1.

Urban boom altering TN population profile A rapidly urbanising Tamil Nadu faces significant social and economic challenges, going byindicators in the 2011 census abstract report released here on Friday. The ratio of rural to urban population has nearly reached parity and stands, in percentage terms, at 51.6 in villages and 48.4 in cities. Tamil Nadus population at the referral time the stroke ofmidnight of March 1, 2011 stood at 7.21 crore, including 3.61 crore men and 3.60 crore women. The population distribution in rural areas stood at 3.72 crore, while urban population was 3.49 crore. Of the total increase of 9.7 million people in the last decade, the contribution of rural areas was 2.3 million, whereas the contribution of urban areas was 7.4 million, Joint Director of Census Operations M.R.V.Krishna Rao told reporters. Chennai had the highest population density at 26,553 persons per sq km. The citys adjoining districts Kancheepuram and Tiruvallur registered the highest population growth rates in the past decade. Sex ratio Despite being one of the States in the country to have an impressive track record in health and family welfare schemes, a comparison of the sex ratio of adults versus children shows a massive gap. The sex ratio (the number of females per 1,000 males) stood at 996, an increase of 9 points from 987 in the 2001 Census. Sixteen districts had a sex ratio in excess of 1,000. However, the child sex ratio (age group of zero to six years) a more thorough indicator of the welfare of the girl child stood at 943 per 1,000, up just marginally from 942 in the 2001 Census. Literacy rate The effective literacy rate in Tamil Nadu has been worked out to 80.1 per cent, with male literacy rate of 86.8 per cent and female literacy rate of 73.4 per cent. The top three districts for literacy rates were Kanyakumari at 91.7 per cent, Chennai at 90.2 per cent and Thoothukudi at 86.2 per cent. The poorest performers were Dharmapuri at 68.5 per cent, Ariyalur at 71.3 per cent and Krishnagiri at 71.5 per cent. SC population The Scheduled Castes (SC) accounted for nearly 20 per cent of the States population. Of the 14.4 million SCs, 9.5 million lived in rural areas, while 5 million lived in urban areas. 2. to East Asia As important as the new bilateral treaty on extradition with Thailand, the progress made in finalising the trilateral highway through Myanmar marks an important milestone in Indias relations with its eastern neighbours. After concluding a productive visit to Japan, Prime Minister Manmohan Singh wound up his trip with a useful stopover in Bangkok. Though it took two decades for the extradition treaty to be negotiated, it has finally been signed and New Delhi can look forward to some tangible results. A longish list of wanted men is already with Thailand, and Prime Minister Yingluck Shinawatra has promised to expedite the process of extraditing those wanted in India, including Sayed Ahmed Ali Kari alias Munna, alleged to be involved in major cases in Mumbai. Apart from making it easier for India to get hold of fugitives, the treaty will give a boost to intelligence sharing and wider bilateral cooperation against terrorism, money laundering, organised crime, drug trafficking and counterfeiting. It has been Indias argument all along that many organised groups indulge in serious crime in India and escape to Thailand, getting away from the long arms of law. The fact that Thailand had emerged as somewhat of a haven for Indian criminals has done Bangkoks image no credit. The push to shut down safe havens for Indian insurgents in Bangladesh has proved to be a win-win situation for both countries. Equally significant on Indias borders with Southeast Asia is the trilateral highway that will connect Manipur and other northeastern States with Thailand through Myanmar. Also hanging fire since the first decade of this century is the proposal for a trans-Asian railway line

Highway

that will allow the movement of goods and people from Camranh Bay to the Caspian. India needs to pursue both projects seriously with ASEAN, especially the highway which is tantalisingly within reach. India has already extended a $500 million loan to Myanmar, which will also fund the trilateral highway. This project should substantially increase border trade with Myanmar, which has not picked up the way it should have because of infrastructure bottlenecks on both sides of the border but especially inside Myanmar. India and ASEAN have become such close partners that the highway project assumes greater significance. Thailand is already well linked to Malaysia and Singapore, which means that the trilateral highway to Mae Sot in Thailand could in effect connect India with four of its Southeast Asian friends. Connectivity through Myanmar is the bottleneck. New Delhi and Bangkok should work together with Nay Pyi Taw to ensure rapid completion of themissing link. 3. the markets clean The Securities and Exchange Board of India (SEBI) is celebrating its silver jubilee this year. A period of 25 years may not be sufficient to assess the performance of a financial sector regulator, especially when the period under review spans a very tumultuous phase of economic history. During the decade before the start of financial sector reforms in the early 1990s, Indian stock markets had started attracting a wider clientele, such as nonresident Indians. But after the reforms, the markets really took off, both in terms of volumes and types of instruments. Yet even 25 years after SEBI was formed, Indian stock markets are overwhelmingly dominated by equities which, however, continue to form a small part of household financial savings. The government faces daunting challenges in popularising products such as those necessary for infrastructure finance. Matters are not helped by the lackadaisical approach of the government towards the regulator. Set up in 1988, the Board remained a toothless body until April 1992 when the SEBI Act waspassed. The stock market scam of 1992, attributed to lax regulations, hastened theconferment of legal status on the regulator. Right from that initial act of empowerment, the governments support to the new regulator has always come in reaction to a crisis or the emergence of new scams. It is not surprising that at its silver jubilee function, the SEBI chairman sought jurisdiction over multilevel financial conglomerates and other deposit-gathering entities whose failure has wrought havoc in Bengal and a few other States. At an even more basic level, the governments support to SEBI has been found wanting when it is crucially needed. This is spectacularly demonstrated by the failure of the government and all political parties to support the regulator, even after it had scored a major victory in the Supreme Court over the Sahara Pariwar. SEBI has also been handicapped in not having a strong middle management cadre, the backbone of any regulator. Despite all these hurdles, SEBIs performance deserves appreciation: its oversight has contributed to the exponential growth of the stock market, faster settlements, and extensive use of technology, encouraging disclosures and, above all, in extending regulation for the first time over capital market intermediariesthrough a well designed licensing process. In the 25 years it has spent down in the trenches of the financial world, SEBI has done well to earn a measure of respect from the markets and investors. What it requires today is the government support needed to go further and take its place among the most credible and respected global financial regulators. 4. Nepal tactics, without the strategy On November 23, 2001, the Communist Party of Nepal (Maoist) attacked an army barrack in western Nepal. The move shook the Nepali polity, for the rebels had been in ceasefire talks with the government for the preceding five months. Violence resumed. More significantly, the Maoists had, for the first time, directly hit the army. Till then, as fierce battles raged between the Nepal Police and the Maoists, the Royal Nepalese Army (RNA) even when it was in

Keeping

the vicinity looked the other way. It had then seemed unfathomable why the Maoists would draw the RNA into the conflict. Kathmandus commentators concluded that the rebels had committed political suicide. RNA generals declared that they would defeat the insurgency in six months. Like their Nepali counterparts in 2001, in Chhattisgarh the Indian Maoists have made a move which will lead to an escalation of an already violent conflict. Fortunately for the Indian political system, their institutional interests, and the people in the conflict zone the Indian Army has stayed away from the battles in central India so far. But stories emanating from the Home Ministry in Delhi indicate a renewed determination to step up the security offensive. Numbed by the attack, Ministers who earlier understood the limits of the security approach have declared the rebels as terrorists. Security analysts have jumped at the opportunity to portray constitutionalists, liberals and human rights activists as somehow complicit in the attack arguing it is time to go the whole way in eliminating red terror, irrespective of the collateral damage. This narrative conveniently ignores the fact that the security operations have never let up and the state, overtly and covertly, has invested enormous resources to fight the Maoists. In fact, in the past few months itself, the Maoists have suffered losses in Jharkhand, Chhattisgarh, and Maharashtra. Sharpening polarisation The current rhetoric in Delhi would be music to the ears of the Maoist leadership, for this is precisely the kind of belligerence they are hoping to ignite. If the Nepali experience ofhighprofile attacks is any guide, the Indian Maoists have sought to project power. This would be a much-needed morale-booster to the organisations rank-and-file after a series of setbacks. It would have satisfied the impulses for revenge among a large section of South Bastars population, who have suffered due to the Salwa Judum experiment led by Mahendra Karma. The attack would be an effective medium to silence political rivals seeking to challenge the Maoists in the region and beyond. But there are two other striking similarities with the tactics adopted by the Nepali Maoists. The first is provoking the state to launch even more ruthless coercive operations, in order to expose the character of the ruling classes. The 2001 attack on the army barrack led to a full-scale war in Nepal. An emergency was declared. The RNAs strength went up from 45,000 to 90,000 in a matter of a few years. It was armed, financed, and supported by the international community, including U.S. and India to defeat the terrorists. Yet, this was the period when the Maoists witnessed the greatest expansion, for the rebels calculated that the greater the repression, the better for their kranti . It gave them ammunition to portray the monarch-led state as being anti-people, and imperialists and local feudals as acting in concert. The army engineered disappearances; soldiers raped and killed women; and by the end of the war in 2006, the security forces were responsible for almost two-thirds of the total killings, including of innocent civilians. The state approach helped the Maoists to tap into the resentment of local communities. For a range of reasons, in areas where insurgents have the advantage of being enmeshed with society, security forces have a terrible track record of identifying targets, winning the confidence of the local population, and using force with caution. Instead, reports show their tendency to alienate citizens with their unaccountable actions. The Indian Maoists wish to invite this avatar of the state. This is in no way an argument to turn a blind eye to the Maoist violence, but to make a practical case that building on an already flawed counter-offensive which has not eroded Maoist capacity substantially, as this attack proves will aid the rebels. The second similarity is engineering rifts within the mainstream political actors. The Nepali Maoists never targeted all their enemies simultaneously. In the first few years, they att acked the Nepali Congress (NC) the palace felt this would add to the kings strength and turned a blind eye. When the Maoists attacked activists of the mainstream left, the NC felt that the divisions within the left would benefit them. The Maoists then attacked the palace loyalists

and the army, which suited the parliamentary parties locked in conflict with the king. With the attack on the Congress state leadership, the Maoists have succeeded in sharpening the divisions within the Indian political mainstream. Sections of Congress have begun attacking BJP in the hope of making the state governments failure a poll issue and garnering sympathy; sections of the BJP may feel that with key Congress leaders out of the scene, they have an electoral advantage. The ability of the Maoists to become a key poll factor, even while calling for its boycott, is at play here a feature visible in the Andhra Pradesh elections in 2004, when they tacitly backed Congress, and West Bengal elections, when they actively targeted the CPM. (It is another matter that in both cases, the newly elected governments were quick to launch an offensive against the rebels, showing the fragility of such alliances.) To what end? But certain caveats are in order. The Indian states coercive apparatus, and bleeding capacity, is much stronger. The Maoists cannot take over a single district headquarter let alone state power. International factors play a much greater role in Nepal, while corporate interests are more influential in India. India has a functioning democracy, and a relatively flexible constitutional arrangement, with the ability to accommodate new aspirations. The biggest difference, however, is that the Nepali Maoists had a clear objective. Their tactical moves were meant to achieve the strategic goal of creating a new political mainstream, holding elections for a Constituent Assembly, and abolishing the monarchy. The Indian Maoists may score temporary victories; they may shake local power structures; they may push the state to adopt welfare programmes and win concessions for their social base. But they do not have an attainable political goal which could serve as a meeting point with the Indian state in the existing balance of power, and give them space in the state structure. As Aditya Adhikari, author of a forthcoming book on the Nepali Maoists, says, In Nepal, the objective was to project military power to gain authority at the negotiating table. If you are not negotiating, and you do not have the capacity to win state power militarily, such attacks become merely tactical and unhinged from any long-term strategy. Irrespective of the damage they inflict on the state, it is in the realm of a strategic political vision where the Indian Maoists will falter. The Maoists may be escalating the conflict to expose the state and divide mainstream parties, but without an attainable goal, their battles will be futile 5. Economy high on voters agenda in Bhutan Second elections since it became a democracy Voters in Bhutan braved rain and treacherous mountain paths to cast their ballots on Friday as the land of the thunder dragon began electing a government for only the second time. Wearing traditional dress and sheltering under umbrellas, Bhutanese queuedpatiently at polling stations in the isolated Himalayan nation in the first round of voting to determine the Lower House of Parliament. There are so many pledges in their [politicians] manifestos but basically what we expect is a government that can bring abouthappiness to the people and at the same time economic development, said Chimi Dorji (35) as he waited to vote in Dopshari village, about an hour-and-a-half drive from the capital Thimphu. Because without economic prosperity there cant be happiness, he added. Bhutan is the only country in the world to pursue Gross National Happiness, a development model that measures the mental as well as material well-being of citizens. Other policies that have set the country apart include: banning television until 1999, keeping out mass tourism to shield its Buddhist culture and aiming to makeall of its farming 100 percent organic. While the electorate comprises fewer than 400,000 four lakh people, voting is a huge logistical challenge across the rugged country, where democracy was ushered in just five years ago after Bhutans dragon kings ceded absolute power. In the run up to the poll, officials trekked for up to seven days to reach voters in the most remote corners of the country. Armed with satellite

phones to send in results, officials have battled heavy rains and slippery leech-infested trails to ensure that even isolated yak-owning nomads can cast their vote, the national Kuensel newspaper reported. 6. Fiscal deficit lower at 4.89 % in 2012-13 Even as the low GDP (gross domestic product) and core infrastructure growth numbers came as a disappointment to the government , the fiscal deficit figure for 2012-13 was something to cheer about. With larger than anticipated mop-up by way of taxes coupled with higher nontax collection, the fiscal deficit for 2012-13 worked out lower at 4.89 per cent of the GDP, significantly below the revised estimate of 5.2 per cent. While the government had budgeted for a revenue realisation of Rs. 10.38 lakh crore during 2012-13, the revised estimates had pegged the direct taxes mop-up at Rs. 5.65 lakh crore with another Rs. 4.69 lakh crore coming from indirect taxes. During the course of the fiscal year, while there was a marginal slippage in direct tax collection, the revenue mop-up through indirect tax mop- up ended up exceeding the revised estimates. Alongside, with the total expenditure pegged at Rs. 14.30 lakh crore, the governments expenditure was consciously compressed through strict monitoring of spending by various departments. In the Budget, while the government had pegged the fiscal deficit at Rs 5.20 lakh crore or 5.2 per cent of GDP for 2012-13, the data released by the Controller General of Accounts (CGA) show the fiscal gap between expenditure and revenue at Rs 4.89 lakh crore, or 4.89 per cent of the GDP. Finance Minister P. Chidambaram attributed the decline in the fiscal gap to additional tax revenues and savings on expenditure. Many of the ministries could not spend money given in Revised Estimate. Also, there was some additional tax revenue of about Rs. 7,000 crore. So it has come down to 4.9 per cent [in 2012-13], he said. In keeping with its commitment to adhere to the path of fiscal consolidation, Mr. Chidambaram, in the Budget for 2013-14, had proposed to lower the fiscal deficit to 4.8 per cent of GDP this fiscal and subsequently reduce it gradually to three per cent by 2016-17. With the fiscal deficit target nearly achieved in the previous fiscal itself, the Finance Minister sought to set himself a higher benchmark. I don't wish to compress expenditure. Therefore, revenues have to go up... For 2013-14, [we] have to do much better than 4.8 per cent, he said. 7. Why Japan, China are wooing India Japan wants to offset Chinas might, while China needs a friendly neighbour. The two countries needs can translate into economic advantages for India. Its been a month of hectic high-level diplomacy. The back-to-back exchanges with the Prime Ministers of China and Japan underscore the opportunities opening up for India. We seem to be at a rare moment when these two Asian giants are simultaneously desirous of moving closer to India. Their motivations for doing so are diametrically opposed. Yet, they present us with the possibility of expanding Indias strategic and economic footprint in Asia. Lets start with Japan. Prime Minister Shinzo Abe has been a champion of strategic ties with India since his first tenure in 2006-07. He is back in office now with a clear plan for jump-starting Japans economy and beefing-up its military muscle. The backdrop to this is, of course, the sustained rise of China and the increasing toughness in Beijings approach to dealing with maritime disputes. Japans strategies Tokyo has already announced dramatically expansionist monetary and fiscal policies. Abe is also resolved to raising the long-run rate of economic growth. Towards this end, he has signalled his willingness to take on powerful lobbies in agriculture and pharmaceuticals and to spur investment and innovation. He is also keen to negotiate Japans entry into the Trans Pacific Partnership (TPP), a new free trade agreement being pushed by the US. Economic ties with India have assumed greater importance in this context. The Japanese are eager to

diversify their foreign investments to destinations other than China. Over the past couple of years, it has become clear to Japan that the web of economic ties with China, especially their massive direct investments, are working more to Beijings advantage. India is already the largest recipient of Japanese overseas development aid. And Tokyo wants to give a major boost to economic relations with India. Apart from announcing a slew of grants for infrastructure and educational initiatives, the Japanese have expressed their desire to build high-speed rail networks in India. A joint feasibility study will soon be underway. All of this presents an excellent opportunity for India. For one thing, we should push for redressing the current imbalance in trade with Japan. Indian companies that have a competitive advantage should have greater market access in Japan. Non-tariff barriers that hinder Indian exports of shrimp, for instance need to be removed. Boost to infrastructure On the flip side, we need to give a fillip to Japanese investments in India. The Japanese are particularly concerned at the lack of progress in introducing the Goods and Services Tax. At this point, Japanese equity inflows to India remain a ridiculously small percentage of the total foreign direct investment by Japan. Similarly, we need to expedite large infrastructure projects where Japan is the key contributor: The Delhi-Mumbai Industrial Corridor, the Dedicated Freight Corridor, and the Chennai-Bengaluru Corridor. The Japanese have been admirably patient, but this should not be taken for granted. Japans eagerness to bolster economic ties also presents us the best opportunity to become part of the integrated supply chains of Asia, and so give a strong economic basis to our Look East policy. On the security front, too, Japan is keen to give real content to the relationship with India. The two sides are already engaged in a range of bilateral Defence and strategic exchanges at various levels. There is an opportunity now to make substantial progress. Tokyo has expressed interest in boosting cooperation in Defence and dual-use technology. The Japanese have offered the state-of-the-art US 2 amphibian surveillance aircraft to India. The Indian Government wants to encourage this not as a direct sale, but as part of Japanese FDI in the Defence and aviation sectors in India. The Abe government also wants to push ahead with civilian nuclear cooperation an issue of considerable interest to India. This is likely to happen after the elections in the Upper House of the Japanese parliament. Promoting investments New Delhi, for its part, has worked to deepen cooperation in security and Defence. The joint statement issued at the end of the visit, both sides, addressed regional security issues of concern to the other. Japan acknowledged the challenges confronting Afghanistan after 2014 as well as terrorism in South Asia. And India agreed with Japans concerns about North Koreas nuclear programme and called on Pyongyang to adhere to UN resolutions as well as the understandings reached in the six-party talks. Bilateral exchanges on Defence have also been stepped up. Last year, the two Navies held a joint exercise off the coast of Japan. The next round will be conducted in the Indian Ocean. India has also been engaged in trilateral discussions on security matters with Japan and the US. At the same time, New Delhi seems conscious that the Defence relationship with Tokyo should not be seen as being driven by Washington. This is as it should be. It is certainly not in Indias interest to convey an impression that its security partnerships are subordinate parts of the US pivot to Asia. In fact, this balanced posture works to Indias advantage in its dealings with China as well. It is no coincidence that the Chinese Premier Li Keqiang went all out to impress upon his Indian interlocutors the importance that Beijing attached to the relationship with India. For China, too, believes that it faces an unfavourable international environment. The heating up of its various maritime disputes, the American efforts to strengthen its strategic presence in Asia, and bold measures being initiated by Japan: All seem to have given pause to Beijing. In consequence, the new Chinese leadership wants to keep relations with India on an even keel.

