NATIONAL AFFAIRS
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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