JUne 2010-National

NATIONAL AFFAIRS

Compulsory public float rule issued
On June 5, 2010, the Union government made it mandatory for all listed companies to have a minimum public float of 25 per cent. Those below this level will have to get there by an annual addition of at least 5 per cent to public holding.

The move is expected to result in equity dilution of about Rs 1,60,000 crore by 179 listed companies. These include Reliance Power, Wipro, Indian Oil Corporation, DLF and Tata Communications.

According to the notification, ‘public’ will not include the promoter, promoter group, subsidiaries and associates of a company. ‘Public shareholding’ will mean equity shares of the company held by the public and not the shares held by the custodian against depository receipts issued overseas.

A company can increase its public shareholding by less than 5 per cent in a year if such increase brings its public shareholding to the level of 25 per cent in that year. If the public shareholding in a listed company falls below 25 per cent at any time, the company will have to bring the public shareholding to 25 per cent within 12 months from the date of such fall, compared with the two years allowed at present.

Bhopal Gas Tragedy verdict
On June 7, 2010, nearly 26 years after the world's worst industrial disaster left more than 15,000 dead in the Bhopal gas tragedy, former Union Carbide India Chairman Keshub Mahindra and seven others were convicted and sentenced to two years imprisonment.

Chief Judicial Magistrate Mohan P. Tiwari held the 85-year-old non-executive chairman of the Indian subsidiary of the US-based company and gave them punishment under less stringent provisions of the Indian Penal Code for causing death by negligence.

The 89-year-old Warren Anderson, the then Chairman of Union Carbide Corporation of USA, who lives in the United States, appeares to have gone scot free for the present as he is still an absconder and did not subject himself to trial. There was no word about him in the judgement.

The US based company reacted to the judgement saying neither it nor its officials were subject to the jurisdiction of the Indian court since they were not involved in the operation of the plant, which was owned and operated by Union Carbide India Limited.

In his 93-page verdict, Tiwari said the accused were not sentenced under section 304 IPC (culpable homicide not amounting to murder that provides a maximum of life imprisonment) since they were old age and were suffering from serious ailments including heart disease.

All the convicts applied for bail immediately after the sentencing and were granted relief on a surety of Rs 25,000 each.

Law Minister M. Veerappa Moily described the verdict as an example of “justice buried” and said there was need for fast-tracking such cases and ensuring proper investigation.

The BJP termed the order as “painful” and said the prosecution should appeal against the lower punishment. It also utilised the opportunity to reconsider the provisions of the nuclear liability Bill.

ONGC, OIL get freedom to price natural gas
In a significant development, the Union government has given national oil companies, Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL), freedom to price any additional natural gas produced from blocks given to them on nomination basis at market rates. So far, all gas—current and future—produced from blocks given to ONGC and OIL was priced at government-controlled rates, called administered price mechanism (APM).

Even the price of APM gas from June 1 has been more than doubled to $4.2 per million British thermal units, on a par with the rate at which Reliance Industries sells gas from its eastern offshore KG-D6 fields.

The government has also made a significant departure from the previous practice of pricing natural gas in rupees and has now decided to price it in US dollars.

State-run ONGC and OIL produce 54.32 million cubic metres of gas per day — about 40 per cent of the total amount originating from the country — through fields given to them on a nomination basis.

Petrol, Diesel prices freed from government control
On June 25, 2010, the Union government announced that prices of petrol and diesel would become market-driven, in line with the recommendations of a panel headed by former Planning Commission member Kirit Parikh.

An empowered group of ministers led by Finance Minister Pranab Mukherjee agreed to raise diesel prices by Rs 2 a litre for now. The fuel will eventually be freed from State control. Petrol has been freed fully.

The panel also increased prices of liquefied petroleum gas (LPG) by Rs 35 a cylinder and of kerosene by Rs 3 a litre, though both will remain under government control.

The decision will help to cut fuel subsidies and limit losses of State-run refiners.

The market-driven mechanism would mean users would have to pay more whenever international crude oil prices rise and less when they fall.

The move would bring down the government’s huge subsidy bill and relieve State-owned oil marketing companies of some of the burden they bear by selling fuels much below the market prices. This burden, also called under-recovery, is estimated at Rs 215 crore every day.

Jharkhand again under President’s rule
On June 1, 2001, Jharkhand came under Central rule with President Pratibha Patil accepting a recommendation of the Union Cabinet after the Congress and the BJP gave up efforts to form an alternative government following resignation of Chief Minister Shibu Soren.

