Weekly Current Affairs Bulletin

1ST APRIL 2014 TO 7TH APRIL 2014

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Weekly Current Affairs Bulletin��

CONTENTSCONTENTSCONTENTSCONTENTSCONTENTS

TOPICS Pg. No.

National ......................................................................................................................... 4-8

International ............................................................................................................... 9-12

India and the World .............................................................................................13-15

Economy ....................................................................................................................16-19

Science & Technology ..........................................................................................20-24

Health .........................................................................................................................25-26

News in Brief...........................................................................................................27-29

Editorials ....................................................................................................................30-61

Message from Sri Lankan polls .................................................................................. 30

Maintaining the status quo.......................................................................................... 30

Poorly performing public services ............................................................................. 31

The endless calamity in West Asia ............................................................................ 33

Public purpose of architecture .................................................................................... 35

Voting while in the Army ........................................................................................... 35

Tax theatrics.................................................................................................................... 37

Threat of disintegration ............................................................................................... 37

US built a secret 'Cuban Twitter' to stir unrest against communist

govt, says AP .................................................................................................................. 38

A cautious beginning.................................................................................................... 39

An inclusive growth policy ......................................................................................... 39

Diplomatic gains from a strategic abstention ......................................................... 41

Weekly Current Affairs 1st April to 7th April, 2014 [3]

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Funny money.................................................................................................................. 42

The two RBIs ................................................................................................................... 43

Manila peace? ................................................................................................................. 43

A bank is born................................................................................................................ 44

The wisdom of abstaining ........................................................................................... 44

Hope prevails ................................................................................................................. 45

A touch here, a tweak there......................................................................................... 46

RIP repo rate? ................................................................................................................. 47

India’s new political economy .................................................................................... 48

The ten crore question .................................................................................................. 49

Licensing for competition ............................................................................................ 51

One Inc ............................................................................................................................. 51

Coalition govt: Spokes without a hub? ..................................................................... 52

A policy with clarity of purpose................................................................................. 53

Watching the watchdogs.............................................................................................. 55

For a world of freer labour flows............................................................................... 55

Life is an injection .......................................................................................................... 56

The run of rains in Indian agriculture ...................................................................... 57

The changing face of global risk ................................................................................ 58

Election 2014: a polarized vote .................................................................................. 59

Worshipping false gods in India ................................................................................ 60

[4] Weekly Current Affairs 1st April to 7th April, 2014

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NATIONAL

40 % WOMEN AMONG NEW VOTERS

Women have historically been outsiders inpolitics, legally barred from voting until thetwentieth century. From the local to the global level,women’s leadership and political participation arerestricted. Women are underrepresented as voters,as well as in leading positions, whether in electedoffice, the civil service, the private sector oracademia. Women face several obstacles toparticipating in political life.

In India a look at the demographic profile ofnewly-eligible voters shows that the share ofwomen in the electorate aged between 18 and 19years is too low the percentage of women in thecountry's total electorate.

� Compared to 47.6% women in the nationalelectorate this year, women constitute just41.4% of the 2.3 crore electors in the 18-19group.

� The gender gap in newly-eligible voters ismore pronounced in the 10 states and Unionterritories, where women constitute less than40% of voters in the 18-19 years age group.As many as 15 states and UTs fall short ofthe national proportion of female voters inthis category.

� The worst-performing states includeHaryana, where the percentage of femalevoters in the 18-19 age group is a just 28.3%,against 45.8% women in the state's totalelectorate.

� Very young women voters in Maharashtraconstitute just 35.5% of the 18-19 year oldelectorate, followed by Punjab, Gujarat andChandigarh (36.2% each), Uttarakhand(36.4%), Odisha (37.9%), Delhi (38.9%) andUP (39.6%).

� Compared to eight states/UTs with a largerpercentage of women voters, only Nagaland

has more women electors in the 18-19 agegroup.

� The other states/UTs faring better in terms ofproportion of women in the 18-19 electorategroup are Mizoram (49.9%), Arunachal(49.6%), Lakshadweep (49.1%), Meghalaya(48%) and Goa (48.1%).

The Election Commission of India is targetingthis difficulty in voter recognition programmes aspart of a Systematic Voters Education and ElectoralParticipation (SVEEP) initiative, through which theCommission is reaching out to immature citizens incollege campuses by girl fests and campusambassadors.

SVEEP

The Systematic Voter Education and ElectoralParticipation Wing (SVEEP)formulates policies, laysdown the framework, plans interventions andmonitors implementation besides carrying outcontinuous discourse with voting publics, civilsociety groups and media. It handles work relatedto all aspects of Voters’ Awareness & Educationaimed towards improving Electoral Participationin the country and building up a culture ofparticipative democracy among citizens. TheSVEEP Wing commenced work since 2009.

It promotes dissemination of knowledge,information, materials, designed to sensitize thevoters about voting process. It initiated newmeasures regarding about voter facilitation in areasof registration, issuing voter identity cards andsuggests ways and means to make the electionprocess voter- friendly. ECI has developed specialstrategies to encourage participation of young andnewly eligible voters bringing about a particularlysignificant progress in their registration onelectoral rolls.


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ALARMING CONDITIONS OF CHILDREN IN DELHI SLUMS

The census defines a slum as “residential areaswhere dwellings are unfit for human habitation”because they are dilapidated, cramped, poorlyventilated and unclean. Over 65 million people livein slums. Slum populations have grown slower thanthe average urban population. The average householdliving in a slum is no larger than an average urbanIndian household, with 4.7 family members

With over 11 million of its residents in slums,Maharashtra has the highest slum population; 4.6million of them in ‘identified’ slums. AndhraPradesh follows with over 10 million in slums, andWest Bengal and Uttar Pradesh have over 6 millionslum residents each.

Over 1 million of Delhi’s 1.7 million slumresidents live in ‘identified’ slums. With an infantmortality rate of 35.6 per 1,000 and an under five-year-old mortality rate at 73.6 per 1,000 in slums,Delhi has registered itself as a high-risk zone forchildren.

The absence of day-care arrangement leads tomany accidents. Poor quality of schools,anganwadis and dispensaries adversely impactedthe children. The worst hit are differently-abledchildren and those whose lives have been disruptedby relocation and slum clearances.

Gangsters roam in the areas of urban slumclusters where both parents work and childrenoften go missing from these localities. Shockingly,at least 14 children go missing every day.

Eviction from slums is another major issue andhas adverse impact on women and children due tothe absence of basic services, anganwadis, schools,etc., in the area that they are relocated into.

More than one-third of under-five year oldsliving in the Indian capital's slums aremalnourished. This is especially challenging fornewborns and infants whose health entirelydepends on the availability of the mother tobreastfeed, the ability of the caregiver andhousehold to provide nutritious meals, the qualityof the public healthcare system and overallcommunity support.

Practices such as bottle-feeding, child marriageand discrimination against women were occurringin slum communities with little awareness that theywere contributing to child malnutrition.

More than 50 percent of the malnourishedchildren did not have access to clean drinking waterand defecated in the open, leading to frequent boutsof water-borne diseases such as diarrhoea.

CLIMATE CHANGE: DIRE CONSEQUENCES

Climate change is a fundamental threat todevelopment and the fight against poverty. Thegrim reality of increasing food insecurity as a resultof climate change is highlighted by the UnitedNations Intergovernmental Panel on ClimateChange's (IPCC) in its report. The climate disordercan result in flooding, heat-related mortality,droughts and food shortage. India is likely to be hithard by global warming. It is already one of themost disaster-prone nations in the world and manyof its 1.2 billion people live in areas vulnerable tohazards such as floods, cyclones and droughts.

All aspects of food security are potentiallyaffected by climate change including food access,utilisation of land, and price stability and the yieldsof wheat and rice have decreased due to climatechange.

MAIN POINTS:

� Like other developing economies, India maylose up to 1.7% of its Gross Domestic Product

if the annual mean temperature rises by 1degree Celsius.

� It has been predicted that extreme weatherevents such as last year's flash floods inUttarakhand and cyclone Phailin in Odishawould become unavoidable if steps are nottaken to control the rise in temperature.

� The report has predicted a rise in globaltemperatures of between 0.3 and 4.8 degreesCelsius and a rise of up to 32 inches in sealevels by the late 21st century due to meltingice.

� Irregular weather patterns will not only affectagricultural output and food security, but willalso lead to water shortages and result inoutbreaks of water and mosquito-bornediseases such as diarrhea and malaria.

� India is likely to suffer loss in all major sectorsof the economy including energy, transport,farming and tourism. India ranked as the


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most vulnerable of 51 countries in terms ofbeach tourism.

� Extreme weather may also harm infra-structure such as roads, ports and airports,impacting delivery of goods and services.

� The changes taking place either in the Indusriver basin or in Brahmputra river system dueto climate change can not be ignored in thelong run.

The IPCC report mentions that in coming yearsthere will be extreme weather events, like floods,cyclones, cloud bursts, unseasonal excessive rainsand drought etc in most parts of the world andcountries like the Maldives, China, India, Pakistan,Bangladesh and Sri Lanka will be among the mostaffected.“Over-exploitation of fresh water resources

in South Asia and China may become a reason forarmed conflict in the region by middle of the 21stcentury as climate change is likely to become adetermining factor in national security policies. Itis pointed out that some fish and other marineanimals will become extinct by 2050, adverselyaffecting fishing community.“

In many regions, changing precipitation ormelting snow and ice are altering hydrologicalsystems, affecting water resources in terms ofquantity and quality. Glaciers (includingHimalayan) continue to shrink almost worldwidedue to climate change, affecting run-off and waterresources downstream. Climate change will impacthuman health mainly by exacerbating healthproblems that already exist.

DEGREES FAIL TO CURB UNEMPLOYMENT

The growing level of unemployment is a muchbigger cause for concern as the rate ofunemployment has progressively increased withrising level of education for both men and women.The situation is more or less same for the highlypopulated developing countries across the world.There is a rise in the unemployment rate in syncwith the level of education as boys and girls withouteducation often belong to low income householdsand hence, cannot afford to remain unemployedfor long.

� According to the NSSO estimates, 16.3 % ofwho are graduates or above in the age groupof up to 29 years are unemployed.

� The rate of unemployment goes up by another12.5 per cent if diploma and certificate holdersare included.

� The chances of getting employment for youngmen and women become less once theyacquire vocational skills or a college degree.

� The situation is worse for women diplomaholders and those with graduate degreescompared with men, in both rural and urbanareas.

� Women who went for diplomas in varioustrades had a higher unemployment rate of17.3 per cent, three times the percentage forno-jobs figures for those who had completedonly middle school, in urban areas

Broadly one in every four men with a graduatedegree or a vocational education in this age groupis likely to be unemployed in India. The highlydisturbing trend holds true for all categories,

including men in rural India and women in bothurban and rural areas.

Skill- development programmes and collegeeducation are not creating the sort of training thatis in demand in the manufacturing and servicessector. Even though educational attainment hasrisen quickly in recent years, gaining a foothold inthe labour market remains elusive for many youngIndians.

NSSO

National Sample Survey Organisation (NSSO)which is now known as National Sample SurveyOffice, is an organization under the Ministry ofStatistics of the Government of India. It wasestablished in 1950 and is the largest organisationin India conducting regular socio-economic surveys.

NSSO has four divisions, namely, Survey Designand Research Division, Field Operations Division,Data Processing Division and the Co-ordinationand Publication Division.

The main functions of the NSSO is to conductlarge scale sample surveys on subjects like householdconsumer expenditure, employment andunemployment, health and medical services etc.

It decides the topics to be covered in a particularsurvey round and also conducts annual survey ofindustries every year. NSSO every year brings outreports on status of estimation of agriculturalproduction in India. NSSO has the centralresponsibility of coordinating the results of the cropestimation surveys conducted by the states.


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POLITICAL EMPOWERMENT OF WOMEN: A MYTH

India’s 11.4% representation of women in the15th Lok Sabha is lower than even the Asianaverage. In a ranking of 189 countries, the world’slargest democracy figures at a poor 111. The needfor greater representation is perhaps underscoredat a time when women voters are increasinglyturning out in larger numbers than men to casttheir ballot.

In India, states with the high sex ratios andgender indices elect the fewest women toParliament while states with poorer gender indiceshave the highest percentage of women Members ofParliament.

The top five states with the highest percentageof women MPs are, in order of ranking, Punjab,Haryana, Madhya Pradesh, Chhattisgarh and WestBengal.

� Punjab, with a sex ratio of 893 women forevery 1,000 men, far below the nationalaverage of 940, as per the 2011 Census, has31% or the highest percentage of women MPsin the country.

� Haryana, with one of the country’s worst sexratios of 877 women for 1,000 men, has 20%women MPs, finds the report.

� states that do well on gender tend to havepoor representation of women in Parliament.Kerala has the country’s best sex ratio of 1,084and 91.8% female literacy, and has 20 LokSabha seats. None is occupied by a woman.

The representation of women is just as dismalin the state assemblies. None of the five states thatwent to the polls last year—Madhya Pradesh,Chhattisgarh, Rajasthan, Delhi and Mizoram—elected more than 10% women. Mizoram, in fact,

has not had a woman MLA for the past 10 years.

� A large proportion of women MPs are backedby politically well-connected families.

� Jammu and Kashmir is the only exceptionthat fares poorly on gender indices and alsodoes not have a single woman MP. The statehas a sex ratio of 883, female literacy of just58.1%.

There is no connection between developmentand the growth of women’s leadership. In thebackward states, men are opposed to women’sreservation and the only women who advance arewomen they can control. They are mostly theproxies for male politicians.

The conclusions are based on two parameters:the gender development index (GDI) and the genderempowerment measure (GEM). The GDI looks athealth, including infant mortality and lifeexpectancy, education and income and standardof living among women. GEM has threeparameters: political participation and decision-making, economic participation and decision-making and power over economic resources.

It is observed that women are more likely tocontest elections in constituencies where the sexratio of electors is worse. States like Haryana andPunjab are far more likely to see women candidatesthan, say Kerala and Tamil Nadu. In states with ahigher sex ratio, women seek representation throughvoting.

Moreover, women have lower chances ofwinning elections in constituencies that have a lowsex ratio. So, either women don’t contest in sociallyadvanced states or they contest from sociallybackward states but don’t win.

RISING INCOME-POOR SERVICES: WIDENING RIFT

Income inequality can lead to slower or lesssustainable economic growth. India is a well-established middle-income country in terms of itsgross GDP and is the tenth richest country in theworld. The country is also macro-economicallyrobust, having maintained moderately stable fiscaland monetary bases. The Indian growth-inequalityparadox is easy to pin down—the wealth that Indiacreates is not evenly redistributed. This lies at theroot of India’s rising inequality.

Data from the 2011-12 round of India Human

Development Survey (IHDS) conducted by theNational Council for Applied Economic Research(NCAER) has brought to light some eye-opening points:

1. Families with an annual income of Rs 1.5lakh are among the richest 20 per cent in thecountry.

2. Incomes have grown considerably in the lastseven years but access to adequate publicservices is still severely lacking, as mentionedin the data collected from 42,000 householdsacross the country.


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3. For the 2011-12 IHDS, the NCAER researchteam surveyed over 80 per cent of thehouseholds to make an estimate of the changeover the last seven years.

4. In 2004-05, a family earning Rs. 70,000annually would have been among the richest20 per cent in the country, while in 2011-12,the same family would find a place in themiddle of the distribution.

5. An annual household income of Rs. 25,000placed a family in the middle of the order in2004-05. In 2011-12, Rs. 25,000 is the annualincome of the poorest 20 per cent of Indians.

6. The situation on the public services front isworse. Piped water available indoors hasgrown by only 2% and is now available to27% households.

7. In urban areas, piped water is available tobetween half and two-thirds of families. Offamilies which get piped water, less than athird get three hours of supply a day.

8. Gujarat, Maharashtra, Goa and Delhi havethe highest coverage of families for pipedwater (60%). Delhi gives its residents water

for the most number of hours in a day.

9. Flush toilets are now accessible to one-thirdof all households and over two-thirds ofurban households. Toilet coverage is thehighest in Kerala (92%), Delhi (79%) andPunjab (74%).

10. Access to electricity is inching towardsbecoming universal with 83 per cent of allhouseholds getting supply. Jammu andKashmir, Himachal Pradesh and Delhi have100% access to ‘some electricity’.

11. Just 45% households with access to powerget 18 hours or more of electricity in the day.Himachal Pradesh, Punjab, Kerala, Delhi andGujarat lead the country in terms of supplyof 18 hours or more.

NCAER

The NCAER is the only research organisationwith a large sample survey to estimate householdincome. The government’s National Sample SurveyOrganisation (NSSO) collects data on consumptionexpenditure, which is often used as a proxy forincome.

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INTERNATIONAL

SAUDI DECLARES ATHEISTS AS TERRORISTS

Recently, Saudi Arabia has introduced a seriesof new laws which define atheists as terrorists. Ina string of royal decrees, the Saudi King Abdullahhas clamped down on all forms of political dissentand protests that could "harm public order". Thenew provisions define terrorism as calling for atheistthought in any form, or calling into question thefundamentals of the Islamic religion on which thiscountry is based.

The new laws have largely been brought in tocombat the growing number of Saudis travelling totake part in the civil war in Syria, who havepreviously returned with newfound training andideas about overthrowing the monarchy.

Under the new decree by King Abdullah, SaudiArabia will jail for up to 20 years anyone whofights in conflicts abroad - an apparent move todeter Saudis from joining rebels in Syria.

But the law also applies to any Saudi citizen ora foreigner residing in the kingdom that 'calls foratheist thought in any form or calls into questionthe fundamentals of the Islamic religion on whichthis country is based.

Yet last month further regulations were issuedin Saudi, identifying a broad list of groups whichthe government considers to be terrorist

organisations - including the Muslim Brotherhood.Saudi authorities have never tolerated criticism oftheir policies, but these recent laws and regulationsturn almost any critical expression or independentassociation into crimes of terrorism. Theseregulations dash any hope that King Abdullahintends to open a space for peaceful dissent orindependent groups.

Riyadh fears returning fighters will target theruling Al Saud royal family - as happened afterthe wars in Afghanistan and Iraq. An appealcontained in the counter-terrorism measures forfighters to turn themselves in had not beenanswered. Saudi authorities fear that the MuslimBrotherhood, whose Sunni Islamist doctrineschallenge the Saudi principle of dynastic rule, hastried to build support inside the kingdom since theArab Spring revolutions.

According to the Human Rights Watch, thenew regulations were also a setback to campaignsfor the protection and release of a number ofprominent human rights activists currently jailedin Saudi Arabia. The new "terrorism" provisionscontain language that prosecutors and judges arealready using to prosecute and convict independentactivists and peaceful dissidents.

DOMESTIC WORKERS IN U.K. ENSLAVED WITH TIED VISA RULES

Migrant domestic workers accompanying theiremployers to the United Kingdom are beingsubjected to serious abuses including forced laboras has been reported by the Human Rights Watchin its report, “Hidden away: migrant domesticabuses in the U.K.”. According to the report, theUK government is not interested in safeguardingthese vulnerable workers, and recent changes toUK immigration rules make it harder for workersto flee abuse.

With the confiscation of the passport,confinement to the home, physical and emotionalabuse, long working hours with no rest time, no

holidays, and low wages or non-payment of wages,the plight of the migrant domestic workers in theUnited Kingdom has worsened.

� According to the Home Office, 15,000domestic workers enter the U.K. every year.

� Mainly poorly educated women, they comefrom Asia and Africa with their employersas child-minders, careers for the elderly, cooksand cleaners.

� Their lives were made considerably worse,when in 2012, the Home Office, underTheresa May’s drive to control immigration,introduced a new ‘tied’ visa rule.


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� This disallows a domestic worker who hasbeen brought by an employer into the countryto change employers, thus effectively trappingthe worker in an exploitive workplace.

� Thus, those who flee abusive workenvironments become illegal immigrants. Ifthey return they must face the employers’fury.

On April 1, a campaign coalition comprisingtrade union ‘Unite’, and the charities ‘Justice forDomestic Workers’, and ‘Kalayaan’, submitted asigned petition to Prime Minister David Cameron,calling for scrapping of the ‘tied’ visa rule, andrestoration of the1998 Overseas Domestic Workersvisa. According to this, a migrant domestic workerneed only work for an employer for a minimumperiod of a year, after which she is free to changeemployers.

The powerful alliance that achieved theOverseas Domestic Workers visa in 1998 shouldcome together again to expose the slavery statusreintroduced by the new tied visa, which hasprevented migrant domestic workers from gainingtheir rights.

Domestic workers here work up to 18 hours aday without breaks, going hungry and have to eatleftovers, of being not allowed to use mobile phones,and of not being able to contact their families orleave the homes of employers. Some received wagesas little as £100 a month.

Before the rule was changed ‘Kalayaan’ wasgetting from 300 – 350 domestic workersapproaching its centre for assistance every year.After the introduction of the ‘tied’ visa, 100 or soless approach it, possibly because of the difficultiesworkers have of getting out of the house.

TIBETAN REFUGEES UNDERSUEVEILLANCE IN NEPAL

Nepal has long been a way station for Tibetansfleeing China. Many continue on to India, wherethe Dalai Lama lives and where they can obtainrefugee status. Still, some 20,000 Tibetans live inNepal. Most were born there, yet the governmentof Nepal refuses, according to Human RightsWatch, to issue at least half of them officialidentification. Even those Tibetans who arrivedbefore a 1989 rapprochement with China have noright to own property, or to gain officialemployment or access to higher education.

Human Rights Watch has accused the Nepalgovernment of exerting increased surveillance andabuse of Tibetan refugees under China pressure.The Nepal government is accused of forciblyreturning fleeing Tibetans to China, where theywere allegedly persecuted. In effect, Nepal hasturned itself into a partner of China’s anti-Tibetanpolicies.

Tibetan refugee communities were now facinga de facto ban on political protests, sharprestrictions on public activities promoting Tibetanculture and religion, and routine abuses by Nepalisecurity forces. These include excessive use of force,arbitrary detention, ill-treatment in detention,threats and intimidation, intrusive surveillance, andarbitrary application of vaguely formulated securityoffenses.

Wherever Tibetans in Nepal gather to socialize

or worship, they are likely to be spied on byNepalese security forces who make no secret oftheir close links with Chinese authorities. Non-governmental organizations that seek to monitorthe situation or are engaged in humanitarian workwith Tibetans in Nepal are also under surveillanceand have been accused of disloyalty.

In February, Nepal’s Parliament elected SushilKoirala Prime Minister. Nepal’s ConstituentAssembly is tasked with drafting a new constitutionbefore February 2015. Nepal now has a freshopportunity to reform its unjust policies towardTibetan residents and refugees. B

China, which was fully aware of Nepal’seconomic needs, invited Mr. Koirala to attend theChina-South Asia Exposition in Kunming, China,in June and pledged to increase tourism to Nepal,a poor country heavily dependent on Chinese helpand investment. China has also offered lawmakersfinancial assistance in drafting the new constitution.

The government of Nepal has every right toseek positive trade and diplomatic relations withChina. But it must stop allowing China to dictatepolicy regarding Tibetans in Nepal.

A quick move by Koirala and Nepal’sConstituent Assembly is the need of the hour toguarantee resident Tibetans legal status that respectstheir basic rights, and to treat Tibetan refugees inaccordance with Nepalese and international law,without which, Nepal’s struggle to achieve lastingdemocratic governance will remain incomplete.


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UKRAINE: IN NEED FOR REFORM

Through an inclusive constitutional reform,Russia and the United States have agreed to workfor a diplomatic solution in the Ukraine crisis.Russia’s Foreign Minister Sergei Lavrov and U.S.Secretary of State John Kerry summed up theiragreement after stating that Russia and the U.S.differed on the causes of the crisis in Ukraine.

The diplomatic solution points towards fourpriority goals:

� To assure minority and language rights;

� To disarm irregulars and provocateurs;

� To launch an inclusive constitutional reform;

� To hold free and fair elections.

It is by far the most important part of theRussian-American agreement while theconstitutional reform came closer to the end of theannounced list of priorities. It has been made clearthat nobody can impose any configuration onUkrainians and that federalisation was the onlyway to prevent Ukraine from splitting along theeast-west fault lines.

The U.S. opposes the federal structure for

Ukraine for the same reason as Kiev does — thereform would give Russian-speaking eastern andsouthern regions veto power over a possible decisionby the central government to join NATO or theEuropean Union (EU).

