few private banks. By its own
admission, the RBIs approach to this round of bank
licences has been conservative, a trait that is wholly
appropriate in the present context. That the process
has taken a long time before the first licences were
approved merely underlines the complexities
involved. A High Level Advisory Committee headed
by former RBI Governor Bimal Jalan recommended
these two applicants out of a list of 25 applications.
All of them were earlier scrutinised by the RBI to
ensure their eligibility under the guidelines issued
in February 2013. It is noteworthy that none of the
big corporate names that figured in the list made
the grade. The RBI has neatly sidestepped what
has been the most controversial aspect of the new
licensing norms permitting corporates to start
banks. The Reserve Bank received a number of
negative responses to this proposal from both the
public at large and experts. Indeed, the RBI itself
was opposed to it in the beginning, and it was the
pressure from the Finance Ministry, among others,
that made the central bank relent.
For the two successful applicants both of
them leading non-banking finance companies
getting the in-principle approval is only the first
step. They have 18 months to comply with the
requirements under the guidelines and fulfil other
conditions that may be imposed. They will face
daunting challenges to scale up to being universal
banks and compete with existing institutions. Their
existing strengths infrastructure finance for IDFC,
and microfinance for Bandhan will no doubt
help but, as the top officers of the two institutions
admitted, there is a great deal of work to be done
soon. Expectations from them are immense. The
governments rationale for new bank licences has
been to extend the geographical coverage of
organised finance and to promote financial literacy
and inclusion. Sceptics of the new policy who
wonder what the new banks will do that the
existing players under all categories cannot do, need
to be answered effectively by creating a viable, tech-
savvy model that is also customer-friendly. They
have to reward their shareholders who have
enabled them to invest at least Rs.500 crore. The
RBI Governor has said that after learning from the
latest exercise, it might be possible to revise
guidelines so that licences can be made available
on tap. Be that as it may, it is obvious that the two
successful applicants have just assumed additional
responsibilities of being role models.
Source: The Hindu
AN INCLUSIVE GROWTH POLICY
The Indian economy has moved on a high
growth path since the mid-1980s. After a blip in
growth between 1990-92, liberalisation, initiated for
aligning the Indian economy with the world in
1991, not only put the economy back on a higher
growth path but also sustained this growth till the
2000s. During the last few years, India has been
the second fastest growing economy in the world.
Despite the high growth over the past two
decades, concerns have been raised over the growth
not being equally distributed. Policy makers
responded to these concerns arguing for
inclusiveness in the 11th Five Year Plan in 2007.
How has the rapid growth during the 11th Five
Year Plan period helped in improving the income
levels of the most vulnerable Indian households?
Sharing of growth
The aggregate estimates routinely brought out
by the Central Statistical Organisation (CSO) show
a feel good factor that real per capita income
has been growing rapidly. But there is little evidence
on (a) how this growth has been shared among
households in rural India versus urban India and
(b) whether households belonging to different socio-
religious groups have grown together. Three rounds
of the National Sample Survey Consumer
Expenditure (NSS CE) surveys carried out between
2004-05 and 2011-12 suggest an unprecedented rise
in household expenditure and a consequent decline
in poverty. These estimates imply that some benefits
of growth have been shared by vulnerable
households. But these data do not clarify whether
poverty has declined because of new social safety
net programmes or because vulnerable households
have participated in the general economic growth.
The recently-concluded India Human
Development Survey (IHDS) a nationally
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representative survey of about 42,000 households
conducted by researchers from the National Council
of Applied Economic Research (NCAER) and the
University of Maryland examines changes in the
incomes of the households during the period of
rapid economic growth, 2004-05 and 2011-12. It is
the only nationally representative panel survey
covering the same households. During the two
rounds of IHDS, besides a range of outcome
indicators, data on household income and its
sources have also been collected.
Though validation of the data is still underway,
we present some pointers based on preliminary
analysis. The median real income of the households
from all sources had been about Rs. 28,200 in 2004-
05; this increased to about Rs. 37,500 in 2011-12,
which is an average of 4.7 per cent annually. Unlike
aggregate growth figures released by the CSO, IHDS
data allows calculation of household income by
the place of residence of households. Those IHDS
calculations show for the first time that the real
average household income in rural India has
increased 5.0 per cent annually almost twice
the 2.6 per cent annual growth in urban India.
This has resulted in a significant narrowing of the
gap in household income from 2.26 times in
2004-05 to 1.97 in 2011-12. These figures are
consistent with the growth of per capita
expenditure calculated from the respective NSS CE
(61st and 68th rounds) monthly per capita
expenditure growth in the rural and urban sectors.
When we normalise the household median
income by the number of members in the household,
the growth of income in rural India is even more
impressive an average annual median per capita
income increase of 7.2 per cent, which is more than
twice the rate experienced by urban households
(3.2 per cent annually). This story of growth at the
aggregate level is fascinating in itself because most
of the changes during the liberalisation phase have
favoured the growth of non-primary activities. But
the impressive gain by rural households in spite of
the favouritism towards non-primary activities
appears real and requires further investigation.
Further proof of growth
We note similar differences in median income
growth across different socio-religious groups that
provide further confirmation of the inclusiveness
of the recent economic growth. In IHDS surveys,
we have defined six social and religious groups
high caste Hindus, Other Backward Classes, Dalits,
Adivasis, Muslims and Other Religious Minorities.
The highest growth in the median per capita
incomes is reported for Dalits (7.8 per cent annually)
and OBCs (7.3 per cent), while the real median
income of high caste Hindus grew only at 4.6 per
cent annually. The average income growth of other
vulnerable groups was also higher than that of high
caste Hindus. The income of Adivasis grew at 5.7
per cent annually while the income of Muslims
grew by 5.4 per cent.
A working plan
Our preliminary results point towards the
largest gains for the traditionally vulnerable
households rural areas, Dalits, OBCs, Adivasis
and Muslims. This narrowing of group differences
is all the more remarkable in the face of a slightly
diverging overall income distribution. Our
preliminary calculations of per capita income
inequality suggest a small increase from a Gini ratio
of 53 in 2004-5 to 55 in 2011-12.
The relatively greater progress of vulnerable
sectors despite this growing inequality seems to
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suggest that the inclusive growth policy
implemented during the 11th Five Year Plan may
have been working. While a much more rigorous
analysis is required to delineate the factors that
have led to this, our conjecture is that some of the
social sector schemes like the Mahatma Gandhi
National Rural Employment Guarantee Act, Janani
Suraksha Yojana, the National Rural Health Mission
et al. may have contributed to this inclusive growth.
Source: The Hindu
DIPLOMATIC GAINS FROM A STRATEGIC ABSTENTION
With 23 countries backing a relatively strong
resolution against Sri Lanka at the recent U.N.
Human Rights Council (UNHRC) session in
Geneva, one would have thought the country
would feel effectively cornered. However, a day
after the resolution was adopted, Sri Lanka only
seemed too pleased, thanks to its neighbour.
Amid all the buzz around the strategically-timed
elections to Sri Lankas Sinhala majority Southern
and Western Provinces, senior politicians including
President Mahinda Rajapaksa were rather prompt
in expressing their happiness over Indias decision
to abstain from voting.
Foreign Minister G.L. Peiris termed Indias
departure from its voting pattern over the last two
years as a significant development. Mr. Rajapaksa
went a step further, ordering the immediate release
of all Indian fishermen in Sri Lankan custody then
as a goodwill gesture.
In an interaction with journalists days before
the Geneva session, Mr. Rajapaksa said: I dont
know what India will do, they voted against us
last two years, quickly adding, but we
understand them, as if India had already cast a
negative vote.
So when India declared its decision to abstain
on March 27, Colombo was clearly elated. Indias
decision may not have influenced the larger voting
pattern but to Sri Lanka, apparently, its neighbours
abstention meant a massive victory of sorts, despite
the majority vote in Geneva proving negative.
Foreign policy analysts who thought New Delhi
had for long been succumbing to Tamil Nadus
pressure hailed it as excellent diplomacy,
though Tamil diaspora organisations and sections
of northern Tamils said they were deeply
disappointed with India.
A reset for diplomacy
The fact that the Ministry of External Affairs
was fully in charge at Geneva is significant. It was
the same Ministry which, despite its best efforts,
could not get Prime Minister Manmohan Singh to
attend the Commonwealth Heads of Government
meeting in Sri Lanka last November. As former Sri
Lankan diplomat Dayan Jayatilleka observed, the
abstention has pressed the reset button, activating
positive Indo-Lanka diplomacy. Sri Lankas
response to the vote in general and to Indias
decision suggests that to Colombo, what India
thinks matters more than what many other
powerful nations do. That said, given the renewed
possibilities of closer engagement with Sri Lanka, it
is now completely up to New Delhi to convert this
diplomatic goal to a diplomatic gain.
Speaking in Geneva, Dilip Sinha, Ambassador
and Permanent Representative of India to the
United Nations in Geneva, hailed the September
elections to Sri Lankas Northern Province, at the
same time calling for effective and timely
implementation of all the constructive
recommendations contained in the Lessons Learnt
and Reconciliation Commission report, including
those pertaining to missing persons, detainees,
reduction of high security zones, return of private
lands by the military and withdrawal of security
forces from the civilian domain in the Northern
Province.
With a renewed possibility of closer engagement
with Sri Lanka, it will be interesting to see if New
Delhi can put political pressure in these said areas
where progress has been grossly inadequate.
The Hindu in December 2013 reported that 18
schools in Jaffna were struggling for space with
the Sri Lankan Army having taken over their
original buildings, some even a century old, as part
of its questionable high security zones. Fishing
villages in these zones have been usurped, delivering
a blow to livelihoods.
The process of resettlement, the Indian mission
implementing a massive housing project in the
former war zone would very well know, still has
several gaps. In Sampur, located in Trincomalee
where NTPC partners a joint venture to set up a
thermal power plant 800 families lost their homes
to land taken over by the Sri Lankan government
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for the plant. In reality, the 500-acre area
earmarked for the plant displaced only seven
families that the Indian government is helping
relocate, while permanent housing to the rest who
lost their homes remains a question mark.
Militarisation of the north, something that Dr.
