NATIONAL AFFAIRS - MAY 2010

NATIONAL AFFAIRS - MAY 2010

RBI measures to boost liquidity
The Reserve Bank of India (RBI) has announced special measures to provide liquidity in the system, which may face a cash crunch because of huge outgo on third generation (3G) telecom spectrum licences and payment of advance tax by companies.

On May 27, 2010, RBI allowed banks to avail of additional support under the liquidity adjustment facility (LAF). Till July 2, banks have been permitted to avail of support of up to 0.5 per cent of their net demand and time liabilities, which will provide an additional liquidity support of over Rs 20,000 crore.

In addition, RBI said that as an ad hoc measure, banks can seek a waiver for any shortfall in maintenance of the prescribed 25 per cent statutory liquidity ratio (SLR) while availing the temporary facility.

Decks cleared for first Defence University
More than 40 years after it was mooted, the Union Cabinet, on May 13, 2010, gave its approval to set up the nation’s first defence university at Binola, around 20 km from Gurgaon. It would aim at imparting education on strategic challenges to armed forces officials, bureaucrats, academicians, parliamentarians and trainees at military academies.

To be established at an estimated Rs 300 crore, the institute would come up on an area of about 200 acres. A sum of Rs 100 crore has been earmarked for land acquisition. The existing defence educational institutions like the National Defence College, New Delhi, College of Defence Management, Secunderabad, National Staff College, Wellington, and National Defence Academy, Pune, would also be affiliated to the INDU. At present, these institutions are attached to various universities across the country.

The proposed university, which would be fully autonomous and constituted under an Act of Parliament, would promote policy-oriented research on all aspects of national security as part of the strategic national policy-making. The university was first mooted in 1967 and the matter was accorded all seriousness after the 1999 Kargil conflict.

The government had set up a Kargil Review Committee, headed by strategic expert K. Subrahmanyam, which had recommended establishment of such a university to exclusively deal with defence and strategic matters. It will encourage awareness of national security issues by reaching out to scholars and an audience beyond the official machinery.

No law practice without clearing exam
From September 2010, law graduates will have to clear an entry-level exam to be eligible for legal practice. In a widely anticipated move, the Bar Council of India—the regulator for the legal profession—has decided to implement its decision of making aspiring lawyers walk the extra mile.

Till now, a law degree from a recognised university or a law institute was the sole eligibility criterion for getting registered as a lawyer.

Emissions up, but way lower than US, China
Driven by higher industrial growth, energy production and transport, an environment ministry report says the annual GHG (greenhouse gas) emission of India increased by around 58 per cent from 1994 to 2007, but per capita emissions were still much less than those of US or China. Greenhouse gas emissions per unit of the GDP, however, declined by more than 30 per cent during 1994 and 2007, says the country’s updated emission inventory “India: Greenhouse Gas Emissions 2007”.

The country’s net GHG emissions in 2007 were 1.9 billion tonnes compared to 1.2 billion tonnes in 1994. However against 1.5 tonnes of CO2 per capita in 1994, the per capita GHG emission was estimated to be 1.7 tonnes of CO2 in 2007.

Even though India is ranked fifth in aggregate GHG emissions after US, China, the European Union and Russia in its contribution to global warming, emissions of US and China are almost four times that of India.

China and the US are the world's top emitters of greenhouse gases and disagreement between the two on slashing their carbon dioxide output was a major cause of the failure of the UN-sponsored climate change talks in 2009. At the Copenhagen Summit, India announced its intent to further reduce the emission intensity of the GDP by 20-25 per cent between 2005 and 2020 even as it pursues the path of inclusive growth.

No lie detector tests: SC
In a verdict expected to weaken cases against terrorists, other dreaded criminals and high-profile offenders, the Supreme Court has cited “mental privacy” to rule that police and other prosecuting agencies cannot forcibly conduct lie detector tests—narco-analysis, polygraph or brain electrical activation profile (BEAP, popularly known as brain mapping)—on accused, suspects or witnesses.

“Compulsory administration of any of these techniques is an unjustified intrusion into the mental privacy of an individual. It would also amount to cruel, inhuman or degrading treatment with regard to the language of evolving international human rights norms,” a Bench comprising Chief Justice K.G. Balakrishnan, R.V. Raveendran and J.M. Panchal held.