Russia Makes Gas Costly for Ukraine

Russia has scrapped the last discount on gasprice granted by Moscow to Ukraine, effectivelyraising the price by $100 to $485 for every 1,000cubic metres. Russia had granted this earlierdiscount to its neighbour in exchange for keepingits Black Sea Fleet facilities in Crimea’s port ofSevastopol.

This will result in rising the price on gas forUkraine automatically, going up to $485 for 1000cm starting in April.

Ukraine is a dependent on imports from itsresource-rich former Soviet master to keep thecountry running. Russia has repeatedly shownreadiness to use gas as a lever in conflicts withUkraine, which remains dependent on imports.

NATO–RUSSIA: END OF CO-OPERATION

NATO's foreign ministers have ordered an endto civilian and military cooperation with Russiaand are searching out ways to better protect alliancemembers that feel threatened by the Kremlin.

A kremlin is a major fortified central complexfound in historic Russian cities. This word is oftenused to refer to the most famous one, the MoscowKremlin, or to the government that is based there.The complex serves as the official residence of thePresident of the Russian Federation.

The suspension of all practical civilian andmilitary cooperation between NATO and Russiamay result into

� The possible deployment and reinforcementof military assets in eastern NATO members,such as Poland and the Baltic states, that feelmenaced by Moscow's latest actions.

� A possible increase of readiness levels for theNATO rapid response force.

� A possible review of NATO's crisis response

plans, as well as its military training andexercise schedules.

To reassure alliance members closest to Russiaand Ukraine, NATO already has stepped up airpatrols over the Baltic Sea and AWACSsurveillance flights over Poland and Romania.

The North Atlantic Treaty Organization (NATO)

� Also called the (North) Atlantic Alliance, itis an intergovernmental military alliancebased on the North Atlantic Treaty whichwas signed on 4 April 1949.

� NATO's headquarters are in Brussels,Belgium.

� It has 28 member states the newest of which,Albania and Croatia, joined in April 2009.

� The organization constitutes a system ofcollective defence whereby its member statesagree to mutual defense in response to anattack by any external party.


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PALESTINE DEFIES TO JOIN GLOBAL AGENCIES

After President Mahmoud Abbas of thePalestinian Authority defied the United States andIsrael by taking concrete steps to join 15international agencies the Middle East peace talksverged on a breakdown.

The move was to gain the benefits of statehoodoutside the negotiations process. In the emergingdeal, the United States would release an Americanconvicted of spying for Israel more than 25 yearsago, while Israel would free hundreds of Palestinianprisoners and slow down construction of Jewishsettlements in the West Bank

Abbas had vowed not to seek membership ininternational bodies because Israel had failed torelease a fourth batch of long-serving Palestinianprisoners by the end of March, as promised.

As per Israeli officials they are not bound bytheir pledge because no meaningful negotiationshave taken place since last year.

According to the American officials thePalestinians appeared to be using leverage againstIsrael rather than trying to scuttle the negotiations.Abbas did not move toward joining theInternational Criminal Court, a step Israel fearsmost because the Palestinians could use the courtto contest Israel’s presence in the West Bank.

Mr. Abbas has argued his moves right. He hasbeen under pressure from other Palestinian leadersand the public to leverage the non-memberobserver-state status they won at the UnitedNations in 2012 to join a total of 63 internationalbodies.

Despite these events, the White House, believesthat the mediating efforts have reached their limitand that the two sides need to work their way outof the current impasse.

TRADE GAP WIDENS IN U.S.

U.S. exports fell in February amid weakoverseas demand resulting in the largest trade deficitsince September. The nation's exports declined 1.1%to $190.43 billion, while imports rose 0.4% to$232.73 billion. As a result of which, the nation'strade gap widened 7.7% to $42.3 billion, more thanthe $38.6 billion. February's export decline followeda 0.6% gain in January. That suggests the surge inoverseas sales that helped boost economic growthlate last year was likely unsustainable.

February's meager import growth provided newevidence of weak spending by U.S. consumers andbusinesses in the early part of the year.

What are the Reasons?

� Growth in China is slow while Europe'srecovery remains fragile, tempering demandfor U.S. exports.

� Domestic demand looks even weaker afteradjusting the import data for inflation.

� Stripping out the effect of higher prices forpetroleum and other products, imports fellslightly.

� Imports of capital goods, industrial suppliesand petroleum products all declined.

� Imports of crude oil fell to $19.5 billion, thelowest level since late 2010, a reflection ofexpanded domestic energy production.

The U.S. economy trade data showed also somesigns of strengthening in March. Recent datashowed auto sales surging to one of the strongestrates in years after weakening in January andFebruary, while manufacturing activitystrengthened.

A bout of financial volatility in emerging marketsearly in the year has subsided, providing a morestable outlook that should help support U.S. exports.

The Challenges:

� China's growth engine is downshifting.

� Economists believe Europe risks entering aperiod of deflation.

� Tensions with Russia over Ukraine couldfurther harm the global economy.

U.S. exports to the European Union in Februarywere down 2.5% from January, while exports toChina were 4.6% lower.

The recovery is taking hold, but is too slow.Unless countries come together to take the rightkind of policy measures, we could be facing yearsof slow and subpar growth. The report hastriggered a spate of downward revisions to first-quarter growth estimates, which had already comedown substantially due to economic disruptionscaused by unusually cold and stormy weather.


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INDIA AND THE WORLD

INDIA-RUSSIA DEFENCE CO-OPERATION

India and Russia have signed defence dealsworth almost Rs 25,000 crore, including the onesfor 42 Sukhoi-30MKI fighters and 71 additionalMi-17 V5 armed helicopters.“The two countriesinked the over Rs 16,000 crore deal for 42 Sukhois,which will add to the 230 Sukhois contracted inprevious years, and the one for 71 Mi-17 V5helicopters , to add to the 80 of these choppersalready been inducted.““India will not order anymore Sukhois, 272 of them come at an overall priceof over $12 billion with a bulk of them beingproduced by Hindustan Aeronautics. Instead, Indiais preparing a plan to upgrade them into "SuperSukhois" in the years ahead with more advancedavionics, weapons and AESA (active electronicallyscanned array) radars.

Key Points of the Deal:

� India and Russia will also ink the final designcontract for the joint development of afuturistic stealth fifth-generation fighter at alater stage since it is still being drafted. ThisR&D contract is pegged at $11 billion, withthe two countries supposed to chip in with$5.5 billion each.

� Each 5th Gen fighter - IAF hopes to inductaround 200 of them from 2022 onwards -will cost at least $100 million extra.Consequently, India will eventually spendaround $35 billion on this gigantic project.

� Russia has also assured India that INSVikramaditya, the refurbished 44,570-tonneAdmiral Gorshkov for which $2.33 billion hasbeen paid, will not be delayed.

� The "technical problems" being faced byIndia's solitary nuclear-powered submarineINS Chakra, the Akula-II attack submarineleased from Russia for 10 years at a cost ofaround $1 billion, will also be sorted out.

� India and Russia also agreed to take the firststeps towards operating a “ranging station”that will help accurately fix the location ofsatellites. A military side agreement onreceiving precision signals from Glonass wassigned last year, following active interestshown by National Security Advisor ShivShankar Menon.

Russia and India have agreed to further extendtheir partnership in the energy sector, which hasmoved beyond investment in Sakhalin-I to directtrade (Gazprom-Gail). Both are now seemingly setfor joint investment in downstream and upstreamsectors. India put its interest areas as equityparticipation through ONGC-OVL in existing andnew projects in Siberia, Russia’s Far East and theArctic Shelf, besides showing interest in acquiringequity stake in discovered or producing assets andin proposed Liquefied Natural Gas (LNG) projectsin Russia.

INDIAN POLICIES HAMPERING AMERICAN TRADE

A US Trade Representative (USTR) report hasmentioned that India’s policies pose barriers toAmerican trade and that the US will pursue Indiato remove obstacles in a bid to smoothen businessrelations. The US will continue to press India toresolve these issues in 2014. The 2014 report on‘Technical Barriers to Trade’ takes note of the talkswith India at both bilateral and the World TradeOrganization levels and listed some of the issuesobstructing trade relations. The trade barriershighlighted were Indian policies on wholesale food

labelling, security regulations on telecom equipment,safety testing requirements for electronics and ITequipment, and a proposed amendment to theHazardous Wastes Act.

According to the report, the proposed FifthAmendment to the Hazardous Waste Act,published in November 2013, but not notified tothe WTO, sets out conditions for the import andmovement of used and refurbished electrical andelectronic equipment (EEE).


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The United States fully supports the protectionof the environment and health against adverseimpacts of wastes. US industry has expressedconcerns that, under the proposed FifthAmendment, hazardous waste controls on importsof used EEE for direct reuse and imports ofrefurbished EEE pursuant to a service warranty,and other similar controls on EEE, would imposeunnecessary burdens on trade that facilitates reuseand extension of life of EEE to the benefit of theenvironment. US electronics and IT goodsmanufacturers have raised concerns about theIndian Department of Electronics and InformationTechnology’s (DEITY) September 2012 order thatmandates compulsory registration for 15 categoriesof imported electronic and IT goods.

The policy mandates exporters to register theirproducts with laboratories affiliated or certified bythe Bureau of Indian Standards (BIS). This is despitethe fact that all US electronic exports currently soldin India are fully certified in internationallyrecognised laboratories, and the government ofIndia has never articulated how such a domesticcertification requirement advances India’s legitimatepublic safety objectives. Notwithstanding ongoingefforts by global industry to engage the governmentof India to resolve concerns and ambiguities in thepolicy the Order entered into force in January 2014.

An important first step is to seek an exemptionfor Highly Specialised Equipment (HSE), includingservers, storage, printing machines, and IT productsthat are installed, operated, and maintained byprofessionals who are trained to manage theproduct’s inherent safety risks. USTR said theUnited States will continue to seek clarification onthe scope and application of the revised PreferentialMarket Access (PMA) policy for domesticallymanufactured telecommunications equipment andclosely monitor its implementation in 2014.

The United States has detailed concerns aboutIndia-specific labelling issues. India’s responses havefailed to provide additional or reliable informationwith regard to how the elements of this measureadvances safety or efficacy or quality of the productsin question or meets the specific needs of India.

The Legal Metrology Rules create mandatorypackage sizes in metric units. Highly impactedcommodities include canned and bottled drinks,packaged biscuits and bottled vegetable oils.Mandatory package size requirements are notrecommended by international standards. Netweight declaration, supported by Codex and otherinternational bodies, protects consumers fromfraudulent packaging practices, as was mentionedin the USTR Report.

JAPANESE LOAN FOR DELHI METRO

A loan agreement for the five projects wassigned between the Japanese Ambassador to India,Takeshi Yagi, and Joint Secretary in the Departmentof Economic Affairs, Ministry of Finance, RajeshKhullar, in New Delhi recently.

Japan has committed a loan of Rs.15,188 croreto India under its Official Development Assistancefor implementation of five projects relating toenhancement of transportation capacity of the DelhiMetro, new and renewable energy development,energy conservation by micro, small and mediumenterprises, upgradation of power distributioninfrastructure in Haryana, and renovation andexpansion of water supply facilities in Agra, UttarPradesh.

The loan for the projects relating to new andrenewable energy development, energyconservation by MSMEs and upgradation of powerdistribution infrastructure in Haryana was pledgedby Japanese Prime Minister Shinzo Abe during hissummit meeting with Prime Minister Dr.Manmohan Singh in January this year.

� The Japanese government has granted a newloan amounting to Rs.8,933 crore forenhancing the transportation capacity ofDelhi Mass Rapid Transport System Project(Phase 3)in order to enhance its trans-portation capacity.

� The objective of the project is to link theexisting 190 km radially developed networkwith additional 116-km belt line including sixroutes and six intervals which connect IndiraGandhi International Airport and Noidadistrict and construction of a heritage lineconnecting Central Secretariat, Delhi Gate,Lal Qila and Kashmiri Gate.

� The project on completion will extend thenetwork length to 329.4 km and transformDelhi Metro into a global standard urbantransportation system comparable to theTokyo Metro.

� The Japanese government has been providingfinancial support amounting to Rs.30,162crore for development of Delhi Metro.


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The agreement grants a new Rs.1,800 crore loanto power producers through the Indian RenewableEnergy Development Agency Ltd for developmentof new and renewable energy including solar andwind power succeeding phase-I of the project.

� The ongoing project includes wind powerprojects to the tune of Rs.1,160 crore inAndhra Pradesh, Gujarat, Karnataka, andsolar power projects to the tune of Rs.220crore in Andhra Pradesh.

� The MSME energy saving project aims toenhance energy efficiency and eliminatepower shortage in the country.

� Under phase-III of the project, an ODA loanof up to Rs.1,800 crore has been granted to2,000 small and medium-sized enterprisesthrough the Small Industries DevelopmentBank of India for investment in energyconservation equipment.

� The financing facility will enable SMEs toutilise energy efficient equipment includingJapanese cutting-edge technology at a low cost.

The Rs.1,608 crore Haryana power distributionsystem upgradation project, covered under theODA loan agreement, is aimed at improving power

supply in all of the 21 districts of the state.

� It will increase capacity of the sub-stationsby 1,905 MVA and bring down powerdistribution loss rate to 30 per cent in theregion.

� The Japanese government has been providingfinancial support totalling Rs.65,664 crore for73 power projects in the country.

The Japanese ODA loan of Rs.977 crore for theAgra water supply improvement project, whichcommenced in 2007, has been granted taking intoconsideration the increase in project cost due torise in material prices.

The ongoing project includes a loan of Rs 1,160crore for wind power projects in Andhra Pradesh,Gujarat and Karnataka and Rs 220 crore for solarpower project in Andhra Pradesh.

India is ranked fifth among the wind powerintroducing countries in the world as of end of2012, shows its willingness to further increaserenewable energy including solar power asillustrated in 'Twelfth Five Year Plan (2012-2017)'.This project reaffirms our commitment tosustainable development of India.

FIGHT AGAINST TERRORISM

The United States has provided counter-terrorequipment to Mumbai Police in order to fightterrorism in a better way. The explosive incidentcounter measures equipment, worth $300,000,includes explosive ordnance disposal suits, speciallydesigned helmets, disruptors and scanners.

The outgoing U.S. Ambassador, Nancy J. Powellhanded over the equipment to Mumbai Policementioning that the relationship between the U.S.and India, the oldest and largest democracies inthe world, was very deep and strategic. The twonations are committed to fighting terrorism andworking to make life safe for all. The explosiveincident countermeasures equipment are worth$300,000.

The Explosive Ordnance Disposal (EOD-9) bombsuit and helmet have been designed with directinput from bomb disposal technicians to providethe highest degree of modular protection andoperational flexibility, the statement said. The helmetoffers protection against fragments with velocitiesof over 683 metre per second is made of high-strength fibre and weighs only 3.6 kg with visor.

The ergonomic design allows easy movement andgood visibility without strain.

Since the first anti-terrorist assistanceprogramme in 1995, the U.S. State Department haspartnered with the Government of India indelivering 113 courses to the Indian Police. Morethan 2,000 officers have received training. The U.S.has, in current year, already contributedapproximately $10 million in training andequipment through the anti-terrorist assistanceprogramme.

Nancy Powell

Nancy Jo Powell is the United StatesAmbassador to India. In sudden development ofevents, the US ambassador resigned and will leaveher post by the end of May. The move comes aftera row between the US and India over the arrestand brief jailing of an Indian diplomat in NewYork on a visa fraud charge. The arrest of DevyaniKhobragade in December triggered a furiousresponse in India, exposing deep misunderstandingsbetween two states who were supposedly becomingcloser allies.


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ECONOMY

NOW, ROTATION OF AUDITORS COMPULSORY

The Ministry of Corporate Affairs, retros-pectively, has made the rotation of auditorsmandatory for listed companies, unlisted companieswith a share capital for more than Rs.10 crore, allprivate companies with paid-up capital of Rs.20crore or more, and all companies with publicdeposits of a minimum of Rs.50 crore.

For the first time ever, India is introducingmandatory auditor rotation — both at an individualauditor level and at the audit firm level.

Main Features:

� The rules will apply not from the date ofnotification of the rules, but retrospectivelyfrom the date the auditors were appointed

� The auditor or audit firm will usually havean extra three years as a “transition” period.

� Prior to the new law, an auditor or an auditfirm could be appointed by shareholders fora maximum period of one year.

� The rules also rule out rotation to a “networkfirm” or an associate or affiliate of the existingaudit firm. Several audit firms had createdsuch firms in anticipation of the rotationmandated by the companies’ legislation.

� The rules notified pertain to three more

chapters of the new companies law andcomes into force from 1 April.

� The new rules also require auditors to get aresponse from a company’s board or the auditcommittee before reporting a fraud to theUnion government which has to be reportedwithin 60 days.

� The auditor is first required to report the fraudto the board or audit committee seeking theirreply within a 45-day period and post receiptof the reply, within 15-day period report thefraud to the central government. along withthe response received from the board or auditcommittee.

� As of now, there is no duty cast upon theauditors. They are not mandated to report fraud.

� Auditor's early resignation and removal havebeen made possible.

The provision for rotation of auditors wasapproved by the Parliamentary Standing Committeeon Finance earlier. According to the Committeeinstead of year-to-year basis, an auditor can beappointment by members in general meeting forfive years. This would ensure that promoter orcompany or management does not change auditorprematurely who is doing good job.

CONSUMER PRICE INDEX TO MEASURE INFLATION

In the first bi-monthly monetary policystatement, the Reserve Bank of India adopted theconsumer price index on April 1, 2014 as a measureto curb inflation. Till date, the RBI was usingWholesale price index to measure indicativeinflation projections.

It was adopted on the basis of therecommendations of Urjit R. Patel Committee reporton revising and strengthening the monetary policyframework.

The recommendations also include explicitrecognition of the path for disinflation, transition

to a bi-monthly monetary policy cycle, progressivereduction in access to overnight liquidity at thefixed repo rate, and a corresponding increase inaccess to liquidity through term repos, andintroduction of longer-tenor term repos as well as,going forward, term reverse repos.

Based on the recommendations of the high-leveladvisory committee chaired by Bimal Jalan, the RBIis all set to announce in-principle approval for newbank licences. It will also set out categories ofdifferentiated bank licences that will allow a widerpool of entrants into banking.


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In order to expand the market for corporatebonds, banks would be allowed to offer partialcredit enhancements to them. The feasibility oflimited re-repo/re-hypothecation of governmentsecurities is also being explored.

The RBI would be working to ease entry costsfor foreign investors. It would also strive to reducerisk for investors and the volatility of flows.Towards this end the modalities for allowingforeign portfolio investors to hedge their currencyrisks through exchange-traded currency futureswere being worked out in consultation with theSecurities and Exchange Board of India.

To encourage longer-term flows and reducevolatility, FPI investments in G-Secs would bepermitted only in dated securities of maturity ofone-year and above. The existing investment in T-bills would be allowed to taper off on maturity.Any investment limits vacated at the shorter endwould be available at longer maturities, so thatoverall FPI limits do not get diminished.

To enlarge the base for banking correspondent(BC) the inclusion of new entities and a relaxation

of existing distance restrictions, was beingconsidered.

The RBI would frame comprehensive consumerprotection regulations based on domestic experienceand global best practices. In the interest of theirconsumers, banks should consider allowing theirborrowers the possibility of prepaying floating rateterm-loans without any penalty. Banks should alsonot take advantage of customer difficulty andprovide and guide them with all possible help.

In order to tackle discrepancies in the system, thecomprehensive framework to help banks reduce theirnon-performing assets (NPAs) even while puttingdistressed projects back on track was made effective.Adoption of CPI as a measure of inflation will helpRBI in managing the monetary policy in a better way.

A consumer price index (CPI) measureschanges in the price level of a market basket ofconsumer goods and services purchased byhouseholds. A CPI can be used to index the realvalue of wages, salaries, pensions, for regulatingprices and for deflating monetary magnitudes toshow changes in real values.

Urjit Patel Committee

In September, 2013 the Reserve Bank of Indiahad set up an expert committee Chaired by DeputyGovernor Urjit Patel to revise and strengthen themonetary policy framework to make it transparentand predictable. The committee submitted its reportin January, 2014.

The main recommendations of committee areas follows:-

(a) Inflation should be the ‘nominal anchor’ ofthe monetary policy framework, and it shouldbe defined without any ambiguity.

(b) RBI should adopt CPI (Consumer Price Index)inflation as the new nominal anchor, as it isthe closest reflection of cost of living andinflation expectations.

(c) It suggests adopting a longer-term target of 4per cent for CPI inflation with a band of +/- 2 per cent.

(d) Inflation from the current level of 10 per centto be brought down to 8 per cent over aperiod not exceeding the next 12 months andto 6 per cent over a period not exceeding thenext 24 month period before formallyadopting the recommended target of 4 percent inflation with a band of +/- 2 per cent.

(e) The committee asked the Central Government

to ensure that the fiscal deficit as a ratio toGross Domestic Product is brought down to3.0 per cent by 2016-17.

(f) That the monetary policy decision-makingshould be vested with a Monetary PolicyCommittee (MPC). It went on to recommendthat the Governor of the RBI should be theChairman of the MPC. The term of office ofthe MPC could be three years, withoutprospect of renewal. Besides it alsorecommended that MPC should also havetwo external members.

(g) It suggested that dependence on marketstabilisation scheme (MSS) and cashmanagement bills (CMBs) may be phased out,consistent with government debt and cashmanagement being taken over by thegovernment's Debt Management Office.

(h) All fixed income financial products shouldbe treated on a par with bank deposits forthe purposes of taxation and Tax Deductionat Source.

(i) On Open Market Operations (OMOs) haveto be detached from fiscal operations andinstead linked solely to liquidity management.Further the panel said, OMOs should not beused for managing yields on governmentsecurities.


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Wholesale Price Index (WPI) represents theprice of goods at a wholesale stage i.e. goods thatare sold in bulk and traded between organizationsinstead of consumers. WPI is used as a measure ofinflation in some economies. WPI is used as an

important measure of inflation in India. Fiscal andmonetary policy changes are greatly influenced bychanges in WPI. In the United States, ProducerPrice Index (PPI) is used to measure inflation.

GOLD GLITTERS IN CHINA

According to the World Gold Council, China’sgold demand has doubled from 10% to 21%. Earlierthis year, it replaced India as the world’s biggestconsumer of gold Chinese demand reached 1,189.8tonnes last year, a 32 per cent year-on-year jump.The frenetic buying of gold in China, which led toa temporary shortage of physical stocks, wassparked by the 28 per cent fall in the preciousmetal’s price in 2013.

With 400 tonnes of domestic production andover 600 tonnes of physical imports in 2013, China’sgold consumption has now exceeded a thousandtonnes, making it the real mover and shaker of theworld gold market. China’s hunger for gold is theresult of rising wealth among its young population,rapid urbanisation and evolving lifestyles.

Indian consumption rose 5 per cent to 987.2tonnes last year, but was held back by new importtariffs and restrictions. In China there were nobrakes. Gold jewellery fabrication rose nearly athird to 724 tonnes, surpassing India for the firsttime, and the retail sector boomed. In July andAugust, more than 200 gold showrooms opened inthe southern city of Shenzhen.

Because many Chinese buy jewellery forinvestment reasons rather than adornment, highpurity 24 carat gold products dominated sales.Purchases of physical bars – mostly kilobars andsmaller weights – rose 47 per cent to 366 tonnes, anew record.

Chinese hold gold in the physical form; andhas a price-sensitive market too. Demand forjewellery fabrication in China has been growingrobustly alongwith retail demand for bars and coins.The physical demand in the form of jewellery andcoins hit a record high.

With large-scale redemptions since mid-April2013, estimated at over 600 tonnes, after the pricemeltdown from $1600 an ounce to $ 1200/oz levels,a significant part of the outflow has reportedlymoved to China. With prices moving down, therisk of further outflow has increased. In recentyears, China’s gold demand growth has faroutstripped its GDP growth.

Trade data from the US, the UK andSwitzerland point to large shipments of gold toHong Kong from where the goods move over tothe mainland. Gold coin shipments from Switzerlandto China and Hong Kong have also increased.

Over the last five years, China’s domesticproduction of gold has been growing on an averageat eight per cent a year. These reserves were builtfrom domestic production rather than from imports.Gold has always been popular in China and nowis increasingly seen as an asset class for individuals.Greater wealth and disposable incomes createdpent-up demand when prices were high, so whenthey dropped there was this phenomenal surge inbuying.

