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Garuda-IV Excercise
Six Indian Sukhoi-30MKI multi-role fighters, supported by IL-76 heavylift aircraft and IL-78 midair refuellers, tore into the
skies over France to participate in the joint combat exercise with the French and Singaporean air forces. In ‘Garuda-IV’
exercise, being held at the Istres airbase north of Marseille, France has deployed its Rafael and Mirage-2000 fighters, while
Singapore is participating with F-16s.
The exercise comes at a time when India and France are trying to finetune the around Rs 10,000 crore deal to upgrade the 56
Mirage-2000 fighter jets in IAF’s combat fleet. The first four to six Mirages will be upgraded in France, with the rest 50 or so
being upgraded in India by Hindustan Aeronautics under transfer of technology. India’s defence ties with France are quite
broad-based, including as they do the over Rs 20,000 crore project to build six French Scorpene submarines currently
underway at Mazagon Docks. France has also offered its multi-role Rafael fighter for the ongoing competition in the gigantic
$10.4 billion project to supply 126 medium multi-role combat aircraft to IAF.
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Kerala govt gets to run golf club for all
The rich man’s sport, golf, will get a taste of socialism in Kerala. The Supreme Court allowed the Achuthanandan government to
wrest control of the Trivandum Golf Club (TGC).
The state had justified its bid to acquire the control of the golf course by saying that private management had made it a ‘‘rich-
only’’ affair, and the lawns were being used for marriages and film shootings.
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ECONOMY, BANKING AND FINANCE
IRDA wins battle against SEBI
India’s insurance regulator—the Insurance Regulatory and Development
Authority (IRDA)—has got a clear mandate from the government to regulate
unit-linked insurance plans (ULIPs) and it will unveil new rules soon to raise
the risk cover and to lower charges to make this product more attractive to
investors. The government promulgated an ordinance to amend four major
laws (the RBI Act, the Insurance Act, the Sebi Act and the Securities
Contract Regulation Act) that could revive the sale of Ulips and force the
mutual fund industry to look for new avenues to get investors.
Irda and Sebi got into a legal battle over Ulips regulation after the markets regulator on April 9 banned 14 insurers from selling
Ulips. Sebi withdrew the ban when bureaucrats brokered a truce, but only to revive it. Sebi moved the Supreme Court to club
various public interest litigations against Ulips and resolve the issue of alleged mis-representation and the issue of jurisdiction.
ULIPs can be set to offer guaranteed maturity benefits to protect policyholders even when markets crash. Insurers now offer
guaranteed returns only on pension policies that are not sold on a unit-linked platform.
According to IRDA , the guidelines for Ulips will be revised to make it attractive for investors. Insurers will also be given more
time to redesign these products.
Pension plans will now have to be bundled with a life cover or health cover or annuities. Insurers can offer all three, but at least
one will be mandatory. IRDA is also planning to prescribe a minimum health cover for policyholders. For pension plans, the
insurer has to convert the accumulated fund value into an annuity at maturity. The policyholder or the insured will have the
option to commute up to a maximum of one-third of the accumulated value as lump sum on maturity. If the policy is
surrendered, the policyholder will get only a third of the surrender value. Further, the policyholder will have to buy an annuity
for the remaining amount. GROUP products will continue to be on annually renewable basis. All top-up premiums paid during
the tenure of the contract should have an insurance cover and will be treated as single premium.
Important facts:
Insurance Act to be amended to cover Ulips in life insurance business. Similarly, Securities Contracts (Regulation)
Act will make it clear that 'securities' will not include Ulips
The lock-in period will be five years against 3 years now. Partial withdrawals will be allowed only at the start of fifth
year. Insurers have to mandatorily offer a life cover, health cover or annuities with the life cover. They can offer all
three, but at least one will be mandatory
If policyholders find it attractive to buy policies that are tax-free, insurers will have to re-design some products that
lose tax cover post-DTC (Direct Tax Code)
The government has also constituted a high-level committee chaired by Finance Minister Pranab Mukherjee, which
will sort out all issues of jurisdiction regarding hybrid products. And will also include the Finance Secretary, the
Financial Services Secretary and heads of RBI, IRDA, SEBI and the Pension Fund Regulatory and Development
Authority (PFRDA).
Irda proposes a fair deal to those who pull out their investments in Ulips by introducing a ceiling on the difference between
gross yields (returns had there been no charges) and net yields (returns after factoring in charges) from the sixth year
onwards. The charges will be close to 2.5-3.3% in the sixth year, which drops to 3% by the 10th year. Surrender charges will be
capped at 20% for premiums ranging between Rs 15,000 and Rs 20,000.
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The regulator has also proposed curbs on direct marketing either through telephone or DTH television whereby marketers
would have to obtain the consent of the prospect before proceeding with their marketing pitch. Telecallers will also have to
follow a fixed script and insurance companies will need to maintain recordings of conversations with prospects.
