CURRENT NATIONAL AFFAIRS
BANKING & FINANCE
E-payments to be credited directly to merchants
In what would make online commerce faster for customers, the Reserve Bank of India (RBI) has mandated that all payments for such transactions be credited directly to merchants, instead of getting cleared by intermediaries such as CC Avenue and Paypal.
Currently, until a payment is authorised and processed by intermediaries, a transaction is not completed. For instance, online retailers such as eBay do not ship goods purchased online unless funds are credited to their account, after being routed through an intermediary. CC Avenue, BillDesk, Direc-Pay, ICICI PaySeal and Paypal are among major payment gateways in India.
Under the new system, all payments to merchants shall be effected within a maximum of three days from the date of transaction. From now on, no payment other than the commissions at the pre-determined rates/frequency shall be payable to the intermediaries. The existing system has some pitfalls. Often, there is a delay in transferring money to the merchant; at times it is more than seven days.
SEBI allows auction of shares in follow-on offer
SEBI has allowed companies to go for pure auction of shares (offered at bid price) in a follow on public offer for pricing of issues for institutional investors. However, the companies will have to offer shares to retail investors, including employees, at the floor price, fixed before start of the auction process and the existing system of public offerings of shares at an uniform price in a band through book-build method will also continue.
To encourage small and medium firms to come out with public issues, SEBI has also allowed existing stock exchanges to set up a separate trading platform and relax the criteria like track record on profitability for listings. On the issue of trading hours, the board has left it on exchanges to decide between 9 am and 5 pm.
Giving more choices to listed companies in pricing shares via book-build route, SEBI introduced an additional method, called Dutch auction, in which the companies making public issues will fix only floor prices. Institutional bidders will have to submit bids above the floor prices. The bidders will be allotted shares on the basis of their bid prices. The highest bidder will be offered shares first, followed by the second-highest.
If the demand for the highest bidder is equal to the total issue size, second-highest bidder will get nothing. However, if the issuer wants to put a cap on allotting shares to a single bidder, it can do so.
Under the present system, known as French auction, companies fix a band of prices for public offers. The maximum difference between floor and ceiling prices in the band is 10%. A bidder has to bid in the given band only. On the basis of demand at various price points, the offer price is fixed and applied uniformly to all investors. The new methodology of pricing is likely to be used by government while divesting its stake in REC and NTPC.
COMMISSION
Liberhan inquiry commission
It took 17 years and 48 extensions for the Liberhan Commission, probing the 1992 demolition of the Babri Masjid in Ayodhya, to submit its report to Prime Minister Manmohan Singh in June 2009. One of the country’s longest running inquiry commissions, it has cost the government nearly Rs 7 crore.
During the entire tenure, the one-judge probe was dogged by procedural delays, non-cooperation from key witnesses and even constant transfers during the early days of the commission’s functioning. The commission’s lawyer, Anupam Gupta, dissociated himself from the one-man panel after eight years because of differences with Justice Liberhan.
The commission recorded statements of scores of politicians from the Bharatiya Janata Party (BJP), including senior leaders Advani, Murli Manohar Joshi, then Chief Minister of Uttar Pradesh Kalyan Singh and now Bharatiya Jan Shakti party chief Uma Bharati. Several members of the Congress and the Rashtriya Swayamsevak Sangh (RSS) were also questioned.
Former Prime Minister Atal Behari Vajpayee, senior BJP leaders LK Advani, Murli Manohar Joshi and ex-UP Chief Minister Kalyan Singh are among the 68 persons severely indicted by Justice M.S. Liberhan Commission for their role in the Babri Masjid demolition 17 years ago, which led the country to a “brink of communal discord.”
The commission, surprisingly, is soft on Congressman and the then Prime Minister P.V. Narsimha Rao for his perceived ‘inaction’ in deploying Central forces or imposing President’s Rule in then BJP-ruled Uttar Pradesh to protect the 16th century structure, purported to have been built during the reign of Mughal emperor Babar. The commission refers to it as the Ram Janam Bhoomi-Babri Masjid structure (RJBM) and has clarified that its role was not to study if the structure was a mosque or a temple or even its history.
In his 1,029-page report, Justice Liberhan, a former Chief Justice of Madras High Court, indicts the perpetrators for having reduced “the oldest civilisation to stark intolerance and barbarianism, all for petty political gains.”
Coming down heavily on the troika of Advani, Vajpayee and Joshi, Justice Liberhan calls them “pseudo-moderates" and refers to them as “icons” of the movement. The commission also indicts Uma Bharti, RSS ideologue K. Govindacharya and Shankar Singh Vaghela, along with Kalyan Singh, who are no more connected with the BJP or the RSS.