WAY TO PROGRESSIVE TAXATION

The Indian rich people may have to pay moretaxes as country’s government is mulling to proposeheavy taxes for super rich class on basis of therecommendations in the draft Direct Taxes CodeBill, 2013, which was put in the public domain onApril 1, 2014. The original Direct Taxes Code Bill,2010, will lapse with the end of the 15th Lok Sabhaand the new Government will have to initiate theprocess for the introduction of the Bill.

The structure of Income Tax system in the

country will not be disturbed and will remain as itis now. However, a surcharge for income aboveparticular level is likely to be added. Thegovernment needs to raise more revenues and thepeople with larger incomes must be willing tocontribute more.

In India taxes on income are levied at threerates – 10 per cent, 20 per cent and 30 per cent.These rates were fixed in 1997. With a view tomaintain overall progressivity in levy of income tax,


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the revised Code provides for a fourth slab forindividuals, Hindu Undivided Families (HUFs) andartificial juridical persons. In their case, if the totalincome exceeds Rs 10 crore, it is proposed to betaxed at the rate of 35 per cent. There is anadditional surcharge of 10 per cent on incomeexceeding Rs 1 crore.

There have been repeated calls within India thatrich people should pay more taxes. People havebeen demanding that rich people should pay moretax as they enjoy more amenities and more facilities.

The Finance Ministry has not accepted arecommendation on revising the tax slabs asproposed by the Standing Committee on Finance,headed by Yashwant Sinha, as it will result in hugerevenue loss.

The Committee favoured revising the slab withno tax on income up to Rs 3 lakh (now Rs 2 lakh),

10 per cent on income between Rs 3 lakh and Rs10lakh (Rs 2-5 lakh), 20 per cent on Rs 10-20 lakh (Rs5-10 lakh) and 30 per cent for income beyond Rs20 lakh (now Rs 10 lakh and above).

There is a 10 per cent additional tax on therecipient if the total dividend in his hand exceedsRs 1 crore. Under the present regime as well as theone proposed by the original DTC in 2010, dividenddistribution tax is to be levied at the rate of 15 percent.

The draft has retained the dividend taxationprovision which favours high net-worth taxpayerswho only pay a fraction of their earnings as tax ontheir investments in the capital market.

Now it needs to be seen whether Indiangovernment proposes higher taxes for rich of thecountry and whether there is any resentment fromthe rich or super rich class.

WORLD BANK TO CURB POVERTY

The World Bank Group (WBG) is all set toachieve its ambitious twin goals of ending extremepoverty by 2030 and boosting shared prosperityfor the bottom 40 percent of the population indeveloping countries.

According to the World Bank president, JimYong Kim, the development lender will focus on10 countries -- including India, China, Bangladeshand Democratic Republic of Congo -- that are hometo 80 percent of the world's extreme poor. Theseresidents live on less than $1.25 a day.

The World Bank is nearly doubling its lendingcapacity to middle-income countries because theycan provide insight to poorer countries in solvingproblems. These countries will benefit by being ableto borrow another 2.5 billion dollars a year overand above their current limits.

The increase will boost annual lending to middleincome countries from the current 15 billion dollarsa year to 26 billion-28 billion dollars. The moveresponds to demand from middle income countriesthat had reached their borrowing limits. Very poorcountries will benefit from a record 52 billiondollars in grants and loans pledged in December.

The World Bank's proposal to support thebuilding of the world's largest hydroelectric damon the Congo River - called Grand Inga Dam is anexample of the bank's bold steps on its way toeliminating world poverty by 2030.

The bank said there will be expansions in all ofits major branches, including a $100 billion boostin the fund for middle-income countries, known asthe International Bank for Reconstruction andDevelopment. The bank's private sector arm, theInternational Finance Corporation, will boostannual commitments to $26 billion a year. And theMultilateral Investment Guarantee Agency, whichprovides political risk insurance, aims to increaseits guarantees by 50 percent over four years.“TheWBG’s effort to shore up support for middle incomecountries reflects the changing geography ofpoverty, which is now home to three-quarters ofthe world’s extreme poor. Middle-income countriessuch as China, India and Indonesia continue tostruggle with rising inequality and deep pockets ofpoverty, where large segments of the populationremain in extreme poverty or are vulnerable tofalling below the $1.25 per day line. By increasingavailable funds for these countries, the Bank isdemonstrating its strong commitment to endingpoverty in all corners of the world.

The World Bank will help developing countriesend extreme poverty and boost shared prosperity,by providing them with more financial resources,more solutions-based knowledge, and help leveragemore private sector investment. The bank alsofocuses on improving the quality of its lendingrather than just the amount thrown as loan.

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SCIENCE & TECHNOLOGY

A DROUGHT HIT PLANET BY 2100

An increase in evaporating drying means thatthose regions expected to get more rain, includingthe important rice, wheat and corn belts of theAmerican and Asian continent, will be at high riskof drought. One third of the world may be atincreased risk of drought by 2100 as warmertemperatures wring more moisture from the soil.

Much of concern about future drought underglobal warming has focused on rainfall projectionsbut increasing heat is expected to extend dryconditions to far more farmland and cities by theend of the century than changes in rainfall alone.The higher evaporation rates may also play animportant role as warmer temperatures wring moremoisture from the soil, even in some places whererainfall is forecasted to increase.

It is estimated that 12 per cent of land will besubject to drought by 2100 through rainfall changesalone; but the drying will spread to 30 per cent ofland if higher evaporation rates from the addedenergy and humidity in the atmosphere isconsidered. Warmer temperatures will help to drythings out.

The International Panel on Climate Change(IPCC) has warned that soil moisture is expectedto decline globally and that already dry regionswill be at greater risk of agricultural drought.

Using two drought metric formulations, it hasbeen analysed that projections of both rainfall andevaporative demand from the collection of climatemodel simulations have led to this conclusion. Bothmetrics agree that increased evaporative drying willprobably tip marginally wet regions at mid-latitudeslike the US Great Plains and a swath of southeasternChina into aridity.

The dry zones in Central America, the Amazonand southern Africa will grow larger. In Europe,the summer aridity of Greece, Turkey, Italy andSpain is expected to extend farther north intocontinental Europe.

If precipitation were the only consideration, thegreat agricultural centres would not be consideredat risk of drought The moisture balance in the soilis what really matters for agriculture.

If rain increases slightly alongwith increase intemperature, drought is a potential consequence.

GETTING SOLAR CELLS FROM SUNLIGHT

In a recent advance in solar energy, researchershave discovered a way to tap the sun to directlyproduce solar energy materials. This breakthroughcould soon reduce the cost of solar energy, expediteproduction processes and make the sun almost a"one-stop shop" that produces both the materialsfor solar devices and the eternal energy to powerthem.

How a Solar Cell Works?

Solar cells or photovoltaic cells convert the sun’senergy into electricity. Sunlight is composed ofminiscule particles called photons, which radiatefrom the sun. Silicon is what is known as a semi-conductor, meaning that it shares some of theproperties of metals and some of those of anelectrical insulator, making it a key ingredient in

solar cells. As these hit the silicon atoms of thesolar cell, they transfer their energy to looseelectrons, knocking them clean off the atoms. Thephotons could be compared to the white ball in agame of pool, which passes on its energy to thecoloured balls it strikes. Creating an electricalimbalance within the cell, which acts a bit like aslope down which the electrons will flow in thesame direction. As the photons smash the electronsoff the silicon atoms, this field drives them along inan orderly manner, providing the electric currentto power calculators, satellites and everything inbetween.

The Benefits:

� Cheaper and slimmer than conventionalsilicon cells, these could soon be used as


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coatings in buildings to produce energy.

� This approach is also very environment-friendly.

� Several aspects of this system should continueto reduce the cost of solar energy, and whenwidely used, our carbon footprint.

In this process, simulated sunlight is focusedon the solar microreactor to rapidly heat it. Thework is based on the use of a "continuous flow"

microreactor to produce nanoparticle inks thatmake solar cells by printing.

The solar materials were made with copperindium diselenide, but to lower material costs itmight also be possible to use a compound such ascopper zinc tin sulfide. The chalcogenide-based, thinfilm solar cells have already returned a fairly highsolar energy conversion efficiency of about 20percent in the laboratory, researchers said, whilecosting less than silicon technology.

INDIA ADDS YET ANOTHER FEATHER TO ITS CAP

IRNSS is equivalent to Global PositioningSystem of the United States. India has successfullylaunched its second navigational satellite IRNSS1B onboard PSLV-C24 from the Satish DhawanSpace Centre.

Indian Space Research Organisation'sworkhorse Polar Satellite Launch Vehicle PSLV-C24 placed the IRNSS IB in precise orbit about 19minutes after a perfect lift-off at 5.14 pm.

The navigational system has a total budget of

around Rs 1,420 crore and will provide accurateposition information to users within the countryand up to 1,500 km from the nation’s boundaries.It is similar to the global positioning system of theUS, Glonass of Russia, Galileo of Europe, China’Beidou and the Japanese Quasi Zenith Satellite System.

There will be multiple uses of the system,including for terrestrial, aerial and marinenavigation, disaster management, vehicle trackingand fleet management. It can also be integratedwith mobile phones and mapping.

About IRNSS-1B :

� IRNSS-1B is the second dedicated navigationsatellite of India.

� It is one of the seven satellites constitutingthe IRNSS space segment.

� Its predecessor, IRNSS-1A, was launched byPSLV-C22 in July 2013.

� IRNSS-1B has a lift-off mass of 1432 kg.

� The configuration of IRNSS-1B is similar tothat of IRNSS-1A

� IRNSS -1B carries two types of payloads -navigation payload and ranging payload.Thenavigation payload of IRNSS-1B will transmitnavigation service signals to the users.

� This payload will be operating in L5 band(1176.45 MHz) and S band (2492.028 MHz).

� The ranging payload of IRNSS-1B consists ofa C-band transponder which facilitatesaccurate determination of the range of thesatellite.

� IRNSS-1B also carries Corner Cube RetroReflectors for laser ranging.

� The design of the payload makes the IRNSSsystem interoperable and compatible withGlobal Positioning System (GPS) and Galileo.

� The satellite is powered by two solar arrays,which generate power up to 1,660 watts, andhas a life-time of ten years.

INDIA’S OWN GPS: THE KARGIL FACTOR

Geopolitical needs can very much be a factorfor making advanced developments in R&D, at leastin case of India. When Pakistani troops tookpositions in Kargil in 1999, the Indian militarysought GPS data for the region but the space-based navigation system maintained by the USgovernment denied it to India. The Kargilexperience made the nation realise the inevitabilityof having for an indigenous satellite navigation

system. Indian Space Research Organisation tookthe nation closer to the goal, which it would achievein less than two years. By making reality the IndianRegional Navigation Satellite System (IRNSS) whichworks on a combination of seven satellites whichwould 'look' at the region from different angles,and, in the process, helps calculate from relativedata, real-time movement of objects by as less as10m. Isro launched the first of the satellites in the


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group, IRNSS-1A, in July 2013. By mid-2015, itplans to have all the seven in place. Three of theseven satellites will be in geostationary orbits andthe other four in inclined geosynchronous orbits.Apart from navigation, the system will help inprecise time keeping, disaster management, fleetmanagement and mapping.

The IRNSS will be offering two types ofservices: the first is called Standard PositioningService (SPS) which is for civilian use while thesecond is called Restricted Services (RS), which candetect movement of objects by less than 10m. Itwill put India in the company of select nationswhich have their own positioning systems.

INDIA GETTING HIGH ON SOLAR CAPACITY

The solar market potential remains as large asever. As power shortfalls continue, peak shortageis a critical problem that has stifled industrialgrowth, and back-up generation is becomingincreasingly expensive. The total grid-connectedsolar capacity, commissioned under the NationalSolar Mission, crossed the 2,500-MW mark andstood at 2,632 MW as on March 31, 2014.

� In January 2014 , India’s total grid-interactiverenewable energy capacity crossed 30,000MW and the total installed capacity of windsegment crossed 20,000 MW.

� State-policy driven contributions stand tallestat 1,322 MW, followed by MNRE projects at688 MW, REC Scheme at 491 MW, with therest coming from renewable purchaseobligation private sector rooftop and centralgovernment organisations.

� Gujarat (916 MW) is on the top of the listwith Rajasthan (730 MW), Madhya Pradesh(347 MW) and Maharashtra (249 MW)following it among others.

� During fiscal 2013-14, a total capacity of 947

MW was commissioned of which MP addedthe highest capacity of 310 MW.

Hikes in diesel prices have made solar a veryattractive option thereby increasing its potentialeven in a slower-growing economy. With continuedpower shortfalls, peak shortage becomes a criticalproblem and increases the costs involved in backup generation thereby stifling industrial growth.

The Jawaharlal Nehru National Solar Missionwas launched on the 11th January, 2010 by thePrime Minister. Also known as the National SolarMission is a major initiative of the Government ofIndia and State Governments to promoteecologically sustainable growth while addressingIndia’s energy security challenges. The Mission hasset the ambitious target of deploying 20,000 MWof grid connected solar power by 2022. It is aimedat reducing the cost of solar power generation inthe country through (i) long term policy; (ii) largescale deployment goals; (iii) aggressive R&D; and(iv) domestic production of critical raw materials,components and products, as a result to achievegrid tariff parity by 2022.

INSAT – 3E DECOMMISSIONED

INSAT-3E is a third-generation communicationsatellite which was launched in September 2003with 36 transponders — 24 C-band and 12extended C-band transponders, out of which only25 of them have been working since 2009. Thesatellite has completed its life and gone out ofservice. Built to last 15 years, it has completed ten-and-a-half years in orbit.

Few days back, it ran out of the on-boardoxidiser, which, along with fuel, keeps it Earth-locked or fixed over the Indian sub-continent andruns its daily functions. The ISRO had apparentlyexpected that the satellite, positioned at 55 degreesE longitude, would last a few more months andthat it would be smoothly replaced with GSAT-16.Now the space agency is getting set to launch

IRNSS-1B, second of its seven regional navigationsatellites.

A start has been made of shifting users ofINSAT-3E on to standby capacities on some of theother satellites. The spare capacity includes thethree-month-old GSAT-14.

INSAT-3E’s 10 extended C-band transponderssupported VSAT operators; its C-band supportedBSNL and captive communication networks of theNational Thermal Power Corporation and the Oiland Natural Gas Corporation, among others.

The ISRO is now left with 189 transponders onits INSAT/GSAT fleet and 91 additionaltransponders leased on foreign satellites.

INSAT-3E had briefly blinked and disrupted


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services for almost a day in September 2012 andwas restored. The Master Control Facility at Hassanis due to move the expired satellite into a higher

IS BUREAUCRACY DOMINATING SCIENCE IN INDIA?

INSAT 3E was launched on September 28, 2003from the European Space Agency's spaceport inFrench Guiana on board the Ariane rocket.Currently it has become defunct.

� The satellite had a launch mass of 2750kilograms.

� It is the 4th satellite launched in the INSAT-3 series of ISRO.

� It was designed for providing high-speedcommunication, Television, VSAT & Tele-education services.

In April 2014, almost eleven years after beinglaunched, the satellite ran out of oxidizer and afew days later, was decommissioned by the ISRO.K. Radhakrishnan is the Chairman of the IndianSpace Research Organisation.

‘graveyard’ orbit and keep it out of the way ofmany working spacecraft of other countries.

Though R&D spending is less than 1 per centof India’s GDP, there is no dearth of funds forresearch in India, because there is no competitionhere. The only negative point is that money comeswith the same bureaucratic restrictions that applyto all government expenditure.

A case can be taken of the research studentswho get no funding support to travel abroad toparticipate in conferences, scientists are constrainedby limited foreign travel. These restrictions onforeign travel prevent students and scientists fromgaining in terms of networking, exchanging ideasand being exposed to the kind of work being doneby their peers in other countries.

The systematic undermining of scientificenterprise started way back in the mid 1950s. Thefact that scientific departments are modelled onthe rest of the bureaucracy has turned out to be abig mistake. That’s because bureaucracy is notdesigned to encourage innovation. DAE and thedepartment of space are the only institutions thatundertake developments in-house. Others like theDepartment of Biotechnology do not.

By being a part of the bureaucracy, even thosescientists in India who do remarkable researchcannot be rewarded with promotion or pay hike,so there is no motivation, so scientists are not willingto take up novel scientific challenges. The malaiseof promotion based on years of service, and not byachievement has spread to institutions at thenational level too.

Indian science has for too long been hamstrungby bureaucratic mentality that valuesadministrative power over scientific achievements.It is pertinent to note that the department of spacestands out from the rest. Younger people have been

put in charge of important programmes, and theyhave succeeded.

These factors essentially explain the reason asto why prior to the 1950s important contributionsfrom people like Jagadish Chandra Bose, SatyendraNath Bose and Srinivasa Ramanujan came fromwithin the country.

Another problem is the lack of lateral movementfrom one institution to another. While collaboratingwith scientists from other institutions would go along way in putting to test the usefulness of one’sexpertise without actually moving to anotherinstitution, one ends up gaining more by movingout.

Even collaborating with scientists from otherinstitutions is rarely seen in India. Adding worseto it, even the funding agencies do not insist onthis. Funding is rather provided for collaborationwithin the institution than across institutions. Thisis true even in the case of the Nano mission whichwas launched in 2007. The Nano mission hasfunded 150 individual projects, 11 centres ofexcellence and six industry-linked projects. But themission has required no collaboration betweeninstitutions.

There are very few national frameworks forcollaboration that would work towards a commongoal. Collaboration becomes all the more importantas the size of the groups in any area is small inIndia.

There is an inherent resistance to collaborationacross institutions in other countries as well.Programmes like ESPRIT [European StrategicProgramme on Research in InformationTechnology] insist on collaboration acrossinstitutions and countries for funding.


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How to overcome this ailment?

� Changes that need to be urgently initiated toreinvigorate research is to decouple fundingand government control.

� Indian science needs public funding, but notgovernment control.

� There are numerous examples in othercountries and in Europe where such a systemhas been operating successfully.

� The tenure of heads of institutions should alsobe limited and they should be encouraged toreturn to active research.

� The rotation should be every five years.

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HEALTH

GENES RESPONSIBLE FOR OBESITY

People who have fewer copies of a gene AMY1 that helps the body digest carbohydrates are ata greater risk of obesity. Obesity may be geneticallylinked to how our bodies digest the starch found incarbohydrate-rich foods like bread, rice andpotatoes.

The scientific study investigated the relationshipbetween body weight and the gene AMY1, whichis responsible for an enzyme present in our salivaknown as salivary amylase. This enzyme is the firstto be encountered by food when it enters themouth, and it begins the process of starch digestionthat then continues in the gut. When we eat, anenzyme in saliva called salivary amylase kick-startsdigestion by breaking down some of the starchfound in carbohydrates into sugars. This enzyme isproduced by the gene AMY1.

It's an unusual gene, in that people can havemultiple copies of it, unlike most genes where thereare just two. The more copies one has, the moreenzyme he produces. It is believed that humansevolved to carry more copies of the gene as ourdiets shifted towards carbohydrate-rich foods.

The number of copies of AMY1 can be highlyvariable between people, and it is believed thathigher numbers of copies of the salivary amylasegene have evolved in response to a shift towardsdiets containing more starch since prehistoric times.

Researchers looked at the number of copies ofthe gene AMY1 present in the DNA of thousandsof people from the UK, France, Sweden andSingapore.They found that people who carried alow number of copies of the salivary amylase gene

were at greater risk of obesity. The chance of beingobese for people with less than four copies of theAMY1 gene was approximately eight times higherthan in those with more than nine copies of thisgene.

The researchers estimated that with everyadditional copy of the salivary amylase gene therewas approximately a 20 per cent decrease in theodds of becoming obese.

This is discovery is important because itsuggests that how we digest starch and how theend products from the digestion of complexcarbohydrates behave in the gut could be importantfactors in the risk of obesity. The number of copiesof a gene that a person carries can vary throughouttheir DNA, although people usually have two copiesof each gene. The researchers found that thenumber of copies of AMY1, however, can varywildly between people. The study found that peoplewith a low number of copies of AMY1 were mostlikely to become obese.

The researchers examined the number of copiesof AMY1 present in the DNA of more than 6,000people from the UK, France, Sweden andSingapore. According to the results of the study,people with a low number of copies of AMY1 weremost likely to become obese. From this data, theyfound that AMY1 was the gene that had thegreatest influence on body weight. Also, thenumber of copies of the salivary amylase gene ishighly variable between people, and so, given thisfinding, can potentially have a large impact on ourindividual risk of obesity.

‘NO SMOKING’ BENEFICIAL

The number of premature births and childrenvisiting hospitals for asthma has droppedsignificantly in parts of the US, Canada, and Europebarely a year after they enacted smoking bans.

The new analysis combined the results of 11

studies encompassing more than 2.5 million birthsand nearly 250,000 asthma attacks. Experts calledit the best evidence to date that legislation creatingsmoke-free public places and workplaces improveschildren’s health, even in the womb. There are overa million babies dying of being born preterm every


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year in the world which can be saved by makingmajor strides in decreasing that with smoking bans.The investigators have also pooled data and founda 5 per cent reduction in the number of childrenborn very small for their gestational age after theintroduction of smoke-free laws.

An earlier analysis of the effect of smoking banson adult health demonstrated a 15 per centreduction in cardiovascular events. Only 16 percent of the world’s population is covered bycomprehensive smoke-free laws, and 40 per centof children worldwide are routinely exposed tosecondhand smoke. Strong smoke-free laws changesocial norms about smoking, and consequentlypeople implement smoke-free policies in their ownhomes as well. Smoke-free policies have a directimpact on child health.

It is held that any amount of secondhand smokeis dangerous. But still enough efforts are being takento protect children from secondhand smoke. About

half of Americans are protected by complete smoke-free policies in workplaces, restaurants and bars.

The analysis did not prove that smoke-free lawscaused the improvements in children’s health. Andthe researchers did not evaluate other factors, liketaxation of tobacco products and advertisementbans, which could have contributed in reducingsmoking. Further studies are needed to estimatethe effect of smoke-free laws on respiratory tractinfections in children, a major problem ofsecondhand smoke. There is also a “pressing need”for studies of tobacco control laws in low- to middle-income countries. This kind of work will catalysethe introduction of smoke-free laws, and as that isdone, the opportunity is taken to evaluate theirimpact and strengthen the evidence. It is nowevident that early-life protection from involuntarysecondhand smoke exposure, holds great potentialto reduce the consequential disease burden likeasthma and other serious lung diseases.


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NEWS IN BRIEF

NEWSMAKERS

Parvez Musharraf

Parvez Musharraf, former chief of army staffand the President of Pakistan, for the first time,under Article 6 of the Constitution indicted by aspecial court for high treason for imposingemergency and subverting the Constitution. UnderArticle 6 of the Constitution, "Any person whoabrogates or subverts or suspends or holds inabeyance, or attempts or conspires to abrogate orsubvert or suspend or hold in abeyance, theConstitution by use of force or show of force or byany other unconstitutional means shall be guilty ofhigh treason." Justice Faisal Arab who heads thespecial court said it is punishable with death underthe law.

The former military dictator was charged withissuing an unconstitutional and unlawful order in2007 at Rawalpindi as Chief of the Army Staff,called the "Proclamation of Emergency Order,2007" which held the Constitution in abeyance. Hesubverted the Constitution and committed theoffence of high treason.

Musharraf seized power in a coup in 1999and remained President until 2008.

Manuel Carlos Valls

Manuel Carlos Valls is the newly appointedprime minister of France. He is a French SocialistParty politician. He was previously the Minister ofthe Interior from 2012 to 2014, the Mayor of Évryfrom 2001 to 2012 and has also been a Member ofthe National Assembly since 2002. He is a memberof the Socialist Party and is regarded as the "rightwing" of the Socialist Party. In March 2014,following major losses to centre-right and extreme-right political parties in French municipal elections,President Francois Hollande appointed Valls to thepost of Prime Minister. He replaced Jean-Marc Ayrault.

Marie-Louise Coleiro Preca

Marie-Louise Coleiro Preca was sworn in asthe president of Malta. She became the country’sninth president and is the second woman to beappointed head of state in the European Unioncountry. Coleiro Preca, a notary by profession, waspreviously minister for social policy after the Labourparty returned to power following March 2013elections. She is the second female president ofMalta and was previously general secretary ofLabour. She takes over from George Abela, whowas appointed in 2009.

