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NATIONAL AFFAIRS
State Elections, 2012
Widely perceived as a litmus test for the 2014 Lok Sabha elections, the results of the five Assembly polls, declared on March 6, 2012, served as a serious warning for the Congress in general, and its heir-apparent Rahul Gandhi in particular, about the party’s capability to lead the country once again.
Punjab: The Shiromani Akali Dal (SAD)-BJP alliance made history by overcoming anti-incumbency to retain power for the second consecutive term, thus creating history in the Punjab electoral politics. By winning 56 seats on its own and with its alliance partner BJP winning 12 seats, this is the first time in Punjab’s history that a ruling party has been voted back to power.
By wrestling 68 of the 117 Assembly sets, the Akali BJP combine has got a formidable lead over its main rival, Congress, which has won 46 seats. While three independents have won at the hustings, the Third Front under the banner of “Sanjha Morcha” failed to get any seat. The People’s Party of Punjab (PPP) which was part of the third front failed to open its account.
Mr Parkash Singh Badal was sworn-in as the Chief Minister on March 14.
Uttar Pradesh: The Samajwadi Party won a landslide victory and formed the government without any outside support. It won 224 seats of the 403-member Assembly. While the projection of Mulayum Singh Yadav’s son Akhilsh Singh Yadav as the party’s new face proved to be a real winner, the SP’s ride to power was also helped as it was seen as the strongest party capable of dislodging the Mayawati government.
The results were a personal blow for AICC general secretary and Nehru-Gandhi scion Rahul Gandhi. His intensive and aggressive campaign failed to deliver as the Congress was unable to add substantially to its tally of 22 seats.
Akhilesh Yadav, son of Samajwadi Party supremo Mulayam Singh Yadav, was elected as the youngest Chief Minister of Uttar Pradesh, representing a generational shift in a State whose politics is dominated by caste and religion. He was sworn in on March 15.
Goa: The Digambar Kamat-led Congress government in Goa suffered an embarrassing defeat with most of its stalwarts biting the dust, mainly at the hands of newbies fielded by the Bharatiya Janata Party (BJP). The BJP which, along with its ally the Maharashtrawadi Gomantak Party (MGP), bagged a majority (24 seats) in the 40-member Assembly said it had received the support of vast sections of the Goan people. Congress could win only 9 seats.
Mr Manohar Parrikar was sworn-in as the Chief Minister on March 9.
Uttarakhand: Voters in Uttarakhand delivered a hung House, with both the Congress and the BJP falling short by four and five seats, respectively, for a simple majority in the Assembly of 70 members. While the Congress won 32 seats, BJP bagged 31. BSP got 3 seats and Independents 4.
The biggest surprise, however, was the defeat of Chief Minister B.C. Khanduri, who had spearheaded BJP’s campaign.
Mr Vijay Bahuguna of Congress was elected as the Chief Minister of the State.
Manipur: Manipur Chief Minister Okram Ibobi Singh once again proved that he is a hard nut to crack. The veteran Congressman led the party to the third consecutive victory in Manipur, the most troubled state in the North-East, belying speculation about a hung Assembly.
The Congress victory is commendable in the sense that after so many life-sapping national highway blockades during the last regime of Ibobi Singh, the people of Manipur have chosen to opt for the “development and stability” plank of the Congress, ignoring the rag-tag alliance of Opposition parties that failed to project one single formidable leader as the chief ministerial candidate.
The blanket boycott call given by a coordination committee of all the insurgent groups in the valley areas of Manipur had severely hampered electioneering of Congress candidates, but voters were not impressed by the highhandedness of militants who tried to dictate terms to the voters through the gun.
The poll outcome indicates that the Trinamool Congress could impress some voters in the troubled State, while the regional Nagaland People’s Front (NPF) failed to make new ground despite fielding more candidates in the elections this time.
EC countermands Jharkhand Rajya Sabha elections
In an unprecedented step, the Election Commission, on March 30, 2012, countermanded the Rajya Sabha polls in Jharkhand in the wake of allegations of horse trading and seizure of over Rs 2 crore in cash, saying the election process there “has been seriously vitiated”.
The Commission recommended to the President, under Article 324 of the Constitution, read with Section 21 of the General Clauses Act, 1897, that she may be pleased to rescind the notification of March 12 calling upon the elected members of Jharkhand Legislative Assembly to elect two members to the Council of States.
While RS elections have been countermanded in the past, this is the first time that such a step has been taken on account of vitiation of the election process because of money power.
Judicial Standards and Accountability Bill
On March 29, 2012, Lok Sabha passed the Judicial Standards and Accountability Bill, 2011, aimed at striking a balance between maximising judicial independence and laying down accountability at the same time for members of the higher judiciary.
The Bill proposes to reduce the quantum of punishment for frivolous and false complaints against judges from proposed five years rigorous imprisonment to one-year simple imprisonment and quantum of fine from Rs 5 lakh to Rs 50,000.
The most important component of this Bill is the proposed creation of a National Judicial Oversight Committee (NJOC), which gives them wider constitutional powers, including that of taking help from outside for the purpose of getting more information. The NJOC shall be entitled to take assistance of such officers of the Central or the State government or any agency thereof or authority as it deems fit.
Cash-rich PSUs allowed buy-back of shares
In last-ditch efforts to meet its Rs 40,000 crore divestment target in 2011-12, the Cabinet Committee on Economic Affairs (CCEA) has allowed cash-rich public sector companies to buy back government’s equity.
