AGRICULTURE
Scientists slam study behind Bt Brinjal ban
A vital study cited by Environment Minister Jairam Ramesh to justify his decision to disallow the commercial cultivation of Bt brinjal in India is flawed, claim top European scientists. Mr Ramesh had referred to the findings of France-based Caen University professor Gilles-Eric Séralini and his team, which had branded Bt brinjal—India’s first genetically modified (GM) food crop—“unsafe”.
Experts claim that Séralini was unduly influenced by the renowned international NGO Greenpeace—with its aggressive green agenda—which sponsored the study, and never carried out a peer-reviewed laboratory study on GM crops he called hazardous, including Bt maize and Bt brinjal, its gene or seeds.
The European Food Safety Association, a risk assessment body, has trashed Séralini’s findings on Monsanto’s MON 863, a variety of Bt maize.
On February 9, 2010, the Union government decided to freeze the introduction of Bt Brinjal in India till independent scientific studies established health and environment safety of the product to the satisfaction of both public and experts.
Bt Brinjal is a genetically modified vegetable that is infused with Cry1Ac gene from a bacterium, bacillus thuringiensis, to make the plant resistant to fruit and shoot borers and certain pests.
The Environment Ministry has appointed a Genetic Engineering Approval Committee (GEAC) to regulate research, testing and commercial release of genetically modified crops, foods and organisms. The GEAC had cleared Bt Brinjal for commercial release in October 2009. According to GEAC Bt Brinjal would reduce farmers’ dependence on pesticides and enable higher yields.
EDUCATION
Uniform Math and Science content for Class 11 and 12
From the 2011 academic session, students of Classes XI and XII across the country will study a uniform science and math curriculum. Currently, course content of these critical subjects varies with the State school board an institution is affiliated to.
The idea is to have for every student a level playing field for entry to professional colleges. The government has also received the approval of all school boards—including State boards—to work towards a single, national-level entrance exam for all engineering and medical courses in India from 2013. Gradually, such an exam would be extended for entry to colleges of other disciplines, such as law.
One test would mean the end of plenty like IIT-JEE, AIEEE and State exams for engineering colleges and various State-level PMTs, beside national level PMT, which the CBSE conducts. This, the Human Resource Development (HRD) Ministry believes, would lessen the burden on students, who have to prepare for different exams, which bring their own levels of stress.
ENVIRONMENT
India to launch mission to cut emissions
India will spare no efforts to contribute to the success of post-Copenhagen process, Prime Minister Manmohan Singh declared on February 6, 2010, as he announced the launch of a National Mission on Enhanced Energy Efficiency, aimed at cutting carbon emissions by 99 million tonnes. Within the ambit of our National Action Plan on Climate Change, India has already unveiled one of the world's most ambitious plans for promoting solar energy, targeting an installed capacity of 20,000 MW by the year 2022. The initiative is expected to lead to avoidance of capacity addition of nearly 20,000 MW and reduce carbon dioxide emissions of almost 99 million tonnes.
LAW POINT
Courts do not need nod for CBI probe: SC
On February 17, 2010, the Supreme Court upheld the constitutional validity of courts’ powers to order CBI probe without the consent of State governments but with a rider: the powers should be used cautiously and sparingly. The five-judge Constitution Bench, headed by Chief Justice K.G. Balakrishnan, said that such powers have to be used sparingly in exceptional and extraordinary circumstances in cases having national and international ramifications. Otherwise, the CBI will be flooded with such directions in routine cases. Such powers are vested with the apex court and High courts to ensure protection of fundamental rights of citizens under Article 21 of the Constitution, it said.
LEGISLATION
Judicial Standards and Accountability Bill
The proposed Judicial Standards and Accountability Bill, which will replace the four decade-old Judges Inquiry Act, has laid down 14 guidelines for judges. These guidelines will be called judicial standards.
Major highlights of the Bill are:
In an important step towards the implementation of the Indo-US civilian nuclear deal, the Union government is to introduce a Bill to facilitate the entry of American companies in the nuclear sector. The Civil Liability for Nuclear Damage Bill, 2009 is commonly known as the nuclear liability Bill.
The Bill aims at limiting the liability of a nuclear plant operator to Rs 300 crore in the eventuality of an accident and provides for appointing a claims commissioner with powers of a civil court to arbitrate such cases. It also provides for the penalty to be paid by the operator and not the supplier companies, which would mainly be American in this case.
The operator would not be liable for any nuclear damages if the incident is caused by “grave national disaster of exceptional character”, armed conflict or an act of terrorism and is suffered by the person on account of his own negligence.
The Bill also provides for the establishment of the Nuclear Damage Claims Commission, which will have one or more claims commissioners for a specified area. The claims commissioner shall have all the powers of a civil court for the purpose of taking evidence on oath, enforcing attendance of witnesses, compelling the discovery and production of documents and other material objects.
Environment activists have described the attempt to cap the level of compensation for victims of a nuclear accident as a violation of fundamental rights. Currently, the Atomic Energy Act, 1962, allows the government-owned Nuclear Power Corporation of India to operate nuclear power plants in the country.
PLANNING & ECONOMY
Union Budget, 2010
On February 26, 2010, Finance Minister Pranab Mukherjee presented a Budget that broadly focused on fiscal stabilization. The Union Budget was presented at a time when the Indian economy was on the path of revival and almost all demand indicators had turned significantly positive. Investment and consumption demand was also on a revival mode. The buoyancy in the manufacturing sector and up-tick in import and export were also working well for economic growth prospects. In the current economic scenario, what was required from the Budget was a further push for consumption and investment. The Budget announcements tried to do just that.
Highlights:
Union Railways Minister Mamata Banerjee presented the Railways Budget, 2010, on February 24. No change in passenger fares was announced—Planning Commission was pitching for a hike—and the freight rates on select, but significant items such as kerosene and food grains, were cut to keep prices down.
54 new trains, including 10 Durantos, were announced. The Minister also promised to construct over 1,000 km of new rail lines over next one year.
The operating ratio, proportion of expenses to earnings, which was a healthy 75 per cent in 2007-08, was up to 94.7 per cent in 2009-10. The Railways hope to bring it down to 92.3 per cent in 2010-11. Though the budget proposes to raise net surplus from Rs 951.03 crore in 2009-10 to Rs 3,173 crore in 2010-11, these figures were called “peanuts” by experts when compared to the figures of some years ago.
Only Rs 373.09 crore was provided for new projects. Many projects come with riders: they’re either proposed in the public-private partnership (PPP) mode or are “subject to sanction by the Finance Ministry and Planning Commission”.
Highlights:
The Union government has accepted most of the recommendations of the Thirteenth Finance Commission headed by former Finance Secretary Vijay Kelkar.
The Commission has told governments at the Centre and States to set their fiscal house in order, even as it raised the share of taxes that the States would be entitled to receive over the next five years by 1.5 percentage points.
In addition, the Commission, a Constitutional body that is appointed every five years to recommend a tax-sharing formula between the Centre and States, has suggested a roadmap for the introduction of a single-rate goods and services tax (GST), the key indirect tax reform to create a common market in India.
Its stringent new roadmap for fiscal responsibility suggests, among other things, that the overall debt of the Centre and States be capped at 68 per cent of gross domestic product (GDP) from the current 82 per cent, and 75 per cent recommended by the Twelfth Finance Commission.
The Finance Commission has recommended that the Centre reduce debt to 45 per cent of GDP by March 2015, against 54.2 per cent at present. For States the reduction in debt is recommended at 2 percentage points to 25 per cent. The relatively less stringent condition for States comes with the rider that the Fiscal Responsibility and Budget Management Act allows the Centre to borrow on behalf of the States to help them counter macro-economic shocks. During the financial crisis, the Centre had relaxed the cap on the fiscal deficit.