Beijing is apparently serious about taking steps to reduce its trade surplus by allowing greater market access to Indian firms and by promoting investment in India. Whats more, it has indicated its willingness to move ahead on the negotiations for a framework to resolve the boundary dispute. New Delhi should actively leverage these attempts by both Tokyo and Beijing to improve ties with us. Above all, we must avoid making sharp choices or premature commitments in our dealings with either country. 8. Should inflation-indexed bonds be linked to WPI? - YES The first issuance of an indexed financial instrument was in 1742 when the State of Massachusetts issued bills linked to the cost of silver. The market has traversed a long way since, with economists such as Keynes, Musgrave, Friedman, Barro, among others, supporting the issuance of indexed bonds. In India, the first indexed bond was issued in December 1997, in which the capital was indexed. Currently, the Government plans to issue Inflation Indexed Bonds (IIBs) where both principal and interest are to be protected from inflation. Concern has been expressed over the usage of Wholesale Price Index (WPI) as the reference, instead of Consumer Price Index (CPI). The former, it is felt, would not give complete inflation protection to the retail investor. Moreover, WPI tends to fluctuate more than CPI. Globally, too the evidence is tilted towards usage of CPI. However, one of the pioneers of IIBs, Argentina (1972-1989), had referenced their first issue to non-agricultural wholesale prices and later graduated to a combination ofconsumer, construction and wholesale price indices. Similarly Brazil from 1964-1990, Columbia in 1967, Finland from 1945-1967, Turkey 19941997 had issued IIBs linked to wholesale prices. The UK continues to issue gilt linkers with the reference index being Retail Price Index, which happens to be more volatile than the CPI. This is despite the fact that its monetary policy is focused on CPI. Domestically, the choice of WPI instead of CPI as a reference index for pricing IIBs has been made more out of necessity rather than preference. For an index to serve as true reference it needs to meet certain criteria, such as easy accessibility, wide acceptance and regularity in periodic updates. The WPI meets these requirements. It has been in existence for a much longer period than the national CPI (which came into being two years back) with revisions to its base at regular intervals. WPI is also the most important gauge of price movements, as far as monetary policy is concerned. Our markets would require any new product to be well accepted initially by wholesale investors and market intermediaries, resulting in liquidity for the instrument. As the coverage of WPI is wider than the CPI, any financial instrument indexed to WPI can cater to a wider investor base. Once the wholesale market develops a level of comfortregarding IIBs, we could move on to meet the needs of retail investors through CPI. This is already being looked at by the regulator; once the CPI matures to become the focus of monetary policy, the reference index for IIBs could be shifted to CPI. While a retail investor may assume a basis risk when he takes a bond linked to WPI rather than CPI, IIBs in their current avatar will still offer a high degree of protection compared with the nominal yield bond. 9. Bonded labour: The truth is out there The UPA's claim that its flagship rural employment scheme has eradicated an age-old scourge is hard to believe In preparation for the general elections next year, the United Progressive Alliance (UPA) government recently launched a massive advertising campaign to prove how much it has done for the poor and the downtrodden and made good the promises set out in its last two election manifestos. Around Rs 16 crore has been spent on producing the advertisements. And over Rs 200 crore will be spent on running the advertisements on television and in the newspapers. The Union information and broadcasting minister unveiled the multimedia campaign in mid-May, propagating the so-called claim of the government to have achieved everything that the general public could think of. The first advertisement states, "Thanks toMGNREGA. No bonded labour anymore." Had the advertisement said something to the

effect that "Government introduces MGNREGA to tackle labour issues", the UPA would have been on safer ground. A publicity campaign, after all, is just that. But by choosing to headline a propaganda claim, the government has lost much credibility. A casual glance at recent media reporting will show why. On the same day that this advertisement ran in the newspapers, 17 bonded labourers were released by the district administration in Puri, Odisha. They had been forced to work as barbers for a meagre dole of 15 kg of paddy per year for their families. Additionally, on May 15, all state-level media channels relayed the bondage stories of a dozen labourers from the Sahariya community in the state capital of Rajasthan, Jaipur. Then again, at the beginning of this year, 149 victims of bonded labour were freed from a brick kiln in Andhra Pradesh. A couple of weeks ago, on a recent bonded labour rescue mission four hours outside Chennai, a 70-year-old man sobbed as he recounted what his life had been like for 25 years: harvesting catfish and baiting them with maggot-infested chicken carcasses in a foetid, man-made cesspool. This is just a brief glimpse into the reality of the many millions who continue to toil in bondage in brick kilns, rice mills, rock quarries, agriculture and various other industries across thecountry. The advertisement raises an additional puzzle. It seems to imply that the bonded labour system flourished until the advent of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). So what about the Bonded Labour System (Abolition) Actof 1976? Are we to assume it did not have any impact? According to a senior government official in the ministry of labour, over 300,000 bonded labourers have been rehabilitated in the 37 years since the Act was passed. These data are based on the number of bonded labourers who have been able to avail of government benefits after procuring release certificates. The data do not include the actual number of people rescued from bondage since many are unable to produce the necessary documents, so this may be anunderestimate. But this uncertainty only underlines the fact that accurate estimates of bonded labour are hard to establish, so the current government's claims to having abolished it are decidedly weak on this score. In 2008, Human Rights Watch put the number of bonded labourers in India at a steep 40 million. Is it possible to assume that all of them have been delivered from their predicament thanks to a rural employment guarantee programme? Even if the Human Rights Watch number were to be considered an overestimate, take the International Labour Organisation (ILO) estimates of 2013. According to the ILO, over 21 million people across the world are trapped as forced labour. Of this 11.7 million (or 56 per cent) are in the AsiaPacific region. Is it possible that none of them exists in India, the second-most populous country in the region? So, on what basis does the government make this claim? The advertisement does not specify; nor does it provide any statistics to back the headline claim. The text talks of an MGNREGA project in Jharkhand that has brought about social and economic transformation in a district. A blurb says, "The landless SC, ST and BPL population which earlier worked as bonded labour on farms of rich land lords has become free from their clutches owing to MGNREGA projects." The argument appears to be as linear as the assumption that everyone was liberated when India gained independence in 1947 thanks to the freedom movement led by Mahatma Gandhi. The fact is that the feudal system of bonded labour may have abated after independence thanks to land reforms, but modern forms of bondage have emerged. To be sure, this is not to detract from the worth of the MGNREGA. Where it is well implemented, it plays an important role in securing the stability of rural workers, with the guarantee of 100 days of paid labour in a year - indeed, if we take the example quoted in the advertisement at face value, it shows how this can work well. But to say bonded labour has been eradicated through a government scheme is to misunderstand the basic concept. By definition, bonded labourers are denied freedom to leave their place of work and are not

allowed to work elsewhere by employers for a variety of reasons (past debts being a key one). As a result, they are cut off from access to state or central government benefits and schemes, such as the MGNREGA, to which they are entitled. They simply do not have the freedom to engage in such schemes. The first step in any plan to effectively address the issue of bonded labour must be a concerted effort to ensure their freedom through a robust identification system and official release. This will require formulating a comprehensive national bonded labour strategy that complements state-level plans. It will require the strict and effective implementation of the Bonded Labour System (Abolition) Act throughout the country. It is only once bonded labourers are free that schemes such as the MGNREGA and other government welfare programmes can be converged and made easily accessible to promote the intended benefits to the vulnerable community. History shows that some people learn the hard way. The National Democratic Alliance government learnt this after losing the 2004 polls because of its "India Shining" campaign. The UPA government has launched a similar campaign, "Bharat Nirman", investing crores to woo the middle class and poor agrarian voters before the upcoming elections. The problem is the political parties in government might have changed but the bureaucrats running it are the same. The Bharat Nirman authorities still believe that the general public can be persuaded through a campaign like this.

10. A list with surprises Who delivered the most growth in incomes? India used to be the world's second-fastest growing economy, bested only by China. Before that, the story put out was that India was among the half-dozen fastest growingcountries. But if you switch from pure economic growth to per capita incomes, to see which country has done best by its citizens, the picture begins to offer some surprises. You could even question the generally accepted narrative that the poor countries as a group have been doing better than the advanced economies - the "catching up" story. And if you ask who really shines when you look at the long-term record, the answers are both predictable and surprising. The World Bank has modified national income data, using current US dollars (what it calls the Atlas method), that goes back to 1980 for most of some 213 countries. The latest multicountry data is for 2011. Over these 31 years, the runaway winner in terms of growth in per capita income is of course China, which multiplied incomes a staggering 22.5 times. No prizes for guessing the runner-up either: South Korea, which in 1979 had a much higher income base than India has today, and still multiplied incomes more than 11-fold. The dark horse that gets the bronze medal is from our neighbourhood - Sri Lanka, which despite a prolonged civil war grew incomes more than 9-fold. These three winners are followed by a clutch of seven countries, which grew per capita incomes 5- or 6-fold, led by two of the Asian Tigers - Thailand which multiplied incomes 6.2 times over 31 years, and Indonesia (6-fold). The best performers from three other continents come next: Europe's Turkey, South America's Chile and Africa's Egypt. The last two countries that make up the Top Ten are India, which multiplied per capita income 5.26 times, and Spain (5.1 times). No data is presented for Taiwan, while the city-states of Singapore and Hong Kong (also part of the original "Tigers") have of course done very well. Count them all and India ranks a respectable 12th. Crucially, though, a match between China and India is like Roger Federer vs Somdev Devvarman. The interesting discovery is that the advanced economies, supposedly slow-growing, have done well by quadrupling per capita incomes. Australia and Britain are the best performers (multiplying about 4.5 times),

followed closely by Italy, Japan (surprise!) and Canada. The big economies that are traditionally seen as more successful - the US, Germany and France - grew incomes somewhat slower, but did better than a host of poor economies that are supposed to have been "catching up". Within South Asia, the ordering is equally instructive: after Sri Lanka and India, it is Nepal, Bangladesh and Pakistan (3.3 multiple), but all of them have grown incomes more slowly than the rich bunch. Not much evidence of any "catch-up" here. Many of these scenarios could change in the troubled second decade of the new century. China is slowing down, India is searching for the growth elixir again, Europe has long-term problems and the US has its challenges too. Brazil (which did well in 1980-2011, with an income multiple of 4.9) and Russia (which had a terrible 90s and then a spectacular 'noughties' decade) are both down to a crawl. Japan may offer new hope while more than a dozen African countries, laggards till now, are beginning to do much better. So are places like unpretentious Philippines, which is second to China in current Asian growth listings. If India can get back up to a 7 per cent rate of growth, it could continue to feature in the top dozen. If not, it risks becoming one of the also-rans. 11. India in Abepolitik Thanks to Beijing's mis-steps, there is greater enthusiasm today for alliances and initiatives that balance China At 34 paragraphs and over 3,600 words, the joint statement on Prime Minister Manmohan Singh's visit to Japan earlier this week is perhaps as rare as the Japanese emperor's lunch invitation to the Indian prime minister. We do not know what was on the imperial kitchen's menu, but thanks to the joint statement, we do know a lot about the flavour of India-Japan relations. The first substantive issue it mentions is the foreign minister's strategic dialogue, immediately followed by the ministerial level economic dialogue. Note how the strategic precedes the economic. Note how the next seven areas mentioned in that paragraph concerning the two foreign and defence ministries, trilateral dialogue with the United States and issues such as cyber strategy and counter-terrorism - all cover geopolitical issues. A single mention of the word "economic" and then it's back to maritime affairs dialogue again. The prominence accorded to strategic issues in the joint statement, including reference to the 2008 Manmohan Singh-Taro Aso declaration on security cooperation, is a reasonably good indicator of what is driving the bilateral relationship. To be sure, the bulk of the statement - 11 big paragraphs - concerns economics, development and trade. Yet, these paragraphs are sandwiched between those concerning geopolitical issues, for the statement goes into East Asian security architecture, UNCLOS and the freedom of navigation, Afghanistan, North Korean missiles, CTBT, UN reform and climate change before concluding. There is a refreshing boldness in the substance and style of the new Japanese government under Shinzo Abe, as much to his foreign policy as to his economics. Abepolitik conceives of Japan as the key player in preserving "the peace, stability and freedom of navigation" in the Indo-Pacific region, which must stand up to a rising China's attempt to dominate and even appropriate parts of it. Mr Abe sees the United States, India and Australia as his country's key partners with the capability of, and shared interests in, balancing growing Chinese power. The enterprise of bringing the four parties together - first under an "Asian Quadrilateral" and now under an "Asian Democratic Security Diamond" - might well bepackaged under the label of liberal democracy, but is grounded on the principles of good old realism. It is the shared interests and capabilities in balancing Chinese power that underpins this geometry, not their domestic political orders. If, say, Communist Party-run Vietnam were to seek to join the project, Mr Abe is quite likely to upgrade the initiative to a pentagon.

What matters is whether and to what extent are the points of the diamond willing to confront China. Five years ago, the Asian Quadrilateral died because they were not. Kevin Rudd, Australia's former prime minister, might get most of the blame for it, but none of the other countries then had the appetite to engage in an initiative against China's objections. Also, there were a lot of people in New Delhi, Washington, Tokyo, Canberra and other places who believed in - and wished for - China's "peaceful rise". With parts of the Indo-Pacific close to outright military conflict today on the back ofBeijing's extravagant territorial claims, there is greater enthusiasm for architectures, alliances and initiatives that balance China. If it appears as if China is being 'encircled' or 'contained' by its neighbours in concert with the United States, then most of the blame should be directed at Beijing. There is a popular tendency to praise China's leaders for being astute strategists who think long-term, in comparison to the myopic politicians in democracies who don't get strategy. Well, you are not much of a strategist if you provoke all your major neighbours into weighing how to contain you, while the only allies you have are bankrupt delinquents exhibiting terrorists, nuclear weapons and missiles. One measure of China's new leadership's performance must be how well they can reverse the acute insecurities their predecessors created across the Indo-Pacific region. The countries of the region, not least Japan, will count on that. Japan is, after all, a wealthy island nation that is dependent on sea-borne trade, with a greying population, a pacifist constitution, territorial disputes with China and within range of North Korea's nuclear arsenal. The United States does provide it with a nuclear umbrella, but the defence relationship has a physical footprint that is unpopular in many sections of the population. The scars of the Second World War prevent it from developing closer ties with many East Asian countries despite decades of generous Japanese development assistance. Tokyo's need for allies beyond its immediate neighbourhood is therefore acute and Mr Abe's government has started cultivating them with greater clarity and energy than ever. A strong multi-dimensional relationship with Japan is crucial for India. That the relationship is moving beyond investment and development assistance into the strategic realm is a good thing. As India's export of rare earth minerals to Japan shows, we have what they need and vice versa. There's a lot of dogma and dearly-held twentieth-century principle to get around on both sides, but it does appear that a start has been made. We can thank China for that. A number of media reports were quick to declare that Dr Singh and Mr Abe are engaged in a project to counter China. Yes, it has that effect. What many analyses miss out is that strong bilateral ties broaden the two countries' policy options with regard to the United States as well. There is no doubt that Indian, Japanese and American interests are in alignment in many important contexts today. That said, it is quite possible that they sometimes are not. As Stanford University's Daniel Sneider notes, "below the surface, many Japanese of all political stripes were never comfortable with a strategy of reflexive dependence on the United States." That argument resonates in New Delhi as well. It is unlikely that Abepolitik's grand designs will take shape in the manner its proponents intend, for the United States, Australia, India and even Japan do not see conflict with China as being in their interests. The reasons why the Quadrilateral died a quiet death have not gone away entirely. Even so, to the extent that the prospect of an Asian Democratic Security Diamond tempers China's assertiveness, it makes sense to keep this iron in the fire. 12. Government must act now, stop looking at RBI The latest figures released by the Union governments Central Statistical Organisation should make policy makers in the United Progressive Alliances sit and think about rewriting the road map for Indias economic recovery. Pulled down by poor performance of farm, manufacturing and mining sectors, Indias economic growth slowed to 4.8 per cent in the

January-March quarter and fell to a decades low of 5 per cent for the entire 2012-13 fiscal. Indias economic growth was at 6.2 per cent for the 2011-12 fiscal. It had grown by 5.4 per cent, 5.2 per cent and 4.7 per cent in the first, second and third quarters, respectively. Union finance minister P Chidambaram, who has been working overtime to sell India to foreign investors, is right when he says India can continue its growth story if we ensure that conditions for growth remain intact and governance is efficient. The rub is that things are not working as per his plan. That Indias GDP number came down to the lowest in ten years should not come as a surprise to anyone. The finance ministry and the Reserve Bank of India (RBI) have been grappling with the problem of falling growth, low investment and inflation for quite some time without any tangible success. Investments still have to pick up, the balance of payments is under severe stress and inflation remains a risk on the horizon. In his speech on Thursday, RBI governor D. Subbarao has already said that RBI has done all it could and should not be expected to continue easing monetary policy if risks mounted. Despite moderation in global crude and commodity prices, there is a real danger of the tide turning adversely once again. The factors responsible for the continued slowdown need to be addressed urgently. But the solution must come from thegovernment and not the central bank. Unless the government takes effective measures to enforce fiscal consolidation, ease the supply bottlenecks and improve governance to facilitate more public investment, the economys downward slide cannot be arrested. 13. India must get serious about urban planning Mumbai can grow only vertically, not horizontally. Given this simple truth, the Maharashtra government cannot be faulted for asking the ministry of environment and forests to ease the restrictions on construction in the metropolis. Many building plans in the city have been delayed, some for years, because of their non-clearance. It is ironic that a ministry, which is responsible for protecting forests, is also entrusted with clearing building plans in a city bursting at its seams. Restrictions like the one the ministry has imposed only encourage corruption and strengthen the land and building mafia. Maharashtras capital does not have any land for construction. The development of Mumbais suburbs, too, has reached saturation points. The Mumbaites who live in sub-cities that developed on the citys periphery but work in Mumbai face innumerable problems of logistics. High-rise buildings, whether for office or for accommodation, become inevitable. This poses a challenge to urban planners. They have to ensure that while allowing a new multi-storied building to come up, it does not cause traffic jams in the area, there is enough space for parking and water and electricity are available round-the-clock on all the floors in the building. It is by addressing these issues that cities like Hong Kong, New York and Sydneyhave come up and become models of urban planning. Unfortunately, urban planning is still in a nascent state in India, borne out by the fact that not a single city has a proper waste management system. For instance, Bangalore, which was once known for its salubrious climate where people preferred to settle down after retirement, has become a concrete jungle where traffic crawls and vehicular pollution is beyond tolerable levels. Delhi has expanded to become the New Capital Territory. Facilities like road, electricity, water andsewage are woefully short of the needs in all these cities. For a rapidly urbanising nation, this mismatch is a matter of serious concern. 14. New DRDO chief puts Tejas on radar The Defence Research and Development Organisations (DRDO) new boss Avinash Chander has put Indias fighter jet project Tejas on his radar, with a possible mission to jettison it out of the current turbulence. In an interview to Express on Friday, soon after New Delhi officially handed over him the mandate to pilot DRDO for the next three years, Avinash said that completing the Initial Operational Clearance (IOC) of Tejas by September this year and attaining the Final Operational Clearance (FOC) by the end of 2014 were two primary targets he has already set.

After finishing the taking over formalities, I am catching the first available flight to Bangalore to review the project. I am absolutely aware of the issues that are dogging the project and I would now want to see it from close quarters what the delays are. TheTejas IOC and FOC cannot be postponed any further, said Avinash, who will also double up as the Scientific Adviser to the Union Defence Minister. He said the induction of Indias long-range ballistic missile Agni-V and development of 155-mm gun were other projects that would get his immediate attention. Saying that his task was cut out with many projects reeling under time overruns, Avinash promised to turn around DRDO into a delivery-oriented unit. He said the DRDO would be restructured to catch up with the challenges of modern times. I will take everything one step at a time. I am aware that we need to create the Brand DRDO image. It will be a collective team effort. The idea is to take DRDO to the next level. I will ensure that the confidence of users in DRDO will be always high, Avinash said. Incidentally, Avinash will be the second man after Dr A P J Abdul Kalam, who will serve as the DRDO chief beyond 65 years. 15. Growth calls for proactive policy: GDP numbers challenge the government If winter comes, spring can indeed be far behind, when it comes to matters of economic growth. This grim little exception to romantic optimism is the central message of the latest official numbers for India's growth. The Indian economy grew 4.8% in the fourth quarter of 2012-13, bringing up overall growth for the fiscal to a dismal 5%. True, by global comparison, this is eminently respectable. But by the standards of India's own recent performance, India's potential and the pace that India's teeming population demands to address their growing aspirations and basic needs, India needs to grow much faster. And the key to that is boosting investment. Things are not entirely bleak. After a steep fall since the first quarter of 2011-12, the manufacturing growth rate touched a trough of negative 1%in the first quarter of 2012-13 and has staged something of arecoveryto2.6% in the last quarter. The growth in community, social and personal services, mostly driven by government expenditure has fallen from 8.9% in the first quarter to 4%in the fourth quarter, showing the impact of what analysts have dubbed the Chidambaram squeeze. This is a good thing. Fiscal restraint has brought down the trade deficit in goods and services other than those of labour and capital in the fourth quarter. This shows that continued fiscal restraint can rein in the current account deficit. The same goes for the declining expenditure on gold and silver as a share of GDP. Rather than worry about what the RBI will do, the government must act to step up investment, which is the only way to reinvigorate the economy. Its Cabinet Committee on Investment must make delayed clearances history, the enterprises it owns must spend their huge reserves, to create infrastructure. Even more important is getting the policy right.Statemonopolyincoal is responsible for fuel shortage that has brought down power generation and converted the lines laid under rural electrification into dead capital. And subsidies must slim down to feed capital formation. Finally, allocation of natural resources must be freed from corruption and malpractice, so that mining can stop being a dragon the economy 16. End irrational spread on indirect taxes The finance ministry says a tablet will attract a higher duty than a mobile phone when imported, never mind the pious projections that India will see the world's fastest growth in data traffic over 2012-17. Phones and low-cost tablets are what Indians will use to cross the digital divide. Is there any sense in having separate duty rates for the two kinds of products? Tablets and mobile phones, as information technology-related imports, attract zero customs duty. A countervailing duty (CVD) is charged on imports equivalent to the excise duty 6%for mobile phones valued over Rs 2,000 and 12% on tablets. An importer cannot claim tax

credit on CVD, whereas a domestic manufacturer can set offexcise duty on a product against the taxes paid on inputs. A higher CVD on a tablet offers a local producer a higher level of protection than on phones. There is little basis for such differential duties. Economic sense lies in offering precisely the same, uniform tax treatment to any kind of value addition so that policy does not discriminate against some kinds. The irrational spread in duty rates came about on Pranab Mukherjee's watch and the need now is to narrow the range and eventually converge on a single, low rate of import duty and domestic goods and services tax. As potentially the world's largest market for data communications, India has a strong case for developing indigenous manufacturing capability in data products. To realise this potential, creating a rational, non-distortionary duty structure is more important than assorted subsidies and privileges. This, of course, does not militatea against state activism to create a semi conductor chip-making industry in the country, which many consider an important ingredient of the eco system needed to promote electronics manufacture. 17. Why the food security Bill will not boost foodgrain consumption for the poor So much has already been written on the food security Bill that there would seem to be no justification for another column on it. Yet, a recent look at some consumption data has convinced me otherwise. How the food security Bill impacts people's lives ultimately depends on the effect it will have on the consumption basket of the beneficiaries. If you believe in serious analysis over flag waving, assessing this effect turns out to requirecareful detective work. The Bill proposes to give 810 million citizens 5 kg of cereals (rice, wheat, bajara or other grain) per person per month at the subsidised price of Rs 3 per kg or less. Commentators have already reminded that this will have minimal or no effect inChhattisgarh and Tamil Nadu since these states already provide households more grain at even lower prices. Surprisingly, there are good reasons to believe that the same is also likely to turn out true in other states. To see why, consider first the urban households. Based on the large-scale expenditure survey of 2004-05, the poorest 30% of the urban households nationwide consume 10 kg of cereals per person per month. The quantity rises to 10.1 kg for the middle 40% households and drops to 9.6 kg for the top 30%. We can reasonably assume that the top 30% urban households are not income constrained and therefore not opting for what the proponents of the Bill call "low" consumption quantity for reasons of deprivation. Indeed, the argument substantially extends to the bottom and middle groups as well once we recognise that over the past two decades, even their consumption of cereals has been declining despite rising purchasing power. Given this pattern of change over time and little variation in cereal consumption across different income groups currently, the proposition that the Bill will boost cereal consumption of the bottom 810 million citizens is a very long leap of faith. What is far more likely, indeed near certain, is that the households will substitute kg-for-kg subsidised grain from the public distribution system (PDS) for their open-market purchases. That is to say, they will simply cut their purchases of grains in the open market by 5 kg. Assuming the difference between the market and PDS price is Rs 15 per kg of cereal, this will release Rs 75 per person per month in expenditure in each beneficiary household. It is as if the government transferred Rs 75 per person per month in cash to each beneficiary household. The million-dollar question then is: On what will the households spend these extra Rs 75 per person per month? If the opponents of direct cash transfers were consistent, they would rhetorically answer: liquor. But they will be wrong. To rise above rhetoric and search for what is likely to be a more accurate answer, we must once again look at the consumption patterns of different income classes. It turns out that after cereals, the next major item in the consumption basket is milk. The bottom 30% of the urban households consume just 2.3 kg of milk per person per month compared with 4.8 kg and 8.3 kg for the middle and top groups, respectively. It is in milk consumption that deprivation is hitting the poorer households the hardest. So the extra Rs 75