OBITUARIES

Kumba Yala

Former Guinea Bissau President Kumba Yala,who ruled the West African nation from 2000 to2003, died at the age of 61.Yala came to power in2000 after the country's second multi-party election

following a brief civil war in 1999. Some of Yala'spolicies began to cause political and social turmoil.Three years after his election, the military removedhim from office in a bloodless coup. Later in life,he ran twice in polls to regain the presidency butwas unsuccessful.

AWARDS/PRIZES

Padma Awards presented

President Pranab Mukherjee conferred Padmaawards, announced on the eve of 65th Republic

Day, in New Delhi. The list comprises two PadmaVibhushan, 12 Padma Bhushan and 53 Padma ShriAwardees.


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The list of the awardees are:

Padma Vibhushan: Dr. Raghunath A.Mashelkar, Science and Engineering (Maharashtra)

Padma Bhushan: Shri Pullela Gopichand, Sports– Badminton (Andhra Pradesh), Prof.Anisuzzaman, Literature and Education(Bangladesh), Shri Kamal Haasan, Art-Cinema(Tamil Nadu), Prof. Jyeshtharaj Joshi, Science andEngineering (Maharashtra), Shri Vijayendra NathKaul, Civil Service (Delhi), Dr. (Smt.) Neelam Kler,Medicine – Neonatology (Delhi), Late Dr. AnumoluRamakrishna, Science and Engineering (AndhraPradesh), Prof. Lloyd I. Rudolph, and Prof. SusanneH. Rudolph, Literature and Education (USA),Begum Parveen Sultana, Art - Classical Singing(Maharashtra), Shri T.H. Vinayakram, Art -Ghatam Artist (Tamil Nadu), Shri VairamuthuRamasamy Thevar, Literature and Education (TamilNadu),

Padma Shri: Dr Naheed Abidi, Dr KiritkumarMansukhlal Acharya, Dr Subrat Kumar Acharya,Vidya Balan, Sekhar Basu, Prof (Dr) BalramBhargava, Sabitri Chatterjee, Prof AshokChakradhar, Prof Biman Bihari Das, Dr SunilDabas, Chhakchhuak Chhuanvawra, Dr RamakantKrishnaji Deshpande, Elam Endira Devi, Prof G.N.Devy, Dr Brahma Dutt, Prof Kolakaluri Enoch, ProfVed Kumari Ghai, Prof (Dr) Pawan Raj Goyal, RaviBhushan Grover, Ramaswamy R Iyer, Prof (Dr)Daya Kishore Hazra, Prof Eluvathingal DevassyJemmis, Prof (Dr) Shashank R Joshi, Naina ApteJoshi, Bansi Kaul, J L Kaul, Ustad Moinuddin Khan,Prof Rehana Khatoon, Dr P.Kilemsungla, Dr MilindVasant Kirtane, Ashok Kumar Mago, GeetaMahalik, Paresh Maity, Dr Mohan Mishra, ProfVamsi Krishna Mootha, Prof Vishnu NarayanNamboodiri, Ravi Kumar Narra, Dipika RebeccaPallikal, Dr Ashok Panagariya, Sudarsan Pattnaik,

Dr Sunil Pradhan, Pratap Govindrao Pawar,Wendell Augustine Rodricks, Dr SarbeswarSahariah, Rajesh Saraiya, Alur Seelin Kiran Kumar,Shri Anuj (Ramanuj) Sharma, Sooni Taraporevala,Prof Vinod Kumar Singh, Tashi Tondup, WaikhomGojen Meetei, Prof (Dr) Jeewan Singh Titiyal, ProfOm Prakash Upadhyaya.

Padma Awards, the country’s highest civilianawards, are conferred in three categories, namely,Padma Vibhushan, Padma Bhushan and PadmaShri. The Awards are given in various disciplines/fields of activities, viz- art, social work, publicaffairs, science and engineering, trade and industry,medicine, literature and education, sports, civilservice, etc. ‘Padma Vibhushan’ is awarded forexceptional and distinguished service; ‘PadmaBhushan’ for distinguished service of high orderand ‘Padma Shri’ for distinguished service in anyfield. The awards are announced on the occasionof Republic Day every year. The awards areconferred by the President of India at a functionheld at Rashtrapati Bhawan sometime aroundMarch/ April.

KOYAL RANA

Koyal Rana was crowned Femina Miss India2014. She will represent India at Miss World 2014.Jaipur born Rana had to compete with the 23 othermodels at Yash Raj Studio, Mumbai for the tophonour, the fbb Femina Miss India World 2014 Title.

Koyal completed her schooling from St. Thomas'School, Delhi. She is currently doing herundergraduate programme in Bachelor of BusinessStudies from Deen Dayal Upadhyaya College,University of Delhi. She represented India at MissTeen International in Chicago and won the MissUniversal Teen 2009 Title. She also won FeminaMiss India Delhi 2014 title.

TERMINOLOGIES

IRNSS-1B

India successfully launched its secondnavigational satellite IRNSS-1B onboard PSLV C-24 on April 4, 2014. IRNSS-1B is the second of theseven satellites planned under the Indian RegionalNavigation Satellite System (IRNSS). PSLV C24successfully placed the 1,432 kg IRNSS 1B in theintended orbit above the Earth. IRNSS would helpin terrestrial, aerial and marine navigation, disastermanagement, vehicle tracking and fleet management,

integration with mobile phones, mappingand geodetic data capture and others. Oncecompleted, the IRNSS system will offer navigationalservices, for both civilian and defense purposes, inIndia and also 1,500 km beyond its borders.

Pink Revolution

Pink Revolution refers to ‘Indian Meat IndustryPerspective’ of setting up state of the art meatprocessing plants; developing technologies to raise


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male buffalo calves for meat production; increasingthe number of farmers rearing buffalo undercontractual farming; and establishing disease-free

zones for rearing animals. Pink Revolution refersto the slaughter of animals. When animals areslaughtered, the colour of their flesh is pink.

MISCELLANEOUS

Enceladus

NASA’s Cassini spacecraft has made repeatedflybys of Enceladus, one of Saturn’s moon, byphotographing the fissures, nicknamed tiger stripes,where the geysers originate, measuringtemperatures and identifying carbon-based organicmolecules that could serve as building blocks forlife. Using data from NASA’s Cassini spacecraft,they have found gravitational evidence that a vastsea the size of Lake Superior could extend out from

around the southern pole. The sea is at freezingtemperature and in continual darkness. And thewater may have been liquid only in the recent past,a few tens of millions of years. Enceladus has beenshown to have sodium and potassium salts as wellas ammonia and methane in the plume of watervapor being spit out of its south pole. If it hasorganic molecules in its layer of liquid water, it’s acandidate for habitable environments in our ownsolar system.

SPORTS

Anju’s record ratified by IAAF

Anju Bobby George became the first Indianathlete to win a gold medal in the World AthleticsFinal. The International Association of AthleticsFederations (IAAF) has ratified the gold medal forlong jumper Anju Bobby George at the IAAF WorldAthletics Final in Monte Carlo in 2005 after thedisqualification of Russia’s Tatyana Kotova. Kotovafinished ahead of the Anju in the meet but laterfailed to clear a dope test.

Indian athlete star Anju had previously won abronze medal in the 2003 World Championship,gold in the Asian Games and Asian Championship,besides a bronze in the Commonwealth Games.

Barcelona banned from signing

FIFA, the ruling body of world football, hasbanned Spanish football giants FC Barcelona fromsigning any new players until the summer of 2015as both Barcelona and the Spanish Football

Federation (RFEF) had "violated several provisionsconcerning the international transfer and firstregistration of non-Spanish minors with the club,"over the period 2009 to 2013. Barcelona will befined 450,000 Swiss francs ($509,000, 369,027euros) and banned from signing any players fortwo complete and consecutive transfer periods. Theban could impact on the club's reported plans tobring in Gladbach's German goalie Marc-Andre terStegen.

National games to be held in 2015

The National Games would be held in 2015and the dates would be decided in consultationwith the various national federations as has beenannounced by Indian Olympic Association (IOA)president N. Ramachandran. The National Gamesof India is a sporting event and it comprises variousdisciplines in which sportsmen from the differentstates of India participate against each other.

��


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EDITORIALS

MESSAGE FROM SRI LANKAN POLLS

The elections to the Western and Southernprovincial councils in Sri Lanka, home to a third ofthe country’s voters, was expected to be a walkoverfor the Mahinda Rajapakasa-led United People’sFreedom Alliance. After all, the government hadfought bravely against ‘foreign conspirators’ at the25th session of the United Nations Human RightsCouncil in Geneva barely days ahead of the well-timed polling. In fact, much of the electioncampaign made it appear as if Sri Lanka was undersiege and no one other than President Rajapaksa’sUPFA was capable of saving the nation. But theelectorate did not buy the whole story, the voterturnout was low, and the results appearedpuzzling. Local elections may be fought onimmediately relevant issues and the outcome of anational poll may well be decided on largerconsiderations; still, the latest results provide anidea of the country's mood. The UPFA did win amajority in Mr. Rajapaksa’s home province, theSouthern Province, and emerged the biggest partyin the Western Province that has Colombo as itsheadquarters. But a point of concern for the rulingcombine was the numbers: the UPFA won 33 of 55seats in the South — down from 38 in 2009 — andmanaged 56 of the 104 in the West where it had68 in 2009. More worrisome for the UPFA is thefact that it lost votes in the President’s hometown,Hambantota — represented in Parliament by hisson Namal Rajapaksa. Clearly, people of the port-

town prefer their district MP, Sajith Premadasa,son of former President Ranasinghe Premadasa. Mr.Sajith Premadasa has fought both the Rajapaksasand has a running battle going in his own UnitedNational Party. This is the last round of polls in SriLanka ahead of the parliamentary and presidentialelections scheduled for 2016.

Though the losses do not appear massive, themessage behind it cannot be wished away. TheUPFA’s loss did not result in its main rival, theUNP, gaining votes. In fact, there appears to beserious confusion among people: they voted forformer General Sarath Fonseka’s DemocraticNational Alliance, which is now emerging as thethird force in the country, and also the JVP, whichis re-grouping under a new leader, Anura KumaraDissanayake. The UNP’s vote share declined inColombo Central, its biggest stronghold, and it willhave to double its vote share if it has to emerge ontop in a future election. Ranil Wickremasinghe, theUNP chief who survived many bids to unseat him,does not seem to be the leader who can carry theUNP into an election victory. With Sarath Fonseka’sfate already sealed following the deal he struck tobe released from prison, people are clearly lookingfor a new leader. And there appears no one insight. That might be Mr.Rajapaksa’s biggest trumpcard yet.

Source: The Hindu

MAINTAINING THE STATUS QUO

The Reserve Bank of India’s first bi-monthlymonetary policy statement is the last such beforenational elections and the formation of a newgovernment. Obviously, monetary policy will haveto be dovetailed with the new government’spolicies, especially fiscal policy. The interregnum isnot particularly conducive to major monetary policyannouncements. However, even while playing itsafe on certain key ongoing initiatives — forinstance, the award of new bank licences has been

referred to the Election Commission by way ofabundant caution — the central bank has perforceto address monetary policy issues that cannot bepostponed. The policy statement, it has beenemphasised, is an economic and regulatorystatement and ought not to be viewed through theprism of contemporary politics. The decision to holdpolicy rates was widely anticipated and, as is to beexpected, based on a critical assessment ofmacroeconomic factors, both within India and


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outside. Since January, economic growth in thedeveloped economies has moderated. For India anda number of developing economies, renewedvolatility of capital flows and tightening of externalfinancing conditions are the biggest threats. Whilesticking to its inflation and GDP growth forecasts,the RBI has warned of upside risks to inflation anddownward risks to growth.

On inflation, the risks to the central forecast of8 per cent CPI inflation by January 2015 stem froma less-than-normal monsoon, uncertainty in thesetting of minimum support prices, the outlook forfiscal policy and the possibility of higher commodityprices. The monetary policy stance will be firmlyfocussed on keeping the economy in adisinflationary path towards a CPI inflation of 6per cent by January 2016. GDP growth is projectedto pick up from a little below 5 per cent in 2013-14 to the central estimate of 5.5 per cent, in a range

of 5 to 6 per cent in 2014-15. However, there areno tangible signs of a sustained revival in industryand services as yet. Clearing of stalled projects anda pick-up in export growth as the world economygains traction should brighten the outlook.Elaborating on the developmental and regulatorypolicies outlined earlier, the key recommendationsof the Urjit Patel Committee’s report that have beenimplemented include the adoption of the new CPIas the key inflation measure, and a transition to abi-monthly policy cycle. For banks, the transitionalperiod for full implementation of Basel III capitalregulations has been extended by a year to March31, 2019. It is proposed to make inflation-linkedsavings bonds more investor-friendly. A wealth ofinformation on non-monetary policy measures arefound in this bi-monthly monetary policy statement,and hopefully that will become the norm.

Source: The Hindu

POORLY PERFORMING PUBLIC SERVICES

There is something ironic about politiciansmaking announcements about the Right toEducation or the Right to Health when the onlything they can ensure is allocation of funds. Theircontrol over the usage of these funds is somewhatweak; the overall quality of services is even weaker;their control over actual health or educationaloutcomes is the weakest.

Looking at education and health behavioursand outcomes using data from the India HumanDevelopment Survey (IHDS) of 2004-05 and 2011-12 paints a picture of striking dissonance betweengovernment programmes and experiences at theground level. The period between 2004-05 and2011-12 saw initiation of several new programmes.The Right to Education Act (RTE) was implementedin 2010; the National Rural Health Mission(NRHM) began in 2005; the Janani SurakshaYojana (JSY) began in 2005, to be implementedalongside the NRHM. Substantial expenditure wasincurred in each of these centrally-sponsoredprogrammes. Below we look at changes ineducation and health to see how these programmesline up with outcomes.

Privatisation

The implementation of the RTE should, intheory, lead to higher enrolment in governmentschools and better educational outcomes. Ironicallywe see the reverse. Private school enrolment

increased from 28 to 35 per cent between 2005and 2012 for children of 6-14 years, even beforepoor students in private schools were reimbursed.At the same time, in keeping with the findings ofvarious Annual Status of Education Report surveys,the IHDS also found a small decline in readingand writing skills among children of 8-11 years.While 54 per cent of children could read a simpleparagraph in 2005, there was a modest decline to52 per cent in 2012. A similar decline was observedfor basic arithmetic skills like two digit subtraction,from 48 per cent to 45 per cent. For governmentschools the decline was higher — nearly 5percentage points for both outcomes, but a shiftfrom government to slightly better performingprivate schools limits the overall decline in skilllevels.

This growing privatisation of education wasmatched by continued and slightly increased


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privatisation of health care. The NRHM is supposedto strengthen preventive and curative care,particularly in rural areas and in States with poorhealth infrastructure such as Uttar Pradesh, Bihar,Rajasthan, Madhya Pradesh. However, a very smallproportion of the Indian population relies on publicfacilities. About 70 per cent of patients visit privateproviders — either as their first choice or once theyare frustrated with public services.

Between 2005 and 2012, years when the NRHMwas implemented, instead of increased usage ofgovernment services, we see a modest growth inthe use of private services for minor illnesses suchas cough, cold and fever (from 69 per cent to 73per cent) as well as for treatment of major illnesseslike diabetes, cancer and heart problems (from 67per cent to 72 per cent). Ironically the greatestincrease in the use of private services is in high-focus large States like U.P., Bihar, Rajasthan, M.P.and Orissa. Here the proportion of patients goingto private providers increased by nearly 5percentage points.

The disenchantment of parents and patientswith government services is widespread. Whenasked in 2012 about their confidence in governmentand private schools and medical facilities, 53 percent of the respondents expressed confidence ingovernment schools compared to 72 per cent forprivate schools. Similar differences are observed forconfidence in government doctors vis-à-vis privatedoctors. What explains this? There is no reason tobelieve that private doctors and teachers are morequalified than government doctors and teachers.Typically government recruitment standards aremore stringent about training and qualificationswhile there is little control over the private sector.It is hard to imagine that anyone would prefer aself-styled private “doctor” in a distant village toan MBBS doctor in a Primary Health Centre (PHC).Yet, this is exactly what we see around us.

The reasons for these preferences are myriad.Parents and patients feel disrespected bygovernment service providers and may find theyget better service if they pay. For example, about 6per cent of the patients see a government doctor ornurse in their private practice rather than in thegovernment dispensary where the same servicescould be practically free. Government facilities areoften irregular in their opening times and teacherand doctor absenteeism adds to the disenchant-

ment. The classroom environment is often notfriendly and supportive. The IHDS finds thatchildren are scolded and physically punished inboth government and private schools. Indeed, ourqualitative interviews suggest that parents considerthis to be a sign that the teachers care aboutstudents. But this scolding is not balanced bypositive reinforcement in government schools. Onlyabout 33 per cent parents of 8-11-year-olds ingovernment schools claim that their childrenreceived any praise in the school in the prior month;this proportion is about 55 per cent for privateschools.

These observations reflect our pessimism aboutthe potential for improving government health andeducational services, regardless of the “rights” thatget enshrined in the Constitution. Any servicedelivery system that insists that a doctor live in aremote village is doomed to failure since doctorsmust also think of their children’s education. Butinstead of focussing mainly on village-based subcentres — which patients rarely seem to use —enhancing PHCs which are located in slightly largerand perhaps better connected towns may have agreater potential for improving the quality ofservices. Thoughtful organisation of services has afar greater potential for enhancing health andeducational outcomes than ideologically influenceddiscussions of rights.

Some good news

The success of the JSY in increasing hospitaldeliveries is heartening. The years following theinitiation of the JSY document a striking increasein hospital deliveries. This increase is greatest inlarge focus States. Here the hospital delivery ratehas jumped from 25 per cent to 56 per cent between2005 and 2012. Most of this improvement is ingovernment hospitals — from 14 per cent to 40 percent. This success may be due to the efforts madeby medical personnel in response to cash incentivesthey receive, and the fact that hurdles to hospitaldelivery like transportation have receivedconsideration in programme design. Although thequality of maternity care remains a concern,increasing utilisation certainly points to the successof the programme. This suggests that focussing onsmarter organisation of public services that alignswith provider incentives, and enhances efficiency,offers potential.

Source: The Hindu


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THE ENDLESS CALAMITY IN WEST ASIA

Palestine that once was is no more, and whatis no more strives to be reborn. When new nationswere to be born in the dawn of decolonisation,Palestine vanished from the world map. In its placecame Israel, hastily welcomed into the newlycreated United Nations, which played a part in itsformation. Since 1948 the U.N. has attempted inso many ways to atone for Resolution 181, whichdelivered the land to Israel. Its relief organisation,the United Nations Relief and Works Agency forPalestine Refugees in the Near East (UNRWA) tendsto the needs of the Palestinian refugees and its otheragencies attempt to document Israel’s routineviolation of international law and U.N. resolutions.Each year on the day that Resolution 181 passed,November 29, the U.N. celebrates a Day ofSolidarity with the Palestinian People. The daypasses with modest programmes at the local U.N.offices; 2014 is the U.N.’s Year of Solidarity withthe Palestinian People, although the planet can beforgiven for its ignorance. No celebrities have linedup to take “selfies” with signs that proclaim theirsolidarity, and no news organisations have devotedany time for a discussion of this endless calamityin West Asia. Matters are so grave indeed that thePalestinians are no longer sure that they will retainthe 22 per cent of historical Palestine that had beenpromised to them by the 1993 Oslo Accords, whatEdward Said called the “Palestinian Versailles.” TheU.N., as midwife, stands aside as Israel preventsthe birth of even this moth-eaten state.

If not for the blind support by the United States,Israel would be considered one of the planet’s mostundesirable states. Israel has disregarded more U.N.Security Council resolutions that sanction itsbehaviour than any other state. But with U.S.protection, these resolutions come without anypressure — no sanctions, no retribution, andcertainly no threat of humanitarian intervention.The U.N. Special Rapporteur on Human Rights inthe Palestinian Territories, Richard Falk writes inhis December 2013 report that Israeli policyamounts to “segregation and apartheid,” including“continuing excessive use of force by Israeli securityforces,” extra-judicial killings that “are part of actscarried out in order to maintain dominance overPalestinians” and a blockade of the Palestinianeconomy by the use of checkpoints and walls. Themost striking part of Mr. Falk’s report is his assertionthat Israel is conducting “ethnic cleansing” in theregion. “The combined effect of the measures

designed to ensure security for Israeli citizens, tofacilitate and expand settlements, and it wouldappear, to annex land,” he writes, “is hafrada (theHebrew word for separation), discrimination andsystematic oppression of, and domination over, thePalestinian people.”

The ‘Jewish State’

On March 24, Mr. Falk delivered his report tothe U.N. Human Rights Council, which is in theprocess of debating five resolutions that stem fromit. One of them — the one the Israelis have takenmost seriously — is on the call for member statesto urge businesses to take “all necessary steps —including terminating all their business interests inthe settlements.” Due to a labour strike by Israelidiplomats, none of its representatives took their seatsin the Council. The U.N. resolution is non-binding,although it would still dent the reputation of Israel.Israeli Prime Minister Benjamin Netanyahu avoidedall talk of Israeli policy and U.N. resolution. Hehas taken refuge in the charge that all critics ofIsrael are anti-Semites. “In the past, anti-Semitesboycotted Jewish businesses,” he said in February.“Today, they call for the boycott of the Jewish State,and by the way, only the Jewish State.”

Use of the term “Jewish State” has itself comeunder criticism from another U.N. agency, theEconomic and Social Commission for Western Asia(ESCWA). In its new report, “Arab Integration: A21st Century Development Imperative (2014),” theCommission notes, “Israel insists on beingrecognized by the world and the Arabs as anexclusively Jewish State. It imposes this recognitionas a condition for reaching a settlement with thePalestinians. This policy is based on the concept ofthe religious or ethnic purity of States, whichbrought to humanity the worst crimes and atrocitiesof the twentieth century.” It is this idea of theJewish State that fuels the toxic right-wing in Israel— they will not tolerate the return of Palestinianrefugees or deliver full rights to Arab Israelis largelybecause they fear that this would demographicallychallenge their ability to create a Jewish democracy.In 2003, Mr. Netanyahu said that the Wall built toencage the West Bank would prevent a“demographic spillover” into Israel. The collapseof the “peace process” to deliver a two-state solutionthreatens to leave the Israelis with only two options— expel the Palestinians to Jordan and Egypt to


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liquidate the Palestinian question, or absorb thePalestinians into a non-racial one-state of Israel-Palestine. Israeli policy leans toward the former,with the latter its nightmare. On March 26, theArab League — following ESCWA’srecommendation — passed a resolution that rejected“the call to consider Israel as a Jewish State.”Reminding Israel that its definition of statehoodhas immense racial connotations has been a salutarytask of the U.N. — it has also led to a backlashfrom the Netanyahu government, unwilling as it isto allow any criticism.

India and Israeli commerce

As U.N. criticism of Israel deepens, and as Israelbegins to feel pressure from the European Unionand other Arab states for its illegal settlementactivity, India has decided to extend its ties to Israel.Ever since India and Israel established fulldiplomatic ties in 1992, India has cooled its politicalsupport for the Palestinians and heated up itsimports of Israeli arms. Currently, according toIsraeli Defense Ministry data, India imports morethan $1.5 billion of the $7 billion of weaponry thatIsrael exports. It is Israel’s most important customer.India is currently looking at a bid from the Israelifirm Rafael for its Spike anti-tank guided missile.This contract will alone be worth $1 billion.

The arms deals themselves are not alwaysadvantageous to India. A list of corruption scandalslitters the court records in both Israel and India. Asenior Indian diplomat told this writer what anIsraeli arms dealer once said, “I cannot believe youIndians. We quote you a price and you make thedeal. You don’t insist on bargaining for a betterprice or demanding technology transfer.” India’sdomestic arms industry has not lived up to itspromises, with the possible exception of the Tejasfighter jet (whose journey began in 1983 and isonly now ready to take flight). India has exchangedits dependency on Russian military technology fora new dependency on U.S. and Israeli arms. Thisshould be worrying by itself, aside from the moralquestion of being one of the major underwritersfor the Israeli occupation of the Palestinian lands.