The Finance Commission has said the Centre should transfer 32 per cent of the taxes it collects to States, against 30.5 per cent at present. The overall ceiling— including transfers to local bodies—on transfers from the Centre’s gross revenue has been raised from 38 to 39.5 per cent.
Among proposals that provide a thrust to fiscal federalism, the commission has recommended that local bodies receive up to 2.5 per cent of the divisible tax pool. Of this, up to 1 per cent can be incentive-linked.
While there is more reason for the States to cheer since the commission proposes an increase in grants, much of it is tied to specific spending programmes such as those for elementary education and environment. There is, however, a performance incentive of Rs 1,500 crore for Assam, Sikkim and Uttarakhand and a grant of Rs 51,800 crore to meet the deficits of Jammu & Kashmir, Himachal Pradesh and the north-eastern States (excluding Assam).
Like its predecessor, the Thirteenth Finance Commission has recommended a debt relief scheme for the States. The first element is to cap the interest rate on a part of the loans from the National Small Savings Fund at 9 per cent from up to 10.5 per cent. This will translate into a benefit of Rs 28,360 crore to the States. In addition, there is a Rs 4,506 crore benefit with the government accepting the suggestion to write off central loans that are not administered by the finance ministry but were outstanding at the end of 2009-10.
Including the higher grants-in-aid, Madhya Pradesh, Uttar Pradesh and Maharashtra would be the biggest beneficiaries in terms of share of transfers. Himachal Pradesh, Uttarakhand and Jammu and Kashmir would be the top losers.
The Finance Commission has projected that tax receipts would see a compounded annual growth rate of over 17 per cent between March 2010 and March 2015, while nominal GDP growth is estimated at 13.2 per cent.
Prescribing a zero revenue deficit as the golden rule, the Commission has recommended that the endeavour for all States should be to reach that level by 2014-15.
Union Cabinet raises Urea prices
On February 18, 2010, the Union government decided to raise urea prices by 10 per cent. It also allowed the industry to fix retail prices of other subsidised fertilisers, while limiting the government’s subsidy burden under a new policy that will determine the subsidy on phosphorus and potash based on their nutrients.
The decision, to take effect from April 1, 2010, will help the government reduce its fertiliser subsidy bill, estimated at Rs 50,000 crore for 2009-10. But, the move will hit farmers, even as fertiliser companies will stand to gain. The latest decision does away with the practice of government fixing a maximum retail price and aims at replacing the current system of giving subsidy to the industry with direct assistance to farmers.
The switch to the nutrient-based fertiliser plan is significant as companies will now be able to change retail prices of only nutrient-based fertilisers (nitrogen, phosphorus, potash and sulphur), which will help the government cap the subsidy on these fertilisers. The move is also expected to attract fresh investment in the fertiliser industry.
The government’s annual subsidy bill on fertilisers in 2008-09 was estimated at Rs 75,849 crore, which was expected to be brought down to Rs 49,980 crore in 2009-10. The bulk of the increase in the fertiliser subsidy is on account of the sale of decontrolled fertiliser with concession to farmers. Urea accounts for about 30 per cent of the total fertiliser subsidy burden.
POLITICAL
Justice Srikrishna committee to look into formation of Telangana
The Union government has set-up a five-member committee headed by Justice B.N. Srikrishna to look into the modalities of forming the separate State of Telangana. The committee has been given time till December 31, 2010 to consult all sections of the society and submit report. The terms of reference of the committee are:
However, the leaders from coastal Andhra and Rayalaseema regions found comfort in the open-ended nature of the panel’s terms. “We welcome the terms of reference, which are fairly balanced. It will give an opportunity for a thorough assessment of the ground situation,” a ruling Congress MP from coastal Andhra region said.
FOREIGN RELATIONS
Asian group endorses seat to India in UN Council
India's candidacy for a non-permanent seat in the Security Council has been endorsed by all 53 member States of the Asian group in the UN General Assembly. Nineteen countries, including Nepal, Sri Lanka, Afghanistan and Bangladesh, spoke in favour of giving India a slot on the Security Council table from January 2011.
In January 2010, India's path to a non-permanent seat got cleared after its sole competitor from Asia, Kazakhstan, backed out of the race.
The Security Council is made up of 15 States—five permanent members who have the veto power and 15 non-permanent members elected for a two-year term. To win, India needs two-thirds of the General Assembly vote, which adds up to about 128 counties saying yes to India's presence in the Council.
Running after more than a decade, India orchestrated a year-long campaign led by India’s envoy to the UN Hardeep Singh Puri, who campaigned in New York and at multilateral events at the United Nations.
The last time India had a seat at the Council was in 1992. In 1996, Japan won with India trailing behind with approximately 40 votes.
Visit of Nepalese President
President of Nepal Ram Baran Yadav visited New Delhi from February 15, 2010. In an effort to make the visit a truly successful event, India offered a 250-million dollar soft loan through EXIM Bank and signed four major accords with the Himalayan nation.
India also offered to supply 50,000 tonne of wheat, 20,000 tonne of rice and 10,000 tonne of yellow peas to its neighbour. An additional 2,000 tonne of wheat would be provided to Nepal, if required.
The four accords signed by the two countries are: new air services agreement, MOU on development of railway infrastructure at five border points, MOU on development of India-Nepal friendship polytechnic at Hetavda in Makwanpur district of Nepal; and MOU on establishment of India-Nepal friendship convention centre at Birgunj in Nepal.
During the delegation-level talks, the Indian Prime Minister hoped that the peace process and drafting of the constitution would be completed in Nepal as per the schedule. Sixty-two-year-old India-educated Yadav expressed his gratitude to the Indian leadership for assisting his country in its economic development.
The Presidential visit came on the eve of a new constitution the Nepal government has pledged to promulgate in May 2010. Nepal's fragile peace process that began after a decade of insurgency is expected to be consolidated by the new statute. However, hiccups continue, with the Maoists now saying they will agree to the rehabilitation of their guerrilla army, the People's Liberation Army (PLA), only after the new statute came into effect.
Talks with Pakistan end without much headway
A breakthrough eluded India and Pakistan at the Foreign Secretary-level talks with New Delhi rejecting Islamabad’s plea for the resumption of the composite dialogue process (CDP) and handing over three fresh dossiers to the neighbouring country linking elements in Pakistan, including JuD chief Hafiz Saeed, with terrorist activities on the Indian soil.
At the first official dialogue between the two countries after a 14-month hiatus, on February 25, 2010, India focused on terrorism emanating from the Pakistani territory, while Pakistan raised the Kashmir, water and Baluchistan issues.
The three-hour talks, seen by diplomatic observers more as an exercise in scoring brownie points by the two sides, ended with Foreign Secretary Nirupama Rao and her Pakistani counterpart Salman Bashir announcing at separate press briefings that they would remain in touch and continue endeavours to restore trust in the relationship. However, it was quite clear from the statements of the two top diplomats that they would have to cover a lot of distance in putting the peace process between the two neighbours back on track.
Prime Minister Manmohan Singh’s visit to Saudi Arabia
On February 26, 2010, Prime Minister Manmohan Singh became the first Indian Prime Minister in 28 years to visit Saudi Arabia. During the visit, Saudi Arabia expressed concerns over extremism in Pakistan as New Delhi and Riyadh firmed up a strategic partnership.
Prime Minister Manmohan Singh unveiled a roadmap for comprehensive economic partnership as he addressed captains of industry from both the countries.
