National-feb-09

CURRENT NATIONAL AFFAIRS

Cabinet okays Rs 25,000 cr for NBFCs: The government has set in motion the process of providing liquidity support of up to Rs 25,000 crore to cash-strapped Non-Banking Finance Companies (NBFCs) to enable them to pay existing liabilities as was announced in the second stimulus package to spur sagging economic growth. A Stressed Asset Stabilisation Fund, set up for acquiring the stressed assets of IDBI, would function as a Special Purpose Vehicle (SPV) to provide money to non-deposit taking systemically important NBFCs. The SPV would issue government guaranteed securities, subject to a total amount of securities not exceeding Rs 20,000 crore with an additional Rs 5,000 crore, if needed. The funds will be used by NBFCs only to repay existing liabilities he said, adding the RBI would issue guidelines for pricing and lending in consultation with the Department of Financial Services.

India inks safeguards pact with IAEA: On February 2, 2009, India signed a safeguards agreement with the International Atomic Energy Agency (IAEA) which paves the way for the supply of atomic fuel and
technology by the international community to India after 34 years of nuclear isolation. The agreement would effectively bring 14 of India’s nuclear reactors under non-proliferation inspections of the international atomic watchdog. The IAEA currently applies safeguards to six nuclear reactors in India.  The India-specific safeguards agreement was unanimously approved by the IAEA Board of Governors on August 1, 2008. 

RBI leaves rates untouched, sees lower 7% growth: The Reserve Bank, on January 27, 2009, lowered the economic growth forecast to 7%, saying the global economic crisis has hit India shores, but kept key policy rates and ratio unchanged. The bank also
lowered inflation estimates to 3% by March-end. In its quarterly review of the annual monetary policy, the apex bank extended special refinance facilities to banks up to September 30 for providing liquidity support to meet the funding requirements of mutual funds, non-banking finance companies by relaxing the maintenance of SLR up to 1.5%. The bank has injected over Rs 3,00,000 crore liquidity into the financial system through several changes in policy rates since October 2008. In the last three months, the repo rate, at which the apex bank lends short-term funds to banks, has been reduced from 9% to 5.5% and the reverse repo, at which the RBI accepts funds from banks, has been lowered from 6% to 4%. RBI said that the Central government’s fiscal deficit—the money spent more than the revenue raised and borrowed funds—would shoot up from the earlier estimate of 2.5% to 5.9% of the value of the country’s total economic output.

 

India, Kazakhstan ink N-accord: As part of its efforts to boost the country’s energy sources, India, on January 24, 2009, signed a civilian nuclear energy cooperation agreement with the uranium-rich Kazakhstan. The agreement was signed during the visit of President Nursultan Nazarbayev. India and Kazakhstan also signed four other key accords, including an extradition treaty. President Nazarbayev was also the chief guest at the Republic Day parade.

Afghan President’s visit: Expressing solidarity with India in the wake of the Mumbai terror attacks, Afghan President Hamid Karzai, during his visit on January 12, 2009, joined Prime Minister Manmohan Singh in castigating Pakistan for reneging on its commitment not to allow the misuse of its territory for terrorist activities. This was President Karzai’s second visit to New Delhi within six months. He held extensive talks with Prime Minister Manmohan Singh on a wide range
of issues, but the focus was on the Mumbai terror attacks.

SEBI unveils norms for pledging of shares: The Securities and Exchange Board of India (SEBI) has spelt out the reporting norms for companies whose promoters have pledged shares to a third party. The market regulator has asked companies to disclose details of the promoters’ pledged shares within seven days of the date of receiving information from the promoters. In a circular dated January 28, 2009, SEBI said the promoters, who have pledged shares, have to disclose the details to the company within seven days of such a transaction. Further, the market regulator said that companies should disclose all the details pertaining to the promoters’ share pledge, if at the end of any quarter, the total number of such pledged shares exceeds 25,000 or one percentage of the total shareholding, whichever is lower.