India’s relations with Israel are cementedaround commerce, with arms deals at the forefront.Of the two major political parties, the BharatiyaJanata Party (BJP) is far closer to Israel with itshopes for a civilisational and a strategic dealbetween the countries. The Congress is morepragmatic in its deal-making, although no less

committed to a special relationship with Israel. Itsopportunism is tempered by India’s reliance uponthe Gulf Arabs for its oil. In March 2013, PrimeMinister Manmohan Singh told the Shura Councilin Saudi Arabia, “There is no issue more importantfor peace and stability in the region than thequestion of Palestine. Far too long the brave peopleof Palestine have been denied their just, legitimateand inalienable rights, including most of all theestablishment of a sovereign, independent andviable Palestinian state.” If these are not mere words,the Indian government might be asked to reconsiderits arms purchases from Israel, which pays for thevery occupation that Dr. Singh decries. Aloneamong all the parties is the CPI(M), whose 2014election manifesto seeks to “extend full support tothe cause of a Palestinian state; sever military andsecurity ties with Israel.” The CPI(M) is in line withthe mood of the United Nations’ agencies, althoughit is not clear how close this is to the nationaltemper. Does the public even care any longer aboutthe Palestinians?

It is to stem this doubt about the relevance ofthe Palestinian cause that the U.N. has declaredthis the Year of Solidarity. There are two reasonswhy the current U.N. attempt is already morepromising than earlier attempts. For one, the U.N.agencies themselves are much more aggressive aboutIsraeli violations of U.N. resolutions andinternational law than previously. The tone of thereports and the statements by people like the U.N.High Commissioner for Human Rights, Navi Pillaysuggest that U.S. protection notwithstanding, Israelis no longer to get preferential treatment. What isgood for the goose will have to be good for thegander. Second, a new public awareness of Israelipolicies fuels the Boycott, Divestment and Sanctions(BDS) movement, whose Indian branch has begunto protest the participation of Indian artists in Israelicultural fairs and Indo-Israeli business deals. TheBDS movement pushed Oxfam to break its ties withfilm star Scarlett Johansson for her role to alsorepresent SodaStream, an Israeli firm that is basedon seized, settlement land. These protests havebegun to assume the kind of force that oncepropelled the movement against South Africanapartheid. When they will take on that kind ofmoral charge, Israel will be in trouble. It will haveto cease its occupation and reconsider its treatmentof the Palestinians. That is an end that no onewants more than the Palestinians themselves.

Source: The Hindu


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PUBLIC PURPOSE OF ARCHITECTURE

The Pritzker Architecture Prize, the mostdistinguished and celebrated award in architecture,is given to a professional in the field who hascontributed substantially to humanity and displayedexcellence in built work. Awarded this year toShigeru Ban, the 56-year-old Japanese architect, thePrize has truly met its objective after a long time.Mr. Ban has built inexpensive, easily transportableand recyclable disaster relief structures across theworld for two decades. His ingenious designs haveconverted cardboard, paper and other relativelyinexpensive materials into useful and reliablebuilding components. He has utilised them inchallenging situations ranging from earthquake-disaster relief work in Bhuj to refugee structures inRwanda. Not many architects commit their skillsand resources to design for the needy. Theirpreoccupation has been with creating expensive,glitzy and monumental structures, and majorawards, including the Pritzker Prize, thus far havefavoured such less socially relevant projects. Thisrecognition of Mr. Ban’s contributions probablymarks the beginning of a rethink. In a way it triesto make up for the failure to recognise his illustriouspredecessors, such as Hassan Fathy and LaurieBaker, who were prolific in designing delightfulbuildings for the poor.

This year’s Pritzker Prize raises a key questionfor Indian architects and policymakers to reflect

on: if good design brings in innovation and addsvalue, why are they not increasingly deployed toserve the public good? Organisations such as theDesign Council of the U.K., which advises thegovernment on matters of design, have repeatedlydemonstrated that creative solutions can improvethe quality of everyday life and deliver publicservices efficiently. They have also shown that fundsinvested in design fetch profits and social value.Such savings are critical for fund-starved projectssuch as low-cost housing. The New York CityDepartment of Housing and PreservationDevelopment has taken up collaborative work withdesigners to create a better liveable environment intheir affordable housing projects. In contrast, Statedepartments in India pay hardly any attention todesign. As a result, low-income housing projectsimpose unliveable environments on the poor, andcities are yet to see well-designed bus stops, easilymaintainable public toilets and user-friendly civicbuildings. Even the National Design Policy,announced in 2007, has not sufficiently focussedon socially useful products. Architecture has torediscover its social purpose to stay relevant.Professional education and public policy mustenable it to serve those in need than just those whocan pay for it.

Source: The Hindu

VOTING WHILE IN THE ARMY

As a larger number of service personnel wouldbe in the many cantonments in Haryana andPunjab, competitive canvassing there can introduceproblems.

Vote bank politics is a commonly bandied aboutexpression in the election season, which is nosurprise. But a new vote bank of Armed Forcespersonnel is now looking a step closer to realitywith the Supreme Court directing the ElectionCommission (EC) to allow defence personnel to voteas general voters in peace stations. This is somewhatunusual. The Supreme Court merely reiterated thelaw it laid down in an earlier judgment in 1971,though the circumstances of that case weresomewhat different. The Representation of thePeople Act, 1950 defines the term ‘ordinarilyresident’ in Section 20, a qualification required toget registered as a voter. Armed forces personnel

are among the few categories of people defined aspersons with ‘service qualification’ in Section 20(8)and are given a special dispensation in Section 20(3)and Section 20(5). This category can declare whileliving at a place ‘ordinarily resident’ status atanother place where they would have normallylived, if it were not for the exigencies of service.Implicit faith was to be placed on their declarationand they would be registered at the place theyindicated as their place of ordinary residence, mostlikely their native place, and as a corollary the placeof their posting could not be their ordinary placeof residence.

Place of posting vs residence

In a matter arising from the Nagaland AssemblyElection in 1969, the court did not accept theargument that for service personnel, the place of


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posting cannot ipso facto be the place of residence.Instead, the declaration of the Assam Riflespersonnel, who had spent 10 years in one locationclaiming it as a place of ordinary residence underSection 20(5), wherein but for their servicequalification also they would have been ordinarilyresident and not merely because of it, found favourwith the Court. The Court declared that thestatutory fiction in Section 20(3) gave the right tothe personnel to claim registration at their hometown or village but “the fiction cannot take awaythe right of persons possessing service qualificationto get themselves registered at a constituency inwhich they are actually residing though such placehappens to be their place of service.”

The law gave a special dispensation to a servicevoter in that his declaration designating a place ashis place of ordinary residence and certified by hisorganisation was not to be questioned by theElectoral Registration Officer (ERO) but simplyaccepted. It was intended to avoid the delay inregistration if an enquiry were to be doneindependently by the ERO as in the case of ordinaryvoters.

Interpreting that judgment as mandating theregistration of a service voter at the place of hisposting and by cleverly using the provision u/s20(5), a campaign was mounted in the run-up tothe Punjab Assembly election in 2007 by Brig. H.S.Ghuman (retd.) and his All India Veteran’s CoreGroup (AIVCG) to have service personnel postedin several cantonment towns in Punjab to registeras ordinary voters there. A total of 7,274 servicepersonnel were registered as voters, of whom 850were from towns and villages of Punjab and 6,424from other States. All applications were inGurumukhi script, but most of the signatures werenot in that language, therefore providing a clue towhat really went on. The highest registration wasin Kahnuwan constituency in Gurdaspur districtwith an Army cantonment, where 3,488 personnelregistered. Of them, 70 were from Punjab and therest from other States. It was alleged by the Akaliopposition candidate that the Congress candidateP. S. Bajwa’s relative, a retired Brigadier, was theprime mover for this large-scale registration. Theformation commander was accused of collusion.Mr. Bajwa won that contest with a margin of 5,288votes. Evidently Mr. Bajwa used the tactics moreeffectively in the 2009 Parliament election. He seemsto have won the Gurdaspur seat by a margin of8,000 votes, with 11,000 votes from the cantonmentcast in his favour against the 13,345 votes polledby servicemen.

Since then, retired service officers and othersincluding a Member of Parliament have lent theirsupport to this campaign culminating in the latestverdict of the Supreme Court. But as a note ofcaution that was sounded in many border States— that the local voter population may be smalland can be outnumbered by the service personnel— the Court restricted the applicability of the orderonly to peace stations. In other words, only in peacestations can service persons claim they are ordinaryresidents and vote locally. If their units move outto non-peace stations, they cannot registerthemselves there. Imagine a serviceman who hailsfrom Odisha and is posted in Jalandhar and getshimself registered there. He can vote in the LokSabha election but cannot vote for the OdishaAssembly election being held simultaneously. If hisunit moves to a non-peace station, he can neitherregister himself there nor can he vote in the nextParliament or Assembly election unless he isregistered again at some other place.

If peace stations are defined in a location-specific manner, this can lead to anomalies. IfItanagar or Leh are defined as peace stations butnot Tawang or Nubra, it may be kosher for votebank politics but it will create disaffection amongthe local population in both places, given the small-sized constituencies and the thin margins of victory.Distinctions based on unit-specific roles in the samestation will entitle men of the non-operational unitto register as voters and of the operational unitineligible. So States have to be in either category toavoid anomalies.

More problems

As a larger number of service personnel wouldbe in the many cantonments in Haryana andPunjab, competitive canvassing by politicians therecan bring in its wake other problems. A normalmovement of a unit can be questioned by rivalpoliticians as favouring one or the other candidateor party. The formation commanders can be accusedof favouritism as happened in the Punjab Assemblyelection in 2007. Will the Election Commissioner bepetitioned to effect the transfer of a formationcommander because of his perceived partiality asis done in the case of Collectors, Superintendentsof Police, Deputy Inspector Generals of Police, etc.?Only time can tell. But if a perfectly routine exerciseby a detachment of the Army can be hyped toraise fears of a coup, pre-election movement ofArmy units and posting of formation commanderscan become the subjects of political mudslingingwith obvious adverse consequences.


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Since the new dispensation would not extendto all the defence personnel and since many servicepersonnel may still remain registered in their nativetowns and villages by choice, the postal ballotsystem or its alternative — the proxy voting facility— would still be relevant. A study done at thebehest of the EC by the Collector of Thanjavurdistrict in 2007 showed that only 34.54 per cent ofthe postal ballot papers issued to service personnelreturned in time to be included in counting. Asignificant 12.63 per cent of the ballot papers whichwere received late missed the counting. Worse, 25.39

per cent of ballot papers were returned undelivered,which meant that their addresses were not updatedby the Record Office.

Transmission time can be cut down if blankballot papers are sent electronically, providing moretime for their return. Better still would be to developonline voting and what better way than to provideit to the group that deserves it the most? Wecertainly owe it to our Armed forces personnel todo all that is possible to enable them to exercisetheir franchise.

Source: The Hindu

TAX THEATRICS

The finance ministry proposed significantchanges to the Direct Taxes Code recently. But theLok Sabha is set to be dissolved and with that theDTC Bill, 2010, is set to lapse. Apart from the optics,the ministry’s move is entirely pointless — giventhat the incoming government will have to startthe whole process afresh and introduce a new billin Parliament.

The changes proposed in this futile exercise arealso of little merit. Not only have some sensiblesuggestions of the parliamentary standingcommittee been ignored, but other changes — suchas the introduction of a “super-rich” tax bracket of35 per cent for individuals earning above Rs 10crore and an additional tax of 10 per cent ondividends above Rs 1 crore — seem aimed at pre-election signalling rather than reforming the systemto maximise tax collection and compliance.

The fact of the matter is that the soak-the-richschool of taxation doesn’t work. If it did, the daysof 90 per cent-plus personal income tax rateswouldn’t have generated the kind evasion they did.As a result of a moderation in tax rates, theproportion of black money in the economy camedown from 30 per cent of the GDP during the1970s to 17 per cent now. And while proponentsof enhancing the top-bracket tax rate citeconvenient figures comparing India’s tax to GDPratio with those of Scandinavian and westernEuropean countries, the fact remains that India’s

effective (adjusting for the number of people belowthe poverty line) tax to GDP ratio, at 28.3 per cent,is greater than that of the US, and other countriesin its peer group such as China, Mexico andMalaysia.

Rather than focusing on the imagineddereliction of the “rich”, it would be better to tryand encourage better compliance among the middleclasses. Those earning between Rs 10 and 20 lakhon average paid Rs 1.3 lakh, or 8.6 per cent ofaverage income, as income tax in 2011-12. Incontrast, assuming that the average income in theRs 20 lakh-plus bracket is Rs 1 crore, the taxincidence was 23 per cent. Some estimate that only20 per cent of people who actually earn betweenRs 10 and 20 lakh actually pay any tax at all,compared with 45 per cent in the Rs 20 lakh-plusbracket.

Better compliance, particularly among themiddle classes, is clearly the need of the hour. Andthis is exactly what the parliamentary committeesought to encourage when it suggested that thepersonal income tax exemption limit be raised fromRs 2 to 3 lakh. Similarly, it suggested the wideningof slabs so that the 20 and 30 per cent rate wouldonly kick in if one earned between Rs 10 and 20lakh, and above Rs 20 lakh, respectively.Unfortunately, the finance ministry rejected thesesuggestions and chose to strike poses instead.

Source: Indian Express

THREAT OF DISINTEGRATION

The fragile Libyan constitutional arrangement,reached after the dictator Muammar Qadhafi wasoverthrown in a regime-change operation instigatedby NATO governments under cover of a United

Nations no-fly resolution in 2011, is disintegrating.Prime Minister Ali Zeidan, who was kidnapped onOctober 10, 2013 and released within a few hours,fled the country in March 2014 after the General


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National Congress (GNC) passed a vote of no-confidence in him. Secondly, in December 2013 theGNC voted to extend its own mandate for anotheryear, thereby violating the transitional constitutionalplan, which gave it a mandate only until February7. Various GNC factions have their own agendastoo; the Justice and Construction Party, the MuslimBrotherhood’s Libyan branch, leads a bloc with 34of the 80 party-allocated seats in the 200-seatCongress, and may well be spreading hardlineIslamist influence. Furthermore, the easternprovince of Cyrenaica (Barqa in Arabic) accusesTripoli of not sharing oil revenues, and Barqaleaders based in Benghazi now demand a federalconstitution. On March 10, a Barqa militia groupblockaded Es Sidr, ensuring that a tanker ofuncertain origin and ownership loaded anestimated $36 million worth of crude oil and putout to sea; the U.S. sent Navy SEALS to capturethe ship. A wider blockade that started in August2013 has already cost the country $8 billion.

Other tensions are causing yet more fighting.Early in March, Misrata-based militants explodeda bomb at a military base in Benghazi, killing five

persons and injuring 14; moreover, the 225,000Libyans registered as members of militias are paidby the state but remain under their own local orpolitical commanders. Meanwhile, Human RightsWatch and other observers have criticised westerngovernments and sections of the internationalmedia for credulously accepting the rebel factions’claims that the Qadhafi regime had engaged ingenocide and had inflicted mass civilian casualtiesin the western-backed uprising. None of the claimshas been substantiated, and foreign militaryintervention will almost certainly worsen matters,as it did during the uprising, when it enabled rebelgroups to reject deals and escalate violence. InOctober 2013, U.S. commandos arrested an al-Qaeda suspect on Libyan soil, causing fury againstTripoli for collaborating with Washington, but theU.S. failure to create functioning public institutionsin Iraq and Afghanistan may mean it will consideronly military intervention in Libya, with or withoutU.N. legitimation. As Libyans face a new civil warand possible partition, unsurprisingly many of themare reportedly nostalgic about the Qadhafi era.

Source: The Hindu

US BUILT A SECRET 'CUBAN TWITTER' TO STIR UNREST AGAINSTCOMMUNIST GOVT, SAYS AP

A US agency created a 'Cuban Twitter' toundermine Cuba's communist government and getaround its strict Internet prohibitions, using secretshell companies financed through foreign banks,The Associated Press reported.

The two-year project drew 40,000 users whodid not know the communications network wasdevised by a U.S. agency and designed to pushthem toward political dissent, according to the AP.They also did not know their personal informationwas being gathered.

The report identified the US Agency forInternational Development, which delivers aid tothe world's poor, as being behind the project.

The communications network was called"ZunZuneo," Cuban slang for a hummingbird'stweet, and the AP said its goal was to build anaudience of young users.

The plan for the social network was to draw ina certain number of users with messages on sports,music, weather and other noncontroversial topics.Then the operators would introduce politicalcontent to try to inspire spontaneous demons-trations, the AP reported. One USAID documentcited by the AP said the goal was to "renegotiate

the balance of power between the state and society."

It was not clear if the program was illegal.USAID spokesman Matt Herrick told AP that U.S.congressional investigators reviewed their programslast year and found them to be legal.

Interviews and more than 1,000 pages ofdocuments obtained by the AP showed USAID wascareful to hide Washington's ties to the project, thereport said. It used companies in Spain and theCayman Islands to conceal the money trail.

"There will be absolutely no mention of UnitedStates government involvement," read a 2010 memofrom Mobile Accord Inc., one of the project'screators, published by AP. "This is absolutely crucialfor the long-term success of the service and toensure the success of the Mission."

ZunZuneo began shortly after Cuba's arrest ofAmerican contractor Alan Gross, 63, in Cuba inDecember 2009, the AP said. Gross was sentencedto 15 years in prison for installing Internet networksunder a secretive U.S. program the Cubangovernment considers subversive.

USAID said ZunZuneo ended in September2012, the AP reported.



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A CAUTIOUS BEGINNING

The Reserve Bank of India’s in-principleapproval to two applicants, IDFC Limited andBandhan Financial Services Ltd., to set up bankscomes four years after the then Finance Minister,Pranab Mukherjee, in a budget speech mooted theidea of licensing a few private banks. By its ownadmission, the RBI’s approach to this round of banklicences has been conservative, a trait that is whollyappropriate in the present context. That the processhas taken a long time before the first licences wereapproved merely underlines the complexitiesinvolved. A High Level Advisory Committee headedby former RBI Governor Bimal Jalan recommendedthese two applicants out of a list of 25 applications.All of them were earlier scrutinised by the RBI toensure their eligibility under the guidelines issuedin February 2013. It is noteworthy that none of thebig corporate names that figured in the list madethe grade. The RBI has neatly sidestepped whathas been the most controversial aspect of the newlicensing norms — permitting corporates to startbanks. The Reserve Bank received a number ofnegative responses to this proposal from both thepublic at large and experts. Indeed, the RBI itselfwas opposed to it in the beginning, and it was thepressure from the Finance Ministry, among others,that made the central bank relent.

For the two successful applicants — both ofthem leading non-banking finance companies —

getting the in-principle approval is only the firststep. They have 18 months to comply with therequirements under the guidelines and fulfil otherconditions that may be imposed. They will facedaunting challenges to scale up to being universalbanks and compete with existing institutions. Theirexisting strengths — infrastructure finance for IDFC,and microfinance for Bandhan — will no doubthelp but, as the top officers of the two institutionsadmitted, there is a great deal of work to be donesoon. Expectations from them are immense. Thegovernment’s rationale for new bank licences hasbeen to extend the geographical coverage oforganised finance and to promote financial literacyand inclusion. Sceptics of the new policy whowonder what the new banks will do that theexisting players under all categories cannot do, needto be answered effectively by creating a viable, tech-savvy model that is also customer-friendly. Theyhave to reward their shareholders who haveenabled them to invest at least Rs.500 crore. TheRBI Governor has said that after learning from thelatest exercise, it might be possible to reviseguidelines so that licences can be made availableon tap. Be that as it may, it is obvious that the twosuccessful applicants have just assumed additionalresponsibilities — of being role models.

Source: The Hindu

AN INCLUSIVE GROWTH POLICY

The Indian economy has moved on a highgrowth path since the mid-1980s. After a blip ingrowth between 1990-92, liberalisation, initiated foraligning the Indian economy with the world in1991, not only put the economy back on a highergrowth path but also sustained this growth till the2000s. During the last few years, India has beenthe second fastest growing economy in the world.

Despite the high growth over the past twodecades, concerns have been raised over the growthnot being equally distributed. Policy makersresponded to these concerns arguing forinclusiveness in the 11th Five Year Plan in 2007.How has the rapid growth during the 11th FiveYear Plan period helped in improving the incomelevels of the most vulnerable Indian households?

Sharing of growth

The aggregate estimates routinely brought out

by the Central Statistical Organisation (CSO) showa “feel good factor” — that real per capita incomehas been growing rapidly. But there is little evidenceon (a) how this growth has been shared amonghouseholds in rural India versus urban India and(b) whether households belonging to different socio-religious groups have grown together. Three roundsof the National Sample Survey ConsumerExpenditure (NSS CE) surveys carried out between2004-05 and 2011-12 suggest an unprecedented risein household expenditure and a consequent declinein poverty. These estimates imply that some benefitsof growth have been shared by vulnerablehouseholds. But these data do not clarify whetherpoverty has declined because of new social safetynet programmes or because vulnerable householdshave participated in the general economic growth.

The recently-concluded India HumanDevelopment Survey (IHDS) — a nationally


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representative survey of about 42,000 householdsconducted by researchers from the National Councilof Applied Economic Research (NCAER) and theUniversity of Maryland examines changes in theincomes of the households during the period ofrapid economic growth, 2004-05 and 2011-12. It isthe only nationally representative panel surveycovering the same households. During the tworounds of IHDS, besides a range of outcomeindicators, data on household income and itssources have also been collected.

Though validation of the data is still underway,we present some pointers based on preliminaryanalysis. The median real income of the householdsfrom all sources had been about Rs. 28,200 in 2004-05; this increased to about Rs. 37,500 in 2011-12,which is an average of 4.7 per cent annually. Unlikeaggregate growth figures released by the CSO, IHDSdata allows calculation of household income bythe place of residence of households. Those IHDScalculations show for the first time that the realaverage household income in rural India hasincreased 5.0 per cent annually — almost twice

the 2.6 per cent annual growth in urban India.This has resulted in a significant narrowing of thegap in household income — from 2.26 times in2004-05 to 1.97 in 2011-12. These figures areconsistent with the growth of per capitaexpenditure calculated from the respective NSS CE(61st and 68th rounds) monthly per capitaexpenditure growth in the rural and urban sectors.

When we normalise the household medianincome by the number of members in the household,the growth of income in rural India is even moreimpressive — an average annual median per capitaincome increase of 7.2 per cent, which is more thantwice the rate experienced by urban households(3.2 per cent annually). This story of growth at theaggregate level is fascinating in itself because mostof the changes during the liberalisation phase havefavoured the growth of non-primary activities. Butthe impressive gain by rural households in spite ofthe favouritism towards non-primary activitiesappears real and requires further investigation.

Further proof of growth

We note similar differences in median incomegrowth across different socio-religious groups thatprovide further confirmation of the inclusivenessof the recent economic growth. In IHDS surveys,we have defined six social and religious groups —high caste Hindus, Other Backward Classes, Dalits,Adivasis, Muslims and Other Religious Minorities.The highest growth in the median per capitaincomes is reported for Dalits (7.8 per cent annually)and OBCs (7.3 per cent), while the real medianincome of high caste Hindus grew only at 4.6 percent annually. The average income growth of othervulnerable groups was also higher than that of highcaste Hindus. The income of Adivasis grew at 5.7per cent annually while the income of Muslimsgrew by 5.4 per cent.

A working plan

Our preliminary results point towards thelargest gains for the traditionally vulnerablehouseholds — rural areas, Dalits, OBCs, Adivasisand Muslims. This narrowing of group differencesis all the more remarkable in the face of a slightlydiverging overall income distribution. Ourpreliminary calculations of per capita incomeinequality suggest a small increase from a Gini ratioof 53 in 2004-5 to 55 in 2011-12.

The relatively greater progress of vulnerablesectors despite this growing inequality seems to


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suggest that the inclusive growth policyimplemented during the 11th Five Year Plan mayhave been working. While a much more rigorousanalysis is required to delineate the factors thathave led to this, our conjecture is that some of the

social sector schemes like the Mahatma GandhiNational Rural Employment Guarantee Act, JananiSuraksha Yojana, the National Rural Health Missionet al. may have contributed to this inclusive growth.

Source: The Hindu

DIPLOMATIC GAINS FROM A STRATEGIC ABSTENTION

With 23 countries backing a relatively strongresolution against Sri Lanka at the recent U.N.Human Rights Council (UNHRC) session inGeneva, one would have thought the countrywould feel effectively cornered. However, a dayafter the resolution was adopted, Sri Lanka onlyseemed too pleased, thanks to its neighbour.

Amid all the buzz around the strategically-timedelections to Sri Lanka’s Sinhala majority Southernand Western Provinces, senior politicians includingPresident Mahinda Rajapaksa were rather promptin expressing their happiness over India’s decisionto abstain from voting.