will dominantly fuel the demand for milk and if our government continues to be hostage to the milk lobby and refuses to allow duty-free milk imports, given low domestic-supply response in the short run, you can count on another bout of spiralling milk prices. How different is the consumption pattern in rural areas? Not much. In 2004-05, the bottom 30% of the households consumed 11.1 kg of cereal compared with the 12.3 kg and 12.9 kg consumed by the middle and top groups, res-pectively. So perhaps there is a small margin 2 kg per person per month for higher consumption by the bottom group. Beyond this, the data suggest that the rural households too will predominantly spend the cash released by subsidised grain on milk. Milk consumption in rural areas averages 1.2 kg, 3.4 kg and 7.2 kg per person per month among the bottom, middle and top income groups. This analysis has convinced me that if PDS had not been subject to massive leakages and inefficiencies, the food security Bill would work just like cash transfers. Unfortunately, this is a very big if since giving Rs 75 per person per month to 810 million individuals would cost only Rs 729 billion per year compared with the grossly underestimated official cost ofthe Bill at Rs 1,245 billion. Cash transfers would also reach the beneficiaries with greater certainty and empower them rather than leak out along the massive PDS chain and empower the shopkeepers. If our best medical experts are convinced that citizens will benefit from increased cereal consumption, giving them subsidised grain will not do the trick. Instead, the governmentneeds a massive campaign to inform and persuade the people of those benefits. A recent paper by economist Nisha Malhotra shows that lack of knowledge on nutrition and not just access to food plays a vital role in keeping children malnourished. The same also applies to adult malnutrition. 18. Why politicians & intellectuals are wrong about maoists The raw horror unleashed by Maoist murderers in Chhattisgarh and the ghastly killing ofMahendra Karma have faded into memory. Cricket's spot-fixing scandal, bookies supplying call girls to rogue cricketers, N Srinivasan's refusal to quit the BCCI president's post, and Salman Khan's efforts to make Katrina Kaif's sister the new Bollywoodsensation dominate the headlines. The political class, which closed ranks when terror visited their doorstep, is already back at its favourite game of finger-pointing and blame-casting. While Congress leaders insist that their leaders were denied adequate protection, the BJP is flaunting statistics on deployment for the Congress yatra's route to counter the charge of criminal negligence. Expectedly, human rights activists who litter newspaper offices with pamphlets of police atrocities on Maoists - "Gandhians with guns" in writer Arundhati Roy's words - have chosen to keep silent. The activists and historians, who occupy balcony seats in Delhi and Bangalore, continue to warn against tough measures to contain Maoists and argue for throwing more money into poorly targeted and clumsily executed welfare schemes. There will be more of the by-now-familiar "Naxalism is the biggest threat to internal security" statements from the prime minister and the oft-repeated assertion that the "death of innocent people will not go in vain". Senior officials in the government have claimed that there will be a shift in the strategy to tackle Naxalites and that "hard options" are being backed by the top Congress leadership. Really? Past experiences do not suggest that the regime or its leaders have either the stomach or stamina to adopt a muscular approach. There have been several instances of the leadership coming in the way of law enforcers and sharp shooters elevated to the position of harmless human beings. It be recalled that P Chidambaram, who manned the home ministry after the country experienced the worst jehadi terror, was at the receiving end of bitter attack from Congress leaders for not backing their fake encounter theories. And every time Chidambaram tried to tackle the Naxal issue, strongest resistance came from his peers in the Congress. The government has only itself to blame as it looked the other way when the court stepped

into its terrain and disbanded a popular resistance movement founded by Karma against Naxalities. In its order, the court came close to justifying the revolt against the State. "People do not take up arms, in an organised fashion, against the might of the State, or against human beings without rhyme or reason. Guided by an instinct for survival, and according to Thomas Hobbes, a fear of lawlessness that is echoed in our conscience, we seek an order. However, when that order comes with the price of dehumanization, of manifest injustices of all forms perpetrated against the weak, the poor and the deprived, people revolt," the court had noted. The government can raise the confidence level of the grieving mothers and children who lost their dear ones in mindless Maoist violence only if it recognises that Naxalities are not a few men and women gone astray. After the regrouping of the country's Maoists under the banner of CPI(Maoist), it has a dedicated cadre that operates on military lines. According to the government's own estimates, Maoists have around 10,000 combat cadre operating in nine states. The top leadership is believed to be safely ensconced in the "liberated" expanse of Dandkarenya forests straddling Chhattisgarh, Odisha and Andhra Pradesh while the cadres moves freely across state jurisdictions. Armed with sophisticated weapons and tools, the Maoists use local support, which comes as much out of fear as from the absence of governance in these areas, to their advantage. Naxalites have also cultivated a section of the intelligentsia in the cities that helps project them as victims of State oppression rather than as reckless killers. Rural development minister Jairam Ramesh, who frequently visits Naxalinfested areas has correctly summed up the issue in an interview to a Delhi daily on Tuesday. According to Ramesh, 9000 sq km in southern Chhattisgarh is a "free zone" where the Indian flag doesn't fly. Surely, there is a case for a relook at the strategy to deal with the menace that obstructs governance. But a limp-wristed approach will not prompt Naxalites to give up Kalashnikovs and let welfare schemes reach the needy. A readiness to engage Naxals in a protracted fight can. 1. Cabinet nod sought for B.Sc rural healthcare The Ministry of Health and Family Welfare has taken a definitive step towards introduction of the proposed undergraduate course in rural healthcare by deciding to approach the Union Cabinet for its consideration and approval. An affidavit filed on May 27 by the Ministry in the Delhi High Court, as the respondent in the matter of a 2009 petition by public health specialist Meenakshi Gautham, stated that a Cabinet Note was prepared and that it was sent to the Prime Ministers Office on May 24 for its comments before placing it before the Cabinet. The proposed course, now called B.Sc (Community Health), is aimed at creating a new cadre of intermediate level heathcare workers who would fill the gap in the delivery of primary healthcare in rural areas, where medical professionals were unwilling to serve. The proposal is based on the resolution of the 9th Conference of the Central Council of Health and Family Welfare on November 13, 2007, for the introduction of a 3-year diploma course in Medicine and Public Health, as well as the recommendation of a 2007 Task Force on Medical Education Reforms for National Rural Health Mission for the introduction of the 3-year Rural Practitioner Course. In her petition, Dr. Gautham sought directives from the court to the government for the introduction of an appropriate short-term course for training mid-level health workers for primary health care in rural areas and implementation of the recommendations cited above. This proposal had been rejected by the Parliamentary Standing Committee on Health in its March 2013 report (the 65th Report). This despite the fact that a majority of the medical specialists who testified before the committee had favoured its introduction.

In its order of April 18, the court said the Standing Committee Report was examined by the Ministry and a decision was taken, with the approval of the Health Minister, to move a proposal for obtaining the approval of the Cabinet for the introduction of the course.

2. Pakistan MPs in historic swearing-in Newly elected members of Pakistans National Assembly (NA) were sworn in on Saturday, officially marking the first transition of power between democratically elected civilian governments in the nearly 66-year history of the country. Among the steep challenges the legislators will face are massive energy shortages that leave some Pakistanis without power for up to 20 hours a day; a badly ailing economy that might force the nation to seek an international bailout; and ongoing militant activity by Taliban and other extremists. Among the lawmakers in the spotlight was the incoming Prime Minister, Nawaz Sharif (63), whose Pakistan Muslim League-N (PML-N) handily won the May 11 elections. We are facing many challenges, but God willing, we will overcome them, said Mr. Sharif, who is expected to be sworn in as Prime Minister and appoint his Cabinet in the coming week. Outgoing Speaker of Parliament Fehmida Mirza solemnly administered the oath to incoming legislators at noon. Afterward, lawmakers were called up to the front of the hall one by one to sign documents formalising their membership. The PML-N won 176 seats in the 342-member Lower House of Parliament. The previous ruling Pakistan Peoples Party (PPP) was crushed, earning just 39 seats. Former cricket star Imran Khans Pakistan Tehreek-e-Insaf (PTI) party won 35 seats, and has pledged to act as a strong opposition. Mr. Imran Khan, still recovering from an accident he met with in the last few days of the campaign, did not attend Saturdays session. Pakistanis hope peaceful transfers of powers between civilian leaders become the norm and ultimately lead to more government accountability. Many Pakistanis are especially keen on seeing Mr. Sharif move to fix the economy. Perhaps the most critical step in Mr. Sharifs attempt will be to address the energy crisis, which has been exacerbated by the refusal of many Pakistanis to pay their electricity bills. 3. Big trade deficit with China? Excellent! China is India's largest trade partner. But India runs a large trade deficit of $29 billion with China. Prime Minister Manmohan Singh reportedly told his Chinese counterpart, Li Keqiang, at their recent meeting that this "needs to be addressed." But as an economist he surely knows it is wrong to aim for balanced trade with each trading partner. The beauty of international trade is that it enables every country to specialize in what it does best, export these specialties, and use the money to import what other do best. All countries end up specialising in what they do best, improving global productivity and reducing prices for everybody, a win-win situation. India should export whatever it can to whichever destination is profitable at the best possible price. In turn, it should import whatever it needs from wherever at the best possible price. This implies that India should run a trade surplus with relatively uncompetitive countries (like Pakistan or Bangladesh), and run a trade deficit with highly competitive countries (like China or Germany). The more competitive the trading partner, the more India should buy from it, and the bigger should be the bilateral trade deficit. China is the most competitive exporter of all, so India should run its biggest trade deficit with this country. Far from decrying this, we should view

it as evidence that India is, very sensibly, getting its needs from the cheapest source. To see this in perspective, consider Indo-Pak trade. Pakistan has long erected trade barriers against Indian goods, importing many items at prices higher than what India offers. This hurts both Indian exporters and Pakistani consumers. Pakistan has promised to soon liberalise trade with India. When this happens, India's trade surplus with Pakistan will become even larger than it is today. That will be economically efficient, benefiting Pakistani consumers as well as Indian exporters. Yet many Pakistanis fret at the prospect, just as many Indians fret at their growing trade deficit with China. The fretting is unwarranted: large deficits in both cases are proof of sensible buying from the cheapest source. Many Indians argue that China gives huge export subsidies that constitute unfair trade. Sorry, but no individual, corporation or country can become prosperous by selling its goods below cost. You can as a short-term measure subsidise some items here or there, but selling everything at a loss is economic suicide, and China is not suicidal. It does keep interest rates artificially low, and prevents its currency from appreciating. We can join the US in pressing for yuan appreciation. But that will affect the trade gap only slightly. Where China gives excessive subsidies, Indian businessmen are quick to demand antidumping duties, and the government is quick to oblige. India has imposed more anti-dumping duties than any other country. Additional curbs have been placed on Chinese telecom equipment on security grounds. The trade deficit however continues, suggesting that dumping is not the key issue. Rather, the deficit represents the gap in productivity between the two countries, especially in manufacturing. Most people think that exports are desirable and should be maximized, while imports are undesirable and should be minimized. The very opposite is true. You typically export what you have a surplus of, and import what is locally scarce. What's scarce is obviously more valuable than what you have in abundance. Seen in this light, the main benefit of trade is to end scarcities by importing what you don't have. Exports are a secondary aim, required to pay for imports. The pattern of Sino-Indian trade dismays many people. India exports mainly iron ore and other commodities. Its imports are almost entirely manufactured goods, especially machinery and telecom equipment. Some experts think commodities are somehow inferior to manufactures, and so bemoan the Sino-Indian pattern of trade. Now, manufactures often have more value added than commodities, yet somebody has to produce commodities too. Specialising in commodities is not inferior. India's biggest commodity producers are Ambani (oil, gas, petrochemicals, fibres), Tata (steel, soda ash, fertilizers, power) and Birla (aluminium, copper, cement, iron ore). Are Ambani, Tata and Birla inferior industrialists in inferior industries? No, they are India's crme de la crme. Both China and India still have far too many barriers to trade and investment, and these need lowering. Chinese non-tariff barriers are higher, and Indian negotiators must focus on this. But their overall aim must not be to balance trade with China, or target a particular trade deficit. Rather, India should target improvements in its own productivity and competitiveness. Once that happens, its trade deficit with all countries (including China) will automatically fall. Lesson: target the productivity gap, not the trade gap.

CURRENT AFFAIRS (03.06.2013) Part 1

1. Nawaz and the Islamist gauntlet The return to office of an elected Prime Minister a decade-and-a-half after he was deposed by the military is an important development for India as well as the international community, which have stakes in the progress of democracy in Pakistan. The elections, which Nawaz Sharif won, have taken place at a time when Pakistan, a major Islamic country with nuclear weapons, is seen as sliding towards state failure. Extremist forces are gaining strength in the country, staging terrorist attacks with impunity. Pakistani soil is being used for terrorist activity against its immediate neighbours, with suspected complicity of state agencies. The Islamist resurgence in Pakistan threatens not only the secularpolitical structures of Central Asian states but is causing concern even to Pakistans all-weather friend China, which is worried about links between extremist activity in Sinkiang and Pakistani safe havens. Moreover, given the geo-political factors operating in the region, internal political developments in Pakistan bear directly on the future of Afghanistan, particularly after NATO forces withdraw from the country in 2014. A stronger democratic polity can better control the Pakistani extremist religious forces and security agencies seeking political and religious strategic depth in Afghanistan. Consolidation of democracy In this wide-ranging context, the consolidation of democracy in Pakistan offers hope of arresting its decline towards extremism and state failure, controlling the menace of terrorism, strengthening pluralism, changing the equation between the armed forces and thecivilian authority and stabilising the polity, with positive consequences for the region as a whole. The prospects, however, are quite uncertain. Simply put, the structural and societal problems in the country need more than the mechanics of elections for a solution. The basic complexion of the country would have to change; new, genuinely modernising forces with a wide popular base have to take control, armed with a national agenda of introducingthe needed reforms, backed by strong institutional support. The public mood of disenchantment with the mainstream parties had given an early head wind to Imran Khans Pakistan Tehreek e Insaf (PTI). The desire for change in Pakistan seemed strong among the youth, spurred in part by the so-called Arab Spring. But Imran Khan lost momentum towards the end. Political assessments about the depth of this desire for change in Pakistan have eventually proved wrong. Like in the Arab world, social media-urban youth driven calls for political change capture attention more easily than capturing power. The positives in these elections were the high turnout despite threats of violence, and, given the difficult conditions, their relative fairness. The many perturbing negatives were the Islamic criteria which Pakistans Election Commission used for vetting candidacies and the violence unleashed by the Tehrik-i-Taliban Pakistan (TTP) against secular parties such as the Pakistan Peoples Party (PPP) and the Awami National Party (ANP), obstructing even normal electioneering by a national party like the PPP. The implication of this is more members of an Islamist hue in the new National Assembly, even if they do not overtly belong to religious parties. The argument that religious parties have a limited hold over the Pakistani electorate as shown by their poor electoral performance becomes increasingly more academic given the lurch of society as a whole towards Islamism. The fact that India was not a factor in these elections and that improvement of relations with India figured in the election manifestos of various parties with the Pakistan Muslim League (N) the most forward-looking in this regard, is no guarantee that faced with the prospect of serious steps to bury the hatchet with India, religious forces will not become a major obstacle. The disquieting aspect about the PML (N) is its long-standing links with radical India and Shia-baiting groups such as the Lashkar-e-Taiba, the Lashkar-eJhangvi and the Sipah-e-Sihaba. The TTP did not, tellingly, target electioneering by Nawaz Sharifs party and that of Imran Khan.

These linkages will limit how far Mr. Nawaz would be able to go with India, notwithstanding his declared desire to improve all-round ties. He promises to put curbs on Hafiz Saeed, even though political personalities in his own party are closely linked to him. The Punjab government, under the leadership of his brother, has been soft on him all these years, as has the local judiciary.Mr. Sharif is hardly in a position to deliver on his promise to end terrorism against India when Pakistan is finding it difficult to control widespread domestic terrorism, of which the armed forces are a target too. Similarly, it is not clear how he will expedite the trial of those involved in the Mumbai terrorist attack. The promised exposure of the realities behind Pakistans Kargil aggression may help Mr. Sharif settle scores with Pervez Musharraf, but already Pakistani military sources have spilled the beans about the generals lies and obfuscations about the failed adventure he initiated. Practising politician The PML(N) leader may well be sincere in wanting to normalise ties with India, but he is Pakistans leader, a practising politician, and it would be normal for him to bargain his goodwill. He could well leverage it to seek upfront concessions so that his hands get strengthened and the prospects of delivery on his part become more promising. He should be able to finalise the decision to accord the Most Favoured Nation trading status to India. He will encourage increased economic ties, consistent with his policy when he was last Prime Minister. But the issue of non-tariff barriers, fears of the Pakistani market being inundated by Indian goods and concerns about the large trade imbalance that already exists and is likely to expand, will be dissuasive factors. His grand vision of according India transit rights through Pakistan to Afghanistan is unlikely to materialise as this would be seen by many in Pakistan as a crucial strategic step with implications for India-Afghanistan relations and Pakistans role in Afghanistan and Central Asia. Opening Central Asia to Indias political and economic influence would mean a huge reversal of Pakistans strategic thinking, even if such a step will bring Pakistan additional revenue, bolster its economy and bring benefits to the entire region in terms of trade and energy connectivity. Nawaz Sharif has already announced a dialogue with India on Kashmir. He wants to signal domestically that the issue will not recede in importance amidst the general rhetoric of improved relations with India, besides, of course, exploring once again the possibility of resuming a serious dialogue on the subject. India can pick up the threads of the back-channel dialogue conducted with some positive results during General Musharrafs presidency. But can Mr. Sharif take ownership of the Generals initiative? Even the well-meaning Asif Zardari disowned it. Besides that, the UPA government may not want to get embroiled in any controversy over the Kashmir issue close to elections in 2014. India is hardly likely to budge on the Siachen issue, particularly after the recent Chinese incursion into Ladakh, whereas Pakistan considers it a low-hanging fruit. Our Prime Ministers message to Mr. Sharif on his victory has been unusually warm. His invitation to the latter to visit India when he has kept his own visit there on hold was a little surprising. Mr. Sharifs return invitation to Manmohan Singh to witness his oath taking ceremony received a politely discouraging response from the Indian side. A visit when the new Pakistani Prime Minister would not have found his feet yet would have been a waste diplomatically. It is also pertinent to note that Dr. Singh did not attend the oath taking ceremony of Sheikh Hasina of Bangladesh. Relations with the military All said and done, Mr. Sharifs mutually suspicious relations with the military will limit his capacity to do what he wants in the security and foreign policy domains. The military will not give up its ultimate control over these domains. The election results have not given Mr. Sharif the kind of overwhelming mandate as would enable him to radically change the equation between his civilian government and the armed forces. The economic challenge facing Mr. Sharif is enormous. The countrys economic situation, with an abysmal tax to

GDP ratio, poor growth rate, high inflation, energy shortages, high population growth and the like, cannot be easily remedied. Mr. Sharif will be put on test immediately. Even his opening towards India to ease the situation will take considerable time to get translated into meaningful results on the ground. The just-concluded visit of the new Chinese Premier hasnt promised any economic bonanza to Iron Pakistan that Mr. Sharif could capit alise on. Pakistan will have to go the International Monetary Fund for economic relief and accept its onerous conditionalities, which is not a recipe for public popularity. He will have to mend relations with the U.S., but the degree of flexibility he will have on cooperating in Afghanistan and handling the vexed drones issue all in the background of the increasing radicalisation of Pakistan and anti-U.S. feelings in the country is questionable. There are many reasons to be sceptical about Mr. Sharifs capacity to deliver on his promises to the Pakistani public and to India. The future of liberal democracy in Pakistan is not assured as yet, though the recent election is a cause for hope. As hope is a sentiment that requires no reasons to justify it, one can be generous with ones hopes about the success of Mr. Sharifs third tenure as Prime Minister. There are many reasons to be sceptical about the Prime Ministers capacity to deliver on his promises to Pakistanis and India, but his victory offers hope 2. Disappointing, yes surprising, no There ought to have been no surprise much less the kind of disappointment demonstrated by tanking stock markets over the release on Friday of GDP growth data for the last quarter of 2012-13 (January-March 2013). According to the Central StatisticsOffice, the economy grew by 4.8 per cent in the last quarter and by just 5 per cent last year. Both figures were widely anticipated. In fact, as far back as February, the CSO had pegged the growth rate for 2012-13 at 5 per cent based on an advance estimate of national income. What has obviously rankled the markets is the formal, statistical confirmation of the 5 per cent GDP growth rate, the lowest in a decade and well below the previous years 6.2 per cent. The economy had grown at an average rate of 5.1 per cent during the first three quarters, with the first quarter recording the highest rate of 5.4 per cent and the third quarter the lowest of 4.7 per cent. There was absolutely no reason to suppose that in the remaining part of the year, the economy would somehow break out of the sub-five per cent growth trend that had set in by the middle of last year to lift the annual growth rate to a level of respectability, of say above 5.5 per cent. Even the more optimistic government spokespersons, who have placed so much faith on recent policy changes to revive the economy, expect results to flow only in the first part of the current year (2013-14) at the earliest. Lead indicators, notably the index of industrial production (IIP) data, have provided no reasons to believe a rebound was under way. Manufacturing, which accounts for a significant portion of the IIP, grew by 1 per cent over the whole year, compared to 2.1 per cent in 201112. Motor car sales, now emerging as an important indicator on the demand side, have slumped. Agriculture has fared badly, growing by 1.9 per cent compared to 3.6 per cent in 2011-12. Mining and quarrying have posted negative growth for the second year in a row. This reflects the continuing policy logjam in the face of environmental and legal activism. Government spending has been on the low side and there has been a significant drop in private consumption expenditure in the last quarter. These and other corroborative data such as the sticky and lacklustre export performance cast doubtson the belief that the economy has bottomed out and that a recovery is under way.Practically all official growth forecasts for last year are now seen to have been highly exaggerated. Consequently, their initial projections for the current year (2013-14) have been much more realistic, ranging from between 6 to 6.7 per cent. Even those are subject to caveats. 3. Centre to do away with collegium, says Sibal