Foreign Minister Prince Saud al-Faisal, who had a discussion with Singh, later spoke of the “dangerous trend” of extremism in Pakistan and made it clear that Riyadh had nothing to do with the Taliban. Saudi Arabia and Pakistan were among the few countries that had recognised the Taliban regime in Afghanistan.
The Saudi minister said, “Pakistan is a friendly country. Therefore, any time one does see dangerous trends in a friendly country, one is not only sorry but worried. And it is indeed the duty of all political leaders in Pakistan to unite to see that extremism does not find a way to achieve its aim in the country and this can only happen with united political leadership in Pakistan. This, we hope, Pakistan will possibly achieve.”
India sees Saudi Arabia as a strategic partner for promoting peace, stability and economic development. Such a partnership will bring benefits not only to the two countries but to the region. After discussions between Mr Singh and King Abduallah, the two sides signed the Riyadh declaration.
The Delhi Declaration, signed during the historic visit of King Abdullah to India in 2006 as the chief guest on India's Republic Day, had charted out a new path of cooperation between India and Saudi Arabia across a range of fields including security, bilateral trade and investment, culture, science and technology. According to the new declaration, keeping in view the development of relations between the two countries, and the potential for their further growth, the two leaders decided to raise their cooperation to a strategic partnership covering security, economic, defence and political areas.
Visit of President of Turkey
The Turkish President, Abdullah Gul, visited India on February 9, 2010 and held wide-ranging talks with Prime Minister Manmohan Singh on all issues of mutual interest, including the international situation. Apart from the declaration on terrorism, the two countries issued a document on cooperation in the field of science and technology.
Days after keeping New Delhi out of the Istanbul conference on Afghanistan at the instance of Pakistan, Turkish President Abdullah Gul sought to placate India by strongly endorsing its position on the issue of terrorism.
Turkey is the first Organisation of Islamic Conference (OIC) member to support India’s call for early conclusion of a comprehensive convention on international terrorism, which finds a mention in the joint declaration on terrorism. Turkey’s position is being seen as a major departure from that of OIC, which is not willing to exclude armed forces from the purview of the convention.
On Afghanistan, the Turkish President praised the role being played by India in the reconstruction plan in the embattled nation.
India, UK ink N-pact
On February 11, 2010, India signed a civil-nuclear cooperation declaration with Britain, making it the eighth country to sign such a pact with New Delhi after India secured approval of the Nuclear Suppliers’ Group (NSG) to undertake nuclear commerce in September, 2008. It is a general umbrella agreement on civil-nuclear cooperation between the two countries.
India has already signed nuclear deals with France, the USA, Russia, Kazakhstan, Namibia, Mongolia and Argentina. A nuclear agreement between India and Canada has also been finalised. Germany and South Korea have also expressed their desire to cooperate with India in the field of civil-nuclear energy.
The pact is expected to provide legal framework to British companies to export components and products.
RESERVATIONS
Andhra HC quashes quota for Muslims
In a major setback to the Andhra Pradesh government’s Muslim reservation policy, the High Court, on February 8, 2010, struck down a legislation providing four per cent quota for the minority community in jobs and educational institutions.
A seven-member constitutional bench headed by Chief Justice A.R. Dave found fault with the way the survey was conducted by the Backward Classes Commission, whose recommendations had formed the basis for quota policy.
The State Assembly had passed the legislation in July 2007 providing four per cent reservation for socially and educationally backward Muslims by including them among backward classes. The quota was made applicable to 15 Muslim groups identified by the Andhra Pradesh Backward Classes Commission as socially and educationally backward. These were categorised as BC-E Group for the purpose of providing reservation.
Acting on a bunch of writ petitions filed by several individuals and organisations challenging the legislation, the court—in a majority verdict—termed the commission’s survey as “irrational and unscientific” and held the legislation as “unsustainable”.
TERRORISM; LAW & ORDER
Maharashtra, West Bengal ‘poor performers’ in fight against naxalites
Maharashtra and West Bengal, which have been hit by terrorist and Maoist violence, are among the seven States that have fared poorly in modernising their police force. According to official documents, put together by the Home Ministry, Maharashtra and West Bengal have been labelled as “poor performing States” as they failed to use the funds sanctioned to them by the Centre for upgrading their police force and intelligence apparatus.
The Centre earmarked Rs 1,230 crore for 2009-10 for the scheme for modernisation of the State police forces (MPF), which is meant primarily to equip State governments to deal with emerging challenges to internal security like terrorism and naxal violence.
The poor performing States have outdated and obsolete weapons and even the extremist-prone police stations are often not supplied with modern weapons, and even when it is supplied police personnel are not trained to use them. Their police communication network does not function efficiently, they do not have enough vehicles and their forensic laboratories lack proper infrastructure.
CURRENT INTERNATIONAL AFFAIRS
DISASTER
Chile hit by 8.8 magnitude earthquake
On February 27, 2010, more than two million people were affected in some way and more than 300 people were killed as an 8.8-magnitude earthquake hit coastal Chile. Santiago, capital of Chile, is 200 325 km northeast of the epicentre.
The quake was 700 to 800 times stronger, but at a greater depth—35 km—compared to the shallow 14 km depth of the Haiti quake, which contributed towards much of the damage there.
Coastal Chile has a history of deadly earthquakes, with 13 quakes of magnitude 7.0 or higher since 1973. As a result, experts said that newer buildings are constructed to help withstand the shocks. Still, the damage from Chile's earthquake was widespread. A 15-story high rise near the southern city of Concepción collapsed; the country's major north-south highway was severed at multiple points; and the capital city's airport was closed after its terminal sustained major damage.
The epicentre was just a few kilometres north of the largest earthquake recorded in the world: a magnitude 9.5 quake in May 1960 that killed 1,655 and unleashed a tsunami that crossed the Pacific.
WORLD ECONOMY
US Fed signals end to emergency liquidity
On February 20, 2010, the US Federal Reserve Board sent its most explicit signal yet that the emergency supply of liquidity to financial markets is done and the most aggressive monetary policy easing in its 96-year history will eventually reverse. Chairman Ben S Bernanke and his colleagues at the Board of Governors raised the rate charged to banks for direct loans by a quarter-point to 0.75 per cent. It was the first increase in the discount rate since June 2006.
The Fed portrayed the decision as a “normalization” of lending that would have no impact on monetary policy. The assurances didn’t stop investors from increasing bets that the Fed would tighten policy in the fourth quarter. The dollar rose and US stock futures fell after the announcement.
US central bankers closed four emergency lending facilities in February 2010 and are preparing to reverse or neutralize the more than $1 trillion in excess bank reserves they have pumped into the banking system. The discount-rate increase will encourage banks to borrow in private markets rather than from the Fed. In any case, financial institutions have reduced their reliance on the Fed window. Banks had borrowed $14.1 billion as of February 17, 2010, representing less than 1 per cent of the central bank’s $2.28 trillion in total assets. A year ago, borrowing stood at $65.1 billion.
Greek debt crisis tests euro zone
The euro, the single currency that 16 EU (European Union) countries share, is usually highlighted as one of the main achievements of the European project; a rare example of “success” in what has increasingly become a beleaguered tale of EU infighting and lack of vision. But, a threatening debt crisis, with Greece as the main offender, has put the euro-zone to test like never before in its 11-year-long history. February 2010 saw the euro coming in for a pummelling, sending ripple across global markets.
However, it is the political crisis that is posing a question mark before the very future of the EU. The result is a monetary union that features a common currency without a matching fiscal or political union. Thus, although the European Central Bank sets interest rates for the euro-zone, it does so in a vacuum, with constituent governments retaining control over fiscal and economic policy.