Another important event of the divestment calendar was the ONGC auction, with the Union government mopping around Rs 12,000 crore by way of sale of 5 per cent stake in ONGC.
It is evident that the government is going in for fast-track methods of auction and share buyback as it has not been able to garner significant amounts through divestment. Fund raising through these options can be done much faster than a follow-on offer route to the general public.
The Department of Disinvestment had identified about two dozen cash-rich PSUs with a cash balance of nearly Rs 2 lakh crore. The cash-rich companies include SAIL, NMDC, NTPC, Coal India, Oil India, MMTC, Neyveli Lignite, NHPC, BHEL and GAIL.
The CCEA also allowed cash-rich companies to invest in other PSUs through crossholdings. This is a remake of the idea tried in 1998 when three oil companies—ONGC, IOC and GAIL—had invested through crossholdings. According to the markets, this had not really worked.
Census 2011—Economic indicators
In a telling reminder of the wide chasm between urban and rural India, the latest Census figures show a picture that is far from respectable for a country aiming to be on the global high-table of decision making.
In nuclear India capable of routinely sending satellites into space, 31 per cent—10 crore—out of 33 crore households across the country use kerosene for lighting homes. Nearly 7 per cent of the urban houses (presumably slums) use kerosene while 43 per cent rural homes use the fuel, indicating that they either do not have power supply or cannot afford it. This figure is an improvement over 2001, when 42 per cent households used kerosene for lighting purposes.
Only 5 per cent—some 1.65 crore—families in the country own a personal four wheeler. Only 9.7 per cent—some 1 crore—of the 11 crore urban families have a four wheeler.
Despite India’s rapid economic growth, nearly 15 per cent families live in houses that have roofs made of grass, thatch, bamboo, wood, mud etc. Ten years ago, the figure was 21. 9 per cent.
The Census says only 32 per cent households use tap water for drinking from a treated (filtration plant) source. Only 47 per cent families have source of water (tap, well, etc) within the houses, while 18 per cent fetch drinking water from a source located more than 500 meters (villages) and 100 meters (urban) from their homes. In urban areas, 70 pc homes have tapped water supply, while just 30 pc enjoy the facility in the rural areas.
The data shows 61 per cent families across the country have kitchen for cooking. Nearly 79 per cent urban homes have it, while the figure is 53 per cent in villages.
Surprisingly, 67 per cent of families use firewood, crop residue, cow dung and coal as fuel to cook. Only 29 per cent homes across the country have access to LPG, electricity or bio-gas as fuel for cooking purposes. In the urban areas, 65 per cent of homes have access to LPG while 20. 1 per cent use firewood and 7. 5 per cent kerosene for cooking.
Union Budget 2012
On March 16, 2012, battling a tough economic situation and severe political compulsions, Finance Minister Pranab Mukherjee did a balancing act to present a pragmatic and realistic Union Budget for 2012-13.
While tax payers got some relief in the form of increase in exemption and changes in income tax brackets, the Budget, as expected, was tax heavy for consumption as both excise and service tax went up from 10 per cent to 12 per cent.
The fiscal deficit for this year is at 5.9 per cent, much higher than the Budget estimates of 4.6 per cent. In 2013-14, it is proposed to bring it down to 5.1 per cent.
Outlays for welfare schemes have seen modest hikes as the focus is on controlling expenditure. Allocation for road transport has been enhanced by 14 per cent. Target for agricultural credit has been raised to Rs. 5.75 lakh crore. Rural drinking water and sanitation has got 27 per cent rise in allocation to Rs. 14,000 crore. RTE has got Rs. 25,555 crore allocation, showing an increase of 21 per cent.
The government has set a target to raise Rs. 30,000 crore from stake sales in public sector undertakings in 2012-13, even as it missed the target for the current fiscal by a wide margin.
Finance Minister announced a justifiable 17.6 per cent hike in its defence spending to allocate an additional Rs. 28,992 crore for 2012-13, over the ongoing year’s Rs. 1,64,415 crore defence budget.
In an effort to encourage investment in the infrastructure sector, the Union Budget has allowed financial institutions to raise about Rs. 60,000 crore through tax-free bonds in 2012-13.
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Railway Budget 2012
Union Railway Minister Dinesh Trivedi presented the Railway Budget in Parliament on March 14, 2012.
Mr Dinesh Trivedi was forced to resign by Mamata Banerjee and Mr Mukul Roy was appointed as the Railways Minister, who rolled back the hike in fares proposed originally by Mr Trivedi, except in case of AC 2-tier and AC-1 fares. He further added that the financial loss incurred due to the roll-back of fares would be compensated by sale of railway land all over the country and further encouragement of public-private partnerships.
The highlights of Railway Budget are:
—Minimum fare and platform tickets to cost Rs 5.
—50 per cent concession in fare in AC-2, AC-3, Chair Car and Sleeper classes to patients suffering from ‘Aplastic Anaemia’ and ‘Sickle Cell Anaemia’.
—Extending the facility of travel by Rajdhani and Shatabdi trains to Arjuna Awardees.
—Travel distance under ‘Izzat Scheme’ to increase from 100 kms to 150 kms.
—SMS on passenger mobile phone in case of e-ticket to be accepted as proof of valid reservation.
—Introduction of satellite based real time train information system (SIMRAN) to provide train running information to passengers through SMS, internet, etc.