The collegium system of appointing judges has not worked to the expectations, Law Minister Kapil Sibal says Asserting that the Union government must have a say in the appointment of judges, Law Minister Kapil Sibal has said that a proposal to replace the 20-year-old collegium system to choose judges will be moved very soon before the Cabinet. Once cleared, the new system in the form of a Judicial Appointment Commission will pave the way for the Executive to have a say in the appointment of judges to the Supreme Court and High Courts. The collegium system of appointing judges has not worked to the expectations and the government must have a say in such appointments, according to Mr. Sibal. We do not think that the collegium system has worked to our expectations. I dont think it even worked to the expectations of the judiciary, he told PTI in an interview while justifying the need for scrapping the system. Mr. Sibal, who took charge of the Law Ministry last month, said the objective of the government and the judiciary was to have the best peoplechosen as judges with complete transparency and objectivity, and there must be broad-based consultations. Enormous stake Just as judges have enormous stake in the appointment of judicial officers in the higher judiciary [Supreme Court and the 24 High Courts], the government has an equal stake. Since both of us have stakes in the appointment of members of the higher judiciary, the consultation of both of them is absolutely necessary. The government must have a say, he emphasised. Chief Justice of India Altamas Kabir recently strongly defended the collegium system, saying appointments to the higher judiciary are made after intensedeliberations. About the judiciarys objections to changing the system, the Minister said: We know the views [of the judiciary]. We will take that into account. Laws must be acceptable by and large to the stakeholders who include the judiciary, the executive, and all the players in the field of dispensation of justice. 4. ISROs PSLV bags new clients, launch orders To fly a least 7 foreign satellites over 2 years The home-grown PSLV rocket has nosed its way a wee bit more in the global market: it will launch Frances 712-kg SPOT-7 earth observation satellite and separately, at least half-adozen small foreign spacecraft for a fee this year and the next. They are still mini nibbles at the multi-billion-dollar space transportation pie but the countrys workhorse launcher seems to be increasingly catching satellite makers eye for its dependable and precise placing of spacecraft in their slots. Going by the mass of the client satellites, its cache is getting bigger than before. In the upcoming crop of contracts, SPOT-7 and the 950-kg EnMAP are primary satellites, which means the PSLV is graduating from tucking small commercial piggybacks in spare nooks left over by a main Indian passenger spacecraft. Indian Space Research Organisation (ISRO) Chairman and Secretary, Department of Space, K. Radhakrishnan, told The Hindu that a few more countries were discussing sending another half-a-dozen satellites on the PSLV. The contracted ones would be fitted into the launch schedule of ISROs own remote sensing satellites which need the PSLV. One of them, Indonesias LAPAN-A2 observation satellite, is due to go with the countrys astronomy project, Astrosat. Eight PSLV launches are planned during 2013-14 and 2014-15. The PSLV can place roughly 1.6-tonne satellites in a pole-to-pole orbit 650 km away from ground. In 2008, it also sent up Chandrayaan-1 and will again come into planetary play in October this year for ISROs Mars orbiter mission. The launcher made its first commercial twin launch in 1999. In its 23 flights so far, it has slotted 35 foreign commercial satellites in orbit. Globally sought after The PSLV, I should say, is now a globally sou ght after vehicle and for two reasons, Dr. Radhakrishnan said. One, it has a niche in that class of payloads. Two, the number of successful launches we have had with it is an important factor. The very fact that SPOT-

6came to us and now SPOT-7 and EnMAP have followed indicates this. The fee it commands is not disclosed but ISROs marketing arm Antrix Corporation has earned between Rs. 5 crore and Rs. 90 crore for some of its commercial services. The U.S. and European launch prices per kg of satellite weight reportedly range from $10,000-$20,000 depending on the distance to the orbit. EnMAP, the hyperspectral environmental mapping satellite built by German space agency DLR, will be the heaviest lift bagged by the PSLV and is slated for 2016-17 launch. To date, SPOT-6, the earth observation satellite of French space agency CNES, is the heaviest commercial satellite that a PSLV has lifted to space and that was in September last year. A date for SPOT-7 will be discussed when signing the agreement. One can expect the launch from December onwards, Dr. Radhakrishnan said. The date would depend on the readiness of the satellite, the launch vehicle and the launch pad at Sriharikota which will be tied up for the first navigational satellite R1A planned in June and thereafter for the resumed GSLV flight. Then we will be getting ready for the Mars mission in October on the PSLV-C25. It will have to be after them, the ISRO chief said. 5. Nurturing the Girl Tree and hopes The installation represents voices of girls living in poverty across the world Bang in the middle of the corridor is a shiny steel tree; the branches spread wide, brown wooden slabs hang low like leaves beside colourful origami folds. Say hello to The Girl Tree; shes listening to you. An installation at the Women Deliver 2013 conference that just concluded here, the Girl Tree is actually a wishing tree. Quite like the Japanese wishing tree, or those numerous peepul trees in Indian temples, with scrolls of paper tied on fervently by devotees, hoping that the scrawled wish on the paper comes true. This idea has been interpreted to represent the voices of girls living in poverty across the world today, explains Maria Eitel, president and CEO, Nike Foundation. The Girl Tree is part of the The Girl Effect movement, created by the Nike Foundation in collaboration with the NoVo Foundation, the United Nations Foundation and the Coalition for Adolescent Girls. The Girl Effect is about leveraging the unique potential of adolescent girls to end poverty for themselves, their families, their communities, their countries and the world. 250 wooden leaves There are 250 wooden leaves, handwritten by girls aged 10-19 from India, China, Indonesia, Mexico, Rwanda, Kenya and Egypt representing the 250 million girls living in poverty. Girls are the most powerful force for change on the planet and as we look towards 2015 [the deadline for the Millennium Development Goals], we want to enable them to thrive and reach their full potential, Ms. Eitel says. It all began with thinking about what we could do to get girls on the MDG agenda. We wanted visual impact, and an installation that could be transportable, she adds. The concept of the Girl Tree emerged as a result of several funny brainstorming sessions. The next thing was to go around speaking to the girls. We did not frighten them about the MDGs. Again, we did it in a fun way, talking to them, getting them to open up, articulate their hopes and wishes, says Ms. Eitel. And thereby, the world learnt that Apophia from Rwanda wants to be a soccercoach; Ika from Indonesia wants her kids to live a better life; Shrusti from India wants to set up a karate training centre free of cost so that women can protect themselves, and that Chu from China wants to grow up, be a teacher and help people become knowledgeable. On one side of these wooden leaves, the girls have inked their aspirations in their native tongue; and on the other side are English translations of these hopes and dreams. Some of these leaves are interactive, click on a button and you can hear the voice of the girl who wrote on the leaf, followed by an English translation. This, however, is just the beginning. The girls wishes have been collated into Five actionable points which will also go into the Girl Declaration which will be launched on October 11, 2013, the second International Day of the Girl Child. Kathy Calvin, president and CEO, U.N. Foundation, says efforts are on to tap the voices of many more girls in other nations across

the world. The installation will also travel, to DFID in the United Kingdom, and the U.N. General Assembly. But the tree will also travel backwards, to the places it came from, whispering to the girls about how the world has committed itself to making their dreams come true. 6. SEBI at 25, still on a learning curve The capital market regulator, the Securities and Exchange Board of India (SEBI), came into being in 1988 but acquired statutory powers only in 1992 with the passage of the SEBI Act on April 12 of that year. In 1995, it was conferred further powers through an amendment to the Act. It has had seven chairmen so far excluding the incumbent U. K. Sinha. Twenty-five years are a relatively short period to evaluate a financial sector regulatory institution. It can also be argued that the regulator, however well supported by the government, will require a much longer period to make a mark. Both points are valid. The SEBI is considerably junior in age to the Reserve Bank of India (RBI), which has, for a long time, been identified with the financial sector regulation in this country. Regulation The RBI might not have had the mandate to regulate capital market or for that matterinsurance. But until the SEBI and the Insurance Regulatory and Development Authority (IRDA) came into being, regulation in those areas was slack, and the RBI, because of its sheer stature, was presumed to have the final say in all matters, even those not directly connected to its core areas of banking and monetary policy. In the pre-SEBI days, capital market regulation under the Securities Contracts Regulation Act vested loosely with the Controller of Capital Issues, functioning directly under the Ministry of Finance. Also, it is a fact that regulators need time to equip themselves. Needless to say, trained manpower is aproblem for a regulator just starting. Equally importantly, regulation evolves over time, with the accumulation of case laws and precedents. Evaluation Therefore, SEBI ought to be evaluated on yet another yardstick the circumstances under which it came into being, early handicaps it had to overcome in regulating wellentrenched entities like brokers, some of them, when SEBI came into being, were already more than 100 years old. SEBI has also had to reckon with the perception, if not the fact, of a less than supportive government. In 1988, stock markets were already sensing the onset of financial sector reform, which was to come two years later. The new regulator, the SEBI, had to start from scratch, there was nothing comparable to it before. It acquired legal status only after the 1992 stock market scam broke out. One of the important handicaps the institution faced and in many ways continues to face is in recruiting and training qualified manpower. While its heads, drawn from the highest echelons of the government and public financial institutions, were people of high calibre, it is at the middle levels that the new regulator has faced major problems. Handicap The culture of bringing in deputationists from the revenue services and banks has continued with deleterious consequences. Public sector bankers-turned regulators simply did not have the mindset to comprehend stock market activities. A crucial handicap that the SEBI has faced is in being able to match or at least meet half way the remunerationpackage offered by the sector it regulates. As a rule, regulation is less glamorous than, say, working for banks or financial services. Sahara episode These may not be insurmountable but the SEBI has had to face up to the fact that the government has not always been supportive. The ongoing episode concerning the Sahara Pariwar is an apt example. Despite scoring big in the Supreme Court, the regulator has not received even one word of support from any political party. The Finance Minister wants

SEBI to be a fearless regulator, had plenty of praise and homilies for the SEBI but he has not even referred to the Sahara episode. That is most surprising since the SEBI Chairman has asked for extra powers to deal with the Sahara-type shenanigans. To mark its silver jubilee, it would be appropriate to list out its several achievements, which have brought new procedures and systems to India in a relatively short-time. The stock markets and the various intermediaries have been transformed beyond recognition. Yet, if one were to identify its most important accomplishment, it is being able to function with a reasonable degree of independence and professionalism given the major obstacles it faces. In the pre-SEBI days, capital market regulation vested loosely with the Controller of Capital Issues. The regulator has also had to reckon with the perception, if not the fact, of a less than supportive government

CURRENT AFFAIRS (03.06.2013) Part 2

7. Group of Ministers looking to increase urea prices June 6 meeting to discuss new pricing policy. A Group of Ministers (GOM), led by Agriculture Minister Sharad Pawar, is likely to consider an increase in retail prices of urea. This is part of a proposed new pricing policy for urea, which is to be discussed at the meeting on June 6. This policy will be for the existing urea units. The group may consider increasing the retail price due to increase in pool prices of fuel feedstock under modified New Pricing Scheme-III policy from the second year onward, a senior Government official told Business Line. Currently, the maximum retail price is Rs 5,360 a tonne, which include a Rs 50 per tonne charge imposed on October 12 last year for the Mobile Fertilizer Monitoring System. Urea is the only controlled fertiliser where difference between the cost of its production as assessed by Fertilizer Industry Coordination Committee (FICC), known as the retention price, and the statutorily fixed sale price, is paid as subsidy under the Retention Price-cum Subsidy Scheme (RPS). Such a scheme ensures uniform sale price to the farmers besides a reasonable return (12 per cent) on capital investment to the manufacturers. The current pricing mechanism for urea is known as New Pricing Scheme (NPS)-III policy which was extended on a provisional basis on March 17, 2010 till further orders. Now the modified scheme is proposed for implementation. This could be for a period of three years, the official said while adding that the policy would be reviewed taking into account prevailing energy scenario, production and supply scenario and international trend of urea prices. Although, the Planning Commission favours freeing maximum retail price (MRP) within a reasonable limit, the Department of Fertiliser does not support that. The argument is that the present cost of production is approximately Rs 15,000 per tonne, while the international price is hovering around Rs 22,000-24,000 per tonne. Currently with MRP of Rs 5,360 a tonne, around Rs 9,000 per tonne is given as subsidy to gas-based units. Now the fear is, which is also supported by the Department of Expenditure, that freeing the MRP will raise the subsidy levels, while companies will have windfall gain. Farmers will be affected severely. They are already hit by rising prices of phosphatic and potassic (P&K) fertilisers, the official said. Modified price scheme will also contain subsidy at the present level as it is proposed to increase retail price annually to compensate for any increase in gas price and fixed costs of urea unit. Twenty-nine urea units produced around 225 lakh tonnes of urea against the capacity of around 200 lakh tonnes. Still there is gap of 78.4 lakh tonnes which is met through imports. Out of total imports, 20 lakh tonnes are imported from Oman India Fertiliser Company (OMIFCO) at a pre-fixed price, while rest is imported at spot prices. New scheme Minimum fixed cost of Rs 2,000/tonne may be given to urea units

Continued production from naphtha units till natural gas availability and connectivity is provided No subsidy to naphtha based plant beyond December 2013 No new naphtha based plants to be permitted in Greenfield investment Net subsidy payout under new proposal is estimated at Rs 15,763 cr 8. Stuck at the bottom? Recovery is not guaranteed unless govt spends on asset creation The GDP numbers for the fourth quarter of 2012-13 indicated that the Indian economy grew by 4.8 per cent, slightly above the 4.7 per cent estimated for the preceding quarter. A realistic interpretation of these numbers would be that the economy has indeed hit bottom and things are unlikely to become worse, at least on the growth front. The critical question is, of course, how soon they will start getting better. Growth for the whole year of 2012-13 came in at five per cent, consistent with the advance estimates released in February; and virtually all forecasts, from public as well as private agencies, indicate that growth will be better during 2013-14. This is a relief because it suggests a widespread perception that growth has bottomed out. Things are unlikely to become any worse. However, the early-year forecasts are based on several assumptions - of the monsoon, oil prices and so on - which may not pan out. Do the quarterly and annual numbers reveal anything about a potential recovery? From this perspective, the most significant number in the report relates to gross fixed capital formation (GFCF) or, more simply, investment spending. This indicator reflects the magnitude of resources that the economy is allocating to create new capacity. GFCF was 32.6 per cent of GDP in the fourth quarter, slightly lower than the full-year proportion of 33.2 per cent. Over the past eight quarters, this ratio was at its peak, 35.7 per cent, in the first quarter of 2011-12; it was at its trough, 32 per cent, in the third quarter of 2012-13, which also showed the slowest growth rate in this two-year period. While investment spending has been somewhat volatile, the fact that it has moved in a relatively narrow range as a proportion of GDP suggests that a reasonable level of investment is still taking place. A rough rule of thumb using the concept of the incremental capital-output ratio suggests that if the ICOR is four, this level of investment is consistent with about eight per cent growth. This is, presumably, the basis of the government's confidence that growth will revive quite quickly from this bottom. Unfortunately, the investment ratio reflects only the potential. Several things need to be done to realise it. For investment to be truly stimulative of growth, it needs to be balanced across a variety of sectors. In an apt illustration, it is all very well to spend lots of money on building power plants (which shows up as investment spending), but power plants cannot contribute to growth if there is no fuel to run them. The lack of balance is a clear threat to the recovery, ICOR-based optimism notwithstanding. This must be a policy priority if the potential has to be realised. In this context, the fiscal response becomes critical. The government drew some satisfaction from the fact that the eventual fiscal deficit for 2012-13 was lower than the revised estimate presented along with the Budget for 2013-14. But, unquestionably, the government needs to spend more on asset creation, which in turn can catalyse private investment spending. In this lie the real seeds of a recovery. 9. Time to bite the bullet on Telangana issue With the resignation of two members of parliament and important state leaders, the Telangana issue has returned to haunt the Congress again. Congress MPs G Vivekananda and Manda Jagannadham and former state Congress chief K Kesava Rao have announced that they are joining the Telangana Rashtra Samithi (TRS) to achieve statehood for Telangana as the Congress was in no mood to deliver on its promises. However, the Congress high command in New Delhi continues to drag its feet. Congress president Sonia Gandhi

summoned Andhra Pradesh chief minister Kiran Kumar Reddy for a report on the implications of the latest resignation spree and held discussions with the members of the party core committee on Saturday without arriving at any decision. AICC general secretary in-charge of the state, Ghulam Nabi Azad, on Sunday advisedAndhra Pradesh Congress leaders to wait and promised that the party would take a decision on the issue this month. Though he claimed that this was because the party wanted to hold more consultations, it is clear that the Congress does not wish to stir up trouble during the budget session of the state assembly and the elections for local bodies due shortly. Ironically, this is not the first time senior party leaders had set deadlines only to let them lapse. After protracted discussions with all parties and stakeholders, Union home minister Sushil Kumar Shinde had last year set the deadline of December 28 to settle the issue. The Congress and the government that it leads must realise that they have run out of excuses. In December 2009, then Union home minister P Chidambaram had told parliament that the process for formation of Telangana state would be started soon. Subsequently, the Srikrishna Commission it appointed to buy time, also submitted its report in January 2011. The Congress must now bite the bullet and take an unequivocaldecision on creation of Telangana and the status of Hyderabad. Further procrastination will only lead to turbulence and deterioration of law and order in Andhra Pradesh. 10. Tackle price rise with inflation-indexed bonds The sale of inflation-indexed bonds (IIBs) from Monday is an idea whose time had come long ago. It is expected to catch the imagination of the average investor, who expectsregular returns on his investment and also protection from inflation. Many of the existing financial instruments like bank deposits, mutual funds and company shares have not been adequately attractive to a large number of investors. They, therefore, prefer to invest in unproductive gold and real estate. This has, in turn, created a huge foreign exchange problem for the country, as is evident in the surging import of gold. The IIBs are intended to lure them away from investing in gold. The success of the bonds, however, depends on how attractive they are to the investor. The bonds major attraction is that it insulates the investor from inflation. There is logic in the argument that a government, which is unable to control inflation through imaginative economic policies, should compensate those whosuffer on that account. One of the drawbacks of the IIB is that it seeks to protect the buyer only from inflation based on the wholesale price index (WPI). For the common man what matters is the consumer price index (CPI). There is a marked difference between the WPI and the CPI since key indices such as inflation in services like education, health and housing are not incorporated in the WPI. Sadly, even the RBI bases its anti-inflation policies on the WPI. It is time it moved to CPI as its inflation anchor. IIBs should become instruments against inflation that could rid off the craze for gold and real estate. It should enable the government to use billions of rupees the people would have, otherwise, invested in unproductive assets for productive purposes. Since the interest rates will be determined every six months, it should not be difficult for the government to make adjustments to ensure IIBs remain a true bulwark against inflation. The bonds will, hopefully, create confidence in the investing public. 11. No complacency on China Chinese premier Li Keqiangs recent visit to India was high on hype but low on substance. In order to accurately assess if the positive spin imparted to the outcome of the visit was justified or not one must examine the extent to which it addressed Indias major concerns. Clearly the most serious of Indias concerns relates to its recent stand-off with China in Ladakh and the latters disinclination to take any meaningful steps for the early settlement of the boundary dispute. The issue has been referred to briefly and way down at paragraph 24 of a 35-paragraph joint statement wherein far from expressing concern at the glacial pace of the negotiations and the Depsang intrusion, satisfaction has been expressed at the work of the

Special Representatives on the Boundary Question who have been asked to push forward the process of negotiations for a settlement. With no time frame having been set in this regard no early settlement is on the cards. In these circumstances, we will have to contend with an unsettled border with China in the foreseeable future and will have to face more such standoffs at a time and place of the latters choosing. Our endeavours to institutionalise the sharing of information on upstream development projects on border rivers, in the light of Chinas vigorous dam construction activity, appears to have yielded no result. Para 24 of the joint statement addressing trans-border rivers merely makes a general reference to co-operation in regard to them and in concrete terms only suggests provision of flood season hydrological data and emergency management. The MoU signed in respect of sharing of such information only requires China to provide information on water levels pertaining to three hydrological stations on the Brahmaputra twice a day from June 1 to October 15 annually!! In respect of our concerns on the $40 billion adverse trade imbalance, while paragraph 9 states that the two countries agreed to take measures to address this issue these have not been adequately spelt out apart from co-operation on pharmaceutical supervision, stronger links between the Chinese and Indian IT industry and completion of phytosanitary negotiations on agro products. Somehow, the aforesaid language does not inspire much confidence about Chinas sincerity in addressing this issue. Indeed, the three trade related MoUs signed on export of buffalo meat, fishery products, and feed are not particularly encouraging as they reflect a mindset that sees India mainly as a supplier of primary products rather than of high value manufactures. Thus, the trade target of $100 billion set for 2015 is likely to see the imbalance ballooning far beyond the current $40 billion! It goes without saying that Indias concerns about Sino-Pak military co-operation, including in the nuclear field, as well as its undertaking of a variety of infrastructure projects in Pakistan-occupied Kashmir (PoK) remained unaddressed. Indeed, in the joint statement issued during Li Keqiangs visit to Islamabad, China and Pakistan agreed to further enhance co-operation in defence technology and production and upgradeconnectivity related infrastructure between the two countries including the Karakorum Highway. To add insult to injury, we are required to laud the evolution of Sino-Pak ties with their anti-India bias as paragraph 4 of the Sino-Indian joint statement commits both countries to take a positive view of and support each others friendship with other countries. Indias quest for Chinas support to its membership of multilateral non -proliferation related technology control regimes and for a permanent seat in the United Nations Security Council met with no success. In respect of the latter there had been no evolution of the Chinese position beyond its traditional stand as stipulated at paragraph 32 of the joint statement to the effect that it supports Indias aspiration to play a greater role in the UN, including the Security Council. On Afghanistan, while China in its joint statement with us stopped short at expressing support for an Afghan-led and Afghan-owned reconciliation process, in its joint statement with Pakistan it went so far as to state that political reconciliation is a key step towards peace and stability in Afghanistan, thereby indicating an unfortunate readiness to toe the Pakistani line on the imperatives of appeasing the Taliban. In the context of the foregoing, it is evident that premier Li Keqiangs visit did little to alleviate our concerns. While the talks may have been held in a cordial atmosphere as mentioned in the joint statement, it is inexplicable how we allowed it to suggest at the outset in paragraph 2 that India and China have evolved an effective model of friendly coexistence and common development, which can be an example for relations between big neighbouring countries. Surely, Chinas annexation of 42,685 square kilometres in J&K, its contention that the Sino-Indian border is only 2,000km, thus questioning the legality of our possession of Ladakh, ratcheting up of