Further, placing reliance on the results gathered from these techniques would come into conflict with the right to fair trial. “Invocations of a compelling public interest cannot justify the dilution of constitutional rights such as the right against self-incrimination” guaranteed under Article 20(3) of the Constitution, the Bench said in the 251-page verdict.

The apex court also observed that the scientific validity of the techniques “has been questioned and it is argued that their results are not entirely reliable…empirical studies suggest that the drug-induced revelations need not necessarily be true”.

The Bench said that before arriving at the conclusion it also assessed the “tensions between the desirability of efficient investigation and the preservation of individual liberties” and the reasoning that these techniques “are a softer alternative to the regrettable and allegedly widespread use of third degree methods by investigators”.

At the end, the apex court made it clear that the eight-point guidelines issued by the National Human Rights Commission in 2000 for conducting narco-analysis tests should be strictly adhered to. Among the guidelines were: No lie detector tests should be administered except on the basis of consent of the accused. If the accused volunteers for a lie detector test, he should be given access to a lawyer and the physical, emotional and legal implication of such a test should be explained to him by the police and his lawyer. The consent should be recorded before a judicial magistrate.

OECD warns inflation will remain high
The Organisation for Economic Cooperation and Development (OECD) has argued that the Reserve Bank of India’s (RBI’s) process of raising policy interest rates is “still very low by historical standards”.

In a global economic outlook report, the Paris-based grouping warned: “With inflation remaining elevated and the recovery appearing to have taken root, there is a risk that price increases for inputs will flow through to second-round increases and that inflationary expectations will become destabilised. To mitigate this risk, sizeable further monetary tightening will be required through 2010 and into 2011.”

OECD projected the inflation rate to be 7.7 per cent in 2010 and 6.1 per cent in 2011. It expected the consumer price index rise to be at 10.2 per cent in 2010 and still hovering at 6.3 per cent in 2011. The trade deficit has been projected at $80 billion (imports of $405 billion) in 2010 and going up to $101 billion (imports of $478 billion up 13.1 per cent from 2010) in 2011 and real GDP growth in 2010 at 8.3 per cent and at 8.5 per cent in 2011.

OECD Chief Economist Pier Carlo Padoan said: “The outlook for inflation remains the main downside risk, especially if monsoonal rainfall is again deficient. In that case, food inflation would likely begin to risk anew. More generally, the strong state of domestic demand could lead to persistently higher inflation and an upward drift in inflationary expectations.”

Adding the context of anticipated deficit reduction being underpinned on “expected revenue growth, asset sales and some more modest tax measures”, Padoan added “the expected rebound in agricultural activity should help limit further increase in food prices, which have been a major contributor to high inflation. However, underlying inflationary pressures are likely to persist given the strong outlook for demand. Timely policy action to limit the scope for second-round price increases is, therefore, required. Monetary policy normalisation is also important in the light of relatively modest fiscal consolidation”.

National Water Mission gets Cabinet nod
The Prime Minister's Council on Climate Change has approved the National Water Mission, focusing on making water conservation a peoples' movement in the country.

Prime Minister Manmohan Singh, who chaired the meeting of the Council, highlighted the need to create a general consciousness of the need to use water in the most sustainable manner in view of its scarcity and assess the impact of climate change on water.

The Council felt that to make the Mission a peoples' movement it was essential to make available all data on water in the public domain, to be able to mobilise citizens, local bodies and State governments for focused action on water conservation and augmentation.

Members felt incentives should be provided for using water in a sustainable manner and that the Research and Development requirements of the mission should be focused upon.

Water Mission is one of the eight missions in the National Action Plan on Climate Change launched by the Prime Minister in 2009 to tackle the threats of global warming.

The government has already launched Energy Efficient and Solar Mission while a draft of Green Mission has been prepared for public consultation.

Economic growth better than expected
The Indian economy roared past estimates to post a whopping growth rate of 8.6% in the January-March quarter of 2010. The quarter's strong showing also helped India end the fiscal year with 7.4% growth, beating the earlier estimate of 7.2%. Manufacturing led the way, with a whopping 16.3% growth in the quarter and 10.8% overall, while even agriculture, which was expected to decline, ended with marginal growth of 0.2% year-on-year after growing 0.7% in Q4.

The GDP growth rate had slowed to 6.7% in 2008-09 following the global economic crisis, after topping 9% in the previous three years.

The first quarter growth in the gross domestic product (GDP) is better than expected. In February, the Central Statistical Organisation (CSO) had estimated that the Indian economy would grow at 7.2% in 2009-10, with growth of 7.7% in the fourth quarter. But the unexpectedly strong performance in the fourth quarter helped boost the final figure to 7.4%.