—On board passenger displays indicating next halt station and expected arrival time to be introduced.
—Installation of 321 escalators at important stations of which 50 will be commissioned in 2012-13.
—Introduction of regional cuisine at affordable rates; launching of Book-a-meal scheme to provide multiple choices of meals through SMS or email.
—Introduction of coin/currency operated ticket vending machines.
—Upgradation of 929 stations as Adarsh Stations, including 84 stations proposed in 2012-13; 490 stations have been completed so far.
—Specially designed coaches for differently-abled persons to be provided in each Mail/Express trains.
—Introduction of “Rail Bandhu” on-board magazine on Rajdhani, Shatabdi and Duronto trains.
—Setting up of AC Executive lounges at important stations
—75 new Express trains to be introduced.
—725 km new lines, 700 km doubling, 800 km gauge conversion and 1,100 km electrification targeted in 2012-13.
—Rs 6,872 cr provided for new lines, Rs 3,393 cr for doubling, Rs 1,950 cr for gauge conversation, Rs 828 cr for electrification
—Highest ever plan outlay of Rs 60,100 cr
—A wagon factory to be set up at Sitapali (Ganjam District of Odisha)
—A rail coach factory with the support of government of Kerala to be set up at Palakkad; two additional new manufacturing units for coaches to be established in the Kutch area in Gujarat and at Kolar in Karnataka with active participation of the State governments.
—Setting up of a factory at Shyamnagar in West Bengal to manufacture next generation technology propulsion system for use in high power electric locomotives.
—Creating Missions as recommended by Pitroda Committee to implement the modernization programme.
—Setting up of Railway Tariff Regulatory Authority to be considered.
—Rail-Road Grade Separation Corporation to be set up to eliminate level crossings.
—Indian Railway Station Development Corporation to be set up to redevelop stations through PPP mode.
—National High Speed Rail Authority to be set-up.
—Introduction of a ‘Green Train’ to run through the pristine forests of North Bengal.
—Setting up of 200 remote railway stations as ‘green energy stations’ powered entirely by solar energy.
—Providing solar lighting system at 1,000 manned level crossing gates.
—2,500 coaches to be equipped with bio toilets.
—Setting up of 72 MW capacity windmill plants in Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and West Bengal.
—Setting up of a Railway Safety Authority as a statutory regulatory body as recommended by Kakodkar Committee
—Three 'Safety Villages' to be set up at Bengaluru, Kharagpur and Lucknow for skill development for disaster management.
—Institution of 'Rail Khel Ratna' Award for 10 rail sports-persons every year.
—New coaching terminal at Naihati, the birth place of Rishi Bankim Chandra Chattopadhyay, commemorating him on 175th Birth Anniversary.
—Project to connect Agartala with Akhaura in Bangladesh to be taken up in 2012-13.
—Freight loading of 1,025 MT targeted; 55 MT more than 2011-12
—Passenger growth targeted at 5.4 per cent.
Economic Survey, 2012 Highlights
The Economy Survey 2011-12 was tabled by the Finance Minister Pranab Mukherjee in the Parliament on March 15, 2012. Following are the highlights of Survey, a report card of the Indian economic scenario for current fiscal:
—The country's economic growth estimated at 6.9 per cent in the current fiscal; growth momentum to pick up in next two fiscals to 7.6 per cent 2012-13 and 8.6 per cent in 2013-14.
—RBI expected to lower policy interest rates, as inflationary pressures expected to ease in coming months; A low interest rate regime to encourage investment activity and push forward economic growth.
—Steps required for deepening of domestic financial markets, especially corporate bond market and attracting longer-term inflows from abroad; Efforts at attracting dedicated infrastructure funds have begun.
—The growth rate of investment in the economy is estimated to have declined significantly; borrowing costs up due to a sharp increase in interest rates.
—High borrowing costs and increase in other costs affecting profitability and internal accruals.
—Slowdown in Indian economy largely due to global factors, as also because of domestic factors like tightening of monetary policy, high inflation and slower investment and industrial activities.
—Inflation high, but showing clear signs of slowdown by the year-end; Whole-sale food inflation down to 1.6 per cent in January 2012 from 20.2 per cent in February 2010.
—India remains one of the fastest growing economies of the world; Country's sovereign credit rating rose by a substantial 2.98 per cent 2007-12.
—Exports grew by 40.5 per cent in the first half of this fiscal and imports grew by 30.4 per cent; Foreign trade performance to remain key driver of growth.
—Forex reserves expanded further, covering almost the entire external debt stock to the country.
—Foodgrains production likely to cross 250.42 million tonnes; largely on back of increase in rice production.
—Agriculture and Services sectors expected to perform well; Industrial growth pegged at 4-5 per cent and expected to improve further as economic recovery resumes.
—Global economy remains fragile and concerted efforts needed to restore stability and renewed growth; Steps needed for sovereign debt crisis, financial regulation, growth and job creation efforts and energy security, globally.
—India much more closely integrated with world economy' share of trade to GDP of goods and services has tripled in 1990-2010.
—A progressive deregulation of interest rates on savings accounts to help raise financial savings and improve transmission of monetary policy.
—Sustainable development and climate change becoming central areas of global concern and India too is equally concerned and engaged constructively in global negotiations.
—FDI in multi-brand retail can come into effect in a “phased” manner, beginning from metropolitan cities. The survey said that allowing foreign direct investment in multi-brand retail is one of the major issues in the services sector, but the move would address problems relating to food inflation.