Silent on punitive action against those indicted for the 1992 Babri Masjid demolition, government’s Action Taken Report (ATR) on the much-delayed Liberhan Commission findings agrees to enact the Prevention of Communal Violence Bill to punish those who misuse religion for politics, and set up special tribunals to prosecute related offences.
In the name of action against perpetrators of the demolition, all the ATR promises is expediting the hearing of cases registered 17 years ago. These include the case at Lucknow special court against lakhs of unknown karsewaks; case against eight accused (politicians also named by Liberhan) in Rae Bareli special court and 47 other cases in the Lucknow special court.
The ATR, however, is non-condescending to Liberhan’s major recommendation of a statutory national commission of cultural experts to determine the historical legacy of monuments, like those in question. The government plainly rejected this proposal saying the ASI could handle the job. It also declined Liberhan’s idea to confer statutory status on the National Integration Council, though it accepted in part his recommendation that political leaders and holders of public offices should not simultaneously hold positions in religions organisations.
ECONOMY
India climbs to tenth slot among top gold holders
India is the world’s largest private gold consumer, but the government’s holding of gold as an asset is modest. Even so, the latest purchase of 200 metric tonne from IMF puts it at number ten among the list of top 10 gold-holders in the world.
For India, the purchase, apart from signalling that its economy has come full circle, is a way of spreading its assets which are said to be currently over-weighted with foreign currency, mainly in the form of sovereign US Treasury bonds. In other words, it is a hedge against a falling dollar.
Of India’s current foreign exchange reserves of nearly $285 billion, foreign currency assets account for more than 90% ($268.3 billion), followed by gold ($10.3 billion), IMF’s Special Drawing Rights ($5.2 billion) and a reserve position in the IMF of $1.59 billion.
While India’s current gold holdings are said to be historically low, buying 200 tons in addition to the 358 tons it already holds is expected to bump up the gold reserves to more than 6%.
India’s gold trauma occurred in the summer of 1991, when faced with dwindling foreign exchange reserves and a possibility of a default on payments, the government mortgaged 47 tons of gold to the Bank of England and 20 tons of gold to the Union Bank of Switzerland to raise $ 600 million. The move helped tide over the balance of payment crisis, and also kick-started the reforms process.
Food prices biting buyers
Even as the overall inflation rate remains at around 1.5%, prices of food articles have gone up 13.4% in the last one year. That statistic is bad news for the common man, but details of specific commodities like potatoes, onions and pulses are even more disconcerting.
According to the latest data, prices of potatoes have doubled over the last 12 months; onions are 50% more expensive and the prices of pulses have gone up by over 23% on average. It’s another matter that the price of some specific pulses like arhar and moong have risen to all-time highs of around Rs 90 per kg.
Contributing to the spike in food prices has been a weak monsoon in 2009, which is expected to lead to foodgrain production falling by around 21 million tonnes in the current kharif season compared to kharif 2008. Rice production is estimated to fall by over 15 million tonnes and the output of coarse cereals by 5.5 million tonnes.
All-weather roads jack up rural income by 100%
All-weather roads in the villages of the country has doubled the income of rural households, raised literacy rate by 10%, and appreciated land prices by up to 80%, says the World Bank. “In 2000, about 40% of India’s 825,000 villages lacked all-weather roads ... With access to roads, incomes have soared. Household incomes rose by 50% to 100% on average.”
World Bank has been supporting India’s rural connectivity programme—Pradhan Mantri Gram Sadak Yojana (PMGSY). It aids projects in several places like Himachal Pradesh, Rajasthan, Jharkhand and Uttar Pradesh. Over the years, World Bank’s concessionary lending arm International Development Association (IDA) has supported many rural roads projects, both standalone and components of larger projects. The year-round connectivity has narrowed gender gap with access to education for girls and raised job opportunities, IDA said adding every Rs 10 lakh spent on rural roads has helped lift 163 people out of poverty.
The World Bank has said "a second project of $1 billion is under preparation". It would aim to improve maintenance, weak capacity, governance and accountability, and would introduce several efficiency measures. Meanwhile, for two-laning of 6,372-km of the total of 19,702 km single lane highways in the country, the finance ministry has requested the World Bank for a loan of $3 billion.
India’s GDP beats all forecasts
India's economy gave yet another indication of its rapidly improving health, prompting greater ambition from policy-makers still chary of withdrawing the stimulus medicine responsible for the recovery. Gross Domestic Product (GDP) expanded by a surprisingly strong 7.9% during the July-September second quarter, its fastest pace in a year and a half. The growth was driven largely by a pick-up in manufacturing, increased government expenditure, robust investments and modest growth in farm output despite the drought.
The growth in the first half of the year is now a respectable 7% as against 7.8% during the same period a year ago. In the fiscal year ended March 2009, the economy grew by 6.7%, its weakest in six years and way below rates of 9% or more in the previous three years.