The large disparities between euro-zone nations have been thrown into sharp relief by the global economic crisis. On the one hand, you have the unflatteringly named PIGS (Portugal, Ireland, Greece and Spain), all of whom are finding accruing debt increasingly expensive, leading to the spectre of State bankruptcy. The worst of the lot is Greece. Its economy shrank by 1.2 per cent in 2009. Having been found out to be cooking its books for years, Greece’s public debt is expected to break 120 per cent of output.
The poor economic condition of the PIGS, in particular Greece, has thrown up a conundrum for the large, surplus economies of the euro-zone like France, Germany and the Netherlands.
There are three options on the table, none of which are finding immediate takers. The first is to issue a common euro-zone bond, which would be placed at Greece’s disposal. But countries with good credit, like Germany, are opposed to the idea because of the higher interest rates that would result.
An alternative is giving bilateral financial aid with economically healthy countries in the euro-zone taking out loans on the financial market at good rates and passing these on to Greece.
The final option is an old-style IMF bailout, perhaps the most sensible of the choices. But, for the IMF to come to Greece’s rescue would be a slap in the face of EU, implying that it cannot take care of its own house and requires an institution that has always been sceptical of the euro to act as saviour.
Basic Capabilities Index 2009
The Basic Capabilities Index (BCI), 2009, has found that South Asia will get 80 points on the index by 2015, 10 points higher than the present value of 70. India received 68 points in the index, an increase of meagre four points since 2004.
The global NGO Social Watch’s index of 130 countries says 100 points defines well-being of the citizens based on children getting education till primary level, child mortality rate and percentage of births attended by skilled labourers. The BCI does not use income as an indicator.
According to the index, South Asia, a region with worst BCI in 2004, has been making fast progress, but the situation is still “extremely critical”. Since 2004, the report said, one-third of the countries failed to raise their BCI value by more than one per cent and only one out of six countries showed significant progress.
The index also tells about the increasing gap in living standards of rich and poor in the world. The highest BCI is 97 of Iran and lowest is 44 of Chad in Africa, followed by Afghanistan, Ethopia, Bangladesh and Nepal.
Japan still world’s second largest economy
Retaining its position as the world's second largest economy, the Japanese economy grew at a faster-than-expected pace of 1.1 per cent in the last three months of 2009.
China, the fastest-growing large economy, clocked a growth of 10.7 per cent in the December 2009 quarter, bringing it at a sniffing distance to surpass Japan as the second largest economy in the world.
Japan’s economy, which is primarily exports-driven, rose 1.1 per cent in the fourth quarter of 2009. On an annual basis, GDP expanded a much higher pace at 4.6 per cent. For the whole of 2009, the Japanese economy shrank 5 per cent and is valued at 474.92 trillion yen (about $5.1 trillion). The better-than-expected Japanese growth in the December 2009 quarter was mainly driven by better exports and effects of stimulus measures. To bolster the recession-hit economy, Japan had unveiled stimulus measures worth over $130 billion.
NUCLEAR PROLIFERATION
Iranian President declares Iran a nuclear State
Iranian President Mahmoud Ahmadinejad declared on February 11, 2010, that Iran had produced its first batch of 20 per cent enriched uranium, amidst a growing view in the West that Tehran is bluffing.
“Iran was now a nuclear State,” Ahmadinejad told a huge rally of supporters on the 31st anniversary of the Islamic Revolution. Experts say that once Iran can enrich uranium to 20 per cent it should move relatively quickly toward 90 per cent purification, weapons-grade fuel.
Former U.S. officials and independent nuclear experts say continued technical problems could delay—though probably not halt—Iran’s march towards achieving nuclear-weapons capability, giving the US and its allies more time to press for a diplomatic solution.
While Iran says its nuclear program is entirely peaceful, Western nations suspect that the country is intent on developing an atomic bomb.
Scientists slam study behind Bt Brinjal ban
A vital study cited by Environment Minister Jairam Ramesh to justify his decision to disallow the commercial cultivation of Bt brinjal in India is flawed, claim top European scientists. Mr Ramesh had referred to the findings of France-based Caen University professor Gilles-Eric Séralini and his team, which had branded Bt brinjal—India’s first genetically modified (GM) food crop—“unsafe”.
Experts claim that Séralini was unduly influenced by the renowned international NGO Greenpeace—with its aggressive green agenda—which sponsored the study, and never carried out a peer-reviewed laboratory study on GM crops he called hazardous, including Bt maize and Bt brinjal, its gene or seeds.
The European Food Safety Association, a risk assessment body, has trashed Séralini’s findings on Monsanto’s MON 863, a variety of Bt maize.
On February 9, 2010, the Union government decided to freeze the introduction of Bt Brinjal in India till independent scientific studies established health and environment safety of the product to the satisfaction of both public and experts.
Bt Brinjal is a genetically modified vegetable that is infused with Cry1Ac gene from a bacterium, bacillus thuringiensis, to make the plant resistant to fruit and shoot borers and certain pests.
The Environment Ministry has appointed a Genetic Engineering Approval Committee (GEAC) to regulate research, testing and commercial release of genetically modified crops, foods and organisms. The GEAC had cleared Bt Brinjal for commercial release in October 2009. According to GEAC Bt Brinjal would reduce farmers’ dependence on pesticides and enable higher yields.
EDUCATION
Uniform Math and Science content for Class 11 and 12
From the 2011 academic session, students of Classes XI and XII across the country will study a uniform science and math curriculum. Currently, course content of these critical subjects varies with the State school board an institution is affiliated to.
The idea is to have for every student a level playing field for entry to professional colleges. The government has also received the approval of all school boards—including State boards—to work towards a single, national-level entrance exam for all engineering and medical courses in India from 2013. Gradually, such an exam would be extended for entry to colleges of other disciplines, such as law.
One test would mean the end of plenty like IIT-JEE, AIEEE and State exams for engineering colleges and various State-level PMTs, beside national level PMT, which the CBSE conducts. This, the Human Resource Development (HRD) Ministry believes, would lessen the burden on students, who have to prepare for different exams, which bring their own levels of stress.
ENVIRONMENT
India to launch mission to cut emissions
India will spare no efforts to contribute to the success of post-Copenhagen process, Prime Minister Manmohan Singh declared on February 6, 2010, as he announced the launch of a National Mission on Enhanced Energy Efficiency, aimed at cutting carbon emissions by 99 million tonnes. Within the ambit of our National Action Plan on Climate Change, India has already unveiled one of the world's most ambitious plans for promoting solar energy, targeting an installed capacity of 20,000 MW by the year 2022. The initiative is expected to lead to avoidance of capacity addition of nearly 20,000 MW and reduce carbon dioxide emissions of almost 99 million tonnes.
LAW POINT
Courts do not need nod for CBI probe: SC
On February 17, 2010, the Supreme Court upheld the constitutional validity of courts’ powers to order CBI probe without the consent of State governments but with a rider: the powers should be used cautiously and sparingly. The five-judge Constitution Bench, headed by Chief Justice K.G. Balakrishnan, said that such powers have to be used sparingly in exceptional and extraordinary circumstances in cases having national and international ramifications. Otherwise, the CBI will be flooded with such directions in routine cases. Such powers are vested with the apex court and High courts to ensure protection of fundamental rights of citizens under Article 21 of the Constitution, it said.
LEGISLATION
Judicial Standards and Accountability Bill
The proposed Judicial Standards and Accountability Bill, which will replace the four decade-old Judges Inquiry Act, has laid down 14 guidelines for judges. These guidelines will be called judicial standards.
Major highlights of the Bill are:
- No judge shall give an interview to the media in relation to any of his judgement delivered, or order made, or direction issued, by him in any case adjudicated by him.