—Notwithstanding lower growth of domestic steel consumption during the first three quarters of the current fiscal, the overall performance of the sector is “optimistic”. The survey points out a list of bottlenecks responsible for lower steel consumption, including high inflationary pressure within, deteriorating global economy, multiple hikes in interest rates by the Reserve Bank of India.
—Rate of growth estimated to be 6.9% in FY 12.
—Real GDP growth expected at 7.6% in FY 13.
—GDP pegged at 8.6% in FY 14.
—Agriculture grows at 2.5 % growth in FY 12.
—Services grow at 9.4 %, in FY 12, share in GDP at 59%.
—Industrial growth pegged at 4-5 % in FY 13.
—WPI food inflation dropped from 20.2% in February 2010 to 1.6% in January 2012.
—India’s sovereign credit rating rose by 2.98 percent in 2007-12.
—Central spending on social services up at 18.5% in FY 12 Vs 13.4% FY 07.
—Gross capital formation in Q3 of FY 12 as a ratio of GDP at 30%, down from 32% in FY 11.
—Balance of Payments widens to USD 32.8 bn in H1 of FY 12 Vs USD 29.6 bn FY 11.
—Forex reserves up from USD 279 bn in March ’10 to US USD 305 bn in March 11.
—India’s share of trade to GDP of goods and services in world tripled in 1990-2010.
—FDI in multi-brand retail recommended.
—Agriculture, allied activities account for 13.9 % of GDP in FY 12.
—Foodgrains stocks at 55.2 million tonnes.
—Production of foodgrains in FY 12 estimated at 250.42 million tones.
—Industrial growth pegged at 4-5% in FY 12.
—Employment in Industry increase from 16.2% in 1999-2000 to 21.9% in 2009-10 largely due to construction sector.
—Services grow by 9.4% despite slowing GDP growth.
—Share of services in GDP at increased from 55.1% in FY 11 to 56.3% in FY 12.
—India’s exports grew at 23.5% to reach USD 242.8 bn in April 2011 - Jan 2012.
—Imports up 29.4% during April - Jan 2011-12 at USD 391.5 bn.
—Key import areas: petroleum, oil and lubricant, gold and silver.
—UAE India’s largest trading partner, followed by China.
—Total FDI inflows into major infrastructure sectors during April-December 2011 registered growth of 23.6%.
—Rupee falls by 12.4 % against USD. Rupee’s high volatility impairs investor confidence.
—Public sector banks show 19 % growth in priority sector lending.
—Credit Disbursement to agriculture sector exceeded target by 19 %.
—98 % public sector bank branches fully computerised.
—Number of out-of-school children down from 134.6 lakh in 2005 to 81.5 lakh in 2009.
—Share of women in organized-sector employment at 20.4% in 2010 March end.
—MGNREGA: Coverage increases to 5.49 crore households in 2010-11.
India, Brazil sign six pacts
On March 30, 2012, India and Brazil signed six accords in diverse fields and agreed to take steps to exploit the full potential of their cooperation in defence, nuclear energy and other vital areas. The agreements were signed after the meeting between Prime minister manmohan Singh and visiting Brazilian President Dilma Rousseff.
Both India and Brazil, along with Germany and Japan, are part of the G-4 grouping that seeks permanent seats for the four countries in an expended UN Security Council.
The six accords inked between the two countries are: Executive programme of cultural exchanges for 2012-2014; an MoU on technical cooperation; a programme of cooperation on science and technology for 2012-2014; an MoU on cooperation in the field of biotechnology; an MoU under the Brazilian programme "Science Without Border" on reception of Brazilian scholarship students in India and a statement of intent for promotion of gender equality and advancement of the rights of women and children.
Prime Minister Singh and the Brazilian President agreed to enhance consultations between the two countries on reform of global governance system, particularly in the context of the G-20 process.
On global developments, the two leaders felt that a resolution to the crisis in West Asia could only be achieved through dialogue and consultations.
India-China agree to hold first-ever maritime talks
Taking a giant step towards normalisation of relations, India and China, on March 1, 2012, decided to begin a dialogue on maritime issues while resolving to maintain peace and tranquillity along the Line of Actual Control (LAC).
The suggestion for the first-ever maritime dialogue between the two countries was made by Chinese Foreign Minister Yang Jiechi during talks with External Affairs Minister S.M. Krishna in New Delhi.
The proposed dialogue is being considered a major confidence building measure (CBM) between the two countries, given the fact that it comes in the wake of the Chinese navy increasingly trying to assert itself in the Strait of Malacca and the Indian Ocean region. New Delhi has sought to counter the Chinese dominance by strengthening maritime ties with countries in the South China Sea like Vietnam and Japan.
The decision to include maritime issues in bilateral talks is expected to help reduce tension between the two countries ahead of Chinese President Hu Jintao’s visit to India for the BRICS (Brazil, Russia, India, China, South Africa) Summit in March-end.
India-China to celebrate 2012 as Friendship Year
On March 29, 2012, Prime Minister Manmohan Singh and Chinese President Hu Jintao agreed that the current Special Representative (SR) mechanism between the two countries to resolve the border dispute should continue to work and peace and tranquillity be maintained along the Line of Actual Control (LAC).