The strong growth may put pressure on RBI to hike policy rates sooner than March 2010 as worries about inflation grow. Bond yields firmed up to 7.25%, six basis points up, as traders see a 25-basis-point hike in key policy rates by January 2010.
There will also be pressure on the government to cut expenditure and roll back stimulus measures such as the cut in indirect rates. The fiscal deficit between April and October 2009 was 61% of the target for the year, but slower-than-expected tax collections suggest the government could overshoot the target of 6.8% of the GDP for the year.
ENVIRONMENT
Tougher air quality norms unveiled
India has revised its National Ambient Air Quality Standards (NAAQS), discontinuing the old practice of different air quality standards for different land-use classes like residential and industrial areas. The country will now have uniform health-based NAAQS with uniform standards for all areas, whether residential or industrial.
Revised after a gap of 15 years, new air quality standards also provide legal framework for controlling air pollution and protecting public health, meaning that any citizen can now approach the court demanding better air quality. The revised standards include initiatives that had been developed in consonance with globally best practices and in keeping with latest advancements in technology and research.
The big question, however, is of enforcement, which could prove to be a difficult task.
The standards have brought two new deadly pollutants, PM 2.5 and ozone, within the ambit of regulation. The standard for nitrogen oxide has been made more stringent, from the existing 60 micro-gm per cubic metre, it has been tightened down to 40 micro-gm per cubic metre. Suspended particulate matter (SPM) as parameter has been replaced by fine particulate matter (PM 2.5), which is more relevant for public health.
HEALTH
India's children stunted, undernourished, wasted: UN
India has the largest number of stunted children below the age of five in the world, according to the latest United Nations Children's Fund report.
Approximately 200 million children, under the age of five, suffer from stunted growth in the developing world. The report 'Tracking Progress on Child and Maternal Nutrition' found that stunting is primarily caused due to childhood under-nutrition, which contributes to more than a third of all deaths in children under five.
India also has one of the highest numbers of underweight children, below the age of five, and one third of 'wasted children'—those facing a greater chance of death—in the world.
Out of a total of 19 million new-borns per year in the developing world that are born with low birth-weight, India has 7.4 million low birth-weight babies per year—the highest in the world. The report finds that 80 per cent of the developing world's stunted children live in 24 countries.
India, however, does not have the highest prevalence of stunted children as the high numbers was due to its large population. In terms of prevalence, Afghanistan was first while India was 12th. In 17 countries, underweight prevalence among children under 5 years old is greater than 30 per cent. The rates were highest in Bangladesh, India, Timor-Leste and Yemen,` with more than 40 per cent of children being underweight.
The study also found that 13 per cent of children, under 5 years old, in the developing world were wasted, and 5 per cent were severely wasted (an estimated 26 million children).
A number of African and Asian countries have wasting rates that exceed 15 per cent, including India (20 per cent) Bangladesh (17 per cent), and Sudan (16 per cent). The country with the highest prevalence of wasting in the world is Timor-Leste, where 25 per cent of children under 5 years old are wasted.
In Asia, the prevalence of stunting dropped from approximately 44 per cent in 1990 to an estimated 30 per cent in 2008, while in Africa it fell from approximately 38 per cent in 1990 to an estimated 34 per cent in 2008. Unless attention is paid to addressing the causes of child and maternal under-nutrition today, the costs will be considerably higher tomorrow.
JUDICIARY
Finally, SC judges declare assets
In a move that will enhance the image of the judiciary, 21 out of the 22 Supreme Court judges—including Chief Justice K.G. Balakrishnan—have declared their assets and of their wives by posting the details on the court’s website—supremecourtofindia.nic.in.
The step is expected to end months of controversy over the apex court's refusal to place in public domain such details, maintaining that it was not bound to part with these under the Right to Information Act (RTI).
The details, provided under the heading “Assets of Judges,” however, did not have the total assets of each judge and his wife. Also, the value of a number of properties owned by them is not given. Most of the judges had provided such details to the CJI at the time of their elevation to the apex court, but these were not placed in public domain.
FOREIGN RELATIONS
Visit of Australian PM to India
Australian Prime Minister Kevin Rudd visited India in November 2009 with a message to India that Australia remained a safe destination for Indian students. Mr Rudd said his government was committed to using the “full force” of law to protect Indian students.
During his visit, in an attempt to upgrade bilateral ties, both countries agreed to elevate the relationship to a strategic partnership. Discussions between Mr Rudd and Mr Singh covered all aspects of the bilateral relationship—from trade to climate change. On climate change, Mr Rudd said: “Indian Prime Minister and I discussed the great challenge of climate change. We must have a good ambition for Copenhagen.” The two sides agreed that it is an issue of concern for both countries, with the Indian side reiterating its position on climate change.