- No judge shall enter into a public debate or express his views in public on political matters, except views expressed by a judge in his individual capacity on issues of public interest, other than as a judge during a private discussion or at an academic forum.
- The Bill bars the judges from allowing any member of his family, who is a practising lawyer, from using the residence in which the judge actually resides or use of any other facilities provided to the judge, for professional work of any family member.
- The proposed law expects judges not to delay delivering a judgement beyond three months after conclusion of arguments and have bias in judicial work or judgements on the basis of religion, race, caste, sex or place of birth.
- Any wilful breach of judicial standards could be treated as misbehaviour and lead to a disciplinary panel initiating proceedings against the erring judge.
- A complaint alleging misbehaviour or corruption would be referred to a scrutiny panel comprising three judges. If the panel finds merit in any complaint, it would be forwarded to an Oversight Committee, which after investigating the matter can refer it to the President for initiating action against the judge.
In an important step towards the implementation of the Indo-US civilian nuclear deal, the Union government is to introduce a Bill to facilitate the entry of American companies in the nuclear sector. The Civil Liability for Nuclear Damage Bill, 2009 is commonly known as the nuclear liability Bill.
The Bill aims at limiting the liability of a nuclear plant operator to Rs 300 crore in the eventuality of an accident and provides for appointing a claims commissioner with powers of a civil court to arbitrate such cases. It also provides for the penalty to be paid by the operator and not the supplier companies, which would mainly be American in this case.
The operator would not be liable for any nuclear damages if the incident is caused by “grave national disaster of exceptional character”, armed conflict or an act of terrorism and is suffered by the person on account of his own negligence.
The Bill also provides for the establishment of the Nuclear Damage Claims Commission, which will have one or more claims commissioners for a specified area. The claims commissioner shall have all the powers of a civil court for the purpose of taking evidence on oath, enforcing attendance of witnesses, compelling the discovery and production of documents and other material objects.
Environment activists have described the attempt to cap the level of compensation for victims of a nuclear accident as a violation of fundamental rights. Currently, the Atomic Energy Act, 1962, allows the government-owned Nuclear Power Corporation of India to operate nuclear power plants in the country.
PLANNING & ECONOMY
Union Budget, 2010
On February 26, 2010, Finance Minister Pranab Mukherjee presented a Budget that broadly focused on fiscal stabilization. The Union Budget was presented at a time when the Indian economy was on the path of revival and almost all demand indicators had turned significantly positive. Investment and consumption demand was also on a revival mode. The buoyancy in the manufacturing sector and up-tick in import and export were also working well for economic growth prospects. In the current economic scenario, what was required from the Budget was a further push for consumption and investment. The Budget announcements tried to do just that.
Highlights:
- Additional Rs 1,65,000 cr for bank re-capitalisation
- Rs 3000 cr for agricultural impetus
- Farm loan payments to be extended for six months
- Fertilizer subsidy to be reduced
- Rs 100 cr woman farmer fund scheme
- Coal regulatory authority to be set up
- Clean energy fund to be established
- Interest subvention of 2% to be extended for handicrafts and SMEs
- Rs 200 cr for Tamil Nadu textile sector
- Interest subvention for housing loans up to 1 lacs
- Allocation to defence raised to Rs 1.47 lakh cr
- Defence capex raised to Rs 60,000 cr
- Divestment target of Rs 25,000 cr
- Rs 1200 cr assistance for drought in Bundelkhand
- Rs 48000 cr for Bharat Nirman
- NREGA scheme allocation raised to Rs 41,000 cr
- Allocation to health Rs 22,300 cr
- Allocation for school education up from Rs 26,800 cr to Rs 31036 cr
- Allocation to power sector at Rs 5130 cr
- Rs 10,000 cr allocated for Indira Awaas Yojna
- Social Security Fund to have corpus of over Rs 1000 cr
- Rs 2400 cr for MSMEs
- Government to contribute Rs 1000 per month for pension security
- Rs 5400 cr allocated for urban development
- Rs 66100 cr allocated for rural development
- Rs 1900 cr allocated for UID project
- Gross tax receipts Rs 7.46 lakh cr
- Government to set up National Mission for delivery of justice
- 15% rise in planned expenditure
- Fiscal deficit target of 5.5% in FY11
- Excise on all non smoking tobacco raised
- Televisions to be costlier
- Mobile phones to become cheaper
- Cement to be costlier
- Refrigerators to be costlier
- Jewellery to be more expensive
- Monorail granted project import status
- CDs to be cheaper
- Excise duty on CFL halved to 4%
- Bank farm loan target: Rs 3.75,lakh crore
- Nutrient based fertiliser subsidy scheme to come into force from April 1, 2010
- To build 20 km of highway every day
- Income tax on income upto Rs 1.6 lakh: Nil
- Income tax on income above Rs 1.6 lakh and upto Rs. 5 lakh: 10 per cent
- Income tax on income above Rs.5 lakh and upto Rs. 8 lakh: 20 per cent
- Income tax on income above Rs. 8 lakh: 30 per cent
- Economy likely to grow by up to 8.75 per cent in 2010-11.
- Full recovery; return to 9 per cent growth in 2011-12.
- Broad recovery gives scope for gradual stimulus roll back.
- High double-digit food inflation in 2009-10 major concern.
- Signs of food inflation spreading to other sectors.
- Farm & allied sector production falls 0.2% in 2009-10.
- Need serious policy initiatives for 4% agriculture growth.
- Moots direct food subsidy via food coupons to households.
- Favours making available food in open market.
- Favours monthly ration coupons usable anywhere for poor.
- Gross fiscal deficit pegged at 6.5 pc of GDP in 2009-10.
- India 10th largest gold holding nation at 557.7 tonnes.
- Exports in April-December 2009 down 20.3 per cent.
- Imports in April-December 2009 down 23.6 per cent.
- Trade gap narrowed to USD 76.24 bn in April-December.
- 32.5% savings & 34.9% investment (of GDP in 2008-09) put India in league of world's fastest growing nations.
- Government initiates steps to boost private investment in agriculture.
- Wants credit available at reasonable rates on time for private sector to invest in agriculture.
- Slowdown in infrastructure that began in 2007, arrested.
- Domestic oil production to rise 11 per cent in 2009-10.
- Gas output up 52.8 per cent to 50.2 billion cubic meters with RIL starting production.
- India world's 2nd largest wireless network with 525.1 million mobile users.
- Virtually every second Indian has access to phone.
- Auction for 3G spectrum to provide existing and foreign players to bring in new technology and innovations.
Union Railways Minister Mamata Banerjee presented the Railways Budget, 2010, on February 24. No change in passenger fares was announced—Planning Commission was pitching for a hike—and the freight rates on select, but significant items such as kerosene and food grains, were cut to keep prices down.
54 new trains, including 10 Durantos, were announced. The Minister also promised to construct over 1,000 km of new rail lines over next one year.
The operating ratio, proportion of expenses to earnings, which was a healthy 75 per cent in 2007-08, was up to 94.7 per cent in 2009-10. The Railways hope to bring it down to 92.3 per cent in 2010-11. Though the budget proposes to raise net surplus from Rs 951.03 crore in 2009-10 to Rs 3,173 crore in 2010-11, these figures were called “peanuts” by experts when compared to the figures of some years ago.
Only Rs 373.09 crore was provided for new projects. Many projects come with riders: they’re either proposed in the public-private partnership (PPP) mode or are “subject to sanction by the Finance Ministry and Planning Commission”.
Highlights:
- No increase in passenger fares.
- Rs.100 reduction in freight per wagon for fertilisers and kerosene.
- Free travel for cancer patients in 3rd AC classes.