Singh also underlined in his meeting with Mr.
Rajapaksa in March, remains a major concern. The
Army, earlier confined to security and surveillance,
is now involved in purely civil pursuits such as
agriculture and development. In fact, surveillance
in the north increased rapidly around the Geneva
session as did intimidation, reportedly though
the Sri Lankan Army justified it saying it feared a
possible regrouping of the LTTE.
Further, the ghost of the brutal war makes an
appearance every now and then. New video footage
pertaining to alleged war crimes by the Sri Lankan
forces has emerged recently, though the Army has
rubbished each of those as being doctored.
Relatives of 16,000 missing people have petitioned
a Presidential Commission looking into complaints
of disappearances, desperately seeking some closure
to the agony over their missing loved ones.
Indias abstention could gain value if New Delhi
manages to use the goodwill gains that accrued to
it in Geneva to put political pressure on Colombo
to address at least some of these problems.
India in Geneva called upon Sri Lankan
government to make purposeful efforts to fulfil its
commitments, including its promise to fully
implement the Thirteenth Amendment to the Sri
Lankan Constitution and build upon it. New Delhi
has a lot to do in pushing for substantive political
devolution.
Issue of devolution
Post Geneva, India has said it will continue to
closely engage with Sri Lanka on the question of
devolution. Nearly five years after the countrys
brutal war ended, people living in Sri Lankas
Tamil-speaking north and east crave for political
rights and complete freedom. Devolution, after all,
is not just about holding an election to the Northern
Province but also allowing the Council to function
with administrative powers and enabling the people
of the province to lead normal lives as citizens.
Also, when a new Indian government takes
charge soon, the ongoing conflict over fishing
between the two countries will come into sharp
focus. Considering the major role Tamil Nadu is
expected to play in national politics in a post-poll
scenario, India will have to necessarily evolve a
strategy to handle the pressure from the southern
State and at the same time get it to deter its
fishermen from poaching in Sri Lankan waters.
Depending on how New Delhi fares on all these
counts, its seemingly strategic abstention in Geneva
could potentially turn into an actual gain.
Source: The Hindu
FUNNY MONEY
With the Delhi High Court holding both the
Congress and BJP in violation of the Foreign
Contribution Regulation Act (FCRA) for accepting
funding from international mining giant Vedanta,
the shoe is now on the governments foot. Given
the alacrity with which it has deployed FCRA
provisions against NGOs, the Delhi HCs ruling is
a major embarrassment to the government. In the
last 10 years, the UPA has often clamped down on
civil society organisations under the FCRA, adding
teeth in 2010 to its already stringent norms.
Whether for an activist campaign or an
academic gathering, the Union home ministry has
employed the FCRA to delay or revoke licences to
non-profits, often on seemingly flimsy grounds. In
2012, the MHA refused to sanction a request by
the think tank, PRS Legislative Research, to obtain
a foreign grant for its legislative assistants scheme.
A few civil society groups were hauled up under
the FCRA the same year for allegedly accepting
foreign funding to back the anti-nuclear
Kudankulam protests. The Dantewada-based
Vanvasi Chetna Ashram, founded by an outspoken
critic of the Salwa Judum, saw its FCRA permit
cancelled in public interest. Together with its
restrictive visa regime and targeted application of
the Foreigners Act, the FCRA had almost become
a government instrument for suppressing dissenting
perspectives. The 2010 amendments, strengthening
the Act, were cleared by a bipartisan parliamentary
committee.
Consider then home minister P. Chidambarams
remarks during the parliamentary debate on the
FCRA amendments in 2010: if you want to access
foreign money, then one has to come under a
system of regulation certain categories are totally
prohibited A political party must be prohibited.
It is unsurprising, then, that there were
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consequences for the Congress in accepting a
contribution from Vedanta, a company
incorporated outside India.
That the government made a concerted effort
to investigate the Aam Aadmi Partys foreign funds,
while turning the other way for such contributions
to its own party and the BJP, suggests double
standards.
The FCRA cannot be applied unevenly by the
government. The same disclosure norms and
monitoring procedure that are required of NGOs
should bear on political parties. It is important not
to let the foreign hand argument become a
coercive tool in the hands of government.
Source: I ndian Express
THE TWO RBIs
Inspite of persistent calls from certain sections
of industry to cut the repo rate, the RBI maintained
status quo in its first bi-monthly monetary policy
review. In doing this, the RBI exhibited a heartening
determination to fight consumer price index
inflation. But the central banks recent interventions
in the foreign exchange market to prevent the rupee
from appreciating too much on the back of a
deluge of foreign institutional investor inflows
at Rs 20,077 crore, FII inflows reached a 10-month
high in March are misguided and may undercut
its efforts to contain inflation.
By keeping the repo rate at 8 per cent, rather
than raising it, the RBI acknowledged the
moderation in CPI inflation, which has declined
from 11.2 per cent in November 2013 to 8.1 per
cent in February, a 25-month low. This is still above
the RBIs target, which was mooted by the Urjit
Patel committee, of achieving 8 per cent CPI
inflation by January 2015. Equally, by not lowering
the policy rate, the RBI nodded to the significant
upside risks to inflation.
The moderation that has been witnessed is
mostly on account of easing vegetable prices
while CPI inflation has declined 3.1 percentage
points since last November, core CPI inflation has
only declined 0.1 percentage points. But the
possibility of another food-price shock remains high.
Barring 2011-12, food inflation has been above 8
per cent every year since 2007-08, even though
this has been a period of mostly normal monsoons.
This year, there is the added threat of El Nino,
which could prove disruptive for the rains. Further,
CPI inflation has not been stable at a low level
long enough for the high and deeply entrenched
inflation expectations to change.
But there is a contradiction between the RBIs
stance on inflation and its exchange rate targeting
it has been aggressively buying dollars in forex
markets to dampen the rupees appreciation. If this
intervention is unsterilised, the pumping of liquidity
into the market by buying dollars will lower interest
rates and counteract the RBIs efforts to target
inflation, as happened in the mid-2000s.
The RBI must allow the exchange rate to float
freely. If it is worried about the fallout of the US
Feds unconventional monetary policy, the only
solution is for India to maintain low inflation and
low current account and fiscal deficits.
Source: I ndian Express
MANILA PEACE?
Seventeen years of stop-start negotiations over
a bloody 45-year conflict which has cost more than
120,000 lives recently culminated in a historic
reconciliation ceremony in Manilas presidential
palace. The signing of the peace agreement
between the Philippines government and the
countrys largest Muslim rebel group, the Moro
Islamic Liberation Front (MILF), was marked in
the countrys embattled southern island of
Mindanao with joyful celebrations.
The agreement will see the rebels disband their
guerilla forces and disarm in return for a new
enhanced degree of autonomy for the Bangsamoro,
the name used for Muslim and non-Christian
natives of Mindanao. The deal, brokered by
President Benigno Aquino with the assistance of
Malaysia, sets out provisions on power and wealth-
sharing and on the creation of a police force for
the political entity that will replace the failed five-
province autonomous region set up in Mindanao
province in 1989, home to most of the predomiantly
Catholic countrys five million Muslims.
A plebiscite in Muslim-dominated areas in the
south will determine the shape and size of the new
region. Mindanaos relations with Manila have been
difficult since it was incorporated into the
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Philippines state by Spanish and American
colonisers in the 19th and 20th centuries.
The hope is that the agreement will bring
sufficient stability to lift the cloud on economic
development of the island where one in two live
below the poverty line of $1.20 a day. Mineral
companies are eager to come in to develop what
are believed to be up to $312 billion in mineral
deposits.
But there is no certainty that peace will be
sustained. Breakaway nationalists, feuding clans,
and Islamists, including one group, Abu Sayyaf,
affiliated to Al Qaeda, reject the deal and have
pledged to go on fighting for complete
independence.
Source: The Times
A BANK IS BORN
The RBI granted in-principle approval to two
of 25 bank licence applicants recently. This set of
approvals has come after the bank licencing
machinery was put in motion four years ago and
ends the decade-long wait for new licences. After
the Narasimham committee recommended opening
up the commercial banking sector in 1991, 10
private banks were given licences in 1993-94 and
another two in 2002-04.
While the RBIs prudence is welcome, the pace
at which new banks have been licenced so far is
not good enough. Vast swathes of the population
are out of the net of formal banking only one in
two Indians has access to a savings bank account,
and only one in seven to bank finance. The move
towards an on-tap licencing mechanism is welcome
this is the only way to increase the penetration
of financial services. But as more private players
enter the market, the RBI will also have to step its
game up as far as microprudential regulation is
concerned.
The RBIs caution in granting licences to
corporate houses and brokerage firms because
of possible conflict of interest issues and its
acknowledgement of the need to think more deeply
about licencing India Post are also heartening signs.
They indicate the scope of a differentiated licence
framework, as proposed by the Nachiket Mor
committee.
But the increase in private banks and
therefore in innovation and the use of technology
will call for the RBI to improve its regulatory
capacity. The business of banking involves high
levels of leverage, which makes it potentially very
risky. With greater competition, the RBI needs to
evolve higher levels of consumer protection and
stronger microprudential regulation. It must
increase its supervisory capacity.
The FSLRCs proposal to set up a resolution
corporation, so that if a bank fails, the taxpayer
does not have to bail it out, should be implemented.
PSU banks, which account for 75 per cent of all
banking assets, are implicitly sovereign guaranteed.
So the urgency for watertight, sophisticated
regulation is diminished. But once diverse private
banks flourish, the RBI will have to stay one step
ahead of the game. It certainly wont be an easy
task.
Source: I ndian Express
THE WISDOM OF ABSTAINING
Never in Indias history have relations with any
neighbouring country been so dramatically
influenced by the politics of a single state as our
relations with Sri Lanka.
Unfortunately, public opinion in Tamil Nadu
has not been adequately sensitised about the
diplomatic complexities of developments in our
neighbourhood, or of precisely what New Delhi is
doing to address the needs and welfare of Tamils
in Sri Lanka.
The Sri Lankan civil war ended when separatist
leader Velupillai Prabhakaran was killed in 2009.