claims on Arunachal Pradesh, opposition to ADB-financed projects in the north-eastern state, reluctance to settle the land boundary dispute, unwillingness to support our quest for a permanent seat in the UN Security Council even though we have been in the forefront of those supporting its endeavours in this direction, use of Pakistan as a proxy against us through grant of nuclear weapons-related materials and technology as well as conventional weapons, pursuit of a String of Pearls strategy against us, induction of the Peoples Liberation Army in PoK and its rapid upgrade of infrastructure in Tibet coupled with the undertaking of a military buildup in the area with India-specific military exercises should have militated against terming the Sino-Indian relationship as an effective model of friendly coexistence. Much has been made of India being the first foreign country Li Keqiang has visited after assuming office. Too much must not be read into it, for India is after all an important regional player and if such a gesture helps to lull it into complacency at a time when China is confronted with a host of angry neighbours this is a bonus for the latter without conceding anything. The purpose of the visit was, perhaps, little more than to gauge the mood in India and by no means to make any concessions or address its concerns. 12. Preserve repositories of vulnerable biodiversity The India archipelago of Nicobar Islands, home to around 1, 800 animal species and some of the worlds most endangered tribes, has now been declared as a world biosphere reserve. The 103,870-hectare reserve was last week officially declared as protected by the International Coordinating Council of UNESCOs Man and the Biosphere (MAB) Programme. The archipelago is also home to the indigenous Shopmen people, semi-nomadic hunters dwelling inland and the Nicobarese who live in coastal areas and aredependent on fishing and agriculture. Biosphere reserves are chosen by the MAB programme to experiment with different approaches to manage terrestrial, marine, coastal and freshwater resources. They also serve as in situ laboratories for sustainable development. In India the biospheres of Simplipal (Odisha), Nokrek (Meghalaya), Pachmarhi (Madhya Pradesh), Nilgiri (Tamil Nadu), the Gulf of Mannar (Tamil Nadu), Sunderbans (West Bengal) Nanda Devi (Uttarakhand), and Achanakmar-Amarkantak (MP and Chhattisgarh) are already on UNESCOs list. The designation is not binding under any law but aimed at building and promoting a network of places where people are attempting to mesh human activity with biological and scenic assets. Man-made changes to ecosystems are now so alarmingly rapid that human lives and societies face epic challenges. Technological fixes cannot replace the role of robust, complex, and interconnected natural ecosystems in maintaining a biospheres favourable conditions. Any viable response to the global environmental crisis must greatly expand the level of protection afforded to wildlife and wild places through conservation. It is imperative to protect all oldgrowth habitats, as these remnants are ancient repositories of rich and vulnerable biodiversity and optimal arenas for life-sustaining processes. 13. Big trade deficit with China? Excellent! China is India's largest trade partner. But India runs a large trade deficit of $29 billion with China. Prime Minister Manmohan Singh reportedly told his Chinese counterpart, Li Keqiang, at their recent meeting that this "needs to be addressed." But as an economist he surely knows it is wrong to aim for balanced trade with each trading partner. The beauty of international trade is that it enables every country to specialize in what it does best, export these specialties, and use the money to import what other do best. All countries end up specialising in what they do best, improving global productivity and reducing prices for everybody, a winwin situation. India should export whatever it can to whichever destination is profitable at the best possible price. In turn, it should import whatever it needs from wherever at the best possible price. This implies that India should run a trade surplus with relatively

uncompetitive countries (like Pakistan or Bangladesh), and run a trade deficit with highly competitive countries (like China or Germany). The more competitive the trading partner, the more India should buy from it, and the bigger should be the bilateral trade deficit. China is the most competitive exporter of all, so India should run its biggest trade deficit with this country. Far from decrying this, we should view it as evidence that India is, very sensibly, getting its needs from the cheapest source. To see this in perspective, consider Indo-Pak trade. Pakistan has long erected trade barriers against Indian goods, importing many items at prices higher than what India offers. This hurts both Indian exporters and Pakistani consumers. Pakistan has promised to soon liberalise trade with India. When this happens, India's trade surplus with Pakistan will become even larger than it is today. That will be economically efficient, benefiting Pakistani consumers as well as Indian exporters. Yet many Pakistanis fret at the prospect, just as many Indians fret at their growing trade deficit with China. The fretting is unwarranted: large deficits in both cases are proof of sensible buying from the cheapest source. Many Indians argue that China gives huge export subsidies that constitute unfair trade. Sorry, but no individual, corporation or country can become prosperous by selling its goods below cost. You can as a short-term measure subsidise some items here or there, but selling everything at a loss is economic suicide, and China is not suicidal. It does keep interest rates artificially low, and prevents its currency from appreciating. We can join the US in pressing for yuan appreciation. But that will affect the trade gap only slightly. Where China gives excessive subsidies, Indian businessmen are quick to demand antidumping duties, and the government is quick to oblige. India has imposed more anti-dumping duties than any other country. Additional curbs have been placed on Chinese telecom equipment on security grounds. The trade deficit however continues, suggesting that dumping is not the key issue. Rather, the deficit represents the gap in productivity between the two countries, especially in manufacturing. Most people think that exports are desirable and should be maximized, while imports are undesirable and should be minimized. The very opposite is true. You typically export what you have a surplus of, and import what is locally scarce. What's scarce is obviously more valuable than what you have in abundance. Seen in this light, the main benefit of trade is to end scarcities by importing what you don't have. Exports are a secondary aim, required to pay for imports. The pattern of Sino-Indian trade dismays many people. India exports mainly iron ore and other commodities. Its imports are almost entirely manufactured goods, especially machinery and telecom equipment. Some experts think commodities are somehow inferior to manufactures, and so bemoan the SinoIndian pattern of trade. Now, manufactures often have more value added than commodities, yet somebody has to produce commodities too. Specialising in commodities is not inferior. India's biggest commodity producers are Ambani (oil, gas, petrochemicals, fibres), Tata (steel, soda ash, fertilizers, power) and Birla (aluminium, copper, cement, iron ore). Are Ambani, Tata and Birla inferior industrialists in inferior industries? No, they are India's crme de la crme. Both China and India still have far too many barriers to trade and investment, and these need lowering. Chinese non-tariff barriers are higher, and Indian negotiators must focus on this. But their overall aim must not be to balance trade with China, or target a particular trade deficit. Rather, India should target improvements in its own productivity and competitiveness. Once that happens, its trade deficit with all countries (including China) will automatically fall. Lesson: target the productivity gap, not the trade gap.

CURRENT AFFAIRS (04.06.2013)

1. Political parties come under ambit of RTI Act In a landmark judgment, the Central Information Commission (CIC) has ruled that political parties come under the ambit of the Right to Information Act. The CIC order said, We have no hesitation in concluding that INC/AICC, BJP, CPI(M), CPI, NCP and BSP have been substantially financed by the Central government and, therefore, they are held to be public authorities under Section 2(h) of the RTI Act. The full bench of the commission, comprising Chief Information Commissioner Satyananda Mishra and Information Commissioners M.L. Sharma and Annapurna Dixit, argued: It would be odd to argue that transparency is good for all State organs but not so good for political parties, which, in reality, control all the vital organs of the State. The criticality of the role being played by these political parties in our democratic set-up and the nature of duties performed by them also point towards their public character, bringing them in the ambit of section 2(h). The constitutional and legal provisions discussed herein above also point towards their character as public authorities, the commission held. The order came after activists Subhash Chandra Aggarwal and Anil Bairwal of the Association of Democratic Reforms approachedthe CIC, requesting that political parties be declared as public authorities. They had asked the six political parties to make available details of voluntary financial contributions received by them and the donors names and addresses. The political parties, with the exception of the CPI, however, refused to give away information, claiming that they do not come under the RTI Act. The commission then directed the presidents and general secretaries of the six political parties to designate CPIOs and the Appellate Authorities at their headquarters in six weeks time. The CPIOs so appointed will respond to the RTIapplications extracted in this order in four weeks time. 2. One big step towards peace Secretary John Kerry has demonstrated courage and wisdom in abandoning his predecessors insistence on President Bashar al-Assads departure as a precondition to talks for a political solution to the Syrian crisis, thereby bringing the American position closer to that of Russia and many others, including India. He has to go a step further and drop objection to Irans participation in the Geneva II conference. Iran has more than convincingly established its potential to prolong the conflict; it should be given an opportunity to play a constructive role. When the Arab Spring sprouted some shoots in Syria in the spring of 2011, it was immediately seized upon by Israel, the United States and Syrias Sunni neighbours to get rid of the Assad regime the first set of countries to break the Tehran-Damascus axis and the neighbours to replace a Shia dispensation in Damascus by a Sunni one, however fundamentalist. There was thus congruence a term much in use these days of interests among regional and extra-regional players. Israel & Iran For Israel, the ouster of the regime in Damascus would be of immense benefit. It would greatly weaken Irans clout in the region. Anything that debilitates Iran is of enormous importance to Israel, given the portrayal of Iran as posing an existential threat to the Jewish state. Hizbullah, with its massive arsenal of missiles and rockets which can reach Tel Aviv, will have its lifeline disrupted, if not irreparably breached; one of the main reasons for Israels restraint in dealing with Irans nuclear threat is the capability of Hizbullah to inflict considerable damage to Israel in the event of an Israeli attack on Iran. For Syrias neighbours, it was an opportunity, not to be missed, to tilt the regional sectarian balancedecisively against the Shias. The loss of the Alawite regime would be a huge psychological blow to Shias and an equal boost to Sunnis everywhere. For that very reason, the two Shia regimes in the region, Iran and Iraq, were always expected to do their utmost to send succour to the Assad regime. The Hizbullah, which has everything to lose in the event of Mr. Assads fall has, unsurprisingly, decided to jump into the fray. The Shia-Sunni sectarian divide, ever present

but significantly reignited since the American invasion of Iraq in March 2003, has attained a level of intensity which will be extremely difficult to contain in the years ahead. All of Syrias neighbours, including Israel, have become involved, and not necessarily against their wishes. These developments, including the very real possibility of hard line Islamist groups gaining power in Damascus in the post-Assad scenario, were easily anticipatable, and were anticipated by this writer and many others. But the temptation to get rid of Mr. Assad was so great that any price was worth it, including the contingency of having to live with an Islamist government in Damascus. No doubt, the West likewise knew how events would unfold, though now it would like us to believe that things have not turned out as per its calculations. The most inexcusable mistake the western countries made was to assume that the Assad regime would fall within weeks of the beginning of the protests. Was this wishful thinking? Or, were they victims of their own propaganda? The Russian decision to send missiles and other military equipment to Syria should not have surprised anyone. Several Sunni states have been openly arming the rebels since almost the beginning, with the approval of the international community; why should the Russian action to help the other side in the civil war be treated differently? Civil wars have always attracted external players to back opposing sides; why should Syria be an exception? It did not call for great analytical skill to recognise that making diplomatic initiatives conditional on the prior departure of Mr. Assad was never going to work. The rebels could be excused for sticking to this line, since their strategy was to get the West more actively engaged on their side, such as by enforcing a no-fly zone, sending material and even men to the war zones, etc. (This was exactly the strategy of the Bosnian Muslims during the Bosnian civil war.) Syrias Sunni neighbours also were not prepared to countenance the idea of talks with the Damascus regime for sectarian reasons. But if the concern of other external players with the huge loss of lives in Syria was genuine, they had every reason not to insist on the precondition for Mr. Assads departure, as well as to persuade the rebels and their regional supporters not to insist on it. Use of nerve gas Carla del Ponte, member of the U.N. commission of inquiry on Syria, said a few weeks ago that there was strong, concrete suspicion that the rebels had used nerve gas sarin. The western countries were understandably disappointed by the statement of Ms del Ponte and largely ignored it; had she said the same about the Assad regime, the uproar, and clamour for strong action against the regime by the U.S., whose President had repeatedly said that the use of this weapon would be a game changer, can easily be imagined. This is merely to point out the obvious and not to criticise anyone of practising double standards, since every country is guilty of it sometime or the other. There is a civil war within civil war in Syria. The Grand Coalition, cobbled together at the command of the former Secretary of State, was never going to present a unified and effective leadership. Various militia groups are fighting among themselves. Mr. Assad, who is enjoying relative military advantage at present, is making belligerent statements. He should know that great powers do not blink for a moment before deciding to reverse their positions; they really do not have permanent friends. The LavrovKerry call for Geneva II offers the only realistic chance to work for a political settlement, since it leaves open the possibility for both principal Syrian parties to participate. The difficulty is more on the rebel side, since there are nearly 150 rebel groups involved in the civil war, the most effective and disciplined of which are diehard islamists and al Qaedaaffiliated. The Syrian national coalition is a house divided, with different factions unable to reach a consensus on whether and who should participate in Geneva. The hardliners are insisting on prior departure of Mr. Assad, which even the U.S. has wisely decided not to insist on. Secretary Kerry is making strenuous effort to persuade the coalition to attend

Geneva. The Damascus regime has already indicated its willingness to do so. Refusal by the rebels will give an enormous political advantage to the regime as well as to Russia and Iran. The bitter pill The rebels are hesitating because as of present, the regime has gained an upper hand in the fighting; no one wants to negotiate from a position of weakness. On balance, the coalition can be expected to swallow the bitter pill and decide to go to Geneva for one simple reason. If it does not, it will forfeit the possibility of getting enhanced military assistance. If it can demonstrate in Geneva the skill to put the blame for the likely failure of the talks on the regime, it will have a far better prospect of benefiting from the European decision to lift the arms embargo and Americans willing to supply lethal equipment. Zvi Barel, an Israeli expert on such matters, wrote recently: the Syrian civil war is likely to continue for years and l ead to violent spillovers to neighbouring countries the initiative to determine when and if to set off the regional powder keg has fallen into Assads hands. This is the reason, Barel suggests, the U.S. has agreed to leave Mr. Assad in power as long as negotiations will be conducted with the rebels. If Geneva II happens, India should ask to be invited. Our participation would be in line with our official line that the solution should be political and Syrian owned. We will be in good company and we would be seen to be active in a region where we have vital interests.Geneva II, in which both principal parties to the Syrian conflict can participate, offers the only realistic opportunity to work for a political settlement 3. A race towards climate catastrophe When Brian Lara scored a scintillating 400 not out in Antigua in April 2004, it seemed his score would remain unchallenged for the foreseeable future. But we now have another player on the scene who has scored 400, and threatens to go past that number effortlessly carbon dioxide (CO{-2}); CO{-2}levels in the atmosphere touched 400 parts per million (ppm) on May 9. Its symbolic significance is huge, its actual import is even bigger, for three reasons. Impact on life cycles One, the recent pace at which CO{-2}levels have been rising to reach 400 ppm. When Charles Keeling [the worlds leading authority on atmospheric greenhouse gas accumulation and climate science pioneer] began measuring atmospheric CO{-2}in March 1958, and through the 1960s, CO{-2}emissions were found to be rising at a little over half a ppm a year. The world economy was at a much lower level than today notwithstanding post-War growth, and carbon emissions were commensurately lower. By the late 1990s this had changed, spurred primarily, but not exclusively, by the shifting of manufacturing to China, and capitalisms desire to cut costs of energy inputs and labour. CO{-2}rise in the first decade of this century made the collective jaw of climate scientists drop. Despite the world economic crisis since 2007, annual carbon dioxide emissions from burning fossil fuels have been rising in recent years, to 32 billion tonnes (plus another four billion tonnes from deforestation and even more of other gases). Eight billion tonnes of CO{-2}in the atmosphere equals 1 ppm. So even though the Earth absorbs is being forced to absorb twice as much CO{-2}(roughly 17-18 billion tonnes a year currently) as it used to 50 years ago, atmospheric CO{-2}levels have been galloping three times as fast, at a little over two ppm a year for the last decade. This is 20,000 times the long-term natural rate at which carbon dioxide has gone into and out of the atmosphere as part of the carbon cycle. A consequence, usually rendered invisible as we tend to be so anthropocentric, is the oceans getting more acidic, with harmful effects on corals and some marine species. This pace of emissions and consequent warming is also making it increasingly difficult for ecosystems and species to adapt. A metasurvey by Prof. Camille Parmesan [University of Texas, Austin] of 866 published studies reported species across the world struggling to cope with disruptions in the life cycles of predators and prey, of insect pollinators and flowering plants. Birds are laying their first eggs earlier. As their habitat gets warmer, other species are trying to move away from the Equator or climb higher.

Consequently, mountaintop and polar species have suffered contractions in their range or been the first groups in which whole species have gone extinct due to recent climate change. Two, as we reach 400 ppm and beyond, we are going farther away from safe levels of CO{-2}. Albeit a minority view, but a growing one, safe has been deemed as 350 ppm or lower. In its first articulation in 2008, [leading climate scientist] James Hansen and others wrote that if humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted, CO{-2}will need to be reduced to at most 350 ppm, but likely less than that (Target Atmospheric CO{-2}: Where Should Humanity Aim?, The Open Atmospheric Science Journal , 2008, 2, pp. 217-31). This paper provides the intellectual basis for the worldwide campaign to reduce CO{-2}, headed by the organisation, 350.org. Temperature regulator Three, the influence of CO{-2}levels on the Earths temperatures and hence climate over the past 50 million years should give us pause. In The Long Thaw (Princeton 2009),Professor David Archer, who works on the global carbon cycle at the University of Chicago, writes: The similarity between CO{-2}and temperature in [the] Antarctica is jawdropping, a causal link he says thats even stronger than that between smoking and lung cancer, kind of a gold standard in the medical world. Falling CO{-2}levels contributed to the formation of ice caps on the Antarctic 34 million years ago. As CO{-2}levels fell further, to roughly 240 ppm three million years ago, temperatures fell in their wake sufficiently for ice to form in the Arctic. Thats why Arctic ice is now the first to go. I have not come across any work on the potential impact of ice-free Arctic summers on Indias climate, but you can bet your last rupee they will be considerable. CO{-2}was also one of two big factors in the Earth moving in and out of Ice Age glacials over the past 2.5 million years. It is this regulator of the Earths temperature that we have been shortsightedly fiddling with, and pushed beyond the realms of human experience. We dont want to go much beyond 400 ppm. CO{-2}has one quality of the other great batsman of the last 25 years longevity. A significant portion of CO{-2}emitted remains in the atmosphere for several millennia. Climate change is also largely irreversible for a thousand years after emissions stop. The Earth is now in uncharted territory as atmospheric carbon dioxide has shot past the 400 ppm mark. There is no more room for manoeuvre 4. He put India on the open software map Atul Chitnis, technology expert and founder of one of Indias earliest Linux technology conferences, FOSS.in, insisted that Open Source was not philosophy, ideology or politics, but simply about technology and hacking. His passing in Bangalore, at 51, on Monday of intestinal cancer brought tributes for his role in making Linux popular for a range of users: from the military to the small entrepreneur. The Berlin-born technologist, who grew up in Belgaum, Karnataka, was a passionate advocate of open source software, and inspired scores of Linux enthusiasts. His lasting achievement was to convince PC Quest magazine to carry the first ever Linux distribution in India on its cover CD in 1996. This, for most Indians, was their first introduction to Linux. Its easy to underestimate the value of this, said Kiran Jonalagadda, founder of HasGeek in Bangalore. The Linux distribution was put out there, for people to use, and the cover story offered a detailed guide on installing it. This was the first time users got to know about Linux, as something that wasnt just being worked on by geeks in the U.S. He also wrote passionately about it from operating systems to setting up mail servers. As a columnist and consulting editor with PC Quest through the 1990s, Chitnis witnessed a time when India was still finding its way in the digital space, and home users were slowly logging on. Prasanto K. Roy, who worked with him at PC Quest ,calls him a super-guru. The entire project, where the magazine gave away Linux distribution package CDs once a year, was driven by him. His biggest contribution was that he was keen on

presenting technology and technology literature in as simple and user-friendly a manner as possible. FOSS.in What he wrote on Linux, on modems and BBS (bulletin board system) was very popular. A lot of it became the biggest source of information and reference material for those who were trying to set up anything in that era. Chitnis was a key member of the Bangalore Linux Users Group, which organised offline meets in early 1999. These passionately organised events laid the foundation for Linux Bangalore in 2001 later renamed FOSS.in a well-attended technology conference which turned 10 in 2010. Talk is cheap. Show me the code, was Chitnis refrain to friends and adversaries. He was quoting Linus Torvalds. In a 2009 interview, he told The Hindu that the biggest achievement of FOSS.in (for Free and Open Source Software) was that it was able to change Indias image from being a mere consumer of software to a producer. In his last Tweet, posted two days ago, he randomly mentions Pink Floyds Shine on you crazy diamond, a tribute song written by the band members to their former mate Syd Barret. Music lover, amateur musician and a part of a Bangalore-based internet radio station, Chitnis leaves behind a young legacy of software activism. FOSS.in founder ensured that Linux reached a wide audience, enthusing professional and amateur users 5. Bank aspirants get more time to set up holding company Will provide sufficient time for promoters to comply with various stipulations The Reserve Bank of India (RBI), on Monday, said that it had decided to extend the validity period of the in-principle approval for setting up of the Non-Operative Financial Holding Company (NOFHC) from one year to 18 months. It is expected that this would provide sufficient time for the promoters/promoter group to comply with the various stipulations in the guidelines and the terms and conditions that would be set out while granting the inprinciple approvals to successful applicants, said RBI while issuingclarifications to queries on new banking licenses. The RBI had released guidelines forlicensing of new banks in the private sector last February . The queries received from applicants brought out several complex issues pertaining to the re-organisation of the existing corporate structure, restructuring of businesses and meeting the regulatory requirements. The RBI further said that NOFHC is to be wholly-owned by the promoters or promoter group and it cannot be a listed company. If the promoter group, which has the financial services company listed or otherwise, wishes to set up a bank, it must transfer all its regulated financial services business to a separate company and transfer the shareholding in such companies to the NOFHC. After it was transferred, the regulated financial services business will cease to be a financial services company and it can set up a NOFHC provided the public shareholding in it is not less than 51 per cent, said RBI. RBI also said that if a housing finance company plans to have an NOFHC, the lending activities must be conducted from inside the bank. Therefore, RBI said the housing finance activity of the HFC should be transferred to the bank under the NOFHC. The financial sector regulated entity which holds the HFC substantially will have to come under the NOFHC. On rural branches PTI reports: The RBI sought to allay apprehensions over the lack of level playing field on issues such as rural branch presence and foreign holdings between the existing lenders and the new ones who are to be granted licences. Replying to a specific query on the lack of level playing due to the insistence on having 25 per cent presence in rural areas, the RBI said all the incremental branches by the existing players are opened in the same proportion. With a view to enhancing financial inclusion, the conditions relating to the branch network are specifically prescribed at 25 per cent for unbanked rural centres... this norm has been extended to the

existing banks also and they are required to comply with this stipulation while opening new branches, the regulator said. To a query on ceiling of 49 per cent equity for the first five years on foreign holding, the RBI said it has been done to encourage more domestic investors getting in. After expiry of five years, the aggregate foreign shareholding in the bank would be allowed as per the extant FDI policy, the RBI said in the over 160-pages clarifications it issued on Monday. The central bank also clarified that the new banks will have to abide by the existing requirements on the cash reserve ratio or the ratio deposits to be parked with the RBI, the government bond holding or statutory liquidity ratio and the priority sector lending requirements, which have been kept at par with an existing lender. There will no regulatory forbearance in any of the matters, it said. It said non-bank lenders (NBFCs) can convert their presence in tier-II to tier-VI cities into bank branches once they are selected to enter the fray. However, for lucrative Tier-I cities, the Reserve Bank said, the conversion can be done, but would be deducted from the particular applicant NBFCs (non bank finance company) quota of Tier-I branches. All NBFC branches in Tier-1 centres which would carry out banking business may be permitted to be converted into bank branches and the excess over the entitled number of Tier-1 branches would be adjusted against the future entitlements of the new bank within a maximum three years from the date of commencement of business by the bank, it said. The RBI added that the branches of NBFCs and the bank should be distinct and separate. Additionally, once a NBFC branch is converted into a bank branch, it cannot conduct business of the NBFC, it added. The Reserve Bank explained that the new entrants have been disallowed getting into newer areas for three years because it wants them to get on sound footing before diversification.