The two sides have also decided to expedite the feasibility study to look into the impact of an FTA between the two countries. In fact, the Australian side has made no secret of its interest in an FTA, with Mr Rudd saying that he expects the study to recommend an FTA.
Iran seeks help to combat terror
Notwithstanding the US pressure, India has unequivocally conveyed to Iran its commitment to participating in the 7.4 billion dollar Iran-Pakistan-India (IPI) gas pipeline project. This reassurance was given by both Prime Minister Manmohan Singh and External Affairs Minister S.M. Krishna at separate meetings with visiting Iranian Foreign Minister Manouchehr Mottaki in New Delhi.
At the delegation-level talks between the two foreign ministers, Iran sought greater cooperation with New Delhi in fighting terrorism emanating from Pakistan. Like India, Iran has also been affected by terrorism sponsored from the Pakistani soil. A horrific suicide attack in south-east Iran in October 2009 targeted the country's Revolutionary Guards and was blamed on Pakistan-based Jundallah, a Sunni extremist outfit.
This was the first high-level contact between the two countries since the UPA government returned to power in New Delhi and Mahmoud Ahmedinejad was re-elected as the President of Iran in June 2009.
Mottaki renewed an invitation to Manmohan Singh to visit Iran. The invitation was accepted and dates of the visit would be finalised in consultations through diplomatic channels.
The two sides also agreed to convene an early meeting of the joint working group (JWG) on energy cooperation between them to resolve issues connected with the pipeline project. An Iranian team would be visiting India soon for the purpose. As Iran and India share common interests in Afghanistan, they also discussed joint infrastructure projects like the deep sea port of Chabahar and a rail link to provide better connectivity for Afghanistan to Central Asia.
Visit of Prime Minister Manmohan Singh to USA
Prime Minister Manmohan Singh’s deliberations with US President Barack Obama in end-November 2009, as his first State guest, did not result in any dramatic announcements but New Delhi was satisfied that it was able to persuade Washington to acknowledge that India was being inflicted by terrorism from neighbouring Pakistan.
Washington went a step further by calling for the defeat of terrorist “safe havens” in Pakistan and Afghanistan and agreed to enhance collaboration in this effort.
The joint statement was prefaced with a commitment by both leaders to expand and deepen their relations. President Obama described India as a “rising and responsible global power” to assure India that it was very much on the US radar and that any impression to the contrary was incorrect.
The two countries signed a new memorandum of understanding on counter-terrorism cooperation to help each other in information and intelligence sharing related to terrorism, which institutionalised an arrangement which has been in place since the 26/11 Mumbai terror attacks.
President Obama’s commitment on the implementation of the Indo-US civil nuclear agreement during his press conference also found mention in the joint statement, which also acknowledges India as a responsible nuclear power. Taking note of the Obama administration’s sensitivities on non-proliferation, India was quick to reaffirm its unilateral and voluntary moratorium on nuclear testing and agreed with US to start early negotiations on a multilateral, non-discriminatory and internationally verifiable Fissile Material Cut-off Treaty. On its part, the US committed to ratify the Comprehensive Test Ban Treaty (CTBT) at an early date. There are fears that such a development would encourage the US to pressurise India to sign the CTBT, which has not been accepted by New Delhi.
President Barack Obama assured Prime Minister Manmohan Singh that the US-China joint statement issued on his visit to Beijing earlier in November was not an endorsement of Chinese mediation in the India-Pakistan dispute. Mr Singh said Obama told him that the intention of that statement was not to support any “third-party intervention in issues in South Asia.” He said he was “very satisfied” with Obama’s assurance on an issue that caused much heart-burn in New Delhi. India opposes third-party mediation in the dispute with Pakistan over Kashmir.
On Afghanistan, Prime Minister Singh said Obama told him that the US “highly values” India's role in reconstruction and development of the war-ravaged country. Manmohan, who met several Republican Democratic as well as Republican lawmakers while in Washington, said there was bipartisan support for India’s role in Afghanistan. This role is viewed with suspicion by Pakistan.
Visit of Canadian PM to India
India and Canada have entered into an agreement for enhancing energy security. Yet another deal has been inked between the two nations to kick off negotiations between the two with respect to free trade area. This happened during the meeting of Prime Minister Manmohan Singh with visiting Canadian Prime Minister Stephen Harper, in November 2009, on a range of bilateral issues, including trade and investment, civil nuclear cooperation, the global financial crisis, terrorism and climate change.
The energy security pact will enable better cooperation between the nations in areas of renewable energy and energy efficiency, oil and natural gas, power generation, transmission, distribution and end-use, energy research and development.
The FTA deal will enable the formation of a joint study group for exploring the chances for developing a Comprehensive Economic Partnership Agreement, with the first meeting slated to be held in December.
The two nations have also decided to cooperate for tackling global terrorism.