Foreign Minister G.L. Peiris termed India’sdeparture from its voting pattern over the last twoyears as “a significant development.” Mr. Rajapaksawent a step further, ordering the immediate releaseof all Indian fishermen in Sri Lankan custody thenas a goodwill gesture.

In an interaction with journalists days beforethe Geneva session, Mr. Rajapaksa said: “I don’tknow what India will do, they voted against uslast two years,” quickly adding, “but weunderstand them,” as if India had already cast anegative vote.

So when India declared its decision to abstainon March 27, Colombo was clearly elated. India’sdecision may not have influenced the larger votingpattern but to Sri Lanka, apparently, its neighbour’sabstention meant a massive victory of sorts, despitethe majority vote in Geneva proving negative.Foreign policy analysts — who thought New Delhihad for long been succumbing to Tamil Nadu’spressure — hailed it as “excellent diplomacy,”though Tamil diaspora organisations and sectionsof northern Tamils said they were deeplydisappointed with India.

A ‘reset’ for diplomacy

The fact that the Ministry of External Affairswas fully in charge at Geneva is significant. It wasthe same Ministry which, despite its best efforts,could not get Prime Minister Manmohan Singh to

attend the Commonwealth Heads of Governmentmeeting in Sri Lanka last November. As former SriLankan diplomat Dayan Jayatilleka observed, theabstention has pressed the reset button, activatingpositive Indo-Lanka diplomacy. Sri Lanka’sresponse to the vote in general and to India’sdecision suggests that to Colombo, what Indiathinks matters more than what many otherpowerful nations do. That said, given the renewedpossibilities of closer engagement with Sri Lanka, itis now completely up to New Delhi to convert thisdiplomatic goal to a diplomatic gain.

Speaking in Geneva, Dilip Sinha, Ambassadorand Permanent Representative of India to theUnited Nations in Geneva, hailed the Septemberelections to Sri Lanka’s Northern Province, at thesame time calling for effective and timelyimplementation of all the constructiverecommendations contained in the Lessons Learntand Reconciliation Commission report, includingthose pertaining to missing persons, detainees,reduction of high security zones, return of privatelands by the military and withdrawal of securityforces from the civilian domain in the NorthernProvince.

With a renewed possibility of closer engagementwith Sri Lanka, it will be interesting to see if NewDelhi can put political pressure in these said areaswhere progress has been grossly inadequate.

The Hindu in December 2013 reported that 18schools in Jaffna were struggling for space withthe Sri Lankan Army having taken over theiroriginal buildings, some even a century old, as partof its questionable high security zones. Fishingvillages in these zones have been usurped, deliveringa blow to livelihoods.

The process of resettlement, the Indian missionimplementing a massive housing project in theformer war zone would very well know, still hasseveral gaps. In Sampur, located in Trincomalee —where NTPC partners a joint venture to set up athermal power plant — 800 families lost their homesto land taken over by the Sri Lankan government


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“for the plant.” In reality, the 500-acre areaearmarked for the plant displaced only sevenfamilies that the Indian government is helpingrelocate, while permanent housing to the rest wholost their homes remains a question mark.

Militarisation of the north, something that Dr.Singh also underlined in his meeting with Mr.Rajapaksa in March, remains a major concern. TheArmy, earlier confined to security and surveillance,is now involved in purely civil pursuits such asagriculture and development. In fact, surveillancein the north increased rapidly around the Genevasession — as did intimidation, reportedly — thoughthe Sri Lankan Army justified it saying it feared apossible regrouping of the LTTE.

Further, the ghost of the brutal war makes anappearance every now and then. New video footagepertaining to alleged war crimes by the Sri Lankanforces has emerged recently, though the Army hasrubbished each of those as being “doctored.”Relatives of 16,000 missing people have petitioneda Presidential Commission looking into complaintsof disappearances, desperately seeking some closureto the agony over their missing loved ones.

India’s abstention could gain value if New Delhimanages to use the goodwill gains that accrued toit in Geneva to put political pressure on Colomboto address at least some of these problems.

India in Geneva called upon Sri Lankangovernment to make purposeful efforts to fulfil its

commitments, including its promise to fullyimplement the Thirteenth Amendment to the SriLankan Constitution and build upon it. New Delhihas a lot to do in pushing for substantive politicaldevolution.

Issue of devolution

Post Geneva, India has said it will continue toclosely engage with Sri Lanka on the question ofdevolution. Nearly five years after the country’sbrutal war ended, people living in Sri Lanka’sTamil-speaking north and east crave for politicalrights and complete freedom. Devolution, after all,is not just about holding an election to the NorthernProvince but also allowing the Council to functionwith administrative powers and enabling the peopleof the province to lead normal lives as citizens.

Also, when a new Indian government takescharge soon, the ongoing conflict over fishingbetween the two countries will come into sharpfocus. Considering the major role Tamil Nadu isexpected to play in national politics in a post-pollscenario, India will have to necessarily evolve astrategy to handle the pressure from the southernState and at the same time get it to deter itsfishermen from poaching in Sri Lankan waters.

Depending on how New Delhi fares on all thesecounts, its seemingly strategic abstention in Genevacould potentially turn into an actual gain.

Source: The Hindu

FUNNY MONEY

With the Delhi High Court holding both theCongress and BJP in violation of the ForeignContribution Regulation Act (FCRA) for acceptingfunding from international mining giant Vedanta,the shoe is now on the government’s foot. Giventhe alacrity with which it has deployed FCRAprovisions against NGOs, the Delhi HC’s ruling isa major embarrassment to the government. In thelast 10 years, the UPA has often clamped down oncivil society organisations under the FCRA, addingteeth in 2010 to its already stringent norms.

Whether for an activist campaign or anacademic gathering, the Union home ministry hasemployed the FCRA to delay or revoke licences tonon-profits, often on seemingly flimsy grounds. In2012, the MHA refused to sanction a request bythe think tank, PRS Legislative Research, to obtaina foreign grant for its legislative assistants scheme.

A few civil society groups were hauled up under

the FCRA the same year for allegedly acceptingforeign funding to back the anti-nuclearKudankulam protests. The Dantewada-basedVanvasi Chetna Ashram, founded by an outspokencritic of the Salwa Judum, saw its FCRA permitcancelled in “public interest”. Together with itsrestrictive visa regime and targeted application ofthe Foreigners Act, the FCRA had almost becomea government instrument for suppressing dissentingperspectives. The 2010 amendments, strengtheningthe Act, were cleared by a bipartisan parliamentarycommittee.

Consider then home minister P. Chidambaram’sremarks during the parliamentary debate on theFCRA amendments in 2010: “if you want to accessforeign money, then one has to come under asystem of regulation… certain categories are totallyprohibited… A political party must be prohibited.”It is unsurprising, then, that there were


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consequences for the Congress in accepting acontribution from Vedanta, a companyincorporated outside India.

That the government made a concerted effortto investigate the Aam Aadmi Party’s foreign funds,while turning the other way for such contributionsto its own party and the BJP, suggests doublestandards.

The FCRA cannot be applied unevenly by thegovernment. The same disclosure norms andmonitoring procedure that are required of NGOsshould bear on political parties. It is important notto let the “foreign hand” argument become acoercive tool in the hands of government.


THE TWO RBIs

Inspite of persistent calls from certain sectionsof industry to cut the repo rate, the RBI maintainedstatus quo in its first bi-monthly monetary policyreview. In doing this, the RBI exhibited a hearteningdetermination to fight consumer price indexinflation. But the central bank’s recent interventionsin the foreign exchange market to prevent the rupeefrom appreciating “too much” on the back of adeluge of foreign institutional investor inflows —at Rs 20,077 crore, FII inflows reached a 10-monthhigh in March — are misguided and may undercutits efforts to contain inflation.

By keeping the repo rate at 8 per cent, ratherthan raising it, the RBI acknowledged themoderation in CPI inflation, which has declinedfrom 11.2 per cent in November 2013 to 8.1 percent in February, a 25-month low. This is still abovethe RBI’s target, which was mooted by the UrjitPatel committee, of achieving 8 per cent CPIinflation by January 2015. Equally, by not loweringthe policy rate, the RBI nodded to the significantupside risks to inflation.

The moderation that has been witnessed ismostly on account of easing vegetable prices —while CPI inflation has declined 3.1 percentage

points since last November, core CPI inflation hasonly declined 0.1 percentage points. But thepossibility of another food-price shock remains high.Barring 2011-12, food inflation has been above 8per cent every year since 2007-08, even thoughthis has been a period of mostly normal monsoons.This year, there is the added threat of El Nino,which could prove disruptive for the rains. Further,CPI inflation has not been stable at a low levellong enough for the high and deeply entrenchedinflation expectations to change.

But there is a contradiction between the RBI’sstance on inflation and its exchange rate targeting— it has been aggressively buying dollars in forexmarkets to dampen the rupee’s appreciation. If thisintervention is unsterilised, the pumping of liquidityinto the market by buying dollars will lower interestrates and counteract the RBI’s efforts to targetinflation, as happened in the mid-2000s.

The RBI must allow the exchange rate to floatfreely. If it is worried about the fallout of the USFed’s unconventional monetary policy, the onlysolution is for India to maintain low inflation andlow current account and fiscal deficits.


MANILA PEACE?

Seventeen years of stop-start negotiations overa bloody 45-year conflict which has cost more than120,000 lives recently culminated in a historicreconciliation ceremony in Manila’s presidentialpalace. The signing of the peace agreementbetween the Philippines government and thecountry’s largest Muslim rebel group, the MoroIslamic Liberation Front (MILF), was marked inthe country’s embattled southern island ofMindanao with joyful celebrations.

The agreement will see the rebels disband theirguerilla forces and disarm in return for a newenhanced degree of autonomy for the Bangsamoro,

the name used for Muslim and non-Christiannatives of Mindanao. The deal, brokered byPresident Benigno Aquino with the assistance ofMalaysia, sets out provisions on power and wealth-sharing and on the creation of a police force forthe political entity that will replace the failed five-province autonomous region set up in Mindanaoprovince in 1989, home to most of the predomiantlyCatholic country’s five million Muslims.

A plebiscite in Muslim-dominated areas in thesouth will determine the shape and size of the newregion. Mindanao’s relations with Manila have beendifficult since it was incorporated into the


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Philippines state by Spanish and Americancolonisers in the 19th and 20th centuries.

The hope is that the agreement will bringsufficient stability to lift the cloud on economicdevelopment of the island where one in two livebelow the poverty line of $1.20 a day. Mineralcompanies are eager to come in to develop whatare believed to be up to $312 billion in mineraldeposits.

But there is no certainty that peace will besustained. Breakaway nationalists, feuding clans,and Islamists, including one group, Abu Sayyaf,affiliated to Al Qaeda, reject the deal and havepledged to go on fighting for completeindependence.

Source: The Times

A BANK IS BORN

The RBI granted “in-principle approval” to twoof 25 bank licence applicants recently. This set ofapprovals has come after the bank licencingmachinery was put in motion four years ago andends the decade-long wait for new licences. Afterthe Narasimham committee recommended openingup the commercial banking sector in 1991, 10private banks were given licences in 1993-94 andanother two in 2002-04.

While the RBI’s prudence is welcome, the paceat which new banks have been licenced so far isnot good enough. Vast swathes of the populationare out of the net of formal banking — only one intwo Indians has access to a savings bank account,and only one in seven to bank finance. The movetowards an on-tap licencing mechanism is welcome— this is the only way to increase the penetrationof financial services. But as more private playersenter the market, the RBI will also have to step itsgame up as far as microprudential regulation isconcerned.

The RBI’s caution in granting licences tocorporate houses and brokerage firms — becauseof possible conflict of interest issues — and itsacknowledgement of the need to think more deeply

about licencing India Post are also heartening signs.They indicate the scope of a differentiated licenceframework, as proposed by the Nachiket Morcommittee.

But the increase in private banks — andtherefore in innovation and the use of technology— will call for the RBI to improve its regulatorycapacity. The business of banking involves highlevels of leverage, which makes it potentially veryrisky. With greater competition, the RBI needs toevolve higher levels of consumer protection andstronger microprudential regulation. It mustincrease its supervisory capacity.

The FSLRC’s proposal to set up a resolutioncorporation, so that if a bank fails, the taxpayerdoes not have to bail it out, should be implemented.PSU banks, which account for 75 per cent of allbanking assets, are implicitly sovereign guaranteed.So the urgency for watertight, sophisticatedregulation is diminished. But once diverse privatebanks flourish, the RBI will have to stay one stepahead of the game. It certainly won’t be an easytask.


THE WISDOM OF ABSTAINING

Never in India’s history have relations with anyneighbouring country been so dramaticallyinfluenced by the politics of a single state as ourrelations with Sri Lanka.

Unfortunately, public opinion in Tamil Naduhas not been adequately sensitised about thediplomatic complexities of developments in ourneighbourhood, or of precisely what New Delhi isdoing to address the needs and welfare of Tamilsin Sri Lanka.

The Sri Lankan civil war ended when separatistleader Velupillai Prabhakaran was killed in 2009.

It is universally accepted that both sides were guiltyof human rights abuses during the last stages ofthe war — a fact acknowledged by Sri Lanka’sLessons Learnt and Reconciliation Commission(LLRC).

India’s policy, thereafter, has been to worktowards the Sri Lankans themselves implementingthe LLRC recommendations. More importantly,apart from India, no government in the world hasdone anything substantive for the relief,rehabilitation and welfare of Sri Lankan Tamils.

Since 2010, India has doled out assistance


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estimated at $1.3 billion (Rs 8,000 crore) — itslargest ever development assistance project — forthe welfare of Sri Lankan Tamils. The projectsinclude the construction of 50,000 homes and thesupply of materials for around 43,000 war-damagedresidences. There have also been major projects forthe development of rail transport, port infrastructurein Kankesanthurai, a 500 MW thermal powerstation in Sampur and the upgrading of the Palalyairport.

The development of human resources has beenfacilitated through the improvement of schools andvocational training centres, the construction ofhospitals and involvement in employment-generation projects in agriculture, fisheries, smallindustries and handicrafts. Politically, India hasensured that there is a chief minister, Justice C.V.Vigneswaran, in the Northern Province, electedunder the 13th amendment to the Sri Lankanconstitution.

These major development projects could nothave been undertaken without the cooperation ofthe Sri Lankan government. It has, therefore, beencrucial for New Delhi to balance its interests ingetting the excesses of ethnic conflict addressed withthe imperative of securing the cooperation of theSri Lankan government, in order to execute welfareprojects for Sri Lankan Tamils. Still, New Delhihas previously backed UN resolutions that calledfor the investigation of human rights violations,despite Sri Lankan displeasure, primarily becausethe resolutions did not violate Sri Lankansovereignty. It was also felt that President MahindaRajapaksa’s government could be persuaded toimplement these resolutions.

The UN Human Rights Council resolutionpassed this year, unlike in the past, included theconstitution of an open-ended internationalinvestigation on a sovereign member state. This goeswell beyond the current understanding and basicoperative principles of the UNHRC. Moreover,unlike resolutions of the UN Security Council, thoseof the UNHRC are not enforceable by internationalsanctions. Only 23 of the council’s 47 memberssupported the latest resolution on Sri Lanka. Apart

from South Korea, every other member of India’sAsian and Indian Ocean neighbourhood eitherabstained or voted against. These included China,Indonesia, Japan, Kuwait, the Maldives, Pakistan,the Philippines, South Africa and the United ArabEmirates. Despite their reputed global influence,the US and its allies could pick up support onlyfrom a few Latin American and African countries,many of whose leaders and diplomats know littleor nothing of Sri Lanka.

India acted wisely by abstaining from votingon this year’s resolution. Based on the support thatit received from two permanent members of theSecurity Council (China and Russia) and theoverwhelming majority of Asian and the IndianOcean littoral states, Sri Lanka will ignore the moreintrusive aspects of recommendations of theUNHRC, espoused by the UN high commissionerfor human rights, Navanethem Pillay, whose owncountry, South Africa, abstained. Support for thisresolution would have left India with very littleleverage to secure the Sri Lankan government’sunstinted cooperation for its programme of reliefand rehabilitation. Worse, we would have laid theground for growing Chinese and Pakistani presenceand influence in the island, at a time when we canill afford it.

It is interesting that, despite the political rhetoricin Tamil Nadu, not a single political party or leadingbusiness organisation in the state has mobilisedresources for the welfare of Sri Lankan Tamils.There also appears to be a disinclination to acceptthe reality that those who are most vociferous indemanding action against Tamil Nadu fishermenpoaching in Sri Lankan waters are not thatcountry’s security forces, but the Tamil fishermenin Jaffna and elsewhere in Northern Sri Lanka. Allthis, amid debate on our “federal structure” andthe role of individual states in micromanaging theconduct of foreign policy. The statesmen whoframed our Constitution described our country asa “Union of States”, not the “United States ofIndia”, as MDMK chief Vaiko would have it.


HOPE PREVAILS

Dispelling widespread gloom around the worldregarding Afghanistan’s political future and theTaliban’s efforts to disrupt the elections, Afghansturned out in large numbers at the polling boothson Saturday. According to preliminary estimates,

nearly 7 million of the 12 million eligible voters, orclose to 60 per cent of the electorate, cast theirballots to elect a new president to replace HamidKarzai, who has steered the nation after the USforces ousted the Taliban at the end of 2001. The


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previous presidential election in 2009, marred byallegations of fraud, saw barely a third of theelectorate turn out to vote. The enthusiastic turnoutthis time is a befitting political answer to theTaliban, which mounted attacks that killed scoresof people.

If none of the eight presidential candidates gets50 per cent of the votes cast, there will be a run-off between the top two candidates on May 28.Opinion polls showed that the main contendersare Abdullah Abdullah, a runner-up in the lastelection, and Ashraf Ghani. Running a distant thirdis Zalmai Rassoul who is said to have the outgoingpresident’s backing. All three have sought to bridgethe deep divide in Afghanistan between Pashtunsand non-Pashtuns by choosing vice presidentialcandidates who expanded their ethnic appeal.

The next president’s political legitimacy,however, will not resolve Afghanistan’s multiple

problems. The Taliban continues to enjoysanctuaries across the border in Pakistan. Thearmed forces of Afghanistan have demonstratedtheir growing capabilities by securing the nationagainst violence but remain weak and vulnerableto future destabilisation from the Pakistan army.The nation’s economy is in bad shape as largevolumes of foreign aid that flowed in since 2002dry up. All the presidential candidates have agreedto ratify the security pact with the US that willallow the presence of a few thousand Americantroops after 2014. Since 2002, India has investedconsiderable political and economic resources insupport of the fledgling democracy in Afghanistan.The next government in Delhi will have todemonstrate much stronger strategic commitmentto the unity, stability and security of Afghanistanamid the continuing threats from Pakistan anddeclining Western support to Kabul.


A TOUCH HERE, A TWEAK THERE

As the Reserve Bank of India governor said inhis press conference after the release of the bi-monthly review, the only surprise about the policyannouncement was the lack of surprise.

The markets expected no major change in policyas the Election Commission’s Code of Conduct isin operation. Any reduction in policy rates wouldhave attracted criticism from the Opposition. As aresult the policy remained the same, except for sometweaking in the banks’ access to the LiquidityAdjustment Facility.

Not the annual review

Generally, the first review of the financial yearis the Annual Policy Statement. Perhaps, this yearit was not so labelled because the Budget for 2014-15 is yet to be presented. One hopes the contoursof the next Budget will be available after the electionand before the next review due on June 3.

Neither the policy paper nor the governor’sstatement made any reference to the estimates ofmoney supply, credit or deposits in the coming year.

This writer took the view in the past that theRBI should not provide estimates of money supply,with room for 5 per cent inflation after reckoningfor GDP growth and income elasticity of demandfor money. Instead, it should say that it will ensurethat no productive activity will suffer for lack ofcredit. What the governor said in his reply to a

question at the press conference more or less echoedthis idea.

Core inflation

It is also clear that the Consumer Price Indexwill be the touchstone in formulating policy. Buthabits die hard. There is a reference to inflationtrends, excluding food and fuel. Is it the coreinflation in CPI?

The entire CPI should be considered formeasuring ‘core’ inflation, which should be thesame as headline inflation. The enormous increasein food prices, especially those of vegetables andfruits is due to the excess money generated throughsuch schemes as the Mahatma Gandhi NationalRural Employment Guarantee Scheme (MGNREGS).

While we are glad that the poorer sections canafford to buy protein-rich food items, thegovernment should have worked out a scheme toincrease their production before introducing theextension of the MGNREGS throughout the country.

After the idea of core inflation in the WholesalePrice Index was trashed by critics, the RBI startedusing the expression “non-food manufacturedproducts inflation”.

What is liquidity?

The changes in the liquidity adjustment facility


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(LAF), shifting the emphasis from the daily reposto term repos, are well thought out. But there is noofficial definition of liquidity that guides the bank.During the time of YV Reddy the concept of“overhang of liquidity” was in vogue. But it is nolonger used for reasons not known.

There are outstanding “liquidity aggregates”(L1, L2 and L3) presented in a table in the ReserveBank of India Bulletin. One does not know whichone of them is used by the RBI as a criterion fordeciding the surplus or shortage of liquidity. It needsto link its concept to the standards prescribed inBasel III Liquidity Coverage Ratio and LiquidityRisk Monitoring that will come into effect fromJanuary1, 2015.

The RBI has promised to issue guidelines inadopting these Basel standards by end-May 2014.

The bank recognises that forex transactions arepart of the open market operations and interventionshould not be thought of only to stabilise the rupee.

In its forex intervention and through swapswith banks on their FCNR(B) deposits the bankhas built up a good amount of reserves amountingto $298.6 billion as on March 21,2014, of which$271.4 billion constituted foreign currency assets(FCA).

A few months ago, this writer had suggestedthe Bank should aim at building up the foreign

currency assets to $300 billion by the end of March2014.

Enhancing confidence

Eventually, it is the FCA that provides thebulwark against any forex crisis. The othercomponents of reserves will be utilised only in adesperate situation.

The market’s confidence in the rupee can beenhanced if the target of $300 billion is reachedbefore the US Fed starts winding up its quantitativeexpansion by the end of September, as expectednow.

There is not much that the Central bank cando in the current situation. But it can certainlycontrol money supply.

The replacement of the daily repo by the termrepo does not make a difference to the excesscreation of money supply since, for all practicalpurposes, the daily repos have served the purposeof term repos by being rolled over.

The bank says that the daily injection of liquiditythrough LAF and other facilities has been about RsRs 1 trillion. It has no economic rationale whengrowth is on a declining trend. The RBI shouldpause and reflect on whether the money creationis helping GDP or inflation.

Source: BusinessLine

RIP REPO RATE?

By keeping the Reserve Bank of India’s (RBI)policy rates unchanged, Governor Raghuram Rajanhas, on the face of it, acted according to marketexpectations. The RBI has, indeed, retained the‘repo’ or its overnight lending rate to banks at 8per cent. But Rajan’s first monetary policy statementfor the new fiscal is not without his trademarksurprise element. And that has to do with allowingbanks to borrow up to 0.75 per cent of theirdeposits/liabilities from the RBI’s 7- and 14-day‘term repo’ window (against 0.5 per cent now),while halving access to the more familiar overnightrepo facility to 0.25 per cent. Banks are currentlyborrowing roughly Rs 30,000 crore daily from thelatter window at the RBI’s fixed repo rate of 8 percent. By curtailing this to Rs 15,000 crore, bankswill have to henceforth borrow more through theRBI’s term repo auctions at floating interest rates.Given that these have been averaging 8.7-8.8 percent in recent auctions, the RBI has effectivelyincreased interest rates without saying so.

But the relevance of the RBI’s move isn’tconfined simply to the impact on interest rates.Since term repo rates could fall once the liquiditytightness often seen during the financial year-endeases, interest rates may not rise that much. Themore important implication is for the fixed reporate as a monetary policy tool. In the past, it wasconsidered apt to tether the Central bank’s policyto a single, fixed, short-term benchmark lendingrate that could be raised or lowered depending onthe prevailing inflation-growth dynamics. But now,the RBI has apparently chosen to ‘de-emphasise’the role of the overnight repo rate, at least as aliquidity management instrument. The demand forliquidity by banks will be met increasingly throughvariable-rate auctioned term repos. The effectivenessof this move — in line with the Urjit PatelCommittee’s recommendation — needs to be seen,especially so when the fixed repo rate is somethingeasily communicated and understood. The marketstoday clearly know the RBI’s intentions when ithikes or reduces the repo rate.