CURRENT AFFAIRS (05.06.2013)

1. Why the death penalty must end An eye for an eye makes the whole world blind, said Mahatma Gandhi. The death penalty is unjust and inhuman. Its continued use is a stain on a society built on humanitarian values, and it should be abolished immediately. Many think that there could be nothing wrong with the death penalty as the Indian Constitution allows for capital punishment, which means that the founding fathers of this country must have also fully approved of it. In reality, several members of the ConstituentAssembly were firmly opposed to the death penalty. The architect of the Constitution, Babasaheb Ambedkar, admitted in the Constituent Assembly that people may not follow non-violence in practice but they certainly adhere to the principle of non-violence as a moral mandate which they ought to observe as far as they possibly can. With this in mind, he said, the proper thing for this country to do is to abolish the death sentence altogether. On June 3, 1949, Professor Shibbanlal Saxena, a freedom fighter who had been on death row for his involvement in the Quit India Movement, spoke in the Constituent Assembly of how he had seen innocent people being hanged for murder during his days in prison. Proposing the abolition of the death penalty, he said that the avenue of appealing to the Supreme Court will be open to people who are wealthy, who can move heaven and earth, but the common people who have no money and who are poor will not be able to availthemselves of it. Miscarriage of justice is, in fact, one of the biggest concerns about the death penalty. Is it possible that someone could be wrongly hanged in 21st century India? The answer, unfortunately, is yes. Studies conducted by Amnesty International and the Peoples Union for Civil Liberties have shown that the process of deciding who should be on death row is arbitrary and biased. The Supreme Court has itself admitted on several occasions that there is confusion and contradiction in the application of the death penalty.

Instances of innocence Last year, 14 eminent retired judges wrote to the President, pointing out that the Supreme Court had erroneously given the death penalty to 15 people since 1996, of whom two were hanged. The judges called this the gravest known miscarriage of justice in the history of crime and punishment in independent India. Some argue that the death penalty is the only way to deter heinous crime, especially violence against women and children. But a comprehensive study done last year in the United States found that there is no credible evidence that the death penalty has any deterrent effect on crime. The Innocence Project in the United States [a national litigation and public policy organisation dedicated to exonerating wrongfully convicted individuals through DNA testing and reforming the criminal justice system] has found, on the other hand, several cases where innocent people were given the death sentence. One such case is that of Cameron Todd Willingham, who was executed in 2004 for the deaths of his three young daughters. In 2009, reinvestigation of the case raised serious doubts in the appreciation of forensic evidence in the case and the judge concluded that Willingham was wrongfully convicted. Another case is that of Carlos DeLuna who was executed in 1989 for the murder of a young woman some years before. In 2004, a study by Columbia Law School students brought to light the wrongful conviction of Carlos DeLuna, which turned out to be a case of mistaken identity of the actual perpetrator of the murder. Lawmakers in India find it convenient to hold up the death penalty as a symbol of their resolve to tackle crime, and choose to ignore more difficult but more effective solutions like social education and police or judicial reform. The certainty of punishment, not severity, is the real deterrent. Rajiv Gandhi case The death penalty is little more than judicially sanctioned murder. Justice K.T. Thomas, who headed the three member bench in the Rajiv Gandhi assassination case, has said that executing Perarivalan, Murugan and Santhan, convicted and sentenced to death in the case, would amount to punishing them twice for the same offence, as they had already spent 22 years in jail, the equivalent of life imprisonment. In recent months, the Government of India has shown an alarming tendency to implement the death penalty. It is a fallacy to think that one killing can be avenged with another. For, capital punishment is merely revenge masquerading as justice. When the government is trying to create a just society where there is less violence and murder, it cannot be allowed to commit the same crime against its citizens in the name of justice. The DMK president, Kalaignar Karunanidhi, reiterated the partys stand last month when he called upon the Government of India to commute the death sentences of the 16 men, including seven from Tamil Nadu, who are on death row. The DMK president had made similar pleas to the Centre in August 2011 and October 2006. This has been the partys consistent position against this inhumane practice. Rest of the world The world is moving away from using the death penalty. The European Union has made abolition of death penalty a prerequisite for membership. The 65th United Nations General Assembly voted in December 2010, for the third time, in favour of abolishing the death penalty and called for a global moratorium on executions. Amnesty International reports that 140 countries more than two-thirds of the world do not use the death penalty any more. India needs to recognise this global trend, and act in step with it. Lawmakers are eager to appear resolute in the fight against crime, but seem to forget that certainty of punishment, not severity, is the real deterrent 2. Shale gas policy should attract best companies, follow green norms and share royalty

The government aims to finalise an exploration policy for shale gas and oil in the next few months, and then auction shale blocks. Shale gas and oil are produced from rock formations using "fracking" technology. This injects water and sand at high pressure into wells drilled horizontally from a single drill pad in multiple directions, tapping a wide area of shale to make production profitable. Shale gas and oil have transformed the US economy. North America will become energyindependent in 10 years. US natural gas costs onethird the Asian level of $12 per unit. US shale gas became a big story five years ago. India has taken too long to get its act together. It has widespread shale deposits in all sedimentary basins ringing the Deccan plateau. The US has no federal shale gas policy. All minerals underground belong to landowners, from whom oil companies buy drilling rights. This freedom to drill enabled companies and state governments to experiment with many sorts of drilling in many conditions, and come up with the right mix. The productivity of shale wells has skyrocketed. In India, the government owns all oil and gas, but lacks the funds or expertise to develop shale gas. The ONGC has a poor track record. Private participation is vital, from foreign companies with the best technology. Unfortunately, policy has been so restrictive and arbitrary that the multinationals have mostly steered clear of India, leaving only small players like CairnBSE -0.88 % and Hardy. We Shale Overcome The new shale policy needs to attract the best companies in the world, and take care of the needs of the environment and affected communities. Environmental fears have delayed or halted fracking in some countries. However, the US has 20 years of experience in fracking, and China is going ahead with its own shale programme. India must not fall behind. For conventional oil and gas, companies in India bid for productionsharing contracts. These allow companies to first recover drilling costs through "cost oil", with profit oil being shared with the government according to a complex formula. This created perverse incentives for companies to exaggerate drilling costs. Allegations flew of corruption to approve inflated budgets. The companies, in turn, complained of long delays in approving drilling budgets. It was, and is, a lose-lose situation. We must move to a revenue-sharing system, where companies bid for a share of oil and gas produced, leaving the balance (maybe 30%) to the government. This will end delays, gold-plating and corruption. Second, global practice avoids all price and distribution controls. In theory, India has a market price, but it is fixed by the government, which also allots gas to priority users like fertiliser and power producers. Lack of free pricing has discouraged production, and led to accusations (not proven) that Reliance is underproducing gas till prices go up in 2014. Free pricing will end disputes and corruption. The government can always sell its own share of gas cheap to fertiliser and power companies. If this is politically impossible, a second-best solution is the Rangarajan Committee formula, based on a cocktail of global prices. In the US, explorers pay landowners for drilling. In India, the government owns the oil and gas, so, landowners get nothing. States get royalties, but this disappears to state capitals and is not seen by locals. Solution: a sum equal to the royalty must be paid directly into a local panchayat account, and used solely for local benefits. This will give locals a stake in the enterprise. Come Rain or Seawater Environmentalists fear that fracking will use up scarce water, contaminate drinking water, lead to dumping of dangerous chemicals, and cause methane leakage and earthquakes. These are serious issues. Initially, fracking must be limited to coastal areas that can use seawater, and to high-rainfall areas prone to floods and waterlogging: eastern Uttar Pradesh, Bihar, West Bengal and the north-east. Speciality chemicals are added to water before fracking.

Every company must specify what chemicals it is using, and eliminate dangerous ones. All water that flows back after fracking must be recycled into fresh fracking, not dumped anywhere. This will conserve water while avoiding contamination. Go Shale, but Go Green too Gas drilling should be permitted only in deep formations far below acquifers used for irrigation and drinking. New techniques of double-sealing to check gas leaks should be mandated. Disposing of waste water deep underground has sometimes caused tremors, so this should be done in controlled fashion. New technologies are being tested that use natural gas fluids instead of water. If these succeed, most environmental problems will disappear. Green activists will try to get fracking banned. This must be faced squarely. Green safeguards are essential from the start, and local villagers must be made stakeholders with a share in royalties. 3. Build consensus, shun politics on Food Bill After Union parliamentary affairs minister Kamal Naths remarks that all options to push through the controversial Food Security Bill were open, the law ministry is reported to have drafted an ordinance and sent it the cabinet secretary. It is now for the government to decide whether it should adopt the ordinance route or opt for the conventional procedure of legislation through Parliament. Since most political parties, including the principal opposition Bharatiya Janata Party, have agreed to advance the Monsoon Session of Parliament, scheduled to start in July, resorting to the presidential power to promulgate an ordinance to bring it on the statute book will not only amount to a grievous injury to the parliamentary system of democracy but also have far-reaching implications for the Indian economy. Under the Constitution, Parliament is the sole repository of legislative powers of the Union. The legislative powers to promulgate an ordinance have been vested in the president to meet extraordinary situations demanding immediate enactment of a law when Parliament is not in session. The Supreme Court has clarified that the legislative power to issue ordinances is in the nature of an emergency power given to the executive only to meet an emergent situation. If the Congress-led UPA government is really serious about providing food security to Indias poor, it must avoid playing politics on the issue and make a sincere effort to build a consensus. BJP president Rajnath Singh has publicly said that his party wants the Food Security and Land Acquisition Bills passed in Parliament with some amendments. Though the Left parties have dubbed the bill in its present form defective and unacceptable and Samajwadi party is opposing it as anti-farmer, mobilising requisite support for its passage should not be difficult for the government. Adopting short cuts to steamroll the legislation will prove that instead of being concerned for the poor, the Congress is driven by its political insecurity in the run-up to elections. After Union parliamentary affairs minister Kamal Naths remarks that all options to push through the controversial Food Security Bill were open, the law ministry is reported to have drafted an ordinance and sent it the cabinet secretary. It is now for the government to decide whether it should adopt the ordinance route or opt for the conventional procedure of legislation through Parliament. Since most political parties, including the principal opposition Bharatiya Janata Party, have agreed to advance the Monsoon Session of Parliament, scheduled to start in July, resorting to the presidential power to promulgate an ordinance to bring it on the statute book will not only amount to a grievous injury to the parliamentary system of democracy but also have far-reaching implications for the Indian economy. Under the Constitution, Parliament is the sole repository of legislative powers of the Union. The legislative powers to promulgate an ordinance have been vested in the president to meet

extraordinary situations demanding immediate enactment of a law when Parliament is not in session. The Supreme Court has clarified that the legislative power to issue ordinances is in the nature of an emergency power given to the executive only to meet an emergent situation. If the Congress-led UPA government is really serious about providing food security to Indias poor, it must avoid playing politics on the issue and make a sincere effort to build a consensus. BJP president Rajnath Singh has publicly said that his party wants the Food Security and Land Acquisition Bills passed in Parliament with some amendments. Though the Left parties have dubbed the bill in its present form defective and unacceptable and Samajwadi party is opposing it as anti-farmer, mobilising requisite support for its passage should not be difficult for the government. Adopting short cuts to steamroll the legislation will prove that instead of being concerned for the poor, the Congress is driven by its political insecurity in the run-up to elections. 4. Wake-up call to control pollution in cities The findings of a survey conducted by the Energy and Resources Institute (TERI) have confirmed the fears that pollution has reached dangerous levels in six major cities Bangalore, Chennai, Delhi, Hyderabad, Kolkata and Mumbai. The quality of air and water in these cities has been plummeting lower and lower causing serious concern to the citizens. The root cause of the problem is the unplanned growth of the cities. The growing number of motor vehicles, for which there are not enough roads, is mainly responsible for the worsening quality of air. Many vehicles do not conform to international standards of engine quality and they run on substandard fuels. The little achievement the national capital made when all public transport vehicles like buses, autos and taxis were forced to go in for compressed natural gas (CNG)-based engines, has been offset by the constant addition of thousands of vehicles every day to the capitals vehicle fleet. Instead of promoting public transport, the government and banks have been encouraging the common man to have his own motor vehicle for which loans on liberal terms are made available. The authorities charged with the task of controlling air and water pollution turn a blind eye to industries in these cities and their peripheries diverting all their effluents to the rivers. The state of the Yamuna, described by the poets of yore as the most beautiful river, is comparable to that of a sewer. The rising trend of pollution-related diseases in these cities is a grim reminder of the tragic consequences of neglect. It is said that a countr ys development is gauged not by the fact that the poor have their own cars but that even the rich use public transport. While steps topromote public transport and to shift polluting industries from these cities and their suburbs are necessary, the government alone cannot do much. The civil society, trade and industry should join hands with the government to ensure that air is breathable and water drinkable. 5. Thrust to India-Japan relations Set up in 2006, Indian and Japanese prime ministerial summits are held every year alternately in New Delhi and Tokyo. The summits are one of the few mechanisms to carry on bilateral relations that have become multi-dimensional over years, and now stand qualitatively improved. The joint statement issued every time indicates the depth, strength, dimensions and potentials. It is both symbolic and substantial. Sharing a strong strategic interest in expanding co-operation on maritime security and promoting regional stability, both India and Japan realise that ensuring sea lanes remain open and free as vital for the regional prosperity because of its dependence on oil imports from the Middle East. Prime minister Manmohan Singh visit to Japan primarily focused on firming up bilateral economic ties and co-operation in other areas.

Indias relations with Japan are important not only for its economic development but also because India considers Japan as a natural and indispensable partner in our quest for stability and peace in East Asia and the Asia-Pacific. India and Japan have long expressed concern over potential threats to energy supplies due to sea lanes vulnerable to piracy and blockades. Both have shared interests in maritime security, face similar challenges to energy securities. Japan and India are working toward a deal on nuclear energy co-operation, as Tokyo tries to boost exports of atomic technology and other infrastructure to help revive its economy. Armed with a trillion dollar foreign exchange reserve, targeting an achievable 2% domestic inflation, and a huge bulging bag of development assistance, Japanese premier Abe Shinzo is eager to promote sales of Japanese nuclear technology as part of its push to expand exports, especially in emerging markets in Asia and the Middle East that have better growth potential than within Japan. Aided by Abenomics monetary easing and huge public expenditure policy, massive stimulus the yen has fallen by about 25% and Japan is looking for attractive investment propositions abroad. India is certainly on the cards but not priority since development opportunities in Africa and Myanmar commands Japans investment attention. Recent Japan and India agreements on economic co-operation and investment include continued assistance to 100 billion dollar plans for industrial corridors between New Delhi and Mumbai, and between Chennai and Bangalore. Though the former project has begun, it is moving slowly and may not meet the 2017 deadline due to cost escalation and other problems. The world has huge stakes in Japan returning to sustained economic growth, its continued leadership in enterprise, technology and innovation and ability to remain the locomotive in Asian development. India offers increasing opportunities for growth and internationalisation of Japanese corporations. Trade between Japan and India had never been impressive. Japans exports to India in the fiscal year ending March 2013 were worth $8.25 billion. Imports were worth $5.7 billion. Indian bilateral trade with Japan for 2012-13 worth $14 billion is dwarfed by Japan-China trade ($68 billion). Despite Comprehensive Economic Partnership Agreement that envisages abolition of tariffs in 10 years, higher trade with Japan has led India to register higher deficit of $ 6.2 billion for 2012-13. Japan has a goal of 30 trillion yen in infrastructure exports in its growth strategy to be compiled in June. Since Indias plan is toinvest $1 trillion (for five years), the India-Japan summit was a good chance to promote sale of infrastructure like railways and other facilities. India and Japan also will reinforce bilateral co-operation for massive infrastructure projects. Joint research will be conducted for the construction of a high-speed railway connecting Mumbai and Ahmedabad to enable introduction of bullet trains. Abe announced 71 billion yen in loans for the construction of Mumbai metro and 17.7 billion yen for the IITHyderabad. Indias economic growth declined to 6.5% in 2011 and 5% in 2012-13 and hence Japanese investment could be a catalyst. In spite of sustained complementarities between India and Japan, Japanese firms are holding back investment waiting for further reforms relating to problems such as law, labour, land acquisition, tax and the like. Though the civil nuclear pact could not come through this time, India and Japan have agreed to accelerate talks to conclude a pact to facilitate Japanese firms to export nuclear power generation technologies and equipment to India. Such a pact is problematic because India is not a party to the Treaty on the Non-Proliferation of Nuclear Weapons. India plans to build about 20 nuclear power plants to increase the share of nuclear power in supply from the current 4% to 25% by 2050. The worth of Indias nuclear power market is estimated at $150 billion. Besides, the strong anti-nuclear lobby in Japan can create trouble even if the Abe administration gains confidence to move forward politically.

Abe has already signed agreements with the UAE and Turkey to enable the export of Japans nuclear power technologies and equipment. Such exports to India need to pay attention to the danger of nuclear power generation and need to thwart nuclear weapons proliferation. Under pressure from the Bush administration, the Nuclear Suppliers Group, including the US, Britain, France, Germany and Japan, had decided to allow exports of nuclear power technologies and equipment to India. In turn India pledged unilateral and voluntary moratorium on nuclear weapons tests. The Indian call for insertion of a clause in a JapanIndia nuclear pact to ensure it would not hamper Indias nuclear weapons programme, besides right to reprocess spent nuclear fuel from Japanese generation equipment, could continue to be a point of difference. Japan has now offered the US-2 amphibious aircraft. The joint statement has also mentioned India and Japan would regularly hold exercises between the Maritime Self-Defence Force and the Indian Navy and begin talks for the export of MSDFs US-2 amphibious planes to India. They will co-operate to improve counter-cyber attacks, ensure safe sea lanes and strengthen coast guard authorities. The statement was obviously drafted with Chinas increasing maritime presence in mind. Thus, the summit was symbolic and gains were substantial.

CURRENT AFFAIRS (06.06.2013) Part 1

1. The Murthys and the Maoists

In the first week of 2011, Prime Minister Manmohan Singh allowed himself to be persuaded to accept N.R. Narayana Murthys invitation to travel to Mumbai to preside over a function to give away the Infosys Social Science Prizes. The Prime Minister even agreed to attend a dinner that Mr. Murthy wanted to host in his honour after the function at the Taj Mahal Hotel. So far so good. A few days before the event, there was a massive behind-the-scenes dust up between the Prime Ministers staff and Mr. Murthy. The rub was that Mr. Murthy thought that since he was paying for the dinner, he had a right to dictate not only the guest list but even the seating arrangement. However, there is something called protocol and the dignity of constitutional offices. If the Governor and the Chief Minister of Maharashtra were to be at the dinner, they had to necessarily be seated on either side of the Prime Minister, whereas the host thought he ought to be sitting next to Dr. Singh. Mr. Murthy, however, was not one to be so easily rebuffed. As soon as the first course was served, he sought to convert the evening into a grand intellectual conversation and proceeded to invite his son to open the bowling. And the young son wanted to know from the Prime Minister what the government proposed to do so that young men like him could come back to India. All this is recalled because the young man is now back in India, as executive assistant to his father, who in turn has allowed himself to be persuaded to take charge of Infosys again. Nepotism, did you say? No; no sir. A private company is free to hire anyone. Fair enough, but not exactly. Mr. Murthy is not just a private businessman, minding his own business. He has often sought to inject himself into the public domain, telling a thing or two to the political

class about how to behave. He has been serenaded as an iconic entrepreneur. During the heyday of civil society triumphalism two years ago, there was even a suggestion that Mr. Murthy be made President of India. That was the time when Indias corporate leaders th ought they had the ethical credentials to write open letters to the Prime Minister and preach virtues of good governance. Like other corporate leaders, the Murthys, father and son, represent an unrepentant ideological approach to the Indian state, its morals, manners and policies and purpose, but they are not the only ones to do so. The Maoists who once again made their presence felt last month when they massacred the Congress top political leadership in Chhattisgarh too have a list of ideological claims of their own on the Indian state. Both groups are relentless; both are unforgiving. The May 25 attack was the boldest ideological challenge that the Maoists have posed to the countrys political leadership. Violence makes a demand on all stakeholders. It was no surprise, then, that as soon as news trickled in of the attack on the Congress convoy in Bastar, the partys vice-president, Rahul Gandhi, should have taken off for Raipur. It was a commendable journey of political solidarity. It would be interesting to find out if the bloody massacre in Sukma has helped Mr. Gandhi re-set his ideological compass. Let it be recalled that this is the same Mr. Gandhi who had allowed himself to be persuaded in August 2010 to travel to the Niyamgiri Hills in Orissa, where he told the adivasis that he was their sipahi, or soldier in Delhi. Only two days before that visit, the Central government had pointedly withdrawn environmental permission to the Vedanta Group to mine the area for bauxite. For good measure, the young Gandhi had proclaimed that development meant that every voice, including that of the poor and adivasis, should be heard. It would be nice to know if Mr. Gandhi has resolved his ideological equivocations in the aftermath of the Chhattisgarh violence. For two decades the Indian political class has gone about believing that development and growth are innocuous and painless. The prevailing orthodoxy insists that the Indian state has one and only one business: to get out of the businessmans way. There is an unwillingness to acknowledge the basic nature of power: irrespective of its political arrangement, every society plays host to a ceaseless struggle over who gains what at whose expense. Growth and development invariably produce dislocation and dispossession. Good politics in a democratic idiom can go a long way in ameliorating the alienation and anger. Pro-poor initiatives The UPAs approach has been to let the corporate marauders run amok while salving its democratic conscience with a slew of pro-poor, aam aadmi -centric initiatives. In the process, for the past nine years, the country has periodically been treated to a mock controversy over whether Sonia Gandhis National Advisory Council was usurping the governments space and prerogatives, or, when this or that NAC member walks out in a huff, whether the government is not being sufficiently pro-poor. The UPAs approach neither mollifies the corporate buccaneers nor satisfies the poor and the disadvantaged. The corporates, however, have sized up the divided political leadership across the spectrum. They have finessed their tactics. If a government is slow to give them the policy breaks that they demand, the democratic space and its anarchic habits will be creatively used to unleash civil unrest on this or that pretext. There is always the age old anger against corruption to be tapped. And, as it were, one can always rely on an auditor or a judge to step in to divert attention away from corporate misdemeanours of the most serious kind. Pincer movement No wonder, then, that the Indian state is caught in a pincer movement. From one side, the ideologues and practitioners of growth are unrelenting in their insistence that the countrys natural resources and citizens savings be made available to them for exploitation; and, from the other direction, the state is confronted by a vast underclass that is unwilling to see any