BANKING & FINANCE
E-payments to be credited directly to merchants
In what would make online commerce faster for customers, the Reserve Bank of India (RBI) has mandated that all payments for such transactions be credited directly to merchants, instead of getting cleared by intermediaries such as CC Avenue and Paypal.
Currently, until a payment is authorised and processed by intermediaries, a transaction is not completed. For instance, online retailers such as eBay do not ship goods purchased online unless funds are credited to their account, after being routed through an intermediary. CC Avenue, BillDesk, Direc-Pay, ICICI PaySeal and Paypal are among major payment gateways in India.
Under the new system, all payments to merchants shall be effected within a maximum of three days from the date of transaction. From now on, no payment other than the commissions at the pre-determined rates/frequency shall be payable to the intermediaries. The existing system has some pitfalls. Often, there is a delay in transferring money to the merchant; at times it is more than seven days.
SEBI allows auction of shares in follow-on offer
SEBI has allowed companies to go for pure auction of shares (offered at bid price) in a follow on public offer for pricing of issues for institutional investors. However, the companies will have to offer shares to retail investors, including employees, at the floor price, fixed before start of the auction process and the existing system of public offerings of shares at an uniform price in a band through book-build method will also continue.
To encourage small and medium firms to come out with public issues, SEBI has also allowed existing stock exchanges to set up a separate trading platform and relax the criteria like track record on profitability for listings. On the issue of trading hours, the board has left it on exchanges to decide between 9 am and 5 pm.
Giving more choices to listed companies in pricing shares via book-build route, SEBI introduced an additional method, called Dutch auction, in which the companies making public issues will fix only floor prices. Institutional bidders will have to submit bids above the floor prices. The bidders will be allotted shares on the basis of their bid prices. The highest bidder will be offered shares first, followed by the second-highest.
If the demand for the highest bidder is equal to the total issue size, second-highest bidder will get nothing. However, if the issuer wants to put a cap on allotting shares to a single bidder, it can do so.
Under the present system, known as French auction, companies fix a band of prices for public offers. The maximum difference between floor and ceiling prices in the band is 10%. A bidder has to bid in the given band only. On the basis of demand at various price points, the offer price is fixed and applied uniformly to all investors. The new methodology of pricing is likely to be used by government while divesting its stake in REC and NTPC.
COMMISSION
Liberhan inquiry commission
It took 17 years and 48 extensions for the Liberhan Commission, probing the 1992 demolition of the Babri Masjid in Ayodhya, to submit its report to Prime Minister Manmohan Singh in June 2009. One of the country’s longest running inquiry commissions, it has cost the government nearly Rs 7 crore.
During the entire tenure, the one-judge probe was dogged by procedural delays, non-cooperation from key witnesses and even constant transfers during the early days of the commission’s functioning. The commission’s lawyer, Anupam Gupta, dissociated himself from the one-man panel after eight years because of differences with Justice Liberhan.
The commission recorded statements of scores of politicians from the Bharatiya Janata Party (BJP), including senior leaders Advani, Murli Manohar Joshi, then Chief Minister of Uttar Pradesh Kalyan Singh and now Bharatiya Jan Shakti party chief Uma Bharati. Several members of the Congress and the Rashtriya Swayamsevak Sangh (RSS) were also questioned.
Former Prime Minister Atal Behari Vajpayee, senior BJP leaders LK Advani, Murli Manohar Joshi and ex-UP Chief Minister Kalyan Singh are among the 68 persons severely indicted by Justice M.S. Liberhan Commission for their role in the Babri Masjid demolition 17 years ago, which led the country to a “brink of communal discord.”
The commission, surprisingly, is soft on Congressman and the then Prime Minister P.V. Narsimha Rao for his perceived ‘inaction’ in deploying Central forces or imposing President’s Rule in then BJP-ruled Uttar Pradesh to protect the 16th century structure, purported to have been built during the reign of Mughal emperor Babar. The commission refers to it as the Ram Janam Bhoomi-Babri Masjid structure (RJBM) and has clarified that its role was not to study if the structure was a mosque or a temple or even its history.
In his 1,029-page report, Justice Liberhan, a former Chief Justice of Madras High Court, indicts the perpetrators for having reduced “the oldest civilisation to stark intolerance and barbarianism, all for petty political gains.”
Coming down heavily on the troika of Advani, Vajpayee and Joshi, Justice Liberhan calls them “pseudo-moderates" and refers to them as “icons” of the movement. The commission also indicts Uma Bharti, RSS ideologue K. Govindacharya and Shankar Singh Vaghela, along with Kalyan Singh, who are no more connected with the BJP or the RSS.