At a meeting here on the margins of the BRICS Summit, the two leaders emphasised the need to enhance bilateral trade to $ 100 billion by 2015. The Chinese leader also u promised to address India’s concerns over the huge trade imbalance in favour of China.
They also signed a document to celebrate 2012 as ‘The Year of India-China Friendship’ by organising commemorative programmes.
Visit of Prime Minister Manmohan Singh to South Korea
Seeking to expand their strategic ties, India and South Korea agreed to step up political and security cooperation, during the four-day visit of Prime Minister Manmohan Singh to Seoul, starting March 25, 2012. They also vowed to double the bilateral trade to an ambitious $40 billion by 2015.
In a joint statement released after the talks, Prime Minister Manmohan Singh and President Lee Myung-bak expressed grave concern about the continued threat of terrorism and piracy, emanating from various quarters. “The two leaders expressed the hope that the Comprehensive Convention on International Terrorism, which was under consideration at the UN, would be adopted soon”.
India also joined South Korea in voicing concern over North Korea’s plan to launch an ‘application satellite’, a move that is likely to escalate tension in the peninsula. Both leaders also agreed to enhance cooperation and coordination on regional issues, including in the East Asia Summit process.
India and South Korea also discussed ways and means to enhance cooperation between scientists and technicians, including how to operationalise a joint science and technology fund of $10 million. India has also offered to launch Korean satellites on Indian space launch vehicles.
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INTERNATIONAL AFFAIRS
Parliamentary elections in Iran
Clerical Supreme Leader Ayatollah Ali Khamenei tightened his grip on Iran’s faction-ridden politics after loyalists won over 75 percent of seats in Parliamentary elections at the expense of President Mahmoud Ahmadinejad, a near-complete count showed.
The widespread defeat of Ahmadinejad supporters—including his sister, Parvin Ahmadinejad—is expected to reduce the President to a lame duck after he sowed divisions by challenging the utmost authority of Khamenei in the governing hierarchy.
The outcome of vote, essentially a contest between conservative hardline factions with reformist leaders under house arrest, will have no big impact on Iranian foreign policy, notably its nuclear stand-off with the West. But it will boost Khamenei’s influence in next year’s Presidential election.
Independents and women candidates fared relatively well in many provincial towns, where they campaigned on the immediate concerns—generally economic—of their constituents.
Iran's energy-driven economy is suffering badly from Western sanctions, imposed over its refusal to halt sensitive nuclear activity and give unfettered access to UN nuclear inspectors.
Putin is elected President of Russia
Vladimir Putin triumphed in Russia’s Presidential election on March 4, 2012, calling his victory a turning point that had prevented the country falling into the hands of enemies.
Putin’s opponents, however, complained of widespread fraud, refused to recognise the results and said they would press ahead with the biggest protests since he rose to power 12 years ago.
But the former KGB spy said he had won a “clean” victory and was on course to return to the Kremlin after four years as Prime Minister.
Despite the opposition, mainly among well-educated and relatively well-off young professionals, Putin’s support remains strong in the provinces and his victory had not been in doubt.
The mood, however, has shifted in the country of 143 million and many people are uncertain whether he will be conciliatory and reformist, or stand in the way of political and economic change.
Putin, who will be inaugurated in May, is likely to revert to the fighting talk against the West that was the trademark of his first Presidency and his election campaign.
Economists say a key test of Putin’s return will be how far he is ready to go to reform an economy heavily dependent on energy exports, and caution that his populist campaign spending promises could return to haunt him.
Putin has remained Russia’s dominant leader and its most popular politician since stepping aside in 2008 to make way for his ally, Medvedev, because he was barred from a third straight term by the constitution.
Two billion more people get safe water to drink
More than two billion people have gained access to better drinking water sources, such as piped supplies and protected wells, between 1990 and 2010, according to the UN officials.
The figure means the world has met the internationally agreed Millennium Development Goal (MDG) to halve the proportion of people with no safe drinking water well ahead of a 2015 deadline.
United Nations Secretary-General Ban Ki-moon said this was “a great achievement for the people of the world” and noted it was one of the first MDGs to be met.
The Millennium Development Goals were a group of targets set by the international community in 2000, seeking to improve health and reduce poverty among the world’s poorest people by 2015.
A report by the UNICEF and the WHO has found that at the end of 2010, 89 percent of the world’s population, or 6.1 billion people, had access to improved drinking water—higher than the 88 percent MDG target. The report estimates that by 2015, 92 percent of the global population will have access to improved drinking water.
The news needs to be taken by caution, as at least 11 percent of the world’s population—or 783 million people—still have no safe drinking water, and some 2.5 billion do not have improved sanitation facilities.
The report said the world is still far from meeting the MDG target for sanitation, and is unlikely to do so by 2015. Only 63 percent of the world now has improved sanitation access, a figure projected to increase to only 67 percent by 2015, well below the 75 percent internationally agreed aim. Some 1.1 billion people still defecate in the open because they have no toilets and the vast majority of them live in rural areas.
Greece successfully closes bond swap
On March 8, 2012, Greece successfully closed its bond swap offer to private creditors, opening the way to securing the funding it needs to avert a messy default on its debt.
The biggest sovereign debt restructuring in history will see bond holders accept losses of some 74 percent on the value of their investments in a deal that will cut more than 100 billion euros from Greece’s crippling public debt.
After initial fears that the deal could fail altogether, pitching Greece and the euro zone into fresh crisis, the result provides a rare piece of good news for the government of Prime Minister Lucas Papademos.