reason to sacrifice its land and forests so that some others can enjoy the benefit of progress. Just as the corporates have served sufficient notice that they have no qualms in taking the state on and causing misery to its political functionaries, the underclass, too, is willing to match the states capacity for violence, bullet for bullet. Both the Murthys and the Maoists are forcing the Indian state to take a stand. For too long, the Indian political leadership has refused to confront the Grand Conundrum: for whom does the state exist, whom does the state seek to reward and whom does it strive to protect against whom. The UPA leadership has neither the appetite for a brutal repression of the angry tribal, nor is it likely to be able to lure the Naxalites into a democratic engagement without a demonstrable capacity to stand up to corporate greed. A kind of alternative arrangement is already on the drawing board: the Gujarat model of no dissent, no trade unions, no civil society, no Medha Patkar, no tribal resistance, no protests. The great sociologist, Edward Shils, once observed that every society needs grandiose visions and austere standards; the political and intellectual leadership is obliged to prod society to its own historical ideals elements which must be recurrently realized without even being definitively realizable, once and for all. Perhaps we should be thankful that both the Murthys and the Maoists are inviting us to find a vision for India that is morally defensible.Between the relentless demands of corporate leaders and the capacity of the underclass to match the states violence, India needs a vision for itself that is morally defensible 2. A river ran through it From finding a trail of evidence supporting the presence of water on Mars a few billion years ago, Curiositys discovery of subrounded or rounded pebbles provides definitive proof that the red planet once had a river. According to a May 31 paper in Science , multiple exposures of a sedimentary rock (conglomerate) containing densely-packed rounded pebbles, varying in size from 2 mm to 40 mm in diameter, are particularly significant as they provide indisputable evidence of a palaeo-river. While other discoveries such as water-bearing minerals in veins at the Yellowknife Bay area in Gale crater and smectite clay in John Klein rock samples are in themselves noteworthy, they do not reveal if the water body was moving. In fact, water-bearing minerals in veins do not tell us about surface water flow. On the other hand, the very presence of big, rounded pebbles that lie overlapping along with coarse sand in the rock tell a completely different and definitive tale of Marss palaeo-environment. For one, the pebbles not only prove the presence of water but also shed light on the nature and quantum of moving water. Since only water transportation can abrade pebbles as big as 40 mm, and based on estimates for the riverbeds gradient at the site of discovery, scientists have been able to postulate several characteristics about the river. First, it should have flowed at a velocity of up to 0.75 metres per second, the minimum force required to move pebbles of that size. Second, in order to initiate motion, the river should have had a flow depth of less than 0.90 m. Hence, the amount of water flowing in the river was indeed considerable. Finally, the fact that the pebbles have been abraded to produce subrounded or rounded edges despite having varying characteristics in terms of composition and shape strongly suggest that the river flowed for several kilometres. In all, the mere presence of rounded pebbles indicates that Marss atmospheric conditions at some point in the past were so very different from today that they permitted liquid water to flow on the surface. In geology, the possibility of discovering prized fossils and pieces of evidence such as this lies in careful selection of the study area. In the present case, the final landing site was decided based on the presence of Mount Sharp, a layered mound within the Gale crater and its proximity to the alluvial fan, the Peace Vallis fan. The pebble discovery confirms the March 12 find of a non-acidic, freshwater environment based on the finding of smectite clay from a John Klein rock specimen drilled by the rover. Discovering the Holy Grail of space science a planet capable of supporting life in the past is no longer a distant dream.

3. Food Bill in a political quagmire The nation is watching with trepidation the play of politics over the National Food Security Bill, which envisages food security for 67 per cent of the population by providing 5 kg of rice, wheat or coarse cereals per person per month at subsidised rates under the Public Distribution System. For four and a half years, the United Progressive Alliance government tossed the Bill between Sonia Gandhis National Advisory Council (NAC) and itself, also utilising the Empowered Group of Ministers headed by then Finance Minister Pranab Mukherjee and the C. Rangarajan-led Prime Ministers Economic Advisory Council (PMEAC). The day Prime Minister Manmohan Singh asked the Rangarajan panel to study the NACs recommendations on the Bill, it was clear the government was finding it difficult to deliver on the Congresss ambitious election promise. The PMEAC pruned the NACs recommendations drastically. Egged on by the Congress president, the Bill has taken some shape. But it is truncated and is a far cry from the promise of near-universal coverage that the NAC initially projected, and from what activists are fighting for universal coverage with 25 kg per household. By no stretch of the imagination can a Bill that seeks to provide 5 kg of rice or wheat to each individual, or provide for cash in the hands of the beneficiary, rid India of malnutrition and hunger. Now, as a beleaguered UPA braces itself for elections, it is looking at the Bill as a mantra to see it through. Frankly, nobody is happy with this Bill. Economists lament the outgo as subsidy of Rs.1,24,000 crore a year to supply rice at Rs.3 a kg, wheat at Rs.2 a kg and coarse cereals at Re. 1 a kg to identified beneficiaries. Nodal ministries are apprehensive of maintaining deliveries without first streamlining the PDS, plugging leakages and pilferage, creating storage facilities, getting the railways on board and taking care of the producers and the produce. Beneficiaries have to be identified all over again. The Parliamentary Standing Committee to which the Bill was referred in December 2011, did away with the division of BPL and APL categories and recommended the exclusion of 33 per cent of the population. And now, States have been asked to identify 75 per cent beneficiaries in rural areas and 50 per cent in urban areas based on parameters set. The pie has been spread thin. Some welfare categories of beneficiaries have not been included. As such, the annual requirement of grain under the Bill is 60 million tonnes as against about 56 million tonnes now. Five kg of grain does not meet an individuals requirement, which is assessed at 10 to 14 kg a month. Cereals alone do not meet nutrition requirements. Obviously, therefore, the Bill will only meet part of the need. Tamil Nadu, Andhra Pradesh, Karnataka, West Bengal, Odisha, Chhattisgarh and Madhya Pradesh are already providing subsidised grain at Re.1 or Rs.2 a kg. Tamil Nadu has universal subsidised PDS. Chhattisgarh has passed a Bill that provides for cheap grain to 90 per cent of its population, and this is the model the Bharatiya Janata Party wants to follow in States where it is in power. The UPAs Bill thrusts upon States the responsibility for delivery, identification of beneficiaries, creation of storage spaces and storage. This they have to do by meeting half the cost of transportation and decentralised procurement. To do all this, the UPA will have to take political parties and State governments on board. Opposition Already, Tamil Nadu Chief Minister and AIADMK chief Jayalalithaa has said she does not want to be a part of the scheme of the Bill and wants to move an amendment when it comes up in Parliament. Bihar Chief Minister and Janata Dal (United) leader Nitish Kumar wants the Centre to bear the implementation cost. West Bengal Chief Minister and Trinamool Congress chief Mamata Banerjee has accused the Congress of politicising the law in Parliament. She has also questioned how a government whose majority is in doubt can legislate on such an important issue. Declaring the Bill as anti farmer, the Samajwadi Party has opposed the Bill. The Communist Party of India (Marxist) and the CPI plan to move

amendments pertaining to what they see as promotion of the two-child norm through the Bill, and the curtailment of entitlements from 35 kg a household to 5 kg per person a month. Unless it is pure posturing, the UPAs latest move to promulgate an ordinance to fast -track the legislation makes its intentions suspect. Such an ordinance will have to be ratified within six weeks of the convening of the next session in this case the monsoon session of Parliament. And if the principal Opposition party, the BJP, which has opposed an Ordinance, continues to stall Parliament on this count, then this may become an excuse for early elections. The BJP, keen to show it is not responsible for delaying the Bill, has suggested advancing the monsoon session. Some parties have sought a special session. The Parliamentary Affairs Ministry has not responded. Instead, the Ministry nudged the Law Ministry and the Food Ministry to move a Cabinet Note for the promulgation of an ordinance. This was done on June 4, but it was not taken up. Food Minister K.V. Thomass opposition to an ordinance is known. He wants a discussion and debate in the Lok Sabha, where he has moved 81 amendments to the revised Bill. Agriculture Minister Sharad Pawar has reservations on the ordinance route. He has said it would be difficult to implement any mandatory provision of grain in case of a bad monsoon. Even Congressmen agree that the Bill should have been preceded by efforts to streamline the PDS and plug leakages that bring an approximate 40 per cent of PDS-allocated grain into the open market. It is therefore odd that the UPA is going ahead with the Bill without taking its own allies and parties on board, and perceiving their objections as efforts to defeat its intentions. The promise of near-universal coverage is now nowhere in sight. And the UPAs seemingly fretful efforts to get the measure through do not appear to be convincing 4. Syrian Army captures Qusair After two months of heavy fighting, Syrian troops, backed by the Lebanese Hizbollah, have recaptured the strategic town of Qusair, opening the doors for government consolidation over vast swathes of territory in countrys centre and the coastline to the west. This strate gic defeat of the armed opposition could turn out to be defining the moment of a conflict that has lasted more than two bloodstained years. Speaking to Beirut-based Mayadeen television, Brigadier General Yahya Suleiman of the army said: Whoever controls Qusair controls the centre of the country, and whoever controls the centre of the country controls all of Syria. The victory was symbolised by riveting images on Lebanons Al Manar television of a man planting the Syrian flag on top of the towns bullet-riddled clock tower. Our heroic armed forces have returned security and stability to all of the town of Qusair, said a triumphant statement carried by state television. The rebels have acknowledged defeat. In a statement quoted by Reuters, they said: In [the] face of this huge arsenal and lack of supplies and the blatant intervention of Hizbollah... tens of fighters stayed behind and ensured the withdrawal of their comrades along with the civilians. Analysts point out that Qusairs fall means the routes from northern Lebanon, used for funnelling weapons, supplies and personnel to the rebels, have been blocked. The cutting of supply lines in turn implies that the city of Homs the hotbed of the anti-government revolt has been successfully isolated. Vital implications The taking of Qusair has vital implications on two other counts: Damascus will now be easily connected to the coastal areas such as Tartus where the Russians have established a military base and, according to some observers, the army will be free to target the opposition in its other strongholds, such as Aleppo. The armys success can be attributed to its two-phased plan. For 46 days, it battled for control over the surrounding countryside before attacking the town. The combined forces of the army and Hizbollah took a fortnight to overrun Qusair, where hardline Salafi groups from neighbouring Lebanon had reinforced the opposition. The

turnaround was likely to influence Wednesdays meeting of officials from Russia and the U.S. in Geneva to arrange an international conference to resolve the crisis. 5. Sharif sworn in, economy top priority Power crisis could be the top problem he faces Nawaz Sharif, elected Pakistans Prime Minister to an unprecedented third term, took office on Wednesday, vowing to fix the ailing economy and end electricity blackouts while also calling for an end to American drone strikes in the tribal areas. Speaking to Parliament after he was elected, Mr. Sharif (63) vowed action. I will do my best to change the fate of the people and Pakistan, he said. He had received 244 votes in the 342-seat Parliamentand was later sworn in by President Asif Ali Zardari. Mr. Sharif emphasised that fixing the economy was his top priority. He listed the problems facing Pakistan, including unpaid loans, unemployment, a disillusioned youth, extremism and lawlessness, and widespread corruption. As the new Premier, Mr. Sharif will face a mountain of problems, including an unprecedented power crisis. Over the last five years of the previous administration, power outages some as long as 20 hours have plagued the country. Mr. Sharif and his team of advisers have been meeting continuously officials from the power-related industries and interim government officials from affected ministries. Drone strikes Mr. Sharif touched on the countrys often-tenuous relationship with the U.S. when he called for an end to the drone strikes used by the U.S. to kill militants in the tribal areas bordering Afghanistan to the west. This daily routine of drone attacks, this chapter shall now be closed, Mr. Sharif said to widespread applause in the Parliament hall. We do respect others sovereignty. It is mandatory on others that they respect our sovereignty. But he gave few details on how he might end them. Pakistan will need American support for the likely economic bailout it will need from the International Monetary Fund . Chinas new Premier Li Keqiang had met Mr. Sharif during a visit to Islamabad a fortnight ago, and linked growth in his countrys restive western region to that in Pakistan. On Wednesday Mr. Sharif said they had agreed to develop a road and rail network connecting the western Chinese city of Kashgar to Gwadar, the port in southwest Pakistan recently taken over by China. This plan will greatly economically benefit Pakistans northern areas as well as all the four provinces, he said. 6. PMO moots fresh round of consultation on gas pricing Proposal to double prices had raised stiff opposition The Prime Ministers Office (PMO) and the Cabinet Secretariat have returned to the Petroleum Ministry the Cabinet note on gas pricing, asking it to seek inter-Ministerial consultations again in view of the divergent opinions on the issue. Highly placed government sources said the PMO and Cabinet Secretariat were of the view that as the implications of a gas price hike were huge and that the views given by the Power and Fertilizer Ministries were strongly against doubling of gas prices as recommended by the Rangarajan panel, it would be most appropriate to seek inter-Ministerial views on the issue once again. We will again float the CCEA note for views of the various Ministries on the issue, and then go back to the Cabinet. The Petroleum Ministry has not by any means recommended doubling of natural gas prices. We are for a rationale approach to the whole issue so that it does not harm the interests of the consumers or the investors, a senior Petroleum Ministry official said. The Petroleum and Natural Gas Ministry had floated a Cabinet note for effecting a hike in the prices of domestically produced natural gas . The proposal had faced stiff opposition from the Power and Fertilizer Ministries who had alleged that it would impose a huge financial burden on the government and would lead to hike in fertilizer prices and power tariffs. The Left parties had also raised serious concerns over the move by the Petroleum Ministry to dramatically hike natural gas prices and charged the Ministry with allegedly working to

benefit Reliance Industries Limited (RIL). The price reportedly recommended by the Ministry in the CCEA note comes to around $6.775 per million British thermal unit (mmBtu) as against the current rate of $4.2 per mmBtu. RIL is seeking a price of around $12 to $14 mmbtu at par with the landing cost of imported LNG. The Power Ministry had argued that the move by the Petroleum Ministry to raise natural gas prices by almost 60 to 100 per cent would result in a whopping Rs. 46,360 crore per annum impact on power plants. The variable cost of generating electricity at the 2014 gas prices would be around Rs. 5.40 per kilowatt hour (per unit), taking the total cost of generation to around Rs. 6.40 per unit. The Power Ministry has opined that base price of domestic gas beyond $5 per mmBtu was unviable for power sector. Subsidy increase On the other hand, the Fertilizer Ministry has argued that higher gas price would result in a Rs.10,000 crore per annum increase in urea subsidy burden. It said every dollar increase in gas price would lead to cost of urea production going up by over Rs. 2,466 crore. At $8.8 per mBtu gas price, the enhanced cost of production would result in Rs. 10,000-crore additional subsidy outgo 7. India, Australia raise the pitch on maritime cooperation Both nations agree to hold joint Naval exercise in 2015 India and Australia have agreed to hold a joint Naval exercise in 2015 to raise their defence cooperation initiatives to a higher level and strengthen their strategic partnership. Defence Minister A.K. Antony, who is on a two-day visit to Australia, met his Australian counterpart Stephen Smith in Perth on Tuesday. They travelled together to Canberra on Wednesday to discuss shared strategic and security interests, including maritime security and bilateral defence cooperation. A joint statement issued at the conclusion of Mr. Antonys visit, the first by an Indian Defence Minister, stressed that both countries had agreed to continue Naval exchanges to build confidence and familiarity between the two Navies and work towards a bilateral maritime exercise in 2015. India and Australia had participated together in multilateral maritime exercises in Malabar in 2007 and in Milan in 2012. Both sides acknowledged that maritime security and freedom of navigation in accordance with principles of international law were critical for the growth and prosperity of the Asia-Pacific and Indian Ocean regions. Taking note of the growing cooperation between the two Navies, Mr. Antony accepted Mr. Smiths invitation for Indian naval ships participation in the prestigious International Fleet Review (IFR) to be held in Sydney this October. The Indian Navy will get an opportunity to showcase its growing military capability at the IFR, where when mighty navies are expected to line up about 40 top-end warships. The Indian Navys participation is being seen as part of a big strategy unfolding in the Indian Ocean region to contain the ever-growing presence of Chinas Peoples Liberation Army Navy. The Ministers took note of the progress made in defence cooperation in accordance with the Memorandum of Understanding on Defence Cooperation concluded in 2006, the Joint Declaration on Security Cooperation issued during the former Australian Prime Minister Kevin Rudds visit to India in 2009 and the Joint Statement issued during the visit of Prime Minister Julia Gillard in 2012. They [the Defence Ministers] agreed that interactions held between the defence establishments of both sides in a variety of fields and at various levels have been mutually beneficial. Both sides were pleased with the bilateral architecture established for pursuing defence cooperation and agreed that consultations had helped deepen mutual trust and understanding between the defence establishments, the joint statement said. They agreed to continue consultations and cooperation on issues concerning the Asia-Pacific and Indian Ocean regions bilaterally as well as multilaterally, including through the East Asia Summit, the Asean Regional Forum, the Asean Defence Ministers Meeting-Plus, Indian Ocean Naval Symposium (IONS) and the Indian Ocean Rim Association for Regional

Cooperation (IOR-ARC). The Ministers noted that both countries were already cooperating through the IONS which Australia will chair next year before hosting the IONS Conclave of Chiefs in Perth in March 2014 and the IOR-ARC, of which India is the current chair and Australia the next chair. The Ministers also agreed to maintain regular ministerial meetings; promote exchanges between the defence establishments and both the Armed Forces, including regularly holding the Defence Policy Dialogue, Armed Forces Staff Talks and professional military exchanges; and to promote the sharing and exchange of professional knowledge and experiences through participation in training courses in each others military training institutions. Mr. Antony invited Mr. Smith to visit India. 8. Energy sector will be focus of Indias investment plans for Myanmar Anand Sharma to meet top Myanmar ministers to boost ties India will push for greater participation in the abundant oil and gas sector in Myanmar, so far dominated by China, with majors like ONGC Videsh Ltd and Oil India Ltd already in the race for on-shore blocks in the country. Commerce and Industry Minister Anand Sharma, who is leading an official and business delegation to Myanmar this week, is scheduled to meet Myanmars Energy Minister U Than Htay and extensively discuss the countrys interest in the energy sector. India is likely to request for positive consideration to be given to Indian companies for allocation of some of the blocks. Sharma will also meet Myanmars Industry Minister, Foreign Affairs Minister and Minister for Information and Technology to discuss ways to intensify cooperation in bilateral trade and economy. India, which had mostly distanced itself from the country during the military rule despite strong economic interests, has now jumped in to make the most of its geographical proximity. Reflecting the changed political situation in the country, the Minister will start his series of meetings with Chairperson of the National League for Democracy Aung San Su Kyi who was a political prisoner under house arrest less than three years ago. India has strong interests in the energy sector, IT and telecom, agriculture and manufactured items. China has maintained business relations with the country for a long time now and has a head start in most areas, especially energy. But we plan to catch up soon, an official said. Myanmars largely untapped economic potential makes it an attractive destination for other countries. According to a report released recently by global management consultancy firm McKinsey, managed well, Myanmar could conceivably quadruple the size of its economy, from $45 billion in 2010 to more than $200 billion in 2030s. Recently, Myanmar put on offer 30 offshore oil and gas blocks, on a production-sharing basis, and there are seven Indian companies that are reported to be in the short list that includes OIL, OVL, Cairn India and Jubilant Energy. In the telecom sector, Indias Bharti Airtel, along with its consortium partners, is one of the 11 final bidders for a telecom licence in Myanmar. Border trade India is also in talks with Myanmar to open more border trade points to increase trade through the land route. Indias imports from Myanmar stood at $1.4 billion in 2012 while its exports to the country were just $542 million. The turnaround in Myanmar is one big positive message from the region. We are seriously looking at the country. The fact that the World Economic Forum is taking place in Myanmar is in itself a statement of global interest in the country, Sharma told Business Line. The Minister will address the World Economic Forum for East Asia on Thursday in NayPyiTaw that will be attended by leaders from other East Asian countries as well. With the recent spate of political and economic reforms in the country that started in 2010 when the military declared elections after 20 years, its isolation from the world is slowly coming to an end. 9. Open up the accounts But RTI is not the tool to impose transparency on parties