It is universally accepted that both sides were guilty
of human rights abuses during the last stages of
the war a fact acknowledged by Sri Lankas
Lessons Learnt and Reconciliation Commission
(LLRC).
Indias policy, thereafter, has been to work
towards the Sri Lankans themselves implementing
the LLRC recommendations. More importantly,
apart from India, no government in the world has
done anything substantive for the relief,
rehabilitation and welfare of Sri Lankan Tamils.
Since 2010, India has doled out assistance
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estimated at $1.3 billion (Rs 8,000 crore) its
largest ever development assistance project for
the welfare of Sri Lankan Tamils. The projects
include the construction of 50,000 homes and the
supply of materials for around 43,000 war-damaged
residences. There have also been major projects for
the development of rail transport, port infrastructure
in Kankesanthurai, a 500 MW thermal power
station in Sampur and the upgrading of the Palaly
airport.
The development of human resources has been
facilitated through the improvement of schools and
vocational training centres, the construction of
hospitals and involvement in employment-
generation projects in agriculture, fisheries, small
industries and handicrafts. Politically, India has
ensured that there is a chief minister, Justice C.V.
Vigneswaran, in the Northern Province, elected
under the 13th amendment to the Sri Lankan
constitution.
These major development projects could not
have been undertaken without the cooperation of
the Sri Lankan government. It has, therefore, been
crucial for New Delhi to balance its interests in
getting the excesses of ethnic conflict addressed with
the imperative of securing the cooperation of the
Sri Lankan government, in order to execute welfare
projects for Sri Lankan Tamils. Still, New Delhi
has previously backed UN resolutions that called
for the investigation of human rights violations,
despite Sri Lankan displeasure, primarily because
the resolutions did not violate Sri Lankan
sovereignty. It was also felt that President Mahinda
Rajapaksas government could be persuaded to
implement these resolutions.
The UN Human Rights Council resolution
passed this year, unlike in the past, included the
constitution of an open-ended international
investigation on a sovereign member state. This goes
well beyond the current understanding and basic
operative principles of the UNHRC. Moreover,
unlike resolutions of the UN Security Council, those
of the UNHRC are not enforceable by international
sanctions. Only 23 of the councils 47 members
supported the latest resolution on Sri Lanka. Apart
from South Korea, every other member of Indias
Asian and Indian Ocean neighbourhood either
abstained or voted against. These included China,
Indonesia, Japan, Kuwait, the Maldives, Pakistan,
the Philippines, South Africa and the United Arab
Emirates. Despite their reputed global influence,
the US and its allies could pick up support only
from a few Latin American and African countries,
many of whose leaders and diplomats know little
or nothing of Sri Lanka.
India acted wisely by abstaining from voting
on this years resolution. Based on the support that
it received from two permanent members of the
Security Council (China and Russia) and the
overwhelming majority of Asian and the Indian
Ocean littoral states, Sri Lanka will ignore the more
intrusive aspects of recommendations of the
UNHRC, espoused by the UN high commissioner
for human rights, Navanethem Pillay, whose own
country, South Africa, abstained. Support for this
resolution would have left India with very little
leverage to secure the Sri Lankan governments
unstinted cooperation for its programme of relief
and rehabilitation. Worse, we would have laid the
ground for growing Chinese and Pakistani presence
and influence in the island, at a time when we can
ill afford it.
It is interesting that, despite the political rhetoric
in Tamil Nadu, not a single political party or leading
business organisation in the state has mobilised
resources for the welfare of Sri Lankan Tamils.
There also appears to be a disinclination to accept
the reality that those who are most vociferous in
demanding action against Tamil Nadu fishermen
poaching in Sri Lankan waters are not that
countrys security forces, but the Tamil fishermen
in Jaffna and elsewhere in Northern Sri Lanka. All
this, amid debate on our federal structure and
the role of individual states in micromanaging the
conduct of foreign policy. The statesmen who
framed our Constitution described our country as
a Union of States, not the United States of
India, as MDMK chief Vaiko would have it.
Source: I ndian Express
HOPE PREVAILS
Dispelling widespread gloom around the world
regarding Afghanistans political future and the
Talibans efforts to disrupt the elections, Afghans
turned out in large numbers at the polling booths
on Saturday. According to preliminary estimates,
nearly 7 million of the 12 million eligible voters, or
close to 60 per cent of the electorate, cast their
ballots to elect a new president to replace Hamid
Karzai, who has steered the nation after the US
forces ousted the Taliban at the end of 2001. The
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previous presidential election in 2009, marred by
allegations of fraud, saw barely a third of the
electorate turn out to vote. The enthusiastic turnout
this time is a befitting political answer to the
Taliban, which mounted attacks that killed scores
of people.
If none of the eight presidential candidates gets
50 per cent of the votes cast, there will be a run-
off between the top two candidates on May 28.
Opinion polls showed that the main contenders
are Abdullah Abdullah, a runner-up in the last
election, and Ashraf Ghani. Running a distant third
is Zalmai Rassoul who is said to have the outgoing
presidents backing. All three have sought to bridge
the deep divide in Afghanistan between Pashtuns
and non-Pashtuns by choosing vice presidential
candidates who expanded their ethnic appeal.
The next presidents political legitimacy,
however, will not resolve Afghanistans multiple
problems. The Taliban continues to enjoy
sanctuaries across the border in Pakistan. The
armed forces of Afghanistan have demonstrated
their growing capabilities by securing the nation
against violence but remain weak and vulnerable
to future destabilisation from the Pakistan army.
The nations economy is in bad shape as large
volumes of foreign aid that flowed in since 2002
dry up. All the presidential candidates have agreed
to ratify the security pact with the US that will
allow the presence of a few thousand American
troops after 2014. Since 2002, India has invested
considerable political and economic resources in
support of the fledgling democracy in Afghanistan.
The next government in Delhi will have to
demonstrate much stronger strategic commitment
to the unity, stability and security of Afghanistan
amid the continuing threats from Pakistan and
declining Western support to Kabul.
Source: I ndian Express
A TOUCH HERE, A TWEAK THERE
As the Reserve Bank of India governor said in
his press conference after the release of the bi-
monthly review, the only surprise about the policy
announcement was the lack of surprise.
The markets expected no major change in policy
as the Election Commissions Code of Conduct is
in operation. Any reduction in policy rates would
have attracted criticism from the Opposition. As a
result the policy remained the same, except for some
tweaking in the banks access to the Liquidity
Adjustment Facility.
Not the annual review
Generally, the first review of the financial year
is the Annual Policy Statement. Perhaps, this year
it was not so labelled because the Budget for 2014-
15 is yet to be presented. One hopes the contours
of the next Budget will be available after the election
and before the next review due on June 3.
Neither the policy paper nor the governors
statement made any reference to the estimates of
money supply, credit or deposits in the coming year.
This writer took the view in the past that the
RBI should not provide estimates of money supply,
with room for 5 per cent inflation after reckoning
for GDP growth and income elasticity of demand
for money. Instead, it should say that it will ensure
that no productive activity will suffer for lack of
credit. What the governor said in his reply to a
question at the press conference more or less echoed
this idea.
Core inflation
It is also clear that the Consumer Price Index
will be the touchstone in formulating policy. But
habits die hard. There is a reference to inflation
trends, excluding food and fuel. Is it the core
inflation in CPI?
The entire CPI should be considered for
measuring core inflation, which should be the
same as headline inflation. The enormous increase
in food prices, especially those of vegetables and
fruits is due to the excess money generated through
such schemes as the Mahatma Gandhi National
Rural Employment Guarantee Scheme (MGNREGS).
While we are glad that the poorer sections can
afford to buy protein-rich food items, the
government should have worked out a scheme to
increase their production before introducing the
extension of the MGNREGS throughout the country.
After the idea of core inflation in the Wholesale
Price Index was trashed by critics, the RBI started
using the expression non-food manufactured
products inflation.
What is liquidity?
The changes in the liquidity adjustment facility
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(LAF), shifting the emphasis from the daily repos
to term repos, are well thought out. But there is no
official definition of liquidity that guides the bank.
During the time of YV Reddy the concept of
overhang of liquidity was in vogue. But it is no
longer used for reasons not known.
There are outstanding liquidity aggregates
(L1, L2 and L3) presented in a table in the Reserve
Bank of India Bulletin. One does not know which
one of them is used by the RBI as a criterion for
deciding the surplus or shortage of liquidity. It needs
to link its concept to the standards prescribed in
Basel III Liquidity Coverage Ratio and Liquidity
Risk Monitoring that will come into effect from
January1, 2015.
The RBI has promised to issue guidelines in
adopting these Basel standards by end-May 2014.
The bank recognises that forex transactions are
part of the open market operations and intervention
should not be thought of only to stabilise the rupee.
In its forex intervention and through swaps
with banks on their FCNR(B) deposits the bank
has built up a good amount of reserves amounting
to $298.6 billion as on March 21,2014, of which
$271.4 billion constituted foreign currency assets
(FCA).
A few months ago, this writer had suggested
the Bank should aim at building up the foreign
currency assets to $300 billion by the end of March
2014.
Enhancing confidence
Eventually, it is the FCA that provides the
bulwark against any forex crisis. The other
components of reserves will be utilised only in a
desperate situation.
The markets confidence in the rupee can be
enhanced if the target of $300 billion is reached
before the US Fed starts winding up its quantitative
expansion by the end of September, as expected
now.
There is not much that the Central bank can
do in the current situation. But it can certainly
control money supply.
The replacement of the daily repo by the term
repo does not make a difference to the excess
creation of money supply since, for all practical
purposes, the daily repos have served the purpose
of term repos by being rolled over.
The bank says that the daily injection of liquidity
through LAF and other facilities has been about Rs
Rs 1 trillion. It has no economic rationale when
growth is on a declining trend. The RBI should
pause and reflect on whether the money creation
is helping GDP or inflation.
Source: BusinessLine
RIP REPO RATE?