The so-called private sector involvement (PSI) deal is a key element in a broader international bailout aimed at averting a chaotic default by Greece and a potentially disastrous banking crisis across the euro zone. The European Union and International Monetary Fund have made a successful bond swap a pre-condition for final approval of the 130 billion euros bailout.
Despite the apparent success, the deal will not solve Greece’s deep-seated problems and at best it may buy time for a country facing its biggest economic crisis since World War Two and crushed under debt equal to 160 percent of its gross domestic product.
Underlining the severe problems facing Greece after five years of deep recession, latest data shows unemployment running at a record 21 percent in December, twice the euro zone average, with 51 percent of young people without a job.
There has been growing resentment over the austerity medicine ordered by international creditors, which has compounded the pain from a slump which has seen the economy shrink by a fifth since 2008.
U.S. intelligence sees global water conflict risks rising
Fresh water supplies are unlikely to keep up with global demand by 2040, increasing political instability, hobbling economic growth and endangering world food markets, according to a report by the office of the Director of National Intelligence, USA.
South Asia, the Middle East and North Africa will face major challenges in coping with water problems that could hinder the ability to produce food and generate energy.
The report said that a “water war” was unlikely in the next 10 years, but that the risk of conflict would grow with global water demand likely to outstrip current sustainable supplies by 40 percent by 2030.
The report, drafted principally by the Defence Intelligence Agency and based on a classified national intelligence estimate, said that water in shared basins would increasingly be used by States to pressure their neighbours.
During the next 10 years, the over-pumping of ground water supplies in some agricultural areas will pose a risk to food markets and cause social disruption if mitigating steps such as drip irrigation and improved agricultural technology are not implemented. The report also said that through 2040 water shortages and pollution would likely harm the economic performance of important US trading partners by limiting the use and development of hydro power, an important source of electricity for developing countries.
According to the report the risks were greatest for the Brahmaputra which flows through India and Bangladesh and the Amu Darya in central Asia.
How the West rendered USSR bankrupt
A new analysis showing how the radical policies advocated by western economists helped to bankrupt Russia and other former Soviet countries after the Cold War has been released by researchers at the University of Cambridge.
The study, led by academics at the University of Cambridge, is the first to trace a direct link between the mass privatisation programmes adopted by several former Soviet States, and the economic failure and corruption that followed.
Devised principally by western economists, mass privatisation was a radical policy to privatise rapidly large parts of the economies of countries such as Russia during the early 1990s. The policy was pushed heavily by the International Monetary Fund, the World Bank and the European Bank for Reconstruction and Development (EBRD).
Its aim was to guarantee a swift transition to capitalism, before Soviet sympathisers could seize back the reins of power.
Instead of the predicted economic boom, what followed in many ex-Communist countries was a severe recession, on a par with the Great Depression of the United States and Europe in the 1930s.
The reasons for economic collapse and skyrocketing poverty in Eastern Europe, however, have never been fully understood. Nor have researchers been able to explain why this happened in some countries like Russia, but not in others such as Estonia.
Some economists argue that mass privatisation would have worked if it had been implemented even more rapidly and extensively. Conversely, others argue that although mass privatisation was the right policy, the initial conditions were not met to make it work well.
Further still, some scholars suggest that the real problem had more to do with political reform.
Second World Nuclear Security Summit
South Korea hosted the second world Nuclear Security Summit on March 26, 2012, a gathering first convened in 2010 by President Barack Obama with the goal of securing vulnerable nuclear material by 2014.
At the end of the two-day nuclear security summit a bland statement by the leaders reaffirmed the need to work harder to ensure a “safer world for all”.
In a communiqué long on general commitments but short on specifics, the 58 delegates reiterated a joint call to “secure all vulnerable nuclear material in four years” and backed the “essential role” of the International Atomic Energy Agency (IAEA) in “facilitating international cooperation”.
North Korea and Iran's nuclear weapons programs were not on the agenda at the summit in the South Korean capital and neither country was invited to the forum.
US President Barack Obama had first outlined plans for the nuclear security summit in a 2009 speech citing the threat of nuclear terrorism–terror acts using a nuclear blast or the spread of radiation–as the most serious threat to global security.
Concern had been building following the September 11, 2001 US attacks, the worldwide proliferation of nuclear material, and efforts by North Korea and Iran to develop atomic programmes in defiance of international wishes.
Aside from direct casualties from an explosion or radiation, security experts warn an attack could have far-reaching psychological impact on targeted societies, severely disrupt commerce, and provoke security crackdowns that could impinge on civil liberties.
Estimates say as much as 1,600 tons of weapons-grade highly enriched uranium (HEU) and 500 tons of plutonium exist in the world, sometimes stored under questionable security in former Soviet States and elsewhere.
There are millions of other radioactive sources such as nuclear power plants, research facilities and hospitals, which store isotopes used in treating cancer and other conditions. Security experts say this could be used by terrorists to spread contamination through a “dirty bomb”. Only about 55 pounds of HEU or 17.6 pounds of plutonium would be required to build a working nuclear bomb, according to experts.
The International Atomic Energy Agency has confirmed 20 cases of theft or loss of HEU or plutonium in the past two decades and hundreds more cases of other nuclear material going missing.
BRICS Summit
Determined to end the hegemony of rich Western nations in navigating global economic policies, the BRICS nations, on March 29, 2012, signed two key accords to promote trade among them in their local currencies and explore the possibility of setting up a development bank for mobilising resources for infrastructure and sustainable development projects.