Silent on punitive action against those indicted for the 1992 Babri Masjid demolition, government’s Action Taken Report (ATR) on the much-delayed Liberhan Commission findings agrees to enact the Prevention of Communal Violence Bill to punish those who misuse religion for politics, and set up special tribunals to prosecute related offences.
In the name of action against perpetrators of the demolition, all the ATR promises is expediting the hearing of cases registered 17 years ago. These include the case at Lucknow special court against lakhs of unknown karsewaks; case against eight accused (politicians also named by Liberhan) in Rae Bareli special court and 47 other cases in the Lucknow special court.
The ATR, however, is non-condescending to Liberhan’s major recommendation of a statutory national commission of cultural experts to determine the historical legacy of monuments, like those in question. The government plainly rejected this proposal saying the ASI could handle the job. It also declined Liberhan’s idea to confer statutory status on the National Integration Council, though it accepted in part his recommendation that political leaders and holders of public offices should not simultaneously hold positions in religions organisations.
ECONOMY
India climbs to tenth slot among top gold holders
India is the world’s largest private gold consumer, but the government’s holding of gold as an asset is modest. Even so, the latest purchase of 200 metric tonne from IMF puts it at number ten among the list of top 10 gold-holders in the world.
For India, the purchase, apart from signalling that its economy has come full circle, is a way of spreading its assets which are said to be currently over-weighted with foreign currency, mainly in the form of sovereign US Treasury bonds. In other words, it is a hedge against a falling dollar.
Of India’s current foreign exchange reserves of nearly $285 billion, foreign currency assets account for more than 90% ($268.3 billion), followed by gold ($10.3 billion), IMF’s Special Drawing Rights ($5.2 billion) and a reserve position in the IMF of $1.59 billion.
While India’s current gold holdings are said to be historically low, buying 200 tons in addition to the 358 tons it already holds is expected to bump up the gold reserves to more than 6%.
India’s gold trauma occurred in the summer of 1991, when faced with dwindling foreign exchange reserves and a possibility of a default on payments, the government mortgaged 47 tons of gold to the Bank of England and 20 tons of gold to the Union Bank of Switzerland to raise $ 600 million. The move helped tide over the balance of payment crisis, and also kick-started the reforms process.
Food prices biting buyers
Even as the overall inflation rate remains at around 1.5%, prices of food articles have gone up 13.4% in the last one year. That statistic is bad news for the common man, but details of specific commodities like potatoes, onions and pulses are even more disconcerting.
According to the latest data, prices of potatoes have doubled over the last 12 months; onions are 50% more expensive and the prices of pulses have gone up by over 23% on average. It’s another matter that the price of some specific pulses like arhar and moong have risen to all-time highs of around Rs 90 per kg.
Contributing to the spike in food prices has been a weak monsoon in 2009, which is expected to lead to foodgrain production falling by around 21 million tonnes in the current kharif season compared to kharif 2008. Rice production is estimated to fall by over 15 million tonnes and the output of coarse cereals by 5.5 million tonnes.
All-weather roads jack up rural income by 100%
All-weather roads in the villages of the country has doubled the income of rural households, raised literacy rate by 10%, and appreciated land prices by up to 80%, says the World Bank. “In 2000, about 40% of India’s 825,000 villages lacked all-weather roads ... With access to roads, incomes have soared. Household incomes rose by 50% to 100% on average.”
World Bank has been supporting India’s rural connectivity programme—Pradhan Mantri Gram Sadak Yojana (PMGSY). It aids projects in several places like Himachal Pradesh, Rajasthan, Jharkhand and Uttar Pradesh. Over the years, World Bank’s concessionary lending arm International Development Association (IDA) has supported many rural roads projects, both standalone and components of larger projects. The year-round connectivity has narrowed gender gap with access to education for girls and raised job opportunities, IDA said adding every Rs 10 lakh spent on rural roads has helped lift 163 people out of poverty.
The World Bank has said "a second project of $1 billion is under preparation". It would aim to improve maintenance, weak capacity, governance and accountability, and would introduce several efficiency measures. Meanwhile, for two-laning of 6,372-km of the total of 19,702 km single lane highways in the country, the finance ministry has requested the World Bank for a loan of $3 billion.
India’s GDP beats all forecasts
India's economy gave yet another indication of its rapidly improving health, prompting greater ambition from policy-makers still chary of withdrawing the stimulus medicine responsible for the recovery. Gross Domestic Product (GDP) expanded by a surprisingly strong 7.9% during the July-September second quarter, its fastest pace in a year and a half. The growth was driven largely by a pick-up in manufacturing, increased government expenditure, robust investments and modest growth in farm output despite the drought.
The growth in the first half of the year is now a respectable 7% as against 7.8% during the same period a year ago. In the fiscal year ended March 2009, the economy grew by 6.7%, its weakest in six years and way below rates of 9% or more in the previous three years.