By keeping the Reserve Bank of Indias (RBI)
policy rates unchanged, Governor Raghuram Rajan
has, on the face of it, acted according to market
expectations. The RBI has, indeed, retained the
repo or its overnight lending rate to banks at 8
per cent. But Rajans first monetary policy statement
for the new fiscal is not without his trademark
surprise element. And that has to do with allowing
banks to borrow up to 0.75 per cent of their
deposits/liabilities from the RBIs 7- and 14-day
term repo window (against 0.5 per cent now),
while halving access to the more familiar overnight
repo facility to 0.25 per cent. Banks are currently
borrowing roughly Rs 30,000 crore daily from the
latter window at the RBIs fixed repo rate of 8 per
cent. By curtailing this to Rs 15,000 crore, banks
will have to henceforth borrow more through the
RBIs term repo auctions at floating interest rates.
Given that these have been averaging 8.7-8.8 per
cent in recent auctions, the RBI has effectively
increased interest rates without saying so.
But the relevance of the RBIs move isnt
confined simply to the impact on interest rates.
Since term repo rates could fall once the liquidity
tightness often seen during the financial year-end
eases, interest rates may not rise that much. The
more important implication is for the fixed repo
rate as a monetary policy tool. In the past, it was
considered apt to tether the Central banks policy
to a single, fixed, short-term benchmark lending
rate that could be raised or lowered depending on
the prevailing inflation-growth dynamics. But now,
the RBI has apparently chosen to de-emphasise
the role of the overnight repo rate, at least as a
liquidity management instrument. The demand for
liquidity by banks will be met increasingly through
variable-rate auctioned term repos. The effectiveness
of this move in line with the Urjit Patel
Committees recommendation needs to be seen,
especially so when the fixed repo rate is something
easily communicated and understood. The markets
today clearly know the RBIs intentions when it
hikes or reduces the repo rate.
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The other key takeaway from the policy
statement is the RBIs firm focus on sticking to a
CPI inflation target of 8 per cent by January 2015
again an endorsement of the Patel panel report.
Significantly, it has indicated that any move on
interest rates would be dictated by the next
governments stance with regard to minimum
support prices for crops, fuel and fertiliser subsidies,
and overall fiscal policy stance. A clear political
commitment to fiscal consolidation from the next
government is certainly in the economys interest.
Interest rates need to come down, which can
happen only with fiscal and monetary policy being
in sync.
Source: BusinessLine
INDIAS NEW POLITICAL ECONOMY
India has a wonderful way of turning traditional
theories of economic growth on their head. Take
the theory of diversification among sectors
(agriculture, industry and services) as the driving
force of development. Based on the historical
evidence of western societies in the 19th and early
20th centuries, the stagist view of development
was considered the best way forward.
Once the share of agriculture in a nations GDP
had dipped in comparison to industry or services,
then surely a desirable structural change was afoot.
The trajectory of development meant an
inevitable pre-eminence of Services over industry
and agriculture.
By that token, the last two decades, we are
told, have been testimony to a trajectory of growth
appropriate to western societies; judging by GDP
numbers at least, India has done exceedingly well.
In the Economic Survey of 2010-11, the Finance
Ministry gave us a retrospective view on the change
in the relative importance of the three sectors.
In 1950-51, the share of services in GDP was
around 30.5 per cent; this jumped to 55.2 per cent
in 2009-10. If construction is added, the share
climbed to 63.4 per cent.
The ratcheting up of the overall growth rate
(compound annual growth rate or CAGR) of the
Indian economy from 5.7 per cent in the 1990s
to 8.4 per cent in the period between 2004-05 to
2009-10 was in large measure due to an
acceleration in the CAGR in services from 7.5 per
cent in the 1990s to 10.3 per cent in 2004-05 to
2009-10.
For policymakers such numbers presaged Indias
elevation to emerging-market status; the structural
transformation had worked its wonder in India.
But had it? The devil lurked in the details and
together they painted quite another reality to the
one drawn by the CAGR data.
Reality as illusion
The Economic Survey of 2012-13, for instance,
sourly observed that employment had climbed faster
and higher in services sector in India than had
incomes unlike in China, the US and other
services- oriented economies.
Other sources also point to the rise of
employment in services but of the informal kind.
Informal employment is rampant in such high profit
zones as construction and real estate and is steadily
growing in other sectors and sub-sectors as well.
Casualisation of labour has been found to be
the best bet against the so-called rigid labour
laws that encourage unionisation and all the
unpleasantness of strikes and unrest.
And equally, informal employment keeps costs
down, an important factor, perhaps even more
important than incremental productivity, in staying
competitive.
So, behind the numbers is a reality in which
the only structural shift the economy has witnessed
is the emergence of services sector as an alternative
site to farming for informal employment.
The other reality behind the numbers is, of
course, that agriculture has not just slipped to third
place in its share to GDP out of some inexorable
telos of growth, but on account of neglect and the
worship of the accomplished fact by policymakers.
Resonance of neglect
Reforms in agriculture require huge political
will, but once the GDP rate had begun to pick up
steam the roads to success seemed fairly obvious
and easier to follow than attempting a second
agricultural reform drive.
Since 1991, the modern economys discourse
on growth has resonated with the brassy sounds
of an idea of India as urbanised and urbane. This
idea has found favour with the middle class Indian
who is its singular beneficiary.
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The village in this discourse of urban-centric
growth is a metaphor for backwardness, the farm
sector for laziness, both remnants of a past best
forgotten or converted into a vast township or
gated community. And the farmer hears all the
resonances.
The Centre for Studies in Developing Societies
(CSDS) survey that found a majority of respondents
would give up agriculture for some other work,
shows how well farmers are picking up the echoes
of the new exclusionary discourse. Depending on
your take on modernity, you could say that this
lapse of faith is a great psychological moment, a
prelude to a discursive leap into a brighter future
by farmers who for centuries have been unable to
see beyond the horizons of their fields.
But on the other hand, one could also see it as
part of an unfolding crisis for a nation that had
with such enterprise and determination become self
sufficient in food. The CSDS survey shows us the
face of impending pauperisation, of a cultivator
faced with that prospect and intuitively certain that
there are few exits unless he or she wants to
become an informal or casual labourer at a
construction site.
Past tense, future uncertain
The realisation of both the futility of farming
and the lack of choices for alternative livelihoods
drives farmers to suicide, but it also drives them to
a form of enterprise that at first glance appears
liberating.
On the outskirts of Punes eastern suburb of
Hadapsar, the Magars, a rich farming community,
decided to give up farming, formed a real estate
corporation to which they handed over their lands
for a township that has become a model for other
farmers.
Pune city and its fringes provide proof of how
the new discourse defining our ideas of prosperity
is determining the future of villages and farms
surrounding them. Land acquires new meanings
not for agriculture but as a piece of real estate
generating rentier profits.
As urban conglomerates spread and as the
demand for new urban entities (such as the
proposed townships between Delhi and Mumbai
and Kolkata, respectively) increase, land will
become the site for violent contesting claims -- as is
already evident in the outlying areas of Mumbai,
Pune and other towns likely to become epicentres
of growth.
Land has become Indias geographical dividend
as it were, multiplying in value as farm lands are
turned into urban-scapes or as cities advance on them.
The temptations to sell out will grow exponen-
tially and a new political economy of land
acquisition is already emerging--- not with land
mafias as in America but with land monopolies
blessed by politicians and businessmen.
The structural transformation of GDP that
policy makers wax eloquent about seems to have
two stages. In the first, agriculture lost out to Services.
In the second that is upon us, we will see capital
from diverse sources manufacturing and other
forms of productive activity such as farming return
to the land for its conversion into real estate.
That is what India may become a piece of
real estate.
Source: BusinessLine
THE TEN CRORE QUESTION
Whatever else their shortcomings, politicians
have always been skilled at tapping into the
concerns of the people and coming up with
catchy slogans that capture them, while offering
some hope of relief at the same time.
Thus, Lal Bahadur Shastris jai jawan, jai kisan
resonated in an India which had just woken up to
the fragility of its security as a nation state after
two devastating wars with its neighbours. The
celebration of the jawan was a celebration of the
soldier, who had so bravely ensured the survival of
the then still young experiment called India.
The kisan, on the other hand, offered the hope
quotient. The Green Revolution was beginning to
happen, and the new miracle breeds, developed
by crop scientists like Norman Borlaug and our
own MS Swaminathan, promised to remove the
word famine from the countrys lexicon.
Later, it was roti, kapda, makaan. For a
population straining under the personal sacrifices
and hardships imposed by the socialistic planned
development model, accessing basics such as food,
clothing and shelter become aspirational goals
goals which politicians promised to deliver.
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Still later, as we crawled up the rungs of
development, the slogan changed to bijli, sadak,
paani. Endemic hunger was no longer an issue,
except for pockets of the really poor. For most of
the rest, even clothing and shelter were a given,
acquired through their own efforts, without
government handouts. What they wanted from the
government was basic services now, electricity to
power their homes, farms and businesses, roads to
drive their newly-bought vehicles on, and water in
their increasingly overcrowded and under-equipped
towns and cities.
Does the absence of any such slogan this time
around mean that our problems are in a purely
physical, infrastructural and financial sense
over? That there is really nothing to aspire for, and
that all we have to worry about, as Arvind Kejriwal
urges us to do, is corruption?
The jobs factor
Clearly not. Which is why, fairly late in the
day, the biggest issue facing GenNext India has
finally become part of the poll rhetoric jobs. Our
politicians are only now waking up to the fact that
there is a flip side to the demographic dividend.
The realisation has finally dawned that if the 100
million first-time voters who will be voting in these
elections are not employed or worse, do not see
hopes of getting employed in the foreseeable future
they are unlikely to vote for you.
This, going by whatever passes for jobs data in
India, is what is going to happen. India does not
have credible and regularly compiled data on job
creation and workforce participation. What we
have are unreliable numbers put out by various
ministries, and more accurate sample surveys done
by the National Sample Survey Organisation.
According to an NSSO survey, one in three
college graduates in the 15 to 29 years age group
are unemployed.
In its report, Youth employment - unemployment
scenario, 2012-13, the survey paints an even more
dismal picture the labour force participation in
the 15-24 age group,the new voters, is just 31.2 per
cent. Two-thirds of Indias demographic dividend
of youth power is actually not currently
participating in the workforce.
According to a study published in the Economic
and Political Weekly last year, in 2011-12, 30 per
cent of the workers were casual employees, and
only 18 per cent had regular work.