The Master Agreement on Extending Credit Facility in Local Currency and the Multilateral Letter of Credit Confirmation Facility Agreement are being seen as a major step towards replacing the dollar as the main currency for trading amongst the five nations.
On the political side, there were hardly any surprises in the declaration as, contrary to apprehensions, the leaders of the five emerging economies arrived at common formulations on Syria, Iran and Afghanistan after a brief debate during their closed-door meeting. The BRICS’ stand on Syria and Iran will obviously not go down well with the Western nations, which have been on a collision course with these two countries.
On Iran, the declaration said the BRICS countries felt that the situation in the Islamic republic could not be allowed to escalate into a conflict, the disastrous consequences of which would be in no one’s interest. At the same time, they felt that Iran has a crucial role to play for the peaceful development and prosperity of a region of high political and economic relevance.
On Afghanistan, the BRICS countries supported the global community’s commitment to the war-ravaged nation, enunciated at the Bonn International Conference in December last year, to remain engaged over the transformation decade from 2015-2024.
The emphasis at the BRICS meet, however, was on economic and commercial cooperation among the five member-nations.
BRICS ministers target $500 bn trade by 2015
The BRICS (Brazil, Russia, India, China and South Africa) countries are exploring ways to substantially increase the intra-BRICS trade in the next couple of years from the current $230 billion. The trade ministers of the five countries, who met in New Delhi on March 28, 2012, just before the Summit, agreed on enhancing trade, including of high-value manufactured items. They also agreed to intra-BRICS cooperation, especially in the areas of customs cooperation, trade facilitation, investment promotion, SME cooperation and trade data collection.
Though the meeting was devoid of any major announcements or breakthroughs, the trade ministers agreed on a collective response on some global issues like the Eurozone crisis and the spike in oil prices.
According to Goldman Sachs, by 2050, the combined economies of BRICS could eclipse the combined economies of the current richest countries of the world.
In a joint statement, the business leaders of BRICS agreed that it is essential to improve the quality of trade by focusing on more value-added trade in all the three sectors, namely manufacturing, services and agriculture.
It was also necessary to capitalise on opportunities in sectors such as agriculture, energy, infrastructure, mining, healthcare and pharma, and information and communication technology.
BRICS together make up 43 per cent of the world’s population and hold a combined GDP of over $18 trillion.
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DO YOU KNOW
On March 9, 2012, the Reserve Bank of India (RBI) slashed the Cash Reserve Ratio (CRR) by 75 basis points to 4.75 per cent. The move helped in easing the liquidity situation by injecting Rs 480 billion into the banking system.
According to the Forbes magazine’s annual list of world’s richest, RIL chairman Mukesh Ambani (ranked 19th in global list) continues to be the world’s richest Indian, followed by Savitri Jindal and family (80), Sunil Mittal and family (113), and Kumar Birla (116).
Chappar Chiri has a special place in Sikh history. It was here that Banda Singh Bahadur, one of the most respected warriors in Sikh history, won the battle against Wazir Khan, who commanded the Mughal army. The battle was fought in 1710. Recently Chappar Chirri was in news when Mr Parkash Singh Badal chose this place to hold the swearing-in ceremony, on March 14, 2012, after emerging victorious in the Assembly elections.
The fifth unit of the Mundra power plant was synchronized in first week of March 2012, taking its capacity to 4,620 MW and making it the world’s largest single-location coal-fired plant in private sector. China, Poland and Taiwan have three plants exceeding 5,000 MW but they are all State-owned. Mundra is owned by Adani Power and is the fifth largest in the world.
Encyclopaedia Britannica, a 32-volume reference book in homes and libraries worldwide, has decided to stop publishing the print edition for the first time in 244 years and shift focus to digital versions. The book-form of the encyclopaedia had first hit the print in Scotland in 1768.
India Water Week is international level conference to be held from 10 –14th April, 2012 at New Delhi. The main theme of the conference is “Water, Energy and Food Security call for Solution”.
The Advance Pricing Agreement (APA) program is proposed to be introduced from July 1, 2012, as per the Union Budget 2012. An APA is an arrangement between the tax payer and tax authority to resolve potential disputes in relation to determination of Arm’s Length Price (ALP) of an international transaction through an upfront agreement.
General Anti-Avoidance Rules (GAAR) generally empowers tax authorities to deny tax benefit on transactions or arrangements which do not have commercial substance or consideration other than achieving tax benefits. In the GAAR proposed in Union Budget 2012, an arrangement will be considered as ‘impermissible avoidance arrangement’ if it’s ‘main purpose’ is to obtain ‘tax benefit’ and it satisfied one of the four tests—(i) transaction not an aLP, (ii) results in misuse or abuse of tax provisions, (iii) lacks commercial substance, and (iv) non-bonafide purpose.
India has emerged as the world’s largest importer of arms, according to the report of the Stockholm International Peace Research Institute (SIPRI). India accounts for 10 per cent of global arm imports between 2007 and 2011.