- Cost-sharing in public-private-partnership (PPP) mode in some gauge-conversion projects.
- Further extension of Kolkata Metro on priority basis; stations to be named after Bahadur Shah Zafar, Tagore family.
- Karmabhoomi trains to be introduced for migrant labour.
- New Janmabhoomi train between Ahmedabad and Udhampur.
- Special 'Bharat Teertha' train to be run around India to commemorate Rabindranath Tagore's 150th birth anniversary. A special train to be run from West Bengal to Bangladesh to commemorate the anniversary.
- Railway line to be extended from Bilaspur in Himachal Pradesh to Leh in Jammu and Kashmir.
- Andaman and Nicobar Islands to get railway line from Port Blair to Diglipur.
- Sikkim capital Gangtok to be connected by rail from Rangpo.
- Impact of Sixth Pay Commission recommendations placed at Rs.55,000 crore.
- Gross earnings in 2009-10 estimated at Rs.88,281 crore.
- Working expenditure in 2009-10 estimated at Rs.83,440 crore.
- Expenses during 2010-11 estimated at Rs.87,100 crore.
- Thrust on expansion in 2010-11 with allocation of Rs.4,411 crore.
- Net profit of Rs.1,328 crore in 2009-10.
- Ten automobile ancillary hubs to be created.
- Policy decision to employ one member of family whose land is requisitioned for railway projects.
- North-south, east-west dedicated freight corridors to be created.
- Centre for railway research to be established with Indian Institutes of Technology and Defence Research and Development Organisation.
- Design, development and testing centre for railway wheels at Bangalore.
- Five sports academies to be set up; astroturf to be provided for development of hockey; employment opportunities for sports persons.
- Railways to be lead partner for Commonwealth Games.
The Union government has accepted most of the recommendations of the Thirteenth Finance Commission headed by former Finance Secretary Vijay Kelkar.
The Commission has told governments at the Centre and States to set their fiscal house in order, even as it raised the share of taxes that the States would be entitled to receive over the next five years by 1.5 percentage points.
In addition, the Commission, a Constitutional body that is appointed every five years to recommend a tax-sharing formula between the Centre and States, has suggested a roadmap for the introduction of a single-rate goods and services tax (GST), the key indirect tax reform to create a common market in India.
Its stringent new roadmap for fiscal responsibility suggests, among other things, that the overall debt of the Centre and States be capped at 68 per cent of gross domestic product (GDP) from the current 82 per cent, and 75 per cent recommended by the Twelfth Finance Commission.
The Finance Commission has recommended that the Centre reduce debt to 45 per cent of GDP by March 2015, against 54.2 per cent at present. For States the reduction in debt is recommended at 2 percentage points to 25 per cent. The relatively less stringent condition for States comes with the rider that the Fiscal Responsibility and Budget Management Act allows the Centre to borrow on behalf of the States to help them counter macro-economic shocks. During the financial crisis, the Centre had relaxed the cap on the fiscal deficit.
The Finance Commission has said the Centre should transfer 32 per cent of the taxes it collects to States, against 30.5 per cent at present. The overall ceiling— including transfers to local bodies—on transfers from the Centre’s gross revenue has been raised from 38 to 39.5 per cent.
Among proposals that provide a thrust to fiscal federalism, the commission has recommended that local bodies receive up to 2.5 per cent of the divisible tax pool. Of this, up to 1 per cent can be incentive-linked.
While there is more reason for the States to cheer since the commission proposes an increase in grants, much of it is tied to specific spending programmes such as those for elementary education and environment. There is, however, a performance incentive of Rs 1,500 crore for Assam, Sikkim and Uttarakhand and a grant of Rs 51,800 crore to meet the deficits of Jammu & Kashmir, Himachal Pradesh and the north-eastern States (excluding Assam).
Like its predecessor, the Thirteenth Finance Commission has recommended a debt relief scheme for the States. The first element is to cap the interest rate on a part of the loans from the National Small Savings Fund at 9 per cent from up to 10.5 per cent. This will translate into a benefit of Rs 28,360 crore to the States. In addition, there is a Rs 4,506 crore benefit with the government accepting the suggestion to write off central loans that are not administered by the finance ministry but were outstanding at the end of 2009-10.
Including the higher grants-in-aid, Madhya Pradesh, Uttar Pradesh and Maharashtra would be the biggest beneficiaries in terms of share of transfers. Himachal Pradesh, Uttarakhand and Jammu and Kashmir would be the top losers.
The Finance Commission has projected that tax receipts would see a compounded annual growth rate of over 17 per cent between March 2010 and March 2015, while nominal GDP growth is estimated at 13.2 per cent.
Prescribing a zero revenue deficit as the golden rule, the Commission has recommended that the endeavour for all States should be to reach that level by 2014-15.
Union Cabinet raises Urea prices
On February 18, 2010, the Union government decided to raise urea prices by 10 per cent. It also allowed the industry to fix retail prices of other subsidised fertilisers, while limiting the government’s subsidy burden under a new policy that will determine the subsidy on phosphorus and potash based on their nutrients.
The decision, to take effect from April 1, 2010, will help the government reduce its fertiliser subsidy bill, estimated at Rs 50,000 crore for 2009-10. But, the move will hit farmers, even as fertiliser companies will stand to gain. The latest decision does away with the practice of government fixing a maximum retail price and aims at replacing the current system of giving subsidy to the industry with direct assistance to farmers.
The switch to the nutrient-based fertiliser plan is significant as companies will now be able to change retail prices of only nutrient-based fertilisers (nitrogen, phosphorus, potash and sulphur), which will help the government cap the subsidy on these fertilisers. The move is also expected to attract fresh investment in the fertiliser industry.
The government’s annual subsidy bill on fertilisers in 2008-09 was estimated at Rs 75,849 crore, which was expected to be brought down to Rs 49,980 crore in 2009-10. The bulk of the increase in the fertiliser subsidy is on account of the sale of decontrolled fertiliser with concession to farmers. Urea accounts for about 30 per cent of the total fertiliser subsidy burden.
POLITICAL
Justice Srikrishna committee to look into formation of Telangana
The Union government has set-up a five-member committee headed by Justice B.N. Srikrishna to look into the modalities of forming the separate State of Telangana. The committee has been given time till December 31, 2010 to consult all sections of the society and submit report. The terms of reference of the committee are:
- Examine the situation in Andhra Pradesh with reference to demand for separate Telangana State, as well as the demand for maintaining the present status of a united Andhra Pradesh.
- Review developments in the State since its formation and their impact on the progress and development of different regions of the State.
- Examine the impact of recent developments in the State on different sections of people such as women, children, students, minorities, OBCs, SC and STs.
- Consult all sections of people, especially political parties and elicit their views on a range of solutions that would resolve the present difficult situation.
- Identify the key issues that must be addressed.
- Consult organisations of other civil societies such as industries, trade unions, farmer organisations, women students.
- Make any other suggestion and recommendations that the committee may deem appropriate.
- The protagonists of separate State, however, rejected the terms of reference of the Justice Srikrishna committee and vowed to intensify their agitation. The Telangana Rashtra Samithi (TRS), which has been spearheading the statehood agitation, struck a belligerent note and announced that its MPs, MLAs and MLCs would resign in protest.
- Rejecting the terms of reference and the ten-month time frame given for the committee, the TRS chief said the Centre had once again cheated the people of Telangana by backtracking on its December 9, 2009 statement announcing initiation of the process for formation of separate State.
However, the leaders from coastal Andhra and Rayalaseema regions found comfort in the open-ended nature of the panel’s terms. “We welcome the terms of reference, which are fairly balanced. It will give an opportunity for a thorough assessment of the ground situation,” a ruling Congress MP from coastal Andhra region said.