The rest were categorised as self employed
(presumably because, since India doesnt have
unemployment benefits, those without a job were
finding some means of sustenance on their own).
The survey also raises a question mark over the
governments shift in focus to skill development
over the past few years. Underlying this was the
belief that the reason more people were not getting
employment was that they were not employable.
Therefore, the solution lay in imparting employable
skills to the working age population, following
which they would all get nice jobs and lift
themselves permanently above the poverty line.
This led to the creation of a National Skill
Development Mission, a funded skill development
corporation, and a whole skill development
ecosystem now eagerly tapped by the corporate
sector.
Political bombast
Lack of employable skills is certainly one of the
major issues facing the country, but there is a bigger
question: Where are the jobs? The BJP and Congress
are both at loggerheads, accusing each other of
having failed to create enough jobs during their
tenures, but nobody has a concrete plan on how to
go about ensuring that enough jobs are actually
created to meet this staggering demand.
What we have got instead, is political bombast.
If Congress campaign leader Rahul Gandhi
promised 10 crore jobs one for every new voter
the BJP has tried to do one better by promising
to create 25 crore new jobs over the next 10 years
(notice they have quietly ignored the five-year term
of office here) in the series of smart cities that
they will help build across India.
But the same employment survey showed that
unemployment was actually lowest amongst those
with no education or special skills. If you didnt
have a college degree or even a school diploma but
were willing to work for your daily bread, there
was enough work going around even in a slowing
Indian economy.
Unfortunately, the other aspect of the
demographic dividend which has also been ignored
is that of rising aspiration. This generation is no
longer content with just any old labouring job, it
dreams beyond bijli, sadak, paani. But these
aspirations are not finding an echo in either political
palavers or policy platforms. Even a good, job-
oriented replacement for jai jawan, jai kisan would
be a start!
Source: BusinessLine
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LICENSING FOR COMPETITION
Following the Election Commissions nod, the
Reserve Bank of India (RBI) has set the ball rolling
on new banking licences by granting in principle
approval to two applicants IDFC and Bandhan
Financial Services. But what is really refreshing is
the RBIs overall approach to the licensing issue,
which is novel. Unlike in the past, which saw 10
licences being awarded in 1993 and another three
in 2003, Governor Raghuram Rajan has declared
that the Central bank would migrate to a system
where licences are handed out on a regular basis
on tap. The existing stop and go policy,
wherein applications are invited intermittently,
leads to frenzied responses from a large number of
aspirants. It is also conducive for lobbying by those
who would do everything possible to grab the
opportunity that comes once in, say, 10 years.
If bank licences are made available on a
continuous basis, it will put competitive pressure
on existing players. In his latest monetary policy
statement, Rajan also talked about issuing
differentiated bank licences. In other words, there
may no longer be licences for just full-scale banks
subject to the same capital adequacy, liquidity/
reserves and priority sector lending requirements.
Licences could instead vary and be given, for
example, to those engaged only in the business of
facilitating payments (as against lending), lending
to other banks (wholesale banks), infrastructure
credit and other such banking services catering to
niche customers or geographies. Thus, a mobile
wallet or prepaid instrument provider such as
Airtel Money can be given the licence for a
payment bank. It can access deposits just as normal
banks, but will be required to put all this money in
government securities and not be allowed to lend.
This bank will also have a much lower minimum
capital requirement than the Rs 500 crore now
prescribed for full-service banks.
Whether or not this is sufficient to qualify as a
dramatic remaking of the banking landscape,
differentiated licences have clear advantages over
a system that favours the creation of new banks
every decade or so and which are virtual clones of
the existing ones. Such a system imposes undesirable
regimentation for example, non-banking financial
companies (NBFCs), which usually have a core
expertise in some area (say truck financing or gold
loans), having to morph into monolithic, general-
purpose banks. The main attraction for NBFCs
becoming banks is the access they acquire to low-
cost current and savings account deposits. But the
need to adhere to the rigorous regulations
prescribed for full-scale banks from day one clearly
outweigh these benefits. The proposed differentiated
licensing regime with separate micro-prudential
regulations and restrictions on the nature of banking
operations is a feasible alternative to the existing
generic one-size-fits-all model.
Source: BusinessLine
ONE INC
Two is company, three is crowd is pass.
Welcome the one-person company (OPC), the new
kid on the corporate block. This avatar was
unleashed by the 2013 Companies Act. It was
proposed by the Ministry of Corporate Affairs.
Says its website: With increasing use of
information technology and computers, emergence
of the service sector, it is time that the
entrepreneurial capabilities of the people are given
an outlet for participation in economic activity.
Such economic activity may take place through the
creation of an economic person in the form of a
company.
OPC provides the flexibility of starting, owning
and running a company, with the benefit of limited
liability. For one, if the OPC runs into losses, the
sole shareholder/director and his/her personal and
private property is beyond the long arm of the law.
But it is not a brand new idea. Such experiments
are successfully carried out in countries such as
Singapore and the US.
Legally sound
OPC is a legal entity. This means the companys
life does not end even after the lone shareholder
passes away. Its longevity is guaranteed and the
fate of transactions is not jeopardised.
Hence, the people who lent money to the
company cannot sue to recover personal properties
of the shareholder. The lenders arms can reach up
to the shareholders unpaid amount of share
thus far and no further!
The OPC needs to be registered with the
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Registrar of Companies (RoC) as a private limited
company, with the lone shareholder. It may also
have a director. This may sound like a mom-and-
pop store a sole trader establishment but it is
different.
A sole trader invests his or her own resources
and has a lot of freedom to take decisions. The set-
up does not need registration. One may open and
shut a shop at ones will. If the going gets tough,
creditors can reach the private property of the sole
trader.
An OPC, on the other hand, provides an
individual with an opportunity to become a
corporate and attain a distinct personality, quite
different from the creator.
But a cumbersome process
In the case of OPCs, there are a slew of
documents to be submitted. The memorandum of
association, which is the charter of the company,
as also the articles, which are the bye laws of the
company, along with the consent of the individuals
who wish to be directors of the company, need to
be filed with the RoC.
One may well have to hire a professional
lawyer or a company secretary to assist in
documentation, who, naturally, come at a price.
Such an ordeal is not required in sole-trader
organisations.
The OPC needs to nominate a person to ensure
that there is continuity and that nominees name is
to be registered with the ROC. The mom-and-pop
stores are spared of such a requirement.
Since OPC is a legal entity, its affairs need to be
recorded and become more in the public domain,
unlike sole traders.
Another issue is that the OPCs may have to
shell out more taxes as compared to a sole trader,
where the incidence of tax is relatively less.
Besides this, the books of account need to be
maintained as OPC is created by Law.
Nevertheless, the advantages of limited ability
and the possibility of tapping the market for funds
may render OPCs an attractive option. But only
time will tell whether the idea can bloom in India.
Source: BusinessLine
COALITION GOVT: SPOKES WITHOUT A HUB?
The predictions about the coming elections are
that no party will get absolute majority. At the
next level, the question is: Will either of the two
major coalitions get a majority? The election pundits
are still debating whether the two national parties,
the Congress or BJP, will get at least 200 seats. The
hope is that whoever nears that number will have
a chance of putting together a coalition to reach
simple majority.
Gone are the days of brute majority. For
national parties, even getting probable candidates
to contest in 300 seats is a challenge. National
parties have brought this situation upon themselves.
The coalition, ex ante or ex post election, will
again be one of parties with varying ideologies and
agendas. Generally speaking, it will be in the interest
of the nation to evolve a code for coalition politics
before elections are announced.
It is important that the national parties come
together and decide the framework of government
formation and code of governance -- the codes that
would govern the terms of engagement of partners.
The parties say the present situation points to
the inevitability of coalition politics. The prevailing
reality can at best be described as decentred
coalitions. Our polity started as a unipolar system,
migrated to multipolar after the Emergency, and
we thought we had finally stabilised around a
bipolar system, with the NDA and UPA. But the
bipolar system is a morphed version, both bipolar
and polycentric.
In purely bipolar coalitions power would be
centred around the major partner. In a polycentric
system power is diffused and resides within each
partner of the coalition, often dictated by individual
party strength. The first step in coalition governance
was actually made during Indira Gandhis time.
Before that there was no necessity for a coalition.
There was this useful alliance model between the
Congress and AIADMK in Tamil Nadu.
Ideal model
The Congress contested a lions share of Lok
Sabha seats and the regional party contested a
major share of Assembly seats. This was a truly
federal arrangement where both national and
regional parties could mark out their space. This
was the trend in the 1970s. The regional party
claimed no role in the Central government and the
national party no role in the State government.
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Post Emergency, the situation changed. The
opposition parties formed a coalition which
included some national parties and regional parties.
These were supposed to merge. The parties,
however, maintained their identities and it was
multipolar coalition. These decades saw national
parties lose space to state-level parties, and state-
level parties lose in turn to the splinters of regional
parties.
The gain by the state-level parties gave them a
good bargaining position. The national parties could
not muster even a simple majority. The splinter
groups of state-level parties with even less than
five seats also became critical to the sustenance of
the national government.
These parties now started seeing a critical role
for themselves at the central level with very little
capacity or vision for playing a national role. The
national parties on the other hand could not insist
on participation in government at the state level.
They could not voice opposition at the state level
and lost the space to other state-level parties.
Initially, this was the case in Tamil Nadu and
Maharashtra; later it became the scenario even in
larger states such as Bihar and UP.
The present system at best resembles the
franchisee model in the corporate world with
earmarked geographical divisions.
Ungovernability
In a political context, it is quite ungovernable.
First, the decentred nature has led to a distributed
power structure. For example, the prime ministers
prerogative in ministry formation has been
undermined.
It is the coalition partners who decide the
ministers. Ministers are dropped because the
coalition partner say so, even though they were
performing well.
Second, accountability and collective respon-
sibility suffered. The ministers are now responsible
to party leaders than to the head of the government.
The prime minister can enforce performance
only upon party members. Accountability was
sought to be ensured through coalition party leaders
who are outside the Cabinet. This got strengthened
by the formation of a coordination committee which
remained outside the boundaries of Parliament and
government.