According to the latest data released by the Planning Commission, poverty in India has significantly declined between 2004-05 and 2009-10. The new estimates are based on a poverty line that averages Rs 672.80 per month (Rs 22.43 per day) in rural areas and Rs 859.60 per month (Rs 28.65 per day) in urban areas for 2009-10. Poverty is down to 29.8 per cent in 2009-10 from 37.2 per cent in 2004-05. Rural poverty declined to 33.8 per cent, from 41.8 per cent, and Urban poverty declined to 20.9 per cent, from 25.7 per cent. While poverty declined by over 10 per cent in the given period in Tripura, Orissa, Sikkim, Uttarakhand, Maharashtra, Himachal Pradesh, Tamil Nadu and Madhya Pradesh, it increased in Nagaland, Manipur, Assam, Meghalaya Bihar, UP and Chattisgarh.
United Nations has declared 2012 as International Year of Cooperatives. It is intended to raise public awareness of the invaluable contributions of cooperative enterprises to poverty reduction, employment generation and social integration. The Year will also highlight the strengths of the cooperative business model as an alternative means of doing business and furthering socio-economic development.
Recognizing the importance of energy for sustainable development, the United Nations General Assembly designated the year 2012 as the International Year of Sustainable Energy for All. This presents a valuable opportunity to raise awareness about the importance of increasing sustainable access to energy, energy efficiency, and renewable energy at the local, national, regional and international levels.
On March 23, 2012, India’s largest Gas pipeline network became operational. Built by GAIL at a cost of Rs 13,100 crore, it has a capacity to carry 66 MMSCMD of Natural Gas. It passes through eight States (Gujarat, Madhya Pradesh, Uttar Pradesh, Rajasthan, Delhi, Haryana, Punjab and Uttarkhand. Major industrial hubs along the network are: Dahej, Bharuch, Ujjain, Indore, Pithampur, Dewas, Kotam Chittorgarh, Bhilwara, Gwalior, Palwal, Faridabad, Agra, Mathura, Gurgaon, Manesar, Bhiwadi, Moradabad, Rudrapur, Ghaziabad, Meerut, Sonipat, Delhi, Saharnpur, Roorkee, Haridwar, Dehradun, Panipat, Ambala, Ludhiana, Jalandhar, Nangal and Bhatinda.
On March 22, 2012, Bihar turned 100 years old. It was on this day in 1912, when the British had carved out the State from Bengal Presidency. On this occasion State’s own anthem (Bihar Gaan) and State prayer Bihar Prarthna Geet) were released.
World Glaucoma Day is observed on March 12.
World Forestry Day is observed on March 21.
World Water Day is observed on March 22.
Fifty eight leaders, including US President Barrack Obama and Prime Minister Manmohan Singh, took part in the two-day Nuclear Security Summit from March 26, 2012, in Seoul, South Korea.
According to the annual India Philanthropy Report, 2012, brought out by Bain & Company Inc., more than a third of High Networth Individuals (HNIs) who turned to philanthropy in 2011 were below 30 years. Wealthy Indians pledged 3.1% of their income to philanthropy, up from 2.3% in 2010. Education remained the most popular cause, followed by food and clothing.
The Union government has hiked the interest rates for small savings schemes like the Public Provident Fund (PPF) and the National Savings Certificate (NSC) by 0.2 percentage points. The interest rate on the PPF has been increased from 8.6 per cent to 8.8 per cent, while the new rates on the 5-year NSC have been revised from 8.4 per cent to 8.6 per cent.
The fourth BRICS Summit was held in New Delhi in March 2012.
Infosys co-founder N.R. Narayana Murthy is among 12 “greatest entrepreneurs of our time”, according to a Fortune magazine list, which is topped by Apple’s late chief Steve Jobs. It also includes Microsoft founder Bill Gates and Facebook CEO Mark Zuckerberg.
India and China have agreed to observe 2012 as Year of Friendship.
As per the latest Consumer Price index (CPI) figures, Bangalore is the costliest city in India, followed by Mumbai, Chennai,Kolkata and Delhi.
Delhi Daredevils players will wear blue ribbons during their IPL 2012 matches, to support UNICEF’s initiative to protect and empower the girl child in India.
India Government Mint, Kolkata celebrated its Diamond Jubilee on March 31, 2012. An ISO 9001:2008 unit of Security Printing and Minting Corporation of India Limited, it was the first mint to successfully process pure Nickel for minting coins in Asia. Medallion for national and international events, civil and military decorations like Bharat Ratna, Param Vir Chakra etc. are all minted here.
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Business News
In a first of its kind alliance, the largest private sector lender, ICICI Bank, the third-largest public sector lender, Bank of Baroda, and Citi Financial (the NBFC arm of Citigroup) have decided to form the first Infrastructure Development Fund (IDF).
Larsen and Tuobro (L&T) has named Krishnamurthi Venkataramanan as the CEO and Managing Director of the company. Current chairman and Managing director, A.M. Naik will continue as executive chairman.
Bharat Dynamics Ltd has unveiled a plan to set-up a surface-to-air missile unit in Hyderabad at a total cost of Rs 30,000 crore.
The board of IT major Tech Mahindra Ltd has approved the merger with Mahindra Satyam, in a stock deal valued at about USD one billion, at swap ratio of 2:17, becoming India’s fifth largest software exporter by revenue.
L&T MF will Fidelity Mutual Fund in India. The combined entity, with about Rs 13,000 crore in Assets under Management (AUM), will be the 13th largest fund house in India and 10th in terms of equity assets.
Mahindra & Mahindra has announced two defence sector a joint-ventures—one with government of Israel-owned Rafael Advanced Defence Systems and another JV with US-based Telephonics Corp.
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