The fourth-quarter showing is particularly commendable in the light of a sudden dip in the third quarter to 6.5% from 8.6% in the second quarter due to the impact of a drought-like situation in the country.

China is the only large economy with a higher growth rate at 11.9% in the January-March quarter. The rest of the world is witnessing a fragile recovery, which is now under threat due to the brewing Euro-zone crisis. The sixteen developed countries in the Euro-zone expanded by just 0.2% in the quarter. At the same time, the Organisation for Economic Cooperation and Development (OECD)—a grouping of mostly developed countries including Europe that account for over 60% of the global economy—grew at only 0.7% in the quarter, against 0.9% in the previous quarter. US and Japan grew at 0.8% and 1.2%, respectively.

The 7.4% growth in 2009-10 also showed that stimulus provided by government yielded results.

Visit of President Patil to China
Indian President Pratibha Patil visited Beijing from May 27, 2010. She is the first Indian Head of State to visit China in a decade. She had been invited by her Chinese counterpart Hu Jintao and her trip coincided with the 60th anniversary of the establishment of diplomatic relations between India and China.

During her visit, Patil inaugurated China’s first Indian-style Buddhist temple in Luoyang city in Henan province.

Skirting contentious issues, she held discussions with the top Chinese leadership. Controversial issues such as Chinese border incursions, stapled visas for Kashmiris, Indian visas for Chinese telecom companies and Sino-Pak ties did not figure in the discussions. Patil sought Chinese support for New Delhi's permanent membership of the UNSC during talks. The Chinese leaders supported India's aspirations for UNSC permanent seat and assured the Indian leader that Beijing would back India’s bid in 2011’s election for a non-permanent membership of the UNSC.

Rs 67,000 crore 3-G bonanza for government
The bidding frenzy for third generation (3-G) spectrum came to an end on May 19, 2010, with leading operators Bharti Airtel, Reliance Communications and Aircel winning licences for 13 circles each. This was the 34th day of the auction and it saw the price of a pan-India, or nationwide, licence touching Rs 16,828 crore, nearly five times its base price. No single operator could garner enough cash to win bids for all the 22 circles that went under the hammer.

The government emerged as the biggest winner. The sale of wireless airwaves would make it richer by at least Rs 67,719 crore, the double of what it had targeted in the Union Budget 2010 and about 1 per cent of the country’s gross domestic product.

The proceeds from the sale of 3G and BWA spectrum will together help the government plug its fiscal deficit, projected at 5.5 per cent of GDP in the Budget. The winning operators said if the government allots them spectrum as promised, by September 1, they will be able to roll out 3G services in four to six months.

Seventy per cent of the revenue for spectrum comes from only six circles, while locations such as West Bengal, Himachal Pradesh, Assam and Jammu and Kashmir saw licences being awarded at virtually the base price. The surprise package was Bihar where the bids closed at Rs 203.46 crore, seven times its base price.

Ajmal Kasab convicted of 26/11 attacks
On May 3, 2010, a Mumbai court found 22-year-old Pakistani national, Mohammad Ajmal Kasab, guilty of mass murder and waging war against India, while acquitting two other accused, Fahim Ansari and Sabahuddin Ahmed for want of evidence, in the November 26, 2008 attacks on the city. Kasab is the lone surviving gunman from the attacks that killed 166 people. He has been given the death sentence.

“It was not a simple act of murder. It was war,” judge M.L. Tahiliyani said in a summary of the 1,522 page judgement. “This type of preparation is not made by ordinary criminals. This type of preparation is made by those waging war.”

The court also held 20 other accused, including Lashkar-e-Tayiba founder Hafiz Saeed, its operations chief Zaki-ur-Rehman Lakhvi and Abu Hamza, guilty of conspiracy.

Pakistan withdraws objection to J-K power projects
In a significant development, Pakistan, on May 30, 2010, withdrew its objection to construction of Uri-II and Chutak hydel power projects in Jammu and Kashmir. At the Indus Water Commissioner-level talks in New Delhi, the Pakistani side said it had no objection to the designs of the two power projects after the Indian side provided details of these.

Pakistan had earlier raised objections over the 240 MW Uri-II project being constructed on Jhelum river in Kashmir valley and the 44 MW Chutak plant being built on Suru, a tributary of Indus river in Kargil district of Jammu and Kashmir's Ladakh province. Pakistan had claimed that the projects would deprive it of its share of water.