The strong growth may put pressure on RBI to hike policy rates sooner than March 2010 as worries about inflation grow. Bond yields firmed up to 7.25%, six basis points up, as traders see a 25-basis-point hike in key policy rates by January 2010.
There will also be pressure on the government to cut expenditure and roll back stimulus measures such as the cut in indirect rates. The fiscal deficit between April and October 2009 was 61% of the target for the year, but slower-than-expected tax collections suggest the government could overshoot the target of 6.8% of the GDP for the year.
ENVIRONMENT
Tougher air quality norms unveiled
India has revised its National Ambient Air Quality Standards (NAAQS), discontinuing the old practice of different air quality standards for different land-use classes like residential and industrial areas. The country will now have uniform health-based NAAQS with uniform standards for all areas, whether residential or industrial.
Revised after a gap of 15 years, new air quality standards also provide legal framework for controlling air pollution and protecting public health, meaning that any citizen can now approach the court demanding better air quality. The revised standards include initiatives that had been developed in consonance with globally best practices and in keeping with latest advancements in technology and research.
The big question, however, is of enforcement, which could prove to be a difficult task.
The standards have brought two new deadly pollutants, PM 2.5 and ozone, within the ambit of regulation. The standard for nitrogen oxide has been made more stringent, from the existing 60 micro-gm per cubic metre, it has been tightened down to 40 micro-gm per cubic metre. Suspended particulate matter (SPM) as parameter has been replaced by fine particulate matter (PM 2.5), which is more relevant for public health.
HEALTH
India's children stunted, undernourished, wasted: UN
India has the largest number of stunted children below the age of five in the world, according to the latest United Nations Children's Fund report.
Approximately 200 million children, under the age of five, suffer from stunted growth in the developing world. The report 'Tracking Progress on Child and Maternal Nutrition' found that stunting is primarily caused due to childhood under-nutrition, which contributes to more than a third of all deaths in children under five.
India also has one of the highest numbers of underweight children, below the age of five, and one third of 'wasted children'—those facing a greater chance of death—in the world.
Out of a total of 19 million new-borns per year in the developing world that are born with low birth-weight, India has 7.4 million low birth-weight babies per year—the highest in the world. The report finds that 80 per cent of the developing world's stunted children live in 24 countries.
India, however, does not have the highest prevalence of stunted children as the high numbers was due to its large population. In terms of prevalence, Afghanistan was first while India was 12th. In 17 countries, underweight prevalence among children under 5 years old is greater than 30 per cent. The rates were highest in Bangladesh, India, Timor-Leste and Yemen,` with more than 40 per cent of children being underweight.
The study also found that 13 per cent of children, under 5 years old, in the developing world were wasted, and 5 per cent were severely wasted (an estimated 26 million children).
A number of African and Asian countries have wasting rates that exceed 15 per cent, including India (20 per cent) Bangladesh (17 per cent), and Sudan (16 per cent). The country with the highest prevalence of wasting in the world is Timor-Leste, where 25 per cent of children under 5 years old are wasted.
In Asia, the prevalence of stunting dropped from approximately 44 per cent in 1990 to an estimated 30 per cent in 2008, while in Africa it fell from approximately 38 per cent in 1990 to an estimated 34 per cent in 2008. Unless attention is paid to addressing the causes of child and maternal under-nutrition today, the costs will be considerably higher tomorrow.
JUDICIARY
Finally, SC judges declare assets
In a move that will enhance the image of the judiciary, 21 out of the 22 Supreme Court judges—including Chief Justice K.G. Balakrishnan—have declared their assets and of their wives by posting the details on the court’s website—supremecourtofindia.nic.in.
The step is expected to end months of controversy over the apex court's refusal to place in public domain such details, maintaining that it was not bound to part with these under the Right to Information Act (RTI).
The details, provided under the heading “Assets of Judges,” however, did not have the total assets of each judge and his wife. Also, the value of a number of properties owned by them is not given. Most of the judges had provided such details to the CJI at the time of their elevation to the apex court, but these were not placed in public domain.
FOREIGN RELATIONS
Visit of Australian PM to India
Australian Prime Minister Kevin Rudd visited India in November 2009 with a message to India that Australia remained a safe destination for Indian students. Mr Rudd said his government was committed to using the “full force” of law to protect Indian students.
During his visit, in an attempt to upgrade bilateral ties, both countries agreed to elevate the relationship to a strategic partnership. Discussions between Mr Rudd and Mr Singh covered all aspects of the bilateral relationship—from trade to climate change. On climate change, Mr Rudd said: “Indian Prime Minister and I discussed the great challenge of climate change. We must have a good ambition for Copenhagen.” The two sides agreed that it is an issue of concern for both countries, with the Indian side reiterating its position on climate change.