** As per the revised DTC, which will replace the 50-year-old Income Tax Act, only six specified instruments (government provident fund, public
provident fund, recognised provident fund, pension funds regulated by Pension Fund Regulatory and Development Authority (PFRDA), pure life
insurance products and annuity scheme) will qualify for the EEE (exempt-exempt-exempt) taxation. Under the EEE mode, tax exemption is
provided at all the levels of the instrument-- at the time of investment, at accrual and at the time of withdrawal.
In Details:
The earlier draft had also introduced a complex mechanism for taxation of rent income. To compute income from house
property, the previous draft had proposed "a notional rent on presumptive basis" (at the rate of six per cent). The notional rent
was considered at six per cent of either the market value of the house or the cost of construction/acquisition. "However, this
method discriminates against recent owners as such cost is a function of inflation," said the new draft. The revised draft
scrapped this method of computing notional rent.
Capital gains could become a part of the total income, after "allowing a deduction at a specific percentage of capital gains
without any indexation". The effective rate of taxation, as a result, would be lower for capital gains after one year. In the short
term (less than one year), the entire amount will be added as a part of the income and taxed as per the slab. For example, if the
income of a person is Rs 12 lakh (Rs 1.2 million) and capital gains are Rs 500,000, the total income of the person would be Rs 17
lakh (Rs 1.7 million).
The revised proposal retained the existing threshold limit for wealth tax. Earlier, the wealth tax limit was proposed to be hiked
to Rs 50 crore (Rs 500 million). The latest draft retained the definition of wealth as 'unproductive assets' such as plot of land,
jewellery and cash in excess of Rs 50,000.
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The government has dropped its plans to make the direct taxes code (DTC) override double taxation avoidance agreements
(DTAAs). In the revised DTC draft, the finance ministry suggested that the DTC would be the basis for levying tax, if authorities
invoked the provisions of either the General Anti-Avoidance Rule (GAAR) or those related to Controlled Foreign Corporations
(CFCs). The third condition would be when branch profit tax is levied.
The revised discussion paper on the Direct Taxes Code (DTC) has proposed to tax the income of foreign subsidiaries of Indian
companies. A company incorporated outside India will be taxed only when its management is taking decisions in India. As an
anti-avoidance measure, in line with internationally-accepted practices, it also proposed to introduce Controlled Foreign
Corporation (CFC) provisions to ensure that passive income earned by a foreign company controlled directly or indirectly by a
resident in India is taxed by authorities here.
*perquisite is any casual emolument, fee or profit attached to an office or position in addition to the salary or wages. In other words,
perquisites are the benefits in addition to normal salary to which the employee has a right by virtue of his employment.
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hitting the pocket of the common man, include pulses, vegetables and sugar. Furthermore, the prices of metal, textiles and
plywood prices have also gone up, as inflation has spread to non-food items.
The data further revealed that the final inflation figure during March was 11.04 per cent, up from the provisional figure of 9.90
per cent. The data for May, too, will be revised later.
Inflation, measured by the WPI, has been driven primarily by high food prices, leading analysts to predict that prices are likely
to fall once the winter agricultural output starts to boost supplies from April.
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PSUs may sell 50% of hydel power locally
THE government is considering allowing state-owned power companies such as NHPC and Satluj Jal Vidyut Nigam (SJVNL) to
sell up to 50% electricity generated from their hydel power plants to respective home states where the projects are located.
Local allocation could go up to 100% in exceptional circumstances with the approval of the minister of power
The move aims at providing level playing field to government companies so that they are able to compete with private hydel
project developers who bag several hydel projects from state governments offering higher power allocations locally. Most of the
states are energy hungry and need assured supply from local power producers.
Under the present regulations, central public sector enterprises (CPSEs) in hydel sector can only allocate a maximum of 30% of
power from single project to home state. This includes 13% (including 1% for local area development) of power, which the home
state gets as free power and balance from its share decided on the basis the central plan assistance given to the state during
previous five years based on consumption of electricity.
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APPOINTMENTS
SPORTS
BOOKS
1) The Rediscovery of India- By Meghnad Desai
2) The Difficulty of Being Good: On The Subtle Art of Dharma – By Gurcharan Das
3) Super Freakonomics- By Steven D. Levitt and Stephen J. Dubner
4) Nine Lives: In Search of the Sacred in Modern India – By William Dalrymple
5) The Hindus: An Alternative History- By Wendy Doniger
6) India and The United States in the 21st Century: Reinventing Partnership- By Teresita C. Schaffer
7) Chasing The Dragon: Will India Catch up with China? – By Mohan Guruswamy
8) Too Big To Fail: Inside The Battle to Save Wall Street- By Andrew Ross Sorkin
9) Shah Jahan: The Rise and Fall of the Mughal Emperor - By Fergus Nicoll
10) The Arabs: A History - By Eugene Rogan
11) Wolf Hall – By Hilary Mantel
12) The Palace of Illusions - By Chitra Banerjee Divakaruni
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