India scores poorly among the middle-income countries when it comes to health care and well-being of mothers. The country is ranked 73 in the list of 77 nations rated for the “best place to be a mother”, according to a report by child rights organisation Save the Children. What is more shocking in the “State of the World's Mothers 2010” report is that India is rated much lower than a host of conflict-ridden African countries like Kenya and Congo. China is at 18th place, Sri Lanka at 40, while Pakistan lags behind India at 75th place. Bangladesh, featured in the list of 40 least developed countries, is ranked 14. The report analysed a total of 166 countries, among which Sweden is placed at the top while Afghanistan is at the bottom.

A depository receipt is a type of negotiable financial security that is traded on a local stock exchange but represents a security, usually in the form of equity that is issued by a foreign publically listed company.

A survey of slums in cities and towns with a population of over one lakh as per the 2001 Census, says there are 189 cities and towns in India with big slums. Andhra tops the list—it has 36 cities and towns with a slum population of 50,000 and above. It is followed by Maharashtra with 26, Uttar Pradesh (25), West Bengal (21) and Madhya Pradesh (15). Other States with a sizable slum population in its cities are Haryana (8), Chhattisgarh (6) and Gujarat and Rajasthan (5 each). Goa and Kerala and north-eastern States, barring Meghalaya, are the only States where slums are non-existent.
The Centre has launched two programmes to improve the living conditions of slum-dwellers across the country. Jawaharlal Nehru National Urban Renewal Mission (JNNURM) provides funds to States for creating housing and infrastructural facilities for the urban poor in 65 cities, including Mumbai, under the Basic Services to Urban Poor Programme (BSUP). For the remaining 124 towns, the Integrated Housing and Slum development Programme (IHSDP) has been introduced. The components for assistance include provision of basic services to the slum dwellers, whom the government prefers to call urban poor.

The world's first gold vending machine has been set-up in a hotel in Abu Dhabi in the UAE. The 'Gold To Go' machine gives out 1, 5 and 10 gram gold bars as well as gold coins.

Spectrum is radio frequencies used to transmit voice, video and data. 2-G and 3-G are second generation and third generation spectrum, respectively. The fourth generation is being tested. 3-G facilitates high-end use and faster transmission of video images and data etc. 2-G spectrum is used only for voice transmission.

National Technology Day is observed on May 8.

In a rating of 423 cities, done by the Union Urban Development Ministry—to check their access to proper sanitation facilities, how the solid waste is managed and quality of drinking water—Chandigarh has been ranked on the top of the list, followed by Mysore, Surat, New Delhi, Tiruchirrapalli and Jamshedpur. Charu (Rajasthan), Lakhimpur (UP), Pilibhit (UP) and Srinagar (J&K) were listed among the bottom ten. The survey found 190 cities on the brink of public health and environmental emergency.

Vienna has retained its ranking as the place offering the best quality of living in the world in an annual survey which was dominated by European cities. The survey, by management consultancy Mercer, said Western European cities had fared well despite the global economic downturn, with Zurich coming in second place, followed by Geneva in third position. In Asia, Singapore remains the highest-ranking city at 28, followed by Japanese cities Tokyo (40), Kobe and Yokohama (both at 41), Osaka (51) and Nagoya (57). Baghdad retained its position at the bottom of the list as the place offering the worst quality of life. Bengaluru remains the best placed among Indian cities in the global list at 140th rank. New Delhi climbed to 143 rank from 145th slot in 2009. Mumbai moved up four places to 144th rank.

Sahara India has won the sponsorship rights of Indian cricket team till 2013.

The 11th International Indian Film Academy (IIFA) awards were held in Sri Lanka.

India observed May 21 as Anti-Terror Day to mark former Prime Minister Rajiv Gandhi’s assassination on May 21, 1991.

The per capita income of India grew by 10,5 per cent to Rs 44,345 in 2009-10, against Rs 40,141 in 2008-09. The per capita income (at 2004-05 prices) stood at Rs 33,588 in 2009-10, against Rs 31,821 a year ago. Per capita income means income of each Indian if national income is evenly divided among the country’s population of 117 crore. The size of the economy rose to Rs 62,31,171 crore in 2009-10, up 11.8 per cent over previous year.

The Reserve Bank of India has decided to increase the cash withdrawal limit for ATMs to Rs one lakh in a single day.