India lags in health spending: At 4.8 per cent of the GDP, India’s total annual health expenditure (THE) is among the poorest in the world, with only Nigeria, Indonesia and Bangladesh reporting lesser expenditure. The WHO recommends a total annual health expenditure of 6.5 per cent of a country’s GDP. The public health expenditure (PHE) in the country is as low as Rs 215 per capita per year. It works out to a shockingly low 1.2 per cent of the GDP and 25 per cent of the total health expenditure. That the basic health services are yet to reach the low-income groups is clear from the fact that a whopping 75 per cent funding of the health sector still comes from private sources. The national Samples Survey Organisation’s 60th round has reported 126 per cent increase in urban hospita-lization costs and 78 per cent increase in rural hospitalization costs in the private sector as compared to the 52nd NSSO conducted in 1995.

India losing 1m neonates, 78,000 mothers annually: India is losing one million neonates annually, 82 per cent of them to birth-related infections (pneumonia,
tetanus and diarrhea), asphyxia and pre-term birth, finds the latest UNICEF State of the World Children (SOWC) report. Maternal health scenario is even worse, with 78,000 women dying each year from complications related to pregnancy and childbirth. Three-quarters of all maternal deaths in India are occurring from hemorrhage (38 per cent), followed by infections (11 per cent), unsafe abortions (8 per cent) and hypertensive disorders (5 per cent). On an average, every seven minutes, one woman dies of pregnancy problems; institutional delivery rate remains a poor 40 per cent.

State of education—Puducherry best, Bihar worst: India now has lesser number of single-teacher schools than it had a year ago. The latest government study on the state of elementary education in India shows that percentage of single-teacher schools in the country has declined from 11.76 in 2006-07 to 10.13 in 2007-2008, an improvement of 1.63 per cent. Among the States, Puducherry is ranked first in both primary and
elementary education, while Bihar, Arunachal, West Bengal and Jhar-khand are at the bottom. Kerala is the first in upper primary education, while Delhi and Chandigarh are fourth and fifth, respectively. The government also lists Muslim students as a separate category saying the percentage of Muslim enrolment in primary classes increased to 10.49 in 2008 as against 9.39 the previous year.

Jharkhand Chief Minister resigns following loss in by-poll: On January 12, 2009, Jharkhand Chief Minister Shibu Soren submitted his resignation to Governor Syed Sibte Razi, ending speculation on his continuance in the post after his defeat in the Tamar Assembly by-election.  On January 19, the Centre imposed President’s rule in Jhar-khand as no political alliance was in a position to form an alternative government. Soren lost to the Jhar-khand party’s Gopal Krishna Patar, also known as Raja Peter—a local Robin Hood—by nearly 9,000 votes. Raja Peter joins the ranks of MLAs with criminal backgrounds in
Jharkhand.

Satyam—A Rs 7,000 Crore Lie: Ramalinga Raju, the politically-connected promoter-chairman of Hyderabad headquartered Satyam Computers was lying for years to shareholders, employees and the world at large, building up to India’s largest corporate fraud of over Rs 7,000 crore. India’s fourth largest IT company—after TCS, Infosys and Wipro—was for years cooking its books by inflating revenues and profits, thus boosting its cash and bank balances; showing interest income where none existed; understating liability; and overstating debtors position (money due to it). This wasn’t some fly-by-night operator that had been caught out. Satyam is listed on the NYSE, boasts 185 Fortune 500 companies and the US government among clients and employs 53,000 people. The Union government has entrusting the probe to the Serious Fraud Investigations office, or SFIO.
 
Heroes, villains can smoke again: Amitabh Bachchan and Shah Rukh Khan can again blow rings of smoke on celluloid. The Delhi High Court has struck down the Ministry of Health’s 2005 notification banning smoking scenes. The court said the ban violated a filmmaker’s right to freedom of speech and expression as guaranteed under Article 19. “Directors should not have multi-farious authorities breathing down their necks. A film must reflect the realities of life. It may be undesirable but it exists and is not banned by law”, Justice Sanjay Kishan Kaul said. The order came on a petition filed by director Mahesh Bhatt questioning the validity of a notification under the Cigarettes and Other Tobacco Products (Prohibition of advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act.