Third, the formation is fluid wherein the
elements can keep changing. Parties can come and
go. The status preceding the signing of the nuclear
deal showed the fragility of the system. Small parties
with no mandate on such national issues can
jeopardise the system.
Locus of control
The national parties have to seriously consider
their losing position in the central space. They need
to decide how to compete and be assertive in
government formation. Deciding on how to regain
control would mean deciding how to compete. This
would require more codes and norms than
constitutional amendments.
Reform will include revisiting conventions of
Cabinet formation. Regional parties have to concede
the prerogative of the prime minister in Cabinet
formation and in picking ministers.
They can decide the allocation of the number
of ministers but not the allocation of ministries.
The national party should have complete say in
Cabinet formation both in terms of ministry
allocation and selection.
Similarly, the ministers are there at the pleasure
of the prime minister rather than their own
respective leaders. The national parties need a larger
role for themselves and should similarly give a
bigger role to regional parties at the state level, like
the old AIADMK model. The national parties act
as the centripetal force by providing a platform
but control is multilayered.
What we are seeing is not just the fragmentation
of vote politics but of power, control, accountability
and governance. This happens when the locus of
control lies outside the Cabinet, and the prime
minister is not the pivotal force.
Source: BusinessLine
A POLICY WITH CLARITY OF PURPOSE
As the Reserve Bank of India (RBI) Review of
Macroeconomic and Monetary Developments 2014-
15 succinctly brings out, there are three important
considerations for monetary policy in the immediate
ensuing period. First, the disinflationary process is
already under way with headline inflation trending
downward along the path envisaged by the Urjit
Patel Committee, though inflation is still above
comfort levels.
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Second, growth concerns are significant with
GDP growth at a sub-5 per cent level for seven
successive quarters and industrial production
stagnating for two successive years. Third, there
are signs that potential growth has fallen with high
inflation and low growth. Thus, supply-side
constraints on growth will need to be given
attention.
Macroeconomic uncertainties
There are risks to the central forecast of an 8
per cent CPI inflation rate by January 2015 with
the possibility of a less than normal monsoon, given
the likelihood of an El Nino effect, uncertainties on
minimum agricultural support prices and other
administered prices and fiscal pressures. The RBI
policy stance is rightly focused on keeping the
economy on a disinflationary trajectory to hit 8 per
cent CPI inflation by January 2015 and 6 per cent
by January 2016.
It is gratifying to see the RBIs firm commitment
on inflation despite unwarranted criticism that it
has not given enough emphasis to growth.
Status quo
Although the RBI policy overnight repo interest
rate of 8 per cent has been kept unchanged, the
monetary policy reflects great perspicacity. The RBI
has deftly followed the Urjit Patel recommendation
to de-emphasise the overnight guaranteed access
repo facility.
The policy makes a significant departure on the
repo facility issue: the access limits for the 7-day
and 14-day term repo has been raised from 0.50
per cent of net demand and time liabilities (NDTL)
to 0.75 per cent of NDTL while simultaneously
reducing the overnight repo access from 0.50 per
cent to 0.25 per cent of NDTL. This is a significant
development which will improve the efficacy of
monetary policy. The term repo is more effective as
a transmission mechanism across the interest rate
spectrum as it is a better indicator of the underlying
liquidity.
Further, this measure could foster the
development of a term money market. It is hoped
that over time an element of stability emerges in
RBI accommodation as the term repo becomes the
major policy instrument.
While the RBI has, understandably, tried to
avoid undue interest rate volatility at the financial
year-end by providing liberal access to banks under
the term repo facility, this has the unintended effect
of actually encouraging window-dressing. Window-
dressing is a counter-productive activity and while,
on this occasion, the RBI has not undertaken any
punitive measures, it has made it clear that it would,
in future, use appropriate measures to discourage
such activity.
Year-end window-dressing
Some banks try to boost the size of their
balance-sheet while others wish to get some risk
assets off their portfolio, even if temporarily, to
reduce minimum capital requirement. In either case
it is a futile exercise and, in fact, distorts the
evaluation of a banks position.
It is pertinent to mention that many years ago
the RBI had effectively countered window-dressing.
In 1992, as part of the financial sector reforms it
was felt that the statutory liquidity ratio (SLR) of
38.5 per cent of NDTL was too high and there was
a need to bring it down.
Rather than reducing the 38.5 per cent average
SLR, the incremental SLR was reduced at one stroke
to 25 per cent while retaining the 38.5 per cent
SLR on the NDTL as on March 31, 1992.
The effect was that banks which had resorted
to window-dressing on March 31, 1992, were
penalised and got the relief of the lower marginal
SLR only after the NDTL crossed the March 31,
1992 level.
It should be possible to devise measures to curb
window-dressing in the current context. For
instance, all RBI overnight accommodation could
be withdrawn for one day on March 31, or if this
were felt to be insufficient, even 7-day and 14-day
repo facilities could terminate before March 31 and
any RBI accommodation could be restarted from
April 1.
Alternatively, on the incremental NDTL
between March 31 and the preceding fortnight,
there could be a prohibitive cash reserve ratio which
would be locked in for a stipulated period, say
three months. These are just illustrative measures
and the RBI could modulate the measures so that
banks respond sensibly to the suasion of the RBI.
Meaningless window-dressing has gone on for too
long and it is time to put an end to this futile exercise.
Growth of the economy
The RBI does well to use a range of 5-6 per
cent for growth in 2014-15 with a central estimate
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of 5.5 per cent. It is only after the regular Budget
and macroeconomic policies for 2014-15 are
formulated by the new government takes charge
would there be a reasonable estimate of growth in
2014-15.
The policy review also undertakes a compre-
hensive review of developmental and regulatory
policies.
Here, there are a number of important issues
which need to be examined separately.
Source: BusinessLine
WATCHING THE WATCHDOGS
Of the many provisions in the new Companies
Act intended at tightening lax corporate governance
standards, those relating to the auditing profession
are possibly the most significant. Recently notified
rules under the Act have made it mandatory for
companies both listed and unlisted to rotate
their auditor once every five years and the audit
firm once in ten years. The idea here is to ensure
that the auditors objectivity is not compromised
by a cosy relationship with the client. Auditors have
been barred from taking on consulting or other
assignments from their clients and will attract
personal liabilities for negligence; at the same time,
they will be vested with a whistle-blower function.
Thus, in the event of detecting any irregularities
committed in the company, they are obliged to
report the same within 45 days to its board and
within 60 days to the Central government. Besides,
the Act has proposed a new regulatory body
the National Financial Reporting Authority (NFRA)
to oversee these rules, conduct enquiries and
levy penalties on auditors for non-compliance.
Predictably, leading audit firms have criticised
the new rules. Mandatory rotation, they claim, will
dilute the quality of the audit, as there will be less
time now to understand the company or the
industry it is in. But this doesnt hold water as 10
years is more than sufficient to acquire industry
knowledge. The argument against subjecting
unlisted firms to compulsory auditor rotation is also
a non-starter. After all, it is not only public
shareholders, but also banks, suppliers, buyers and
tax authorities that rely on a companys published
financials. Even more specious is the claim that
banning consulting assignments and penalties for
negligence will make statutory audits a costly and
unattractive proposition. What stops auditors from
hiking their fees? Investors who rely on the opinion
of auditors will certainly not object to that.
For investors, lenders and other stakeholders,
the real problem arises from the failure of auditors
to flag serious accounting issues. All too often,
when faced with non-disclosure of material facts,
bad accounting policies or non-adherence to
standards, auditors shy away from qualifying their
reports and take shelter under emphasis of matter
clauses or notes tucked away in the accounts.
These render published accounts unreliable. There
are nearly 1,700 listed companies suspended from
trading for not complying with basic disclosure
requirements such as filing financial results.
Companies routinely vanish from the bourses as a
result of promoters siphoning off funds. These are
common infractions that rigorous auditing can
uncover. The Centre should expedite taking the
next step, that of constituting the NFRA. Many
elaborately drafted Indian laws fail to make a
difference because they are not followed through,
especially by framing the required rules. The
auditor-related provisions in the new Companies
Act should not suffer from this.
Source: BusinessLine
FOR A WORLD OF FREER LABOUR FLOWS
We live in an increasingly globalised world,
characterised by the transnational movement of
goods, services, people and ideas. Yet, the merits of
international migration of people have not been
recognised in substantial measure.
Migration has received attention, albeit of the
wrong kind.
The discourse the world over continues to be
driven by political rhetoric, centred around
populism, xenophobia, security and nationalism.
As a result, the economics of migration has been
overlooked. In international migration in particular,
good economics does not necessarily mean good
politics.
The only easy battles in migration are garnering
support for mobility of high skilled workers, or those
who come and go with a temporary tag.
Freer economic migration is good for business,
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catalysing innovation, investment and
entrepreneurship the building blocks of sustainable
development.
International migration also spurs the investment
rate, saving rate and the consumption rate, which
further serves to expand business and trade.
Despite these obvious gains, an irony peculiar
to our globalising world is the noticeable absence
of industry as a catalyst for global migration. The
Indian Diaspora is the most successful in the world.
Indian industry must find modes of engagement
with the Diaspora to derive advantage from the
success they have achieved.
Brain circulation
We are moving away from brain drain,
towards a more positive notion of brain circulation.
Industry must play a bigger role in skills
development of the workforce, keeping in mind
the paradigm of brain circulation.
India has to earnestly work towards building
an image of a welcoming country; providing equal
opportunities, irrespective of race, gender,
nationality, and so on. Along with this, Indias
ranking in 2014 is 134 among 189 world economies,
according to the World Banks Ease of doing
business survey. Overcoming these issues will
necessitate the involvement of Indian industry.
One of Indian industrys most important
contributions can be through skill development of
our youth with a gender focus. India is at that
unique threshold where its demographic and
economic transitions generate a surplus of workers
in the economy.
Also, women are no longer migrating as
dependents; they are increasingly migrating as
workers, independent professionals and service
providers.
However, most emigration from India is still in
the low-skilled category, 90 per cent of which is to
the Gulf countries. A skilled workforce is necessary
for industry upgradation; it stimulates innovation
and helps countries move up the global value chain.