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The other key takeaway from the policystatement is the RBI’s firm focus on sticking to aCPI inflation target of 8 per cent by January 2015— again an endorsement of the Patel panel report.Significantly, it has indicated that any move oninterest rates would be dictated by the nextgovernment’s stance with regard to minimumsupport prices for crops, fuel and fertiliser subsidies,

and overall fiscal policy stance. A clear politicalcommitment to fiscal consolidation from the nextgovernment is certainly in the economy’s interest.Interest rates need to come down, which canhappen only with fiscal and monetary policy beingin sync.


INDIA’S NEW POLITICAL ECONOMY

India has a wonderful way of turning traditionaltheories of economic growth on their head. Takethe theory of diversification among sectors(agriculture, industry and services) as the drivingforce of development. Based on the historicalevidence of western societies in the 19th and early20th centuries, the ‘stagist’ view of developmentwas considered the best way forward.

Once the share of agriculture in a nation’s GDPhad dipped in comparison to industry or services,then surely a desirable structural change was afoot.

The trajectory of development meant aninevitable pre-eminence of Services over industryand agriculture.

By that token, the last two decades, we aretold, have been testimony to a trajectory of growthappropriate to western societies; judging by GDPnumbers at least, India has done exceedingly well.

In the Economic Survey of 2010-11, the FinanceMinistry gave us a retrospective view on the changein the relative importance of the three sectors.

In 1950-51, the share of services in GDP wasaround 30.5 per cent; this jumped to 55.2 per centin 2009-10. If construction is added, the shareclimbed to 63.4 per cent.

The “ratcheting up of the overall growth rate(compound annual growth rate or CAGR) of theIndian economy — from 5.7 per cent in the 1990sto 8.4 per cent in the period between 2004-05 to2009-10 — was in large measure due to anacceleration in the CAGR in services from 7.5 percent in the 1990s to 10.3 per cent in 2004-05 to2009-10.”

For policymakers such numbers presaged India’selevation to emerging-market status; the structuraltransformation had worked its wonder in India.But had it? The devil lurked in the details andtogether they painted quite another reality to theone drawn by the CAGR data.

Reality as illusion

The Economic Survey of 2012-13, for instance,sourly observed that employment had climbed fasterand higher in services sector in India than hadincomes — unlike in China, the US and otherservices- oriented economies.

Other sources also point to the rise ofemployment in services but of the informal kind.Informal employment is rampant in such high profitzones as construction and real estate and is steadilygrowing in other sectors and sub-sectors as well.

Casualisation of labour has been found to bethe best bet against the so-called “rigid” labourlaws that encourage unionisation and all theunpleasantness of strikes and “unrest.”

And equally, informal employment keeps costsdown, an important factor, perhaps even moreimportant than incremental productivity, in stayingcompetitive.

So, behind the numbers is a reality in whichthe only structural shift the economy has witnessedis the emergence of services sector as an alternativesite to farming for informal employment.

The other reality behind the numbers is, ofcourse, that agriculture has not just slipped to thirdplace in its share to GDP out of some inexorabletelos of growth, but on account of neglect and theworship of the accomplished fact by policymakers.

Resonance of neglect

Reforms in agriculture require huge politicalwill, but once the GDP rate had begun to pick upsteam the roads to success seemed fairly obviousand easier to follow than attempting a secondagricultural reform drive.

Since 1991, the modern economy’s discourseon growth has resonated with the brassy soundsof an idea of India as urbanised and urbane. Thisidea has found favour with the middle class Indianwho is its singular beneficiary.


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The village in this discourse of urban-centricgrowth is a metaphor for backwardness, the farmsector for laziness, both remnants of a past bestforgotten or converted into a vast township orgated community. And the farmer hears all theresonances.

The Centre for Studies in Developing Societies(CSDS) survey that found a majority of respondentswould give up agriculture for some other work,shows how well farmers are picking up the echoesof the new exclusionary discourse. Depending onyour take on modernity, you could say that thislapse of faith is a great psychological moment, aprelude to a discursive leap into a brighter futureby farmers who for centuries have been unable tosee beyond the horizons of their fields.

But on the other hand, one could also see it aspart of an unfolding crisis for a nation that hadwith such enterprise and determination become selfsufficient in food. The CSDS survey shows us theface of impending pauperisation, of a cultivatorfaced with that prospect and intuitively certain thatthere are few exits — unless he or she wants tobecome an informal or casual labourer at aconstruction site.

Past tense, future uncertain

The realisation of both the futility of farmingand the lack of choices for alternative livelihoodsdrives farmers to suicide, but it also drives them toa form of enterprise that at first glance appearsliberating.

On the outskirts of Pune’s eastern suburb ofHadapsar, the Magars, a rich farming community,decided to give up farming, formed a real estatecorporation to which they handed over their lands

for a township that has become a model for otherfarmers.

Pune city and its fringes provide proof of howthe new discourse defining our ideas of prosperityis determining the future of villages and farmssurrounding them. Land acquires new meaningsnot for agriculture but as a piece of real estategenerating rentier profits.

As urban conglomerates spread and as thedemand for new urban entities (such as theproposed townships between Delhi and Mumbaiand Kolkata, respectively) increase, land willbecome the site for violent contesting claims -- as isalready evident in the outlying areas of Mumbai,Pune and other towns likely to become epicentresof “growth.”

Land has become India’s geographical dividendas it were, multiplying in value as farm lands areturned into urban-scapes or as cities advance on them.

The temptations to sell out will grow exponen-tially and a new political economy of landacquisition is already emerging--- not with landmafias as in America but with land monopoliesblessed by politicians and businessmen.

The structural transformation of GDP thatpolicy makers wax eloquent about seems to havetwo stages. In the first, agriculture lost out to Services.

In the second that is upon us, we will see capitalfrom diverse sources — manufacturing and otherforms of productive activity such as farming returnto the land for its conversion into real estate.

That is what India may become — a piece ofreal estate.


THE TEN CRORE QUESTION

Whatever else their shortcomings, politicianshave always been skilled at tapping into theconcerns of the people — and coming up withcatchy slogans that capture them, while offeringsome hope of relief at the same time.

Thus, Lal Bahadur Shastri’s ‘jai jawan, jai kisan’resonated in an India which had just woken up tothe fragility of its security as a nation state aftertwo devastating wars with its neighbours. Thecelebration of the jawan was a celebration of thesoldier, who had so bravely ensured the survival ofthe then still young experiment called India.

The kisan, on the other hand, offered the hopequotient. The Green Revolution was beginning tohappen, and the new ‘miracle’ breeds, developedby crop scientists like Norman Borlaug and ourown MS Swaminathan, promised to remove theword ‘famine’ from the country’s lexicon.

Later, it was ‘roti, kapda, makaan’. For apopulation straining under the personal sacrificesand hardships imposed by the socialistic ‘planneddevelopment’ model, accessing basics such as food,clothing and shelter become aspirational goals —goals which politicians promised to deliver.


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Still later, as we crawled up the rungs ofdevelopment, the slogan changed to ‘bijli, sadak,paani’. Endemic hunger was no longer an issue,except for pockets of the really poor. For most ofthe rest, even clothing and shelter were a given,acquired through their own efforts, withoutgovernment handouts. What they wanted from thegovernment was basic services now, electricity topower their homes, farms and businesses, roads todrive their newly-bought vehicles on, and water intheir increasingly overcrowded and under-equippedtowns and cities.

Does the absence of any such slogan this timearound mean that our problems are — in a purelyphysical, infrastructural and financial sense —over? That there is really nothing to aspire for, andthat all we have to worry about, as Arvind Kejriwalurges us to do, is corruption?

The jobs factor

Clearly not. Which is why, fairly late in theday, the biggest issue facing GenNext India hasfinally become part of the poll rhetoric — jobs. Ourpoliticians are only now waking up to the fact thatthere is a flip side to the demographic dividend.The realisation has finally dawned that if the 100million first-time voters who will be voting in theseelections are not employed — or worse, do not seehopes of getting employed in the foreseeable future— they are unlikely to vote for you.

This, going by whatever passes for jobs data inIndia, is what is going to happen. India does nothave credible and regularly compiled data on jobcreation and workforce participation. What wehave are unreliable numbers put out by variousministries, and more accurate sample surveys doneby the National Sample Survey Organisation.

According to an NSSO survey, one in threecollege graduates in the 15 to 29 years age groupare unemployed.

In its report, Youth employment - unemploymentscenario, 2012-13, the survey paints an even moredismal picture — the labour force participation inthe 15-24 age group,the new voters, is just 31.2 percent. Two-thirds of India’s ‘demographic dividend’of youth power is actually not currentlyparticipating in the workforce.

According to a study published in the Economicand Political Weekly last year, in 2011-12, 30 percent of the workers were casual employees, andonly 18 per cent had regular work.

The rest were categorised as ‘self employed’

(presumably because, since India doesn’t haveunemployment benefits, those without a job werefinding some means of sustenance on their own).

The survey also raises a question mark over thegovernment’s shift in focus to skill developmentover the past few years. Underlying this was thebelief that the reason more people were not gettingemployment was that they were not employable.Therefore, the solution lay in imparting employableskills to the working age population, followingwhich they would all get nice jobs and liftthemselves permanently above the poverty line.

This led to the creation of a National SkillDevelopment Mission, a funded skill developmentcorporation, and a whole skill developmentecosystem now eagerly tapped by the corporatesector.

Political bombast

Lack of employable skills is certainly one of themajor issues facing the country, but there is a biggerquestion: Where are the jobs? The BJP and Congressare both at loggerheads, accusing each other ofhaving failed to create enough jobs during theirtenures, but nobody has a concrete plan on how togo about ensuring that enough jobs are actuallycreated to meet this staggering demand.

What we have got instead, is political bombast.If Congress campaign leader Rahul Gandhipromised 10 crore jobs — one for every new voter— the BJP has tried to do one better by promisingto create 25 crore new jobs over the next 10 years(notice they have quietly ignored the five-year termof office here) in the series of ‘smart cities’ thatthey will help build across India.

But the same employment survey showed thatunemployment was actually lowest amongst thosewith no education or special skills. If you didn’thave a college degree or even a school diploma butwere willing to work for your daily bread, therewas enough work going around even in a slowingIndian economy.

Unfortunately, the other aspect of thedemographic dividend which has also been ignoredis that of rising aspiration. This generation is nolonger content with just any old labouring job, itdreams beyond ‘bijli, sadak, paani’. But theseaspirations are not finding an echo in either politicalpalavers or policy platforms. Even a good, job-oriented replacement for ‘jai jawan, jai kisan’ wouldbe a start!



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LICENSING FOR COMPETITION

Following the Election Commission’s nod, theReserve Bank of India (RBI) has set the ball rollingon new banking licences by granting ‘in principle’approval to two applicants — IDFC and BandhanFinancial Services. But what is really refreshing isthe RBI’s overall approach to the licensing issue,which is novel. Unlike in the past, which saw 10licences being awarded in 1993 and another threein 2003, Governor Raghuram Rajan has declaredthat the Central bank would migrate to a systemwhere licences are handed out on a regular basis— ‘on tap’. The existing ‘stop and go’ policy,wherein applications are invited intermittently,leads to frenzied responses from a large number ofaspirants. It is also conducive for lobbying by thosewho would do everything possible to grab theopportunity that comes once in, say, 10 years.

If bank licences are made available on acontinuous basis, it will put competitive pressureon existing players. In his latest monetary policystatement, Rajan also talked about issuing‘differentiated bank licences’. In other words, theremay no longer be licences for just full-scale bankssubject to the same capital adequacy, liquidity/reserves and priority sector lending requirements.Licences could instead vary and be given, forexample, to those engaged only in the business offacilitating payments (as against lending), lendingto other banks (wholesale banks), infrastructurecredit and other such banking services catering to

niche customers or geographies. Thus, a mobilewallet or prepaid instrument provider such asAirtel Money can be given the licence for a‘payment bank’. It can access deposits just as normalbanks, but will be required to put all this money ingovernment securities and not be allowed to lend.This bank will also have a much lower minimumcapital requirement than the Rs 500 crore nowprescribed for full-service banks.

Whether or not this is sufficient to qualify as a“dramatic remaking of the banking landscape”,differentiated licences have clear advantages overa system that favours the creation of new banksevery decade or so and which are virtual clones ofthe existing ones. Such a system imposes undesirableregimentation — for example, non-banking financialcompanies (NBFCs), which usually have a coreexpertise in some area (say truck financing or goldloans), having to morph into monolithic, general-purpose banks. The main attraction for NBFCsbecoming banks is the access they acquire to low-cost current and savings account deposits. But theneed to adhere to the rigorous regulationsprescribed for full-scale banks from day one clearlyoutweigh these benefits. The proposed differentiatedlicensing regime with separate micro-prudentialregulations and restrictions on the nature of bankingoperations is a feasible alternative to the existinggeneric one-size-fits-all model.


ONE INC

Two is company, three is crowd is passé.Welcome the one-person company (OPC), the newkid on the corporate block. This avatar wasunleashed by the 2013 Companies Act. It wasproposed by the Ministry of Corporate Affairs.

Says its website: “With increasing use ofinformation technology and computers, emergenceof the service sector, it is time that theentrepreneurial capabilities of the people are givenan outlet for participation in economic activity.Such economic activity may take place through thecreation of an economic person in the form of acompany.”

OPC provides the flexibility of starting, owningand running a company, with the benefit of limitedliability. For one, if the OPC runs into losses, thesole shareholder/director and his/her personal and

private property is beyond the long arm of the law.

But it is not a brand new idea. Such experimentsare successfully carried out in countries such asSingapore and the US.

Legally sound

OPC is a legal entity. This means the company’slife does not end even after the lone shareholderpasses away. Its longevity is guaranteed and thefate of transactions is not jeopardised.

Hence, the people who lent money to thecompany cannot sue to recover personal propertiesof the shareholder. The lenders’ arms can reach upto the shareholder’s unpaid amount of share —thus far and no further!

The OPC needs to be registered with the


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Registrar of Companies (RoC) as a private limitedcompany, with the lone shareholder. It may alsohave a director. This may sound like a mom-and-pop store — a sole trader establishment — but it isdifferent.

A sole trader invests his or her own resourcesand has a lot of freedom to take decisions. The set-up does not need registration. One may open andshut a shop at one’s will. If the going gets tough,creditors can reach the private property of the soletrader.

An OPC, on the other hand, provides anindividual with an opportunity to become a“corporate” and attain a distinct personality, quitedifferent from the creator.

But a cumbersome process

In the case of OPCs, there are a slew ofdocuments to be submitted. The memorandum ofassociation, which is the charter of the company,as also the articles, which are the bye laws of thecompany, along with the consent of the individualswho wish to be directors of the company, need tobe filed with the RoC.

One may well have to hire a professionallawyer or a company secretary to assist indocumentation, who, naturally, come at a price.Such an ordeal is not required in sole-traderorganisations.

The OPC needs to nominate a person to ensurethat there is continuity and that nominee’s name isto be registered with the ROC. The mom-and-popstores are spared of such a requirement.

Since OPC is a legal entity, its affairs need to berecorded and become more in the public domain,unlike sole traders.

Another issue is that the OPCs may have toshell out more taxes as compared to a sole trader,where the incidence of tax is relatively less.

Besides this, the books of account need to bemaintained as OPC is created by Law.

Nevertheless, the advantages of limited abilityand the possibility of tapping the market for fundsmay render OPCs an attractive option. But onlytime will tell whether the idea can bloom in India.


COALITION GOVT: SPOKES WITHOUT A HUB?

The predictions about the coming elections arethat no party will get absolute majority. At thenext level, the question is: Will either of the twomajor coalitions get a majority? The election punditsare still debating whether the two national parties,the Congress or BJP, will get at least 200 seats. Thehope is that whoever nears that number will havea chance of putting together a coalition to reachsimple majority.

Gone are the days of brute majority. Fornational parties, even getting probable candidatesto contest in 300 seats is a challenge. Nationalparties have brought this situation upon themselves.

The coalition, ex ante or ex post election, willagain be one of parties with varying ideologies andagendas. Generally speaking, it will be in the interestof the nation to evolve a code for coalition politicsbefore elections are announced.

It is important that the national parties cometogether and decide the framework of governmentformation and code of governance -- the codes thatwould govern the terms of engagement of partners.

The parties say the present situation points tothe inevitability of coalition politics. The prevailingreality can at best be described as ‘decentred

coalitions’. Our polity started as a unipolar system,migrated to multipolar after the Emergency, andwe thought we had finally stabilised around abipolar system, with the NDA and UPA. But thebipolar system is a morphed version, both bipolarand polycentric.

In purely bipolar coalitions power would becentred around the major partner. In a polycentricsystem power is diffused and resides within eachpartner of the coalition, often dictated by individualparty strength. The first step in coalition governancewas actually made during Indira Gandhi’s time.Before that there was no necessity for a coalition.There was this useful alliance model between theCongress and AIADMK in Tamil Nadu.

Ideal model

The Congress contested a lion’s share of LokSabha seats and the regional party contested amajor share of Assembly seats. This was a trulyfederal arrangement where both national andregional parties could mark out their space. Thiswas the trend in the 1970s. The regional partyclaimed no role in the Central government and thenational party no role in the State government.


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Post Emergency, the situation changed. Theopposition parties formed a coalition whichincluded some national parties and regional parties.These were supposed to merge. The parties,however, maintained their identities and it wasmultipolar coalition. These decades saw nationalparties lose space to state-level parties, and state-level parties lose in turn to the splinters of regionalparties.

The gain by the state-level parties gave them agood bargaining position. The national parties couldnot muster even a simple majority. The splintergroups of state-level parties with even less thanfive seats also became critical to the sustenance ofthe national government.

These parties now started seeing a critical rolefor themselves at the central level with very littlecapacity or vision for playing a national role. Thenational parties on the other hand could not insiston participation in government at the state level.They could not voice opposition at the state leveland lost the space to other state-level parties.Initially, this was the case in Tamil Nadu andMaharashtra; later it became the scenario even inlarger states such as Bihar and UP.

The present system at best resembles thefranchisee model in the corporate world withearmarked geographical divisions.

Ungovernability

In a political context, it is quite ungovernable.First, the decentred nature has led to a distributedpower structure. For example, the prime minister’sprerogative in ministry formation has beenundermined.

It is the coalition partners who decide theministers. Ministers are dropped because thecoalition partner say so, even though they wereperforming well.

Second, accountability and collective respon-sibility suffered. The ministers are now responsibleto party leaders than to the head of the government.

The prime minister can enforce performanceonly upon party members. Accountability was

sought to be ensured through coalition party leaderswho are outside the Cabinet. This got strengthenedby the formation of a coordination committee whichremained outside the boundaries of Parliament andgovernment.

Third, the formation is fluid wherein theelements can keep changing. Parties can come andgo. The status preceding the signing of the nucleardeal showed the fragility of the system. Small partieswith no mandate on such national issues canjeopardise the system.

Locus of control

The national parties have to seriously considertheir losing position in the central space. They needto decide how to compete and be assertive ingovernment formation. Deciding on how to regaincontrol would mean deciding how to compete. Thiswould require more codes and norms thanconstitutional amendments.

Reform will include revisiting conventions ofCabinet formation. Regional parties have to concedethe prerogative of the prime minister in Cabinetformation and in picking ministers.

They can decide the allocation of the numberof ministers but not the allocation of ministries.The national party should have complete say inCabinet formation both in terms of ministryallocation and selection.

Similarly, the ministers are there at the pleasureof the prime minister rather than their ownrespective leaders. The national parties need a largerrole for themselves and should similarly give abigger role to regional parties at the state level, likethe old AIADMK model. The national parties actas the centripetal force by providing a platformbut control is multilayered.

What we are seeing is not just the fragmentationof vote politics but of power, control, accountabilityand governance. This happens when the locus ofcontrol lies outside the Cabinet, and the primeminister is not the pivotal force.


A POLICY WITH CLARITY OF PURPOSE

As the Reserve Bank of India (RBI) Review ofMacroeconomic and Monetary Developments 2014-15 succinctly brings out, there are three importantconsiderations for monetary policy in the immediateensuing period. First, the disinflationary process is

already under way with headline inflation trendingdownward along the path envisaged by the UrjitPatel Committee, though inflation is still abovecomfort levels.


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Second, growth concerns are significant withGDP growth at a sub-5 per cent level for sevensuccessive quarters and industrial productionstagnating for two successive years. Third, thereare signs that potential growth has fallen with highinflation and low growth. Thus, supply-sideconstraints on growth will need to be givenattention.

Macroeconomic uncertainties

There are risks to the central forecast of an 8per cent CPI inflation rate by January 2015 withthe possibility of a less than normal monsoon, giventhe likelihood of an El Nino effect, uncertainties onminimum agricultural support prices and otheradministered prices and fiscal pressures. The RBIpolicy stance is rightly focused on keeping theeconomy on a disinflationary trajectory to hit 8 percent CPI inflation by January 2015 and 6 per centby January 2016.

It is gratifying to see the RBI’s firm commitmenton inflation despite unwarranted criticism that ithas not given enough emphasis to growth.

Status quo

Although the RBI policy overnight repo interestrate of 8 per cent has been kept unchanged, themonetary policy reflects great perspicacity. The RBIhas deftly followed the Urjit Patel recommendationto de-emphasise the overnight “guaranteed access”repo facility.

The policy makes a significant departure on therepo facility issue: the access limits for the 7-dayand 14-day term repo has been raised from 0.50per cent of net demand and time liabilities (NDTL)to 0.75 per cent of NDTL while simultaneouslyreducing the overnight repo access from 0.50 percent to 0.25 per cent of NDTL. This is a significantdevelopment which will improve the efficacy ofmonetary policy. The term repo is more effective asa transmission mechanism across the interest ratespectrum as it is a better indicator of the underlyingliquidity.

Further, this measure could foster thedevelopment of a term money market. It is hopedthat over time an element of stability emerges inRBI accommodation as the term repo becomes themajor policy instrument.

While the RBI has, understandably, tried toavoid undue interest rate volatility at the financialyear-end by providing liberal access to banks under

the term repo facility, this has the unintended effectof actually encouraging window-dressing. Window-dressing is a counter-productive activity and while,on this occasion, the RBI has not undertaken anypunitive measures, it has made it clear that it would,in future, use appropriate measures to discouragesuch activity.

Year-end window-dressing

Some banks try to boost the size of theirbalance-sheet while others wish to get some riskassets off their portfolio, even if temporarily, toreduce minimum capital requirement. In either caseit is a futile exercise and, in fact, distorts theevaluation of a bank’s position.

It is pertinent to mention that many years agothe RBI had effectively countered window-dressing.In 1992, as part of the financial sector reforms itwas felt that the statutory liquidity ratio (SLR) of38.5 per cent of NDTL was too high and there wasa need to bring it down.

Rather than reducing the 38.5 per cent averageSLR, the incremental SLR was reduced at one stroketo 25 per cent while retaining the 38.5 per centSLR on the NDTL as on March 31, 1992.

The effect was that banks which had resortedto window-dressing on March 31, 1992, werepenalised and got the relief of the lower marginalSLR only after the NDTL crossed the March 31,1992 level.

It should be possible to devise measures to curbwindow-dressing in the current context. Forinstance, all RBI overnight accommodation couldbe withdrawn for one day on March 31, or if thiswere felt to be insufficient, even 7-day and 14-dayrepo facilities could terminate before March 31 andany RBI accommodation could be restarted fromApril 1.

Alternatively, on the incremental NDTLbetween March 31 and the preceding fortnight,there could be a prohibitive cash reserve ratio whichwould be locked in for a stipulated period, saythree months. These are just illustrative measuresand the RBI could modulate the measures so thatbanks respond sensibly to the suasion of the RBI.Meaningless window-dressing has gone on for toolong and it is time to put an end to this futile exercise.

Growth of the economy

The RBI does well to use a range of 5-6 percent for growth in 2014-15 with a central estimate


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of 5.5 per cent. It is only after the regular Budgetand macroeconomic policies for 2014-15 areformulated by the new government takes chargewould there be a reasonable estimate of growth in2014-15.

The policy review also undertakes a compre-

hensive review of developmental and regulatorypolicies.

Here, there are a number of important issueswhich need to be examined separately.