FOREIGN RELATIONS
Asian group endorses seat to India in UN Council
India's candidacy for a non-permanent seat in the Security Council has been endorsed by all 53 member States of the Asian group in the UN General Assembly. Nineteen countries, including Nepal, Sri Lanka, Afghanistan and Bangladesh, spoke in favour of giving India a slot on the Security Council table from January 2011.
In January 2010, India's path to a non-permanent seat got cleared after its sole competitor from Asia, Kazakhstan, backed out of the race.
The Security Council is made up of 15 States—five permanent members who have the veto power and 15 non-permanent members elected for a two-year term. To win, India needs two-thirds of the General Assembly vote, which adds up to about 128 counties saying yes to India's presence in the Council.
Running after more than a decade, India orchestrated a year-long campaign led by India’s envoy to the UN Hardeep Singh Puri, who campaigned in New York and at multilateral events at the United Nations.
The last time India had a seat at the Council was in 1992. In 1996, Japan won with India trailing behind with approximately 40 votes.
Visit of Nepalese President
President of Nepal Ram Baran Yadav visited New Delhi from February 15, 2010. In an effort to make the visit a truly successful event, India offered a 250-million dollar soft loan through EXIM Bank and signed four major accords with the Himalayan nation.
India also offered to supply 50,000 tonne of wheat, 20,000 tonne of rice and 10,000 tonne of yellow peas to its neighbour. An additional 2,000 tonne of wheat would be provided to Nepal, if required.
The four accords signed by the two countries are: new air services agreement, MOU on development of railway infrastructure at five border points, MOU on development of India-Nepal friendship polytechnic at Hetavda in Makwanpur district of Nepal; and MOU on establishment of India-Nepal friendship convention centre at Birgunj in Nepal.
During the delegation-level talks, the Indian Prime Minister hoped that the peace process and drafting of the constitution would be completed in Nepal as per the schedule. Sixty-two-year-old India-educated Yadav expressed his gratitude to the Indian leadership for assisting his country in its economic development.
The Presidential visit came on the eve of a new constitution the Nepal government has pledged to promulgate in May 2010. Nepal's fragile peace process that began after a decade of insurgency is expected to be consolidated by the new statute. However, hiccups continue, with the Maoists now saying they will agree to the rehabilitation of their guerrilla army, the People's Liberation Army (PLA), only after the new statute came into effect.
Talks with Pakistan end without much headway
A breakthrough eluded India and Pakistan at the Foreign Secretary-level talks with New Delhi rejecting Islamabad’s plea for the resumption of the composite dialogue process (CDP) and handing over three fresh dossiers to the neighbouring country linking elements in Pakistan, including JuD chief Hafiz Saeed, with terrorist activities on the Indian soil.
At the first official dialogue between the two countries after a 14-month hiatus, on February 25, 2010, India focused on terrorism emanating from the Pakistani territory, while Pakistan raised the Kashmir, water and Baluchistan issues.
The three-hour talks, seen by diplomatic observers more as an exercise in scoring brownie points by the two sides, ended with Foreign Secretary Nirupama Rao and her Pakistani counterpart Salman Bashir announcing at separate press briefings that they would remain in touch and continue endeavours to restore trust in the relationship. However, it was quite clear from the statements of the two top diplomats that they would have to cover a lot of distance in putting the peace process between the two neighbours back on track.
Prime Minister Manmohan Singh’s visit to Saudi Arabia
On February 26, 2010, Prime Minister Manmohan Singh became the first Indian Prime Minister in 28 years to visit Saudi Arabia. During the visit, Saudi Arabia expressed concerns over extremism in Pakistan as New Delhi and Riyadh firmed up a strategic partnership.
Prime Minister Manmohan Singh unveiled a roadmap for comprehensive economic partnership as he addressed captains of industry from both the countries.
Foreign Minister Prince Saud al-Faisal, who had a discussion with Singh, later spoke of the “dangerous trend” of extremism in Pakistan and made it clear that Riyadh had nothing to do with the Taliban. Saudi Arabia and Pakistan were among the few countries that had recognised the Taliban regime in Afghanistan.
The Saudi minister said, “Pakistan is a friendly country. Therefore, any time one does see dangerous trends in a friendly country, one is not only sorry but worried. And it is indeed the duty of all political leaders in Pakistan to unite to see that extremism does not find a way to achieve its aim in the country and this can only happen with united political leadership in Pakistan. This, we hope, Pakistan will possibly achieve.”
India sees Saudi Arabia as a strategic partner for promoting peace, stability and economic development. Such a partnership will bring benefits not only to the two countries but to the region. After discussions between Mr Singh and King Abduallah, the two sides signed the Riyadh declaration.
The Delhi Declaration, signed during the historic visit of King Abdullah to India in 2006 as the chief guest on India's Republic Day, had charted out a new path of cooperation between India and Saudi Arabia across a range of fields including security, bilateral trade and investment, culture, science and technology. According to the new declaration, keeping in view the development of relations between the two countries, and the potential for their further growth, the two leaders decided to raise their cooperation to a strategic partnership covering security, economic, defence and political areas.
Visit of President of Turkey
The Turkish President, Abdullah Gul, visited India on February 9, 2010 and held wide-ranging talks with Prime Minister Manmohan Singh on all issues of mutual interest, including the international situation. Apart from the declaration on terrorism, the two countries issued a document on cooperation in the field of science and technology.
Days after keeping New Delhi out of the Istanbul conference on Afghanistan at the instance of Pakistan, Turkish President Abdullah Gul sought to placate India by strongly endorsing its position on the issue of terrorism.
Turkey is the first Organisation of Islamic Conference (OIC) member to support India’s call for early conclusion of a comprehensive convention on international terrorism, which finds a mention in the joint declaration on terrorism. Turkey’s position is being seen as a major departure from that of OIC, which is not willing to exclude armed forces from the purview of the convention.
On Afghanistan, the Turkish President praised the role being played by India in the reconstruction plan in the embattled nation.
India, UK ink N-pact
On February 11, 2010, India signed a civil-nuclear cooperation declaration with Britain, making it the eighth country to sign such a pact with New Delhi after India secured approval of the Nuclear Suppliers’ Group (NSG) to undertake nuclear commerce in September, 2008. It is a general umbrella agreement on civil-nuclear cooperation between the two countries.
India has already signed nuclear deals with France, the USA, Russia, Kazakhstan, Namibia, Mongolia and Argentina. A nuclear agreement between India and Canada has also been finalised. Germany and South Korea have also expressed their desire to cooperate with India in the field of civil-nuclear energy.
The pact is expected to provide legal framework to British companies to export components and products.
RESERVATIONS
Andhra HC quashes quota for Muslims
In a major setback to the Andhra Pradesh government’s Muslim reservation policy, the High Court, on February 8, 2010, struck down a legislation providing four per cent quota for the minority community in jobs and educational institutions.
A seven-member constitutional bench headed by Chief Justice A.R. Dave found fault with the way the survey was conducted by the Backward Classes Commission, whose recommendations had formed the basis for quota policy.
The State Assembly had passed the legislation in July 2007 providing four per cent reservation for socially and educationally backward Muslims by including them among backward classes. The quota was made applicable to 15 Muslim groups identified by the Andhra Pradesh Backward Classes Commission as socially and educationally backward. These were categorised as BC-E Group for the purpose of providing reservation.
Acting on a bunch of writ petitions filed by several individuals and organisations challenging the legislation, the court—in a majority verdict—termed the commission’s survey as “irrational and unscientific” and held the legislation as “unsustainable”.