Promise of Bali
Co-ordination between the main stakeholders
in the skills market helps achieve the targets of
industrial policy.
There are glaring labour shortages and skill gaps
the world over. Industry can play a role in matching
available skills with the demand for them and in
facilitating bilateral coordination for social security
arrangements.
The transnational movement of people should
necessarily be looked at as a natural corollary to
the movement of goods and capital. Bali 2013
brought with it hope of boosting global trade worth
$1 trillion. It has been celebrated as a victory of
multilateralism; as a triumph of globalisation; of
various interests coming together.
However, the real victory will come when we
reach a consensus on the fact that the mobility of
people is good and even necessary to maintain
global economic growth rates. The globalisation of
everything but labour will not work for too long.
Finally, whether or not Indian industry partakes in
the facilitation and advocacy of freer migration, it
will continue to take place.
Changing the perceptions about migration, not
overstating its negatives and understating its
positives, will be a good place to start.
Source: BusinessLine
LIFE IS AN INJECTION
Recently the World Health Day was observed.
It is an apt occasion to look back at the progress
India has made in its fight against preventable
diseases, and the importance of life-saving vaccines.
Diarrhoeal diseases kill nearly 600,000 children
every year. They are one of the foremost causes of
infectious morbidity, second only to acute
respiratory infections.
Kid killers
Unfortunately, India is a major contributor to
the global burden of diarrhoeal diseases. The
number of people dying from diarrhoeal diseases
have come down, thanks to better antibiotic
availability and utilisation of oral rehydration
therapy. But the burden still remains high and is
one of the principal causes of morbidity and
mortality, especially in children.
Enteric bacterial infection (linked to intestines)
is a major cause of diarrhoea throughout the world,
especially in low- and middle-income countries. The
WHO says 1.1 billion people drink unsafe water
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and the vast majority of diarrhoeal disease in the
world (88 per cent) is linked to unsafe water,
sanitation and hygiene. In developing countries,
enteric bacteria and parasites are more prevalent
than viruses and typically peak during the summer.
Recent studies show that bacterial pathogens
such as Vibrio cholerae (causes cholera),Escherichia
coli, Shigella spp. and Campylobacter jejuni account
for moderate to severe diarrhoea in India. Among
these, rotavirus and norovirus are the main
pathogens responsible for acute diarrhoea.
Rotavirus infection accounts for a third of global
child deaths attributable to diarrhoea. It cannot be
controlled by antibiotics, nor are there any specific
drugs for it. It is seen that almost all the children
across the globe will suffer at least one rotavirus
infection, if not more, in their lifetime. It is even
seen in the developed world. Immunising children
with a vaccine is clearly the way to effectively
reduce rotavirus-related morbidity, mortality and
associated medical costs.
Several rotavirus vaccines formulated for oral
administration to infants have been shown to be
highly effective in reducing the incidence of
rotavirus gastroenteritis. An indigenous vaccine
developed in India has been shown to be efficacious
and is currently awaiting licensure.
Life in times of cholera
An important concern is the emergence of
cholera across the globe. Recent outbreaks in Cuba,
Haiti and Zimbabwe show it can cause enormous
loss of human lives. Cholera is endemic in India,
stays in the environment especially in coastal areas,
and as such, the lower Gangetic plain is called
homeland of cholera. It is a pity that despite an
estimated annual burden of two to four million
cases, we react only when an outbreak hits.
Control of cholera depends on the long-term
strategy of improving water quality and sanitation
systems. That said, it is difficult to achieve this in
resource-poor settings (as seen in India). Thus,
vaccination for cholera can be an important short-
term preventive approach along with other efforts.
A low-cost, bivalent, killed whole-cell oral
cholera vaccine is currently made in India and has
also received licensure from the Drug Controller
General of India. It has proven efficacy and safety
and confers 65 per cent protection at the end of
five years following vaccination. Recently, the
Strategic Advisory Group of Experts on
Immunisation of the WHO recommended the use
of this vaccine in endemic areas.
Given the morbidity diarrhoeal diseases bring on,
it is critical to pursue further research in this area.
Source: BusinessLine
THE RUN OF RAINS IN INDIAN AGRICULTURE
The increased probability of an El Nino weather
pattern has already begun to rustle up fears about
how a bad monsoon could hurt a sluggish Indian
economy. The concerns are valid even though the
economy is less dependent on agriculture than
before and reservoir levels this summer are quite
comfortable. The lessons of previous El Nino
episodes in 2002 and 2009 tell us that farm
production as well as food prices can take a knock
in a country where barely a third of farm land is
irrigated.
The harsh impact of unseasonal rains and
hailstorms earlier this month across a number of
statesimposing losses estimated at a billion rupees
on insurershas further added to the concerns.
Add to this the suicide of 23 farmers in
Maharashtra, which has once again exposed the
abysmal state of existing procedures to shield them
from exigencies. Interestingly, the Indian
Meteorological Department has dismissed claims
by Western scientists of the risk posed by El Nino,
calling it a conspiracy to help speculators.
For long, unpredictable weather has remained
one of the biggest threats to farmers. Naturally,
voices in favour of a comprehensive crop insurance
programme to protect farmers from the vagaries of
nature have strengthened over time. However, the
record of state assistance to distressed farmers has
been far from satisfactory.
The comprehensive crop insurance scheme
instituted in 1985, which turned out to be
financially unviable with claims over-running
premiums by almost six times, was one of the
earliest attempts at state-sponsored cover that went
berserk. Subsequently, the National Agricultural
Insurance Scheme (NAIS), which sought to serve
as a more viable alternative through the charging
of higher premiums over time, met with a similar
fate. Throughout, both the central and state
governments footed the gap in funding by
subsidizing crop insurance.
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The justification for extending insurance support
to farmers has emerged from concerns that extreme
uncertainties associated with agriculture will make
market premiums unaffordable to farmers.
Protecting them through subsidized insurance
programmes was seen as the natural way out.
However, massive bailout of farmers by the
government only managed to crowd out private
firms from the market for insurance.
More importantly, the lack of competition in
insurance cover has led to the stifling of much-
needed innovation that is a prerequisite to better
and cheaper insurance products. Also, under a
state-sponsored insurance programme, the
unintended effects of moral hazard and adverse
selection have added to the cost of providing
insurance. This is clearly reflected in the high claims
ratio of over 300% even under the NAIS, which
was supposed to set right the deficiencies of past
relief programmes.
Deregulating the insurance market can only be
part of a larger plan to mitigate the many risks of
Indian agriculture. This is especially true given some
risks cannot be covered by private insurance, or
only at much higher prices. With extreme
dependence on seasonal monsoons still remaining
the norm in most parts of the country, the need for
improving irrigation infrastructure cannot be
stressed enough.
Meanwhile, commodity hedging remains
perhaps the most underexploited risk-mitigating
mechanisms as far as dealing with price risk goes.
While India has exposed its farmers to the
international market in a globalized world, Indian
farmers still remain underserved by the services of
the commodity derivatives market. Last year,
according to the US department of agriculture and
the Futures Industry Association, the ratio of open
interest in hedging instruments to total size of maize
and wheat market in India stood at a negligible
0.1%, compared to the world average of well over
20%.
Given the inefficiency of the current relief
mechanism, and the minuscule size of the market
for pooling risk, there could be no better reason to
improve farmers access to alternatives.
Source: Mint
THE CHANGING FACE OF GLOBAL RISK
The worlds economic, financial and geopolitical
risks are shifting. Some risks now have a lower
probabilityeven if they are not fully extinguished.
Others are becoming more likely and important.
A year or two ago, six main risks stood at centre
stage:
A euro-zone breakup (including a Greek exit
and loss of access to capital markets for Italy
and/or Spain).
A fiscal crisis in the US (owing to further
political fights over the debt ceiling and
another government shutdown).
A public-debt crisis in Japan (as the
combination of recession, deflation, and high
deficits drove up the debt/gross domestic
product or GDP ratio).
Deflation in many advanced economies.
War between Israel and Iran over alleged
Iranian nuclear proliferation.
A wider breakdown of regional order in the
Middle East.
These risks have now been reduced. Thanks to
European Central Bank President Mario Draghis
whatever it takes speech, new financial facilities
to stabilize distressed sovereign debtors, and the
beginning of a banking union, the euro zone is no
longer on the verge of collapse. In the US, President
Barack Obama and Congressional Republicans
have for now agreed on a truce to avoid the threat
of another government shutdown over the need to
raise the debt ceiling.
In Japan, the first two arrows of Prime
Minister Shinzo Abes economic strategymonetary
easing and fiscal expansionhave boosted growth
and stopped deflation. Now the third arrow of
Abenomicsstructural reformstogether with
the start of long-term fiscal consolidation, could
lead to debt stabilization (though the economic
impact of the coming consumption-tax hike is
uncertain).
Similarly, the risk of deflation worldwide has
been contained via exotic and unconventional
monetary policies. And the risk of a war between
Israel and Iran has been reduced by the interim
agreement on Irans nuclear programme concluded
last November.
Though many Middle East countries remain
highly unstable, none of them is systemically
important in financial terms, and no conflict so far
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has seriously shocked global oil and gas supplies.
More important, as the risks of recent years have
receded, six other risks have been growing.
For starters, there is the risk of a hard landing
in China. The rebalancing of growth away from
fixed investment and toward private consumption
is occurring too slowly, because every time annual
GDP growth slows toward 7%, the authorities panic
and double down on another round of credit-fuelled
capital investment. This then leads to more bad
assets and non-performing loans, more excessive
investment in real estate, infrastructure, and
industrial capacity, and more public and private
debt. By next year, there may be no road left down
which to kick the can.
There is also the risk of policy mistakes by the
US Federal Reserve as it exits monetary easing. Last
year, the Feds mere announcement that it would
gradually wind down its monthly purchases of
long-term financial assets triggered a taper
tantrum in markets. This year, tapering is priced
in, but uncertainty about the timing and speed of
the Feds efforts to normalize policy interest rates
is creating volatility. Some investors and
governments now worry that the Fed may raise
rates too soon and too fast, causing economic and
financial shockwaves.