The State Assembly will be kept in suspended animation during the President’s rule, which has been imposed for a second time in two years.

The Soren government was reduced to a minority on May 24 when the BJP, with 18 MLAs and the JD(U) with two, withdrew support to it. The JMM, with 18 MLAs and having the support of seven other legislators, was short of the required 42 in the 82-member House. The BJP took the decision after Soren voted against the cut motions sponsored by the opposition in Lok Sabha on April 27.

Jharkhand has seen seven CMs since its creation on November 15, 2000, came under President’s rule for the first time on January 19, 2009.

India, Canada sign civil nuclear pact
On June 28, 2001, India and Canada signed a civil nuclear cooperation agreement. The pact was signed during Prime Minister Manmohan Singh’s visit to Canada.

The deal, the ninth signed by New Delhi, significantly alters Canada’s stance towards India. The North American nation had led the world in pushing for nuclear isolation after the 1974 tests in Pokhran.

The US, France, Russia, Mongolia, Kazakhstan, Argentina, Namibia and Britain are the eight countries that have already signed similar pacts with India.

Among other things, the India-Canada Agreement for Cooperation in Peaceful Uses of Nuclear Energy provides for tie-ups in design, construction, maintenance, supply of uranium and waste management. The two countries can also promote cooperation in the development and use of applications related to health, industry, environment and agriculture.

Visit of South African President
On his maiden visit to an Asian country as the President of South Africa, Jacob Zuma was given a rousing reception by the Indian leadership on June 4, 2010, as the two countries signed three key pacts, including one on air services, and agreed to support each other’s candidature for the non-permanent seat at the UN Security Council for the 2011-2012 term.

A wide range of bilateral issues as well as global developments, including reforms of the UN Security Council, closer cooperation between the two countries at various international fora, particularly on climate change, and increasing the volume of bilateral trade, came for discussions during the talks.
Apart from the pact on enhancing air connectivity, the two countries signed an MoU on agriculture cooperation and another for linkages between the Foreign Service Institute of India and the Diplomatic Academy of South Africa.

Both India and South Africa are keen to increase the two-way trade, which currently stands at $7.5 billion annually. Zuma said he wanted that to grow to $10 billion by 2012.

Visit of Sri Lankan President
Sri Lankan President Mahinda Rajapaksa visited New Delhi on June 9, 2010. During his talks with Prime Minister Manmohan Singh, he sought to cool down tempers in India over the plight of Tamils in his island nation by promising to quickly resettle displaced Tamils and expedite a political solution to the ethnic issue.

The two countries also signed seven agreements, including a treaty on mutual legal assistance in criminal matters and an MOU on sentenced prisoners, after wide-ranging talks.

The two countries announced a major initiative to undertake a programme of construction of 50,000 houses for internally displaced persons (IDPs) in Northern and Eastern provinces of Sri Lanka with India’s assistance. India would also be taking up several projects for the reconstruction of the North and the East, including rebuilding of railway infrastructure, rehabilitation of Kankesanthurai harbour and Palaly Airport, construction of a cultural centre in Jaffna and several vocational training centres, renovation of the Duraiappaj stadium and rehabilitation of war widows.

The two countries also decided to resume the ferry services between Colombo and Tuticoran and between Thalaimannar and Rameswaram. India would also establish consulates general in Jaffna and Hambantota. India would also assist the island country in setting up a thermal power plant at Trincomalee.

At their one-on-one meeting which was followed by delegation-level talks, the Indian PM and the Sri Lankan President also discussed a wide range of bilateral issues, including the proposed comprehensive economic partnership agreement (CEPA), as well as international issues. Sri Lanka supported India’s case for inclusion in an expanded UN Security Council, as well as its candidature for a non-permanent seat for the 2011-2012 term.

The five other agreements, signed after the talks between the two sides, were: renewal of MoU on SDP schemes, MoU on setting up of a women’s trade facilitation centre and community learning centre, renewal of cultural exchange programme, MoU on interconnection of electricity grids and MoU on Talaimannar-Madhu railway line.

Indo-US strategic dialogue
The Strategic Dialogue between India and US is another “milestone” in bilateral relationship with the Obama Administration. External Affairs Minister S.M. Krishna and US Secretary of State Hillary Clinton co-chaired the first Cabinet-level Indo-US Strategic Dialogue, which helped to set the pace for the long-term strategic relationship between the two countries.