WATCHING THE WATCHDOGS

Of the many provisions in the new CompaniesAct intended at tightening lax corporate governancestandards, those relating to the auditing professionare possibly the most significant. Recently notifiedrules under the Act have made it mandatory forcompanies — both listed and unlisted — to rotatetheir auditor once every five years and the auditfirm once in ten years. The idea here is to ensurethat the auditor’s objectivity is not compromisedby a cosy relationship with the client. Auditors havebeen barred from taking on consulting or otherassignments from their clients and will attractpersonal liabilities for negligence; at the same time,they will be vested with a whistle-blower function.Thus, in the event of detecting any irregularitiescommitted in the company, they are obliged toreport the same within 45 days to its board andwithin 60 days to the Central government. Besides,the Act has proposed a new regulatory body —the National Financial Reporting Authority (NFRA)— to oversee these rules, conduct enquiries andlevy penalties on auditors for non-compliance.

Predictably, leading audit firms have criticisedthe new rules. Mandatory rotation, they claim, willdilute the quality of the audit, as there will be lesstime now to understand the company or theindustry it is in. But this doesn’t hold water as 10years is more than sufficient to acquire industryknowledge. The argument against subjectingunlisted firms to compulsory auditor rotation is alsoa non-starter. After all, it is not only public

shareholders, but also banks, suppliers, buyers andtax authorities that rely on a company’s publishedfinancials. Even more specious is the claim thatbanning consulting assignments and penalties fornegligence will make statutory audits a costly andunattractive proposition. What stops auditors fromhiking their fees? Investors who rely on the opinionof auditors will certainly not object to that.

For investors, lenders and other stakeholders,the real problem arises from the failure of auditorsto flag serious accounting issues. All too often,when faced with non-disclosure of material facts,bad accounting policies or non-adherence tostandards, auditors shy away from qualifying theirreports and take shelter under ‘emphasis of matter’clauses or ‘notes’ tucked away in the accounts.These render published accounts unreliable. Thereare nearly 1,700 listed companies suspended fromtrading for not complying with basic disclosurerequirements such as filing financial results.Companies routinely vanish from the bourses as aresult of promoters siphoning off funds. These arecommon infractions that rigorous auditing canuncover. The Centre should expedite taking thenext step, that of constituting the NFRA. Manyelaborately drafted Indian laws fail to make adifference because they are not followed through,especially by framing the required rules. Theauditor-related provisions in the new CompaniesAct should not suffer from this.


FOR A WORLD OF FREER LABOUR FLOWS

We live in an increasingly globalised world,characterised by the transnational movement ofgoods, services, people and ideas. Yet, the merits ofinternational migration of people have not beenrecognised in substantial measure.

Migration has received attention, albeit of thewrong kind.

The discourse the world over continues to bedriven by political rhetoric, centred around

populism, xenophobia, security and nationalism.

As a result, the economics of migration has beenoverlooked. In international migration in particular,good economics does not necessarily mean goodpolitics.

The only easy battles in migration are garneringsupport for mobility of high skilled workers, or thosewho come and go with a ‘temporary’ tag.

Freer economic migration is good for business,


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catalysing innovation, investment andentrepreneurship — the building blocks of sustainabledevelopment.

International migration also spurs the investmentrate, saving rate and the consumption rate, whichfurther serves to expand business and trade.

Despite these obvious gains, an irony peculiarto our globalising world is the noticeable absenceof industry as a catalyst for global migration. TheIndian Diaspora is the most successful in the world.Indian industry must find modes of engagementwith the Diaspora to derive advantage from thesuccess they have achieved.

Brain circulation

We are moving away from ‘brain drain’,towards a more positive notion of ‘brain circulation’.Industry must play a bigger role in skillsdevelopment of the workforce, keeping in mindthe paradigm of ‘brain circulation’.

India has to earnestly work towards buildingan image of a welcoming country; providing equalopportunities, irrespective of race, gender,nationality, and so on. Along with this, India’sranking in 2014 is 134 among 189 world economies,according to the World Bank’s Ease of doingbusiness survey. Overcoming these issues willnecessitate the involvement of Indian industry.

One of Indian industry’s most importantcontributions can be through skill development ofour youth with a gender focus. India is at thatunique threshold where its demographic andeconomic transitions generate a surplus of workersin the economy.

Also, women are no longer migrating asdependents; they are increasingly migrating as

workers, independent professionals and serviceproviders.

However, most emigration from India is still inthe low-skilled category, 90 per cent of which is tothe Gulf countries. A skilled workforce is necessaryfor industry upgradation; it stimulates innovationand helps countries move up the global value chain.

Promise of Bali

Co-ordination between the main stakeholdersin the skills market helps achieve the targets ofindustrial policy.

There are glaring labour shortages and skill gapsthe world over. Industry can play a role in matchingavailable skills with the demand for them and infacilitating bilateral coordination for social securityarrangements.

The transnational movement of people shouldnecessarily be looked at as a natural corollary tothe movement of goods and capital. Bali 2013brought with it hope of boosting global trade worth$1 trillion. It has been celebrated as a victory of‘multilateralism’; as a triumph of globalisation; ofvarious interests coming together.

However, the real victory will come when wereach a consensus on the fact that the mobility ofpeople is good and even necessary to maintainglobal economic growth rates. The globalisation ofeverything but labour will not work for too long.Finally, whether or not Indian industry partakes inthe facilitation and advocacy of freer migration, itwill continue to take place.

Changing the perceptions about migration, notoverstating its negatives and understating itspositives, will be a good place to start.


LIFE IS AN INJECTION

Recently the World Health Day was observed.It is an apt occasion to look back at the progressIndia has made in its fight against preventablediseases, and the importance of life-saving vaccines.

Diarrhoeal diseases kill nearly 600,000 childrenevery year. They are one of the foremost causes ofinfectious morbidity, second only to acuterespiratory infections.

Kid killers

Unfortunately, India is a major contributor to

the global burden of diarrhoeal diseases. Thenumber of people dying from diarrhoeal diseaseshave come down, thanks to better antibioticavailability and utilisation of oral rehydrationtherapy. But the burden still remains high and isone of the principal causes of morbidity andmortality, especially in children.

Enteric bacterial infection (linked to intestines)is a major cause of diarrhoea throughout the world,especially in low- and middle-income countries. TheWHO says 1.1 billion people drink unsafe water


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and the vast majority of diarrhoeal disease in theworld (88 per cent) is linked to unsafe water,sanitation and hygiene. In developing countries,enteric bacteria and parasites are more prevalentthan viruses and typically peak during the summer.

Recent studies show that bacterial pathogenssuch as Vibrio cholerae (causes cholera),Escherichiacoli, Shigella spp. and Campylobacter jejuni accountfor moderate to severe diarrhoea in India. Amongthese, rotavirus and norovirus are the mainpathogens responsible for acute diarrhoea.

Rotavirus infection accounts for a third of globalchild deaths attributable to diarrhoea. It cannot becontrolled by antibiotics, nor are there any specificdrugs for it. It is seen that almost all the childrenacross the globe will suffer at least one rotavirusinfection, if not more, in their lifetime. It is evenseen in the developed world. Immunising childrenwith a vaccine is clearly the way to effectivelyreduce rotavirus-related morbidity, mortality andassociated medical costs.

Several rotavirus vaccines formulated for oraladministration to infants have been shown to behighly effective in reducing the incidence ofrotavirus gastroenteritis. An indigenous vaccinedeveloped in India has been shown to be efficaciousand is currently awaiting licensure.

Life in times of cholera

An important concern is the emergence ofcholera across the globe. Recent outbreaks in Cuba,Haiti and Zimbabwe show it can cause enormousloss of human lives. Cholera is endemic in India,stays in the environment especially in coastal areas,and as such, the lower Gangetic plain is called‘homeland of cholera’. It is a pity that despite anestimated annual burden of two to four millioncases, we react only when an outbreak hits.

Control of cholera depends on the long-termstrategy of improving water quality and sanitationsystems. That said, it is difficult to achieve this inresource-poor settings (as seen in India). Thus,vaccination for cholera can be an important short-term preventive approach along with other efforts.

A low-cost, bivalent, killed whole-cell oralcholera vaccine is currently made in India and hasalso received licensure from the Drug ControllerGeneral of India. It has proven efficacy and safetyand confers 65 per cent protection at the end offive years following vaccination. Recently, theStrategic Advisory Group of Experts onImmunisation of the WHO recommended the useof this vaccine in endemic areas.

Given the morbidity diarrhoeal diseases bring on,it is critical to pursue further research in this area.


THE RUN OF RAINS IN INDIAN AGRICULTURE

The increased probability of an El Nino weatherpattern has already begun to rustle up fears abouthow a bad monsoon could hurt a sluggish Indianeconomy. The concerns are valid even though theeconomy is less dependent on agriculture thanbefore and reservoir levels this summer are quitecomfortable. The lessons of previous El Ninoepisodes in 2002 and 2009 tell us that farmproduction as well as food prices can take a knockin a country where barely a third of farm land isirrigated.

The harsh impact of unseasonal rains andhailstorms earlier this month across a number ofstates—imposing losses estimated at a billion rupeeson insurers—has further added to the concerns.Add to this the suicide of 23 farmers inMaharashtra, which has once again exposed theabysmal state of existing procedures to shield themfrom exigencies. Interestingly, the IndianMeteorological Department has dismissed claimsby Western scientists of the risk posed by El Nino,

calling it a conspiracy to help speculators.

For long, unpredictable weather has remainedone of the biggest threats to farmers. Naturally,voices in favour of a comprehensive crop insuranceprogramme to protect farmers from the vagaries ofnature have strengthened over time. However, therecord of state assistance to distressed farmers hasbeen far from satisfactory.

The comprehensive crop insurance schemeinstituted in 1985, which turned out to befinancially unviable with claims over-runningpremiums by almost six times, was one of theearliest attempts at state-sponsored cover that wentberserk. Subsequently, the National AgriculturalInsurance Scheme (NAIS), which sought to serveas a more viable alternative through the chargingof higher premiums over time, met with a similarfate. Throughout, both the central and stategovernments footed the gap in funding bysubsidizing crop insurance.


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The justification for extending insurance supportto farmers has emerged from concerns that extremeuncertainties associated with agriculture will makemarket premiums unaffordable to farmers.Protecting them through subsidized insuranceprogrammes was seen as the natural way out.However, massive bailout of farmers by thegovernment only managed to crowd out privatefirms from the market for insurance.

More importantly, the lack of competition ininsurance cover has led to the stifling of much-needed innovation that is a prerequisite to betterand cheaper insurance products. Also, under astate-sponsored insurance programme, theunintended effects of moral hazard and adverseselection have added to the cost of providinginsurance. This is clearly reflected in the high claimsratio of over 300% even under the NAIS, whichwas supposed to set right the deficiencies of pastrelief programmes.

Deregulating the insurance market can only bepart of a larger plan to mitigate the many risks ofIndian agriculture. This is especially true given somerisks cannot be covered by private insurance, or

only at much higher prices. With extremedependence on seasonal monsoons still remainingthe norm in most parts of the country, the need forimproving irrigation infrastructure cannot bestressed enough.

Meanwhile, commodity hedging remainsperhaps the most underexploited risk-mitigatingmechanisms as far as dealing with price risk goes.While India has exposed its farmers to theinternational market in a globalized world, Indianfarmers still remain underserved by the services ofthe commodity derivatives market. Last year,according to the US department of agriculture andthe Futures Industry Association, the ratio of openinterest in hedging instruments to total size of maizeand wheat market in India stood at a negligible0.1%, compared to the world average of well over20%.

Given the inefficiency of the current reliefmechanism, and the minuscule size of the marketfor pooling risk, there could be no better reason toimprove farmers’ access to alternatives.

Source: Mint

THE CHANGING FACE OF GLOBAL RISK

The world’s economic, financial and geopoliticalrisks are shifting. Some risks now have a lowerprobability—even if they are not fully extinguished.Others are becoming more likely and important.

A year or two ago, six main risks stood at centrestage:

� A euro-zone breakup (including a Greek exitand loss of access to capital markets for Italyand/or Spain).

� A fiscal crisis in the US (owing to furtherpolitical fights over the debt ceiling andanother government shutdown).

� A public-debt crisis in Japan (as thecombination of recession, deflation, and highdeficits drove up the debt/gross domesticproduct or GDP ratio).

� Deflation in many advanced economies.

� War between Israel and Iran over allegedIranian nuclear proliferation.

� A wider breakdown of regional order in theMiddle East.

These risks have now been reduced. Thanks toEuropean Central Bank President Mario Draghi’s“whatever it takes” speech, new financial facilities

to stabilize distressed sovereign debtors, and thebeginning of a banking union, the euro zone is nolonger on the verge of collapse. In the US, PresidentBarack Obama and Congressional Republicanshave for now agreed on a truce to avoid the threatof another government shutdown over the need toraise the debt ceiling.

In Japan, the first two “arrows” of PrimeMinister Shinzo Abe’s economic strategy—monetaryeasing and fiscal expansion—have boosted growthand stopped deflation. Now the third arrow of“Abenomics”—structural reforms—together withthe start of long-term fiscal consolidation, couldlead to debt stabilization (though the economicimpact of the coming consumption-tax hike isuncertain).

Similarly, the risk of deflation worldwide hasbeen contained via exotic and unconventionalmonetary policies. And the risk of a war betweenIsrael and Iran has been reduced by the interimagreement on Iran’s nuclear programme concludedlast November.

Though many Middle East countries remainhighly unstable, none of them is systemicallyimportant in financial terms, and no conflict so far


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has seriously shocked global oil and gas supplies.More important, as the risks of recent years havereceded, six other risks have been growing.

For starters, there is the risk of a hard landingin China. The rebalancing of growth away fromfixed investment and toward private consumptionis occurring too slowly, because every time annualGDP growth slows toward 7%, the authorities panicand double down on another round of credit-fuelledcapital investment. This then leads to more badassets and non-performing loans, more excessiveinvestment in real estate, infrastructure, andindustrial capacity, and more public and privatedebt. By next year, there may be no road left downwhich to kick the can.

There is also the risk of policy mistakes by theUS Federal Reserve as it exits monetary easing. Lastyear, the Fed’s mere announcement that it wouldgradually wind down its monthly purchases oflong-term financial assets triggered a “taper”tantrum in markets. This year, tapering is pricedin, but uncertainty about the timing and speed ofthe Fed’s efforts to normalize policy interest ratesis creating volatility. Some investors andgovernments now worry that the Fed may raiserates too soon and too fast, causing economic andfinancial shockwaves.

Third, the Fed may actually exit zero rates toolate and too slowly (its current plan wouldnormalize rates to 4% only by 2018), thus causinganother asset-price boom—and an eventual bust.Indeed, unconventional monetary policies in theUS and other advanced economies have alreadyled to massive asset-price reflation, which in duecourse could cause bubbles in real estate, credit,and equity markets.

Fourth, the crises in some fragile emergingmarkets may worsen. Emerging markets are facing

headwinds (owing to a fall in commodity pricesand the risks associated with China’s structuraltransformation and the Fed’s monetary-policy shift)at a time when their own macroeconomic policiesare still too loose and the lack of structural reformshas undermined potential growth. Moreover manyof these emerging markets face political andelectoral risks.

Fifth, there is a serious risk that the currentconflict in Ukraine will lead to Cold War II—andpossibly even a hot war if Russia invades the eastof the country. The economic consequences of suchan outcome—owing to its impact on energy suppliesand investment flows, in addition to the destructionof lives and physical capital—would be immense.

Finally, there is a similar risk that Asia’sterrestrial and maritime territorial disagreementscould escalate into outright military conflict.

So far, financial markets have been sanguineabout these new risks. Volatility has increased onlymodestly, while asset prices have held up. Noiseabout these risks has occasionally shaken investors’confidence, and modest market corrections havetended to reverse themselves.

Investors may be right that these risks will notmaterialize in their more severe form, or that loosemonetary policies in advanced economies andcontinued recovery will contain such risks. Butinvestors may be deluding themselves that theprobability of these risks is low—and thus may beunpleasantly surprised.

Indeed, as was the case with the global financialcrisis, investors seem unable to estimate, price, andhedge such tail risks properly. Only time will tellwhether their current nonchalance constitutesanother failure to assess and prepare for extremeevents.

Source: Mint

ELECTION 2014: A POLARIZED VOTE

In Democracy in America, Alexis de Tocquevillewhen describing the effect of elections said, “Longbefore the appointed day arrives, the electionbecomes the greatest, and one might say the only,affair occupying men’s minds.”

Nearly two centuries after de Tocqueville’s bookwas published, his words seem to describe the moodin India perfectly. The Indian electorate numbering814 million will soon decide which party or coalitionof parties will form the next Union government. It

is also an election that is perhaps the mostpolarizing one that India has seen in a decade. Thecontent of polarization is interesting and makesthis election different from recent ones.

Superficially, the two leading parties in thefray—the Congress party and the Bharatiya JanataParty (BJP)—have gone back to old-style religiousand caste polarization to improve their chances.Recently, the Congress’s supreme leader—SoniaGandhi—met the Shahi Imam of the Jama Masjid


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in Delhi. The latter then decided to back theCongress across India. His argument in support ofthe Congress is that the danger to secularism is abigger issue than corruption. Around that time,Amit Shah, the BJP’s key organizational man inUttar Pradesh (UP), allegedly exhorted membersof the Jat caste in western UP to “avenge” their“insults”. Since these events happened barely aweek before the first ballot was cast, they probablyrepresent a nightmare for secular individuals: thatelectioneering in the end was all about polarizingthe vote.

It is true that electoral polarization is at workbut it is not along the religious axis.

In the month or so since the ElectionCommission (EC) announced the poll schedule, thecampaign, countrywide, has revolved on three axes.For the BJP, it has largely been a matter ofhighlighting the Congress party’s misrule in thelast 10 years. The BJP’s plank has largely veeredtowards that of a modern conservative party thatbelieves in free markets and a regulatory state thatis less obstructive for businesses. The Congress’scampaign has been, by and large, disorderly in theface of BJP’s far more organized one. The partyhas stuck to its populist (in its terms welfarist)agenda combined with a personalized attackagainst the BJP’s prime ministerial candidate,Narendra Modi. The third axis is represented bythe fast changing ideas of the Aam Aadmi Party(AAP). The party began as an anti-corruptionmovement but has mutated into an anti-BJPcampaign. AAP is notably soft on the Congressand considers the BJP its primary target. Over time,

it has slowly diluted its anti-corruption stand intosomething else: a campaign against big business(read free markets) and a populism that is not verydifferent from the Congress’s. The AAP’s manifesto,released recently, is telling in this respect.

Effectively, the campaign has polarized Indiain economic terms.

This should not surprise anyone. There are twoforces at work that have made economic issuesmore important than anything else in this election.India is in the midst of changing demographic andeducational trends. The country is home to a verylarge youth population that is not only educatedbut is also concerned about its future. This makesthis election possibly the first time that Indians areraising and demanding answers to economicquestions from leaders.

There is another reason why election 2014 isspecial. India has experienced high growth andprosperity. It has also seen a steep economic slidein the last five years of the United ProgressiveAlliance government. Other parties—BJP andAAP—are making big promises to the electorate.All these promises and choices are largely couchedin economic terms even if the Congress has tried toblend in the politics of secularism into the mix. Butsuch is the potency of economic questions that eventhe Congress cannot avoid these issues. The partyis busy highlighting its track of populist legislationand programmes to woo the electorate. This alonemakes this election more polarizing than those seenin recent decades. The results will be interesting.

Source: Mint

WORSHIPPING FALSE GODS IN INDIA

Amidst the clamour of India’s colourful 2014general election, a public debate of great importfor India’s future is underway. Leading politicalcandidates debate which development model is bestsuited for a country of vast economic potential andembedded historical impoverishment.

Most opinion polls rate Narendra Modi as thefront-runner in the 2014 general election. In hisenergetic campaign, Modi downplays his earlierhostile discourse about the country’s religiousminorities in favour of one which promisesdevelopment on the model of Gujarat. His promiseis that all of India would benefit from the verveand pace of economic growth derived from highprivate investment which his leadershipaccomplished in Gujarat.

This claim raises many pertinent questions. Oneis whether Gujarat under Modi indeed outpacedother states in economic growth and privateinvestment. The second is the terms on which thisprivate investment is encouraged and whether thisindeed was in the public good. Finally, is thereevidence that people of economic and socialdisadvantage have benefited significantly from thiseconomic growth?

On the first question, Gujarat has indeedenjoyed high levels of economic growth in the yearsof Modi’s leadership. But growth rates were alsohigh in the state for two decades prior, suggestingthat Modi’s policies were not decisively responsiblefor this growth performance. It is also pertinentthat growth rates were higher in states such as


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Maharashtra and Tamil Nadu. Gujarat’sperformance as the most attractive destination forprivate investment is also overstated. Its share inforeign direct investment in 2102-13 was 2.38%,placing it at a distant sixth position among states.By contrast, Maharashtra’s share was just under40%. Economist Atul Sood also reminds us that ofthe total agreements signed under successive high-profile investor summits in Gujarat, the proportionof projects actually realized fell precipitously from73% in 2003 to 13% in 2011.

Even more pertinent are the terms on whichGujarat attracts private investment. Its goldstandard reputation as an investor-friendlygovernment derives from the alacrity with whichit provided land for Tata’s small car factory,contrasted with long futile years of bitter publicstruggle in West Bengal. A right to informationapplication revealed that the Tata investment wasRs.2,900 crore, and the state government awardedit a loan of Rs.9,570 crore at 0.1% rate of interest,repayable on a monthly basis after 20 years. Inaddition, it received land at much cheaper thanmarket, and the state paid stamp duty, registrationcharges and electricity. It has been calculated thatthe total subsidy element of the cheap car is half itstotal market price.

This is the basic template of the policies ofModi’s government for other large industrial housesas well. Economists such as Indira Hirway questionwhether this is good governance or cronycapitalism. It turns on its head welfare principlesof taxing the rich to provide a better life for thepoor: the Gujarat model is of taxing the poor tosubsidize the super-rich. Sood also worries aboutthe implications of completely handing over bothinvestment and decision-making regarding all newinfrastructure projects—ports, highways, rail—toprofit-led large industry, and that Gujarat now hasamong the worst records of labour unrest amongstates in the country.

The other side of the same coin of massive stateexpenditure for unprecedented incentives to largebusinesses is markedly declining investments in thesocial sector. In 2011-12, Gujarat ranked 17thamong Indian states in the proportion ofdevelopment expenditure in total publicexpenditure. Only 1.09% of public expenditure inGujarat was on education and health, well behindstates such as Rajasthan (3.09%). Shipra Nigam

points to the inevitable consequences of this neglect:between 1999-2000 and 2007-08, fewer childrenbetween six and 14 years of age attended school inGujarat than the national average. Even moreworrying, the proportion of girls, scheduled castesand tribes, Muslims and other minorities whoattended school was much lower than nationalaverages. Gujarat is again below the nationalaverage and also compares unfavourably with otherhigh growth states such as Tamil Nadu, Haryana,and Maharashtra in infant mortality, under-fivemortality and mortality rates for women. No wonderthat in the India Human Development Report 2011,Gujarat’s ranking was a lowly 11th in 2007-08.

Gujarat’s hunger story is even more damning.A 2012 National Nutrition Monitoring Bureau(NNMB) survey shows 53.7% children under fivein Gujarat are stunted (low height for age). Stuntingis an indicator of chronic malnutrition mainlycaused by lack of access to nutritious food andrepeated illness. About 43% of adult men andwomen have a low body mass index. Time trendsfrom both the National Nutrition MonitoringBureau and National Sample Survey data showthe average calorie consumption and cerealconsumption is also falling. There is also a declinein consumption of other nutrients such as proteins,calcium and iron. While many states have beenimproving their public distribution system (PDS) inthe past five years, Gujarat is one of the worst-performing states on two aspects of the PDS: it hasa low and falling per capita PDS consumption,and among the highest rates of foodgrain diversion.Over half of those in the poorest quintile in Gujaratreport that they do not get any subsidized grain,nearly ten percentage points higher than thenational average, according to the 2009-10 NSS.Below the poverty line lists have not been updatedsince 1998, which pegged the poverty line at Rs.11a day.

Below and bluster and hyperbole of politicalclaims, the choice before the country is stark. Canmarkets alone deliver a better life for people ofdisadvantage, or must caring states play a moreactive role? Will ordinary people, and especiallythe millions who live in poverty, indeed benefitfrom a model of development in which huge publicfunds are committed to supporting privateinvestment, to the neglect of investments ineducation, healthcare, nutrition and infrastructure?

Source: Mint

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