Third, the Fed may actually exit zero rates too
late and too slowly (its current plan would
normalize rates to 4% only by 2018), thus causing
another asset-price boomand an eventual bust.
Indeed, unconventional monetary policies in the
US and other advanced economies have already
led to massive asset-price reflation, which in due
course could cause bubbles in real estate, credit,
and equity markets.
Fourth, the crises in some fragile emerging
markets may worsen. Emerging markets are facing
headwinds (owing to a fall in commodity prices
and the risks associated with Chinas structural
transformation and the Feds monetary-policy shift)
at a time when their own macroeconomic policies
are still too loose and the lack of structural reforms
has undermined potential growth. Moreover many
of these emerging markets face political and
electoral risks.
Fifth, there is a serious risk that the current
conflict in Ukraine will lead to Cold War IIand
possibly even a hot war if Russia invades the east
of the country. The economic consequences of such
an outcomeowing to its impact on energy supplies
and investment flows, in addition to the destruction
of lives and physical capitalwould be immense.
Finally, there is a similar risk that Asias
terrestrial and maritime territorial disagreements
could escalate into outright military conflict.
So far, financial markets have been sanguine
about these new risks. Volatility has increased only
modestly, while asset prices have held up. Noise
about these risks has occasionally shaken investors
confidence, and modest market corrections have
tended to reverse themselves.
Investors may be right that these risks will not
materialize in their more severe form, or that loose
monetary policies in advanced economies and
continued recovery will contain such risks. But
investors may be deluding themselves that the
probability of these risks is lowand thus may be
unpleasantly surprised.
Indeed, as was the case with the global financial
crisis, investors seem unable to estimate, price, and
hedge such tail risks properly. Only time will tell
whether their current nonchalance constitutes
another failure to assess and prepare for extreme
events.
Source: Mint
ELECTION 2014: A POLARIZED VOTE
In Democracy in America, Alexis de Tocqueville
when describing the effect of elections said, Long
before the appointed day arrives, the election
becomes the greatest, and one might say the only,
affair occupying mens minds.
Nearly two centuries after de Tocquevilles book
was published, his words seem to describe the mood
in India perfectly. The Indian electorate numbering
814 million will soon decide which party or coalition
of parties will form the next Union government. It
is also an election that is perhaps the most
polarizing one that India has seen in a decade. The
content of polarization is interesting and makes
this election different from recent ones.
Superficially, the two leading parties in the
fraythe Congress party and the Bharatiya Janata
Party (BJP)have gone back to old-style religious
and caste polarization to improve their chances.
Recently, the Congresss supreme leaderSonia
Gandhimet the Shahi Imam of the Jama Masjid
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in Delhi. The latter then decided to back the
Congress across India. His argument in support of
the Congress is that the danger to secularism is a
bigger issue than corruption. Around that time,
Amit Shah, the BJPs key organizational man in
Uttar Pradesh (UP), allegedly exhorted members
of the Jat caste in western UP to avenge their
insults. Since these events happened barely a
week before the first ballot was cast, they probably
represent a nightmare for secular individuals: that
electioneering in the end was all about polarizing
the vote.
It is true that electoral polarization is at work
but it is not along the religious axis.
In the month or so since the Election
Commission (EC) announced the poll schedule, the
campaign, countrywide, has revolved on three axes.
For the BJP, it has largely been a matter of
highlighting the Congress partys misrule in the
last 10 years. The BJPs plank has largely veered
towards that of a modern conservative party that
believes in free markets and a regulatory state that
is less obstructive for businesses. The Congresss
campaign has been, by and large, disorderly in the
face of BJPs far more organized one. The party
has stuck to its populist (in its terms welfarist)
agenda combined with a personalized attack
against the BJPs prime ministerial candidate,
Narendra Modi. The third axis is represented by
the fast changing ideas of the Aam Aadmi Party
(AAP). The party began as an anti-corruption
movement but has mutated into an anti-BJP
campaign. AAP is notably soft on the Congress
and considers the BJP its primary target. Over time,
it has slowly diluted its anti-corruption stand into
something else: a campaign against big business
(read free markets) and a populism that is not very
different from the Congresss. The AAPs manifesto,
released recently, is telling in this respect.
Effectively, the campaign has polarized India
in economic terms.
This should not surprise anyone. There are two
forces at work that have made economic issues
more important than anything else in this election.
India is in the midst of changing demographic and
educational trends. The country is home to a very
large youth population that is not only educated
but is also concerned about its future. This makes
this election possibly the first time that Indians are
raising and demanding answers to economic
questions from leaders.
There is another reason why election 2014 is
special. India has experienced high growth and
prosperity. It has also seen a steep economic slide
in the last five years of the United Progressive
Alliance government. Other partiesBJP and
AAPare making big promises to the electorate.
All these promises and choices are largely couched
in economic terms even if the Congress has tried to
blend in the politics of secularism into the mix. But
such is the potency of economic questions that even
the Congress cannot avoid these issues. The party
is busy highlighting its track of populist legislation
and programmes to woo the electorate. This alone
makes this election more polarizing than those seen
in recent decades. The results will be interesting.
Source: Mint
WORSHIPPING FALSE GODS IN INDIA
Amidst the clamour of Indias colourful 2014
general election, a public debate of great import
for Indias future is underway. Leading political
candidates debate which development model is best
suited for a country of vast economic potential and
embedded historical impoverishment.
Most opinion polls rate Narendra Modi as the
front-runner in the 2014 general election. In his
energetic campaign, Modi downplays his earlier
hostile discourse about the countrys religious
minorities in favour of one which promises
development on the model of Gujarat. His promise
is that all of India would benefit from the verve
and pace of economic growth derived from high
private investment which his leadership
accomplished in Gujarat.
This claim raises many pertinent questions. One
is whether Gujarat under Modi indeed outpaced
other states in economic growth and private
investment. The second is the terms on which this
private investment is encouraged and whether this
indeed was in the public good. Finally, is there
evidence that people of economic and social
disadvantage have benefited significantly from this
economic growth?
On the first question, Gujarat has indeed
enjoyed high levels of economic growth in the years
of Modis leadership. But growth rates were also
high in the state for two decades prior, suggesting
that Modis policies were not decisively responsible
for this growth performance. It is also pertinent
that growth rates were higher in states such as
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Maharashtra and Tamil Nadu. Gujarats
performance as the most attractive destination for
private investment is also overstated. Its share in
foreign direct investment in 2102-13 was 2.38%,
placing it at a distant sixth position among states.
By contrast, Maharashtras share was just under
40%. Economist Atul Sood also reminds us that of
the total agreements signed under successive high-
profile investor summits in Gujarat, the proportion
of projects actually realized fell precipitously from
73% in 2003 to 13% in 2011.
Even more pertinent are the terms on which
Gujarat attracts private investment. Its gold
standard reputation as an investor-friendly
government derives from the alacrity with which
it provided land for Tatas small car factory,
contrasted with long futile years of bitter public
struggle in West Bengal. A right to information
application revealed that the Tata investment was
Rs.2,900 crore, and the state government awarded
it a loan of Rs.9,570 crore at 0.1% rate of interest,
repayable on a monthly basis after 20 years. In
addition, it received land at much cheaper than
market, and the state paid stamp duty, registration
charges and electricity. It has been calculated that
the total subsidy element of the cheap car is half its
total market price.
This is the basic template of the policies of
Modis government for other large industrial houses
as well. Economists such as Indira Hirway question
whether this is good governance or crony
capitalism. It turns on its head welfare principles
of taxing the rich to provide a better life for the
poor: the Gujarat model is of taxing the poor to
subsidize the super-rich. Sood also worries about
the implications of completely handing over both
investment and decision-making regarding all new
infrastructure projectsports, highways, railto
profit-led large industry, and that Gujarat now has
among the worst records of labour unrest among
states in the country.
The other side of the same coin of massive state
expenditure for unprecedented incentives to large
businesses is markedly declining investments in the
social sector. In 2011-12, Gujarat ranked 17th
among Indian states in the proportion of
development expenditure in total public
expenditure. Only 1.09% of public expenditure in
Gujarat was on education and health, well behind
states such as Rajasthan (3.09%). Shipra Nigam
points to the inevitable consequences of this neglect:
between 1999-2000 and 2007-08, fewer children
between six and 14 years of age attended school in
Gujarat than the national average. Even more
worrying, the proportion of girls, scheduled castes
and tribes, Muslims and other minorities who
attended school was much lower than national
averages. Gujarat is again below the national
average and also compares unfavourably with other
high growth states such as Tamil Nadu, Haryana,
and Maharashtra in infant mortality, under-five
mortality and mortality rates for women. No wonder
that in the India Human Development Report 2011,
Gujarats ranking was a lowly 11th in 2007-08.
Gujarats hunger story is even more damning.
A 2012 National Nutrition Monitoring Bureau
(NNMB) survey shows 53.7% children under five
in Gujarat are stunted (low height for age). Stunting
is an indicator of chronic malnutrition mainly
caused by lack of access to nutritious food and
repeated illness. About 43% of adult men and
women have a low body mass index. Time trends
from both the National Nutrition Monitoring
Bureau and National Sample Survey data show
the average calorie consumption and cereal
consumption is also falling. There is also a decline
in consumption of other nutrients such as proteins,
calcium and iron. While many states have been
improving their public distribution system (PDS) in
the past five years, Gujarat is one of the worst-
performing states on two aspects of the PDS: it has
a low and falling per capita PDS consumption,
and among the highest rates of foodgrain diversion.
Over half of those in the poorest quintile in Gujarat
report that they do not get any subsidized grain,
nearly ten percentage points higher than the
national average, according to the 2009-10 NSS.
Below the poverty line lists have not been updated
since 1998, which pegged the poverty line at Rs.11
a day.
Below and bluster and hyperbole of political
claims, the choice before the country is stark. Can
markets alone deliver a better life for people of
disadvantage, or must caring states play a more
active role? Will ordinary people, and especially
the millions who live in poverty, indeed benefit
from a model of development in which huge public
funds are committed to supporting private
investment, to the neglect of investments in
education, healthcare, nutrition and infrastructure?
Source: Mint