The two sides have also decided to expedite the feasibility study to look into the impact of an FTA between the two countries. In fact, the Australian side has made no secret of its interest in an FTA, with Mr Rudd saying that he expects the study to recommend an FTA.
Iran seeks help to combat terror
Notwithstanding the US pressure, India has unequivocally conveyed to Iran its commitment to participating in the 7.4 billion dollar Iran-Pakistan-India (IPI) gas pipeline project. This reassurance was given by both Prime Minister Manmohan Singh and External Affairs Minister S.M. Krishna at separate meetings with visiting Iranian Foreign Minister Manouchehr Mottaki in New Delhi.
At the delegation-level talks between the two foreign ministers, Iran sought greater cooperation with New Delhi in fighting terrorism emanating from Pakistan. Like India, Iran has also been affected by terrorism sponsored from the Pakistani soil. A horrific suicide attack in south-east Iran in October 2009 targeted the country's Revolutionary Guards and was blamed on Pakistan-based Jundallah, a Sunni extremist outfit.
This was the first high-level contact between the two countries since the UPA government returned to power in New Delhi and Mahmoud Ahmedinejad was re-elected as the President of Iran in June 2009.
Mottaki renewed an invitation to Manmohan Singh to visit Iran. The invitation was accepted and dates of the visit would be finalised in consultations through diplomatic channels.
The two sides also agreed to convene an early meeting of the joint working group (JWG) on energy cooperation between them to resolve issues connected with the pipeline project. An Iranian team would be visiting India soon for the purpose. As Iran and India share common interests in Afghanistan, they also discussed joint infrastructure projects like the deep sea port of Chabahar and a rail link to provide better connectivity for Afghanistan to Central Asia.
Visit of Prime Minister Manmohan Singh to USA
Prime Minister Manmohan Singh’s deliberations with US President Barack Obama in end-November 2009, as his first State guest, did not result in any dramatic announcements but New Delhi was satisfied that it was able to persuade Washington to acknowledge that India was being inflicted by terrorism from neighbouring Pakistan.
Washington went a step further by calling for the defeat of terrorist “safe havens” in Pakistan and Afghanistan and agreed to enhance collaboration in this effort.
The joint statement was prefaced with a commitment by both leaders to expand and deepen their relations. President Obama described India as a “rising and responsible global power” to assure India that it was very much on the US radar and that any impression to the contrary was incorrect.
The two countries signed a new memorandum of understanding on counter-terrorism cooperation to help each other in information and intelligence sharing related to terrorism, which institutionalised an arrangement which has been in place since the 26/11 Mumbai terror attacks.
President Obama’s commitment on the implementation of the Indo-US civil nuclear agreement during his press conference also found mention in the joint statement, which also acknowledges India as a responsible nuclear power. Taking note of the Obama administration’s sensitivities on non-proliferation, India was quick to reaffirm its unilateral and voluntary moratorium on nuclear testing and agreed with US to start early negotiations on a multilateral, non-discriminatory and internationally verifiable Fissile Material Cut-off Treaty. On its part, the US committed to ratify the Comprehensive Test Ban Treaty (CTBT) at an early date. There are fears that such a development would encourage the US to pressurise India to sign the CTBT, which has not been accepted by New Delhi.
President Barack Obama assured Prime Minister Manmohan Singh that the US-China joint statement issued on his visit to Beijing earlier in November was not an endorsement of Chinese mediation in the India-Pakistan dispute. Mr Singh said Obama told him that the intention of that statement was not to support any “third-party intervention in issues in South Asia.” He said he was “very satisfied” with Obama’s assurance on an issue that caused much heart-burn in New Delhi. India opposes third-party mediation in the dispute with Pakistan over Kashmir.
On Afghanistan, Prime Minister Singh said Obama told him that the US “highly values” India's role in reconstruction and development of the war-ravaged country. Manmohan, who met several Republican Democratic as well as Republican lawmakers while in Washington, said there was bipartisan support for India’s role in Afghanistan. This role is viewed with suspicion by Pakistan.
Visit of Canadian PM to India
India and Canada have entered into an agreement for enhancing energy security. Yet another deal has been inked between the two nations to kick off negotiations between the two with respect to free trade area. This happened during the meeting of Prime Minister Manmohan Singh with visiting Canadian Prime Minister Stephen Harper, in November 2009, on a range of bilateral issues, including trade and investment, civil nuclear cooperation, the global financial crisis, terrorism and climate change.
The energy security pact will enable better cooperation between the nations in areas of renewable energy and energy efficiency, oil and natural gas, power generation, transmission, distribution and end-use, energy research and development.
The FTA deal will enable the formation of a joint study group for exploring the chances for developing a Comprehensive Economic Partnership Agreement, with the first meeting slated to be held in December.
The two nations have also decided to cooperate for tackling global terrorism.
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