TERRORISM; LAW & ORDER
Maharashtra, West Bengal ‘poor performers’ in fight against naxalites
Maharashtra and West Bengal, which have been hit by terrorist and Maoist violence, are among the seven States that have fared poorly in modernising their police force. According to official documents, put together by the Home Ministry, Maharashtra and West Bengal have been labelled as “poor performing States” as they failed to use the funds sanctioned to them by the Centre for upgrading their police force and intelligence apparatus.
The Centre earmarked Rs 1,230 crore for 2009-10 for the scheme for modernisation of the State police forces (MPF), which is meant primarily to equip State governments to deal with emerging challenges to internal security like terrorism and naxal violence.
The poor performing States have outdated and obsolete weapons and even the extremist-prone police stations are often not supplied with modern weapons, and even when it is supplied police personnel are not trained to use them. Their police communication network does not function efficiently, they do not have enough vehicles and their forensic laboratories lack proper infrastructure.
CURRENT INTERNATIONAL AFFAIRS
DISASTER
Chile hit by 8.8 magnitude earthquake
On February 27, 2010, more than two million people were affected in some way and more than 300 people were killed as an 8.8-magnitude earthquake hit coastal Chile. Santiago, capital of Chile, is 200 325 km northeast of the epicentre.
The quake was 700 to 800 times stronger, but at a greater depth—35 km—compared to the shallow 14 km depth of the Haiti quake, which contributed towards much of the damage there.
Coastal Chile has a history of deadly earthquakes, with 13 quakes of magnitude 7.0 or higher since 1973. As a result, experts said that newer buildings are constructed to help withstand the shocks. Still, the damage from Chile's earthquake was widespread. A 15-story high rise near the southern city of Concepción collapsed; the country's major north-south highway was severed at multiple points; and the capital city's airport was closed after its terminal sustained major damage.
The epicentre was just a few kilometres north of the largest earthquake recorded in the world: a magnitude 9.5 quake in May 1960 that killed 1,655 and unleashed a tsunami that crossed the Pacific.
WORLD ECONOMY
US Fed signals end to emergency liquidity
On February 20, 2010, the US Federal Reserve Board sent its most explicit signal yet that the emergency supply of liquidity to financial markets is done and the most aggressive monetary policy easing in its 96-year history will eventually reverse. Chairman Ben S Bernanke and his colleagues at the Board of Governors raised the rate charged to banks for direct loans by a quarter-point to 0.75 per cent. It was the first increase in the discount rate since June 2006.
The Fed portrayed the decision as a “normalization” of lending that would have no impact on monetary policy. The assurances didn’t stop investors from increasing bets that the Fed would tighten policy in the fourth quarter. The dollar rose and US stock futures fell after the announcement.
US central bankers closed four emergency lending facilities in February 2010 and are preparing to reverse or neutralize the more than $1 trillion in excess bank reserves they have pumped into the banking system. The discount-rate increase will encourage banks to borrow in private markets rather than from the Fed. In any case, financial institutions have reduced their reliance on the Fed window. Banks had borrowed $14.1 billion as of February 17, 2010, representing less than 1 per cent of the central bank’s $2.28 trillion in total assets. A year ago, borrowing stood at $65.1 billion.
Greek debt crisis tests euro zone
The euro, the single currency that 16 EU (European Union) countries share, is usually highlighted as one of the main achievements of the European project; a rare example of “success” in what has increasingly become a beleaguered tale of EU infighting and lack of vision. But, a threatening debt crisis, with Greece as the main offender, has put the euro-zone to test like never before in its 11-year-long history. February 2010 saw the euro coming in for a pummelling, sending ripple across global markets.
However, it is the political crisis that is posing a question mark before the very future of the EU. The result is a monetary union that features a common currency without a matching fiscal or political union. Thus, although the European Central Bank sets interest rates for the euro-zone, it does so in a vacuum, with constituent governments retaining control over fiscal and economic policy.
The large disparities between euro-zone nations have been thrown into sharp relief by the global economic crisis. On the one hand, you have the unflatteringly named PIGS (Portugal, Ireland, Greece and Spain), all of whom are finding accruing debt increasingly expensive, leading to the spectre of State bankruptcy. The worst of the lot is Greece. Its economy shrank by 1.2 per cent in 2009. Having been found out to be cooking its books for years, Greece’s public debt is expected to break 120 per cent of output.
The poor economic condition of the PIGS, in particular Greece, has thrown up a conundrum for the large, surplus economies of the euro-zone like France, Germany and the Netherlands.
There are three options on the table, none of which are finding immediate takers. The first is to issue a common euro-zone bond, which would be placed at Greece’s disposal. But countries with good credit, like Germany, are opposed to the idea because of the higher interest rates that would result.
An alternative is giving bilateral financial aid with economically healthy countries in the euro-zone taking out loans on the financial market at good rates and passing these on to Greece.
The final option is an old-style IMF bailout, perhaps the most sensible of the choices. But, for the IMF to come to Greece’s rescue would be a slap in the face of EU, implying that it cannot take care of its own house and requires an institution that has always been sceptical of the euro to act as saviour.
Basic Capabilities Index 2009
The Basic Capabilities Index (BCI), 2009, has found that South Asia will get 80 points on the index by 2015, 10 points higher than the present value of 70. India received 68 points in the index, an increase of meagre four points since 2004.
The global NGO Social Watch’s index of 130 countries says 100 points defines well-being of the citizens based on children getting education till primary level, child mortality rate and percentage of births attended by skilled labourers. The BCI does not use income as an indicator.
According to the index, South Asia, a region with worst BCI in 2004, has been making fast progress, but the situation is still “extremely critical”. Since 2004, the report said, one-third of the countries failed to raise their BCI value by more than one per cent and only one out of six countries showed significant progress.
The index also tells about the increasing gap in living standards of rich and poor in the world. The highest BCI is 97 of Iran and lowest is 44 of Chad in Africa, followed by Afghanistan, Ethopia, Bangladesh and Nepal.
Japan still world’s second largest economy
Retaining its position as the world's second largest economy, the Japanese economy grew at a faster-than-expected pace of 1.1 per cent in the last three months of 2009.
China, the fastest-growing large economy, clocked a growth of 10.7 per cent in the December 2009 quarter, bringing it at a sniffing distance to surpass Japan as the second largest economy in the world.
Japan’s economy, which is primarily exports-driven, rose 1.1 per cent in the fourth quarter of 2009. On an annual basis, GDP expanded a much higher pace at 4.6 per cent. For the whole of 2009, the Japanese economy shrank 5 per cent and is valued at 474.92 trillion yen (about $5.1 trillion). The better-than-expected Japanese growth in the December 2009 quarter was mainly driven by better exports and effects of stimulus measures. To bolster the recession-hit economy, Japan had unveiled stimulus measures worth over $130 billion.
NUCLEAR PROLIFERATION
Iranian President declares Iran a nuclear State
Iranian President Mahmoud Ahmadinejad declared on February 11, 2010, that Iran had produced its first batch of 20 per cent enriched uranium, amidst a growing view in the West that Tehran is bluffing.
“Iran was now a nuclear State,” Ahmadinejad told a huge rally of supporters on the 31st anniversary of the Islamic Revolution. Experts say that once Iran can enrich uranium to 20 per cent it should move relatively quickly toward 90 per cent purification, weapons-grade fuel.
Former U.S. officials and independent nuclear experts say continued technical problems could delay—though probably not halt—Iran’s march towards achieving nuclear-weapons capability, giving the US and its allies more time to press for a diplomatic solution.
While Iran says its nuclear program is entirely peaceful, Western nations suspect that the country is intent on developing an atomic bomb.
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