There is no doubt that much is wrong with how elections in India are financed. In India, as in most democratic countries, the need forpolitical funding is often what causes cronyism and outright corruption - in fact, more than one politician, cutting across party lines, is on record making this argument. It is necessary, certainly, to introduce greater transparency and even a degree of regulation to the financing of party politics. But that eminently common-sense intuition should not lead to judgments such as that from the Central Information Commission (CIC), which ruled on Monday that political parties were "public authorities" and thus were subject to the Right to Information Act. The CIC argued that since parties had received public benefits - such as land at concessional rates and airtime on television - they should be treated as public authorities. If so, then the RTI applies to all organisations that have received concessions of one kind or another - in other words, almost every school in India's cities, most private hospitals, and even corporate beneficiaries of public support. It seems clear that the CIC is extending the RTI beyond what Parliament intended the law to be. But the question is whether there is any need for such an extension of the RTI - since, after all, there are already institutions that could be doing the job. Candidates, for example, are supposed to divulge their income and wealth details to the Election Commission of India, or ECI; why not ensure that parties, too, make transparent all sources of funding? Errors or omissions should be penalised by the ECI. For penalties short of deregistration, Parliament can step in - parliamentary committees can be set up to investigate apparent deviations from the truth about political funding; and the data submitted by results, as well as the committee's investigation, should be made public on Parliament's website. Some such investigations will be needed: after all, it beggars belief that only 643 named donors contributed to the Congress between 2009 and 2011. The RTI cannot be seen as a replacement for all other alternative forms of regulation. Naturally, this transparency should only be limited to questions of financing - an artificial divide as far as the RTI Act is concerned, which is why the Act is not the appropriate instrument. Parties have as much of a right to privacy in their strategic deliberations as does any private sector company. After all, parties are responsible only to their members, not to citizens as a whole - they are literally partisan, not responsible for some all-encompassing public interest. The RTI is meant to investigate those entities, namely organs of the state, that are supposed to act in the overall public interest - and are, therefore, responsible to all. Political parties, simply put, are not responsible to all. And that is why using the RTI to examine parties is not just opening it up to further abuse for political ends, but is also a perversion of the purpose of the law itself. The CIC's judgment deserves to be reviewed. 10. Dropping the green ball India is not working hard enough on climate change Shortly before World Environment Day on Wednesday, it was reported that the concentration of carbon dioxide in the atmosphere had soared to its highest level in three million years. Data captured by the US National Oceanic and Atmospheric Administration revealed that environmental incidence of the gas mostly responsible for trapping heat had crossed 400 parts per million - a level that last prevailed in the Pliocene Age 2.5 million to 5.3 million years ago, when the global sea level was 60 to 80 feet higher than it is today. Sadly, there was little response to this news, which is symbolic of the waning global commitment towards arresting and reversing global warming. Regrettably, most governments, including India's, have in these years of economic slowdown taken environmental protection off their priority list. This subtle policy shift has dashed whatever little hope there was of minimising the increase in greenhouse gas (GHG) emissions. Funding for the green agenda, which dropped considerably since the recession began in 2007-08, might dip further now that the Kyoto protocol expires. Should this trend endure, which seems likely considering the current

policies of most countries, even the new, scaled-down, global target of keeping the surge in temperature below 2 degrees Celsius may be out of reach. India's contribution to total GHG emissions is low per capita even by the standards of developing countries - a tiny fraction of China's, for example. Yet it nevertheless has much to do in the field, thanks to its sheer size. In this regard, the government has formulated a comprehensive and well-crafted national action plan on climate change. Progress in implementing the plan, however, hasn't matched its drafting. Few of the eight national missions unveiled in 2008 really got going. The Green India mission, aimed at bringing 10 million hectares under green cover, didn't get off the ground. The national solar mission, although pursued with some seriousness, is also likely to miss its target - thanks to policy deficiencies and especially a stubborn closed-mindedness about renewable energy in the infrastructure sector. The national water mission, aimed at improving water use efficiency 20 per cent through pricing and other measures, will miss targets too. India is growing fast and is seeking to abandon its sole dependence on services-led growth, which has allowed it to ignore emission standards even as it has gained in output. As more factories come up, India's responsibility regarding global warming increases too. Following the national action plan more closely will at least help domestic industry, agriculture and other economic sectors adapt to the emerging climate trends and build their capacity to withstand the potential adverse impacts of these changes. Nor can India work on this problem alone. Its negotiators and policy makers should break their wrongheaded emphasis on a unified front with China at climate change negotiations, and push the global community towards renewing efforts to thrash out a worthy and legally binding successor to the Kyoto protocol - one that binds China as well as the rest of the polluting world. 11. Meeting the ecological test in Point Calimere The Tamil Nadu governments decision to expand the Point Calimere Wildlife and Bird Sanctuary, adding 12,407 hectares of the Great Vedaranyam swamp in Tiruvarur, Nagapattinam and Thanjavur districts, is a right move toward restoring the ecologically sensitive wetland, which attracts hordes of migratory birds from the Arctic region and central Asia. So far, the revenue department held the vast tracts of swamp areas and very little could be done for the migratory birds. Point Calimere wetland complex is the only one in south India given Ramsar site status in 2002 because of the significant role it plays in attracting migratory birds from even Siberia, especially Greater Flamingos. Its expansion will enable the government to restore the ecologically sensitive region which is a site of mudflats, mangroves, backwaters, grasslands and tropical dry evergreen forest. The sanctuarys feature is the large variety of migratory waterbirds that visit every year for winter feeding. The most prominent is the Greater Flamingo which comes mostly from the Rann of Kutch. Some come from faraway places such as the Caspian Sea and Northern Russia. Other visiting waterbirds include species such as the Lesser Flamingo, Avocet, Spot-billed Pelican, Painted Stork, Spoonbill, White Ibis, Grey Heron and a variety of plovers, sandpipers, gulls and terns. A large number of migratory land birds also visit the sanctuary while migrating to places further south such as Sri Lanka. Ornithologists say the site has registered the largest congregation of migratory birds, exceeding four lakh. As many as 236 species were spotted after the onset of the north-east monsoon. This is an encouraging sign. The Tamil Nadu government has shown good sense in managing the sanctuary so far. It will have to tread cautiously in maintaining the ecological

balance so that it continues to attract a huge number of migratory birds. That is no mean task but it seems to know what it is doing. 12. FSDC must limit itself to coordination, Says RBI Governor D Subbarao Reserve Bank of India GovernorDuvvuri Subbarao spoke straight from the shoulder against a bigger role for the government in financial stability and regulation when world over lawmakers are empowering regulators with more autonomy. Rubbishing the idea of a statutory role for the Financial Stability and Development Council (FSDC) headed by the finance ministerinstead of its present role as a coordinator among regulators, Subbarao said this would achieve little. "The recommendation that the executive responsibility for safeguarding systemic risk should vest with the FSDC board runs counter to the post-crisis trend around the world of giving the collegial bodies responsibility only for coordination and for making recommendations," Subbarao told a conference at the Indian Merchants Chamber. "We need to think through whether the responsibility of the FSDC board should be extended from being a coordination body to one having authority for executive decisions." The UPA government has appeared to be wanting to acquire more power in the field of regulation, sometimes justifying its decision on the ground that it was stepping in to smoothen the rift between regulators. While an informal panel of regulators called FSDC was formed when Pranab Mukherjee was the finance minister, it is now being proposed to be made permanent with statutory powers. The Financial Sector Legislative Reforms Commission (FSLRC) headed by Justice BN Srikrishna has also recommended that decisions on interest rates should be taken by a monetary policy committee instead of being the sole prerogative of the RBI governor. "You need something that is drastic, something that is a total overhaul of the existing financial system," Srikrishna had said in his report. Indian regulators such as RBI, Securities & Exchange Board of India and Insurance Regulatory and Development Authority have been reasonably autonomous.This despite occasional prodding by the government to tailor rules to suit its needs. But some believe that total implementation of the Srikrishna committee recommendations will erode the authority of the regulators and expose the markets to the whims and fancies of the ruler of the day. "While FSDC is best suited for coordination, the responsibility for maintaining macroeconomic stability should largely be with RBI," said Vinod Kothari, a financial consultant and a visiting faculty at the Indian Institute of Management, Kolkata. The governor had opposed the plan three years ago."We are all aware that both the prime minister and you have strong and impeccable commitment to regulatory autonomy," Subbarao wrote to Mukherjee in mid-2010 when the plan became public for the first time. "But we must evaluate the regulatory arrangement... in a long-term perspective when personalities change; the misuse of the ordinance is not beyond the realm of possibility for several reasons." In the US and the UK, where light-touch regulation led to the 2008 global credit crisis, are bringing in tough legislation to avoid the repeat of such an event. These countries are empowering the central banks to regulate financial entities much beyond setting interest rates. Instead, in advanced countries, the remit of the central bank now extends to micro managing systemically important financial institutions. In India, not much has moved. "The way forward from here in India is still uncertain," said Subbarao. "The agenda has been set more by immediate concerns, and there has been no explicit attempt to define what constitutes a 'financial stability' issue that falls within the domain of the FSDC."

CURRENT AFFAIRS (07.06.2013)

1. Bird flu viruses mutations to watch out for

All they need is a change to their HA that switches its binding from avian to human receptors Bird flu viruses H5N1 and H7N9 that have sporadically infected humans, could, with a few mutations to a key protein on their surface, become capable of infecting cells along the human upper airway and thereby take a step towards turning into pandemic-causing strains, according to research that has just been published in the scientific journal Cell . People have typically caught these viruses from infected poultry, and there has been little evidence of person-to-person transmission. However, both have caused a more severe disease among infected individuals, with a higher fatality rate, than human-adapted flu viruses. With lack of any pre-existing immunity to the two viruses, experts are concerned that if either gains the ability to pass readily from human to human, it can set off a dangerous flu pandemic. Flu viruses, which spread easily among humans, do so through fine droplets that spew out when infected individuals cough or sneeze. To become similarly transmissible, a bird flu virus must be able to enter and infect cells in the upper respiratory tract. The first step in that entry process is for a viral surface protein, haemagglutinin (HA), to bind strongly to a receptor molecule found on cells lining the human airway. For that, bird flu viruses need changes to their HA that switches its binding from avian to human receptors. A team led by Ram Sasisekharan, professor at the Massachusetts Institute of Technology, modelled the key structural features that the HA of H5N1 and H7N9 viruses need to bind well to human receptors. Some of the recent H5 HAs required as few as one or two amino acid mutations to switch to human receptors, thescientists reported in one of two papers Netherlands examined what changes to important viral proteins would make H5N1 easily transmissible among ferrets, an animal model for what happens in humans. However, Professor Sasisekharan and his colleagues found that introducing those amino acid changes into the HA of currentstrains of H5N1 would not improve their binding to human receptors. It is the network of amino acids in the HA and how they interact with the receptors that become key in the switch from avian to human receptors, he said in an email.In the second Cell paper, the team noted that the H7N9 bird flu virus currently bound poorly to human receptors. However, should a single amino acid mutation occur, this would result instructural changes within the receptor binding site that allow for extensive binding to human receptors present in the upper respiratory tract.Our findings can be put to use to monitor the evolution of H5N1 and H7N9 viruses in the field as well as in the clinic if and when there is an outbreak, said Professor Sasisekharan in a press release.Vincent Racaniello, professor of virology at Columbia University, said in an e-mail: This work is important because it defines structural features in the receptor binding site of H5 HA that are critical for switching from avian to human receptor binding. However, switching of H5 HA to human receptor specificity is not sufficient to gain human-to-human transmissibility; what other changes are needed, in which genes and how many is anyones guess. In the case of the H7N9 virus, the study had shown that its HA might be only one amino acid change away from higher binding to human receptors. However, it does not follow that such a virus would be able to transmit by aerosol among humans, a property which the H7N9 viruses infecting humans currently do not possess, Professor Racaniello said 2. Change the climate for Indias poor If the great Scott Fitzgerald were to have walked into the grand plenary hall of the Durban climate conference in 2011 to announce once again, show me a hero and I will write you a tragedy, all fingers would have pointed to the tiny Indian contingent in the room. There, Fitzgerald would have caught a glimpse of the feisty Jayanthi Natarajan, Union Minister for Environment and Forests, holding the fort against attempts bydeveloped countries to impose binding emission cuts on the global South. The greatest tragedy of all time, Ms Natarajan would herself acknowledge, would be for negotiators to abandon the principles of equity and

Common But Differentiated Responsibilities (CBDR). Two years later, this tragedy is imminent only Indias heroism remains. The first signs of this tragic denouement were visible a few minutes after the Durban plenary closed. Negotiators from the European Union, the United States and the BASIC (Brazil, South Africa, India and China) countries simply huddled together and struck a deal to negotiate an international agreement with legal force on, inter alia , emission cuts by 2015. In this arrangement, known now as the Durban Platform, equity and CBDR principles struggled to find relevance. India somehow claimed victory in helping resuscitate the Kyoto Protocol a treaty rendered worthless without its engagement with the worlds largest carbon emitters, China and the U.S. Throw in a vacuous institution like the Green Climate Fund to save face, and Indias message was clear: we will live to fight another day. That day is nowhere near the horizon. What is, though, is a perfect storm of international and domestic politics that threatens not only to produce an agreement which fails the imperative to tackle climate change, but also derail Indias core concerns in the process. U.S. intransigence' The news from Bonn, where U.N. climate negotiators met last month to flesh out details of the 2015 agreement, is not reassuring. The U.S. has proposed a mechanism by which countries define their own contribution to emission cuts. Once such contributions have been agreed upon nationally, a peer review mechanism could be put in place formonitoring and compliance. The U.S. submission, which Washington claims is driven by realistic expectations, is nothing new. In fact, the narrative of contributions takes two steps backward from the language of commitments that the Durban platform recognises. Even within this minimalist framework, the U.S. has audaciously called for an agreement that lends flexibility to countries to update their contributions. What is worrisome, however, is the international communitys surprisingly warm reaction to the U.S. proposal this time round. To some extent, this was inevitable. Negotiators in Bonn were well aware that the atmospheric concentration of carbon dioxide had neared a staggering 400 parts per million (ppm); a week after their meeting, this threshold was crossed. If the Association of Small Island States (AOSIS), whose very existence hinges on the outcome of these negotiations, had already thrown in the towel for the sake of an(y) agreement, the Least Developed Countries (LDCs) too have joined the chorus. As Sebastian Duyck, an analyst and blogger at the Adopt a Negotiator Project, observes: negotiators of many countries have begun to consider how to accommodate U.S. intransigence. The U.S.s bottom-up proposal, which emphasises national autonomy over multilaterally negotiated commitments, comes too little and too late to achieve any measurable progress in setting the climate clockbackwards. The jury is still out on the fate of equity and CBDR principles what India refers to as nonnegotiables. Over the next two weeks, as negotiators who have returned to Bonn discuss contentious issues relating to reduction targets and technology transfer, differences between the BASIC group and developed countries will be thrown into sharp relief. That said, the European Unions position, which takes off from the Durban consensus, has evolved to be more accommodative. In its submission to the United Nations Framework Convention on Climate Changes Ad Hoc Working Group, the EU calls for a spectrum of commitments that is fair and equitable to countries at different levels of growth. Its bottom line is, however, clear: commitments should be comprehensive and legally binding. Sovereignty card India is reluctant to accept either a bottom-up or a top-down model the former, we have rightly argued, offers little to address climate change. Yet, while discussing the issue of binding commitments, we have stubbornly held up the sovereignty card, saying it is for

none to dictate what India should do to mitigate carbon emissions. This is a fair contention, but New Delhi has set no qualitative or quantitative parameters for the equitable distribution it would take to agree on a legal framework. Taken in sum, the U.S. and EU proposals along with Indias established position set the stage for a head-on collision in Paris two years from now, the result of which has only been too frequently visible at previous Conferences of the Parties (COPs). The emerging strategic framework between India and the U.S. is also likely to prove decisive in future climate change talks. The Obama administration could present a possible deal on shale gas exports to India as a carrot in return for a flexible negotiating posture. Unlike the nuclear deal which served a largely symbolic purpose, shale gas exports which India has sought desperately, given its rapidly depleting fossil fuel sources are an effective bargaining chip. What lends credence to this theory is the U.S.s recent courting of China (Indias Man Friday and de facto negotiating partner at COPs) and Japan (which refused to extend its commitments under the Kyoto Protocol after 2012) on climate change. If the U.S.China Joint Statement on Climate Change, issued during Secretary Kerrys visit to Beijing in April, is any indication, the U.S. is likely to work with major carbon emitters on a bilateral basis than go through the rigours of multilateral agenda-setting. After all, China, Japan and the U.S. have a mutual interest in seeing the Kyoto Protocol off. Arguably, the biggest obstacle that stands in Indias way of articulating and achieving its goals at climate change talks is internal politics itself. Much has been said and written about Indias lack of a coherent negotiating strategy there is little doubt that between the COPs at Copenhagen (2009) and Durban (2011), India did a volte face on the issue of emission cuts. That neither Jairam Ramesh, then Environment Minister, nor Ms Natarajan sought to tie India to legally binding commitments is moot. In 2009, we presented a radically different vision of equity one that departed from the age-old claim that India has had historically low emissions per capita, and thus shouldered little responsibility vis-a-vis developed countries for the damage caused by greenhouse gases. By 2011, we reverted to square one, pretending that the stance at Copenhagen was a result of personality politics. Without commenting on the merits of Mr. Rameshs views, one must ask why Indias climate change negotiations have lent themselves to internal turf battles between diplomats, bureaucrats and ministers. This question assumes importance as India prepares to elect a new government next year. Thus far, the United Progressive Alliance could have afforded not to institutionalise internal deliberations in Indias climate diplomacy. Ultimately, Prime Minister Manmohan Singh and the Union Cabinet were able to paper over differences between negotiators. Since 2007, when the Bali Roadmap was announced, the same handful of policymakers has decided Indias negotiating strategy on an ad hoc basis. But the luxury of continuity is short-lived: it is far from certain whether the incumbent will remain in power after 2014. In particular, a fractured mandate, prone to federalist compulsions, can have serious consequences on Indias emptyshell position on climate change. Two years stand between the Bonn Conference and COP 21 in Paris, where negotiators are expected to churn out a legal instrument. For now, Indias stance runs contradictory to its desire to confront climate change. If our future per capita emissions are likely to be small compared to other industrial economies, of what use are voluntary green initiatives without having major emitters on board? A new report by the International Displacement Monitoring Center has put a number on people displaced by climate-induced disasters in 2012. The tally reads thus: India 8.9 million, European Union 0. Yet India continues to press, almost unconscionably, for incentives to be part of a climate deal. We will be one of the worstaffected when the effects of global warming precipitate; our reactive climate diplomacy conveniently ignores this truth.

New Delhi would do well to reassess its notion of equity, as other developing nations have rightfully done. When, in 2011, Ethiopia announced its intentions to be carbon neutral by 2025, it effectively abandoned the premise that low emitters can forever point fingers at industrialised countries. Just as developed nations bear responsibility to assume more ambitious commitments, India should treat its differentially positioned population in equitable terms. The pernicious effects of climate change will be most acute among Indias vulnerable sections. If the West owes a historic obligation to the rest in confronting climate change, so too does India towards its impoverished. New Delhi should stop its flip-flops and adopt a coherent policy in its negotiations on greenhouse gas emissions 3. In Indian Ocean, threat is from U.S., not China, says Gayoom U.S. setting up base in Maldives could upset balance of power Maumoon Abdul Gayoom, who ruled the Maldives for 30 years and is today a sprightly76year-old, feels that it is the U.S. rather than China that could upset the balance of power in the Indian Ocean by seeking to set up a base in his nation. I am not happy. I didnt want that to happen, he said, reacting to reports of the U.S. and the Maldives discussing a Status of Force Agreement (SOFA) that envisages a foothold forAmerican forces in the heart of the Indian Ocean. There are no such moves from China, Mr. Gayoom said, when he was asked about reports from think tanks from Australia to Europe predicting a Chinese Navy presence now that Beijing has opened an embassy in the Maldives. The leaked draft SOFA being discussed by Male and Washington incorporates the principal provisions and necessary authorisations for the temporary presence and activities of the U.S. forces in the Republic of Maldives and, in the specific situations indicated herein, the presence and activities of United States contractors in the Maldives. Acknowledging that the discussion had taken place, the U.S. embassy in Colombo has, however, clarified that there are no immediate plans for a permanent military base in the Maldives. SOFAs are normal practice wherever the U.S. cooperates closely with a countrys national security forces. SOFAs generally establish the framework under which the U.S. personnel operate in a country when supporting securityrelated activities and the United States is currently party to more than 100 agreements that may be considered a SOFA, it said. Mr. Gayoom appreciated the role played by India, third major player in the region. I am happy with Indias role in my 30 years of presidency. There is no threat from the Indian side. I appreciate what it has done in the social and economic sectors, he said in an exclusive interview to The Hindu on the last day of his three-day visit during which he met Prime Minister Manmohan Singh and External Affairs Minister Salman Khurshid. But on cancellation of the GMR-led consortiums contract for modernising and running the airport at Male the biggest single-ticket FDI proposal in the Maldives Mr. Gayoom blamed Muhammad Nasheed, former President who had defeated Mr. Gayoom in the archipelagos first multiparty polls in 2008. The multibillion-dollar contract was scrapped by Mr. Nasheeds successor, Mohammad Waheed Hasan. But Mr. Gayoom says it was Mr. Nasheed who inked the deal without taking Parliament into confidence. This was a mistake. Had he consulted all political parties, the public would not have formed the impression that corruption had taken place. Then we told the next President Mr. Waheed that he should hold discussions with the GMR Group and the Indian government to arrive at an acceptable solution, after which the government was free to act on its own. Unfortunately, this was not done and suddenly there was this unhappy ending. But he declined to predict what a happy ending would look like on the grounds that case was up for arbitration. As for the presidential elections, Mr. Gayoom once entertained thoughts of Mr. Waheed joining hands with his Progressive Party of Maldives (PPM). That did not happen and it is now a three-horse race, likely to be held in September. Besides Mr. Gayooms brother Yameen Abdulla and Mr. Nasheed, Mr. Waheed has thrown his hat into the ring. That could complicate matters for the

PPM, which has Cabinet Ministers in the government and which till late last year entertained thoughts of the incumbent President becoming a force multiplier by supporting Mr. Abdulla. 4. India can help build Myanmars infrastructure, says Suu Kyi Myanmar's Opposition leader Aung San Suu Kyi has called for meaningful contribution from India in development assistance and infrastructure upgradation of the country slowly embracing political and economic reforms. In a meeting with Commerce & Industry Minister Anand Sharma on Thursday, the National League for Democracy Chief discussed cooperation in a number of areas including education, upgradation of hospitals, textiles, handloom and infrastructure. We discussed development related economic and social issues. She (Suu Kyi) talked about her concerns, particularly those related to people's progress and empowerment, and how India can make meaningful contribution in development assistance and infrastructure upgradation, Sharma told Business Line. Sharma assured Suu Kyi that India stands ready to extend all necessary assistance to the people of Myanmar in their developmental efforts as Myanmar is a vitally important neighbour. Suu Kyi, who along with 43 members of her party is part of the country's Opposition, was critical of what the country had achieved since the military made way for a democratically elected Government in 2010. This is the third year of reforms and it is time that we see real change in the lives of common people, she said speaking at the World Economic Forum for East Asia on Thursday. The pro-democracy leader, who was under house arrest for several years under the military's five decades long rule over the country, reiterated her wish to be President. If I pretended I did not want to be President, I would be dishonest, she said. The country's Constitution, however, would not allow her to contest for the post as her spouse is an overseas citizen. Her party is hopeful that the Constitution would be amended and she would be allowed to contest in the Presidential polls in 2015. In her meeting with Sharma, Suu Kyi expressed keen interest in building linkages with the textiles sector of India. Stressing the preference of the people of Myanmar for natural fiber, Suu Kyi said that the handloom sector of India had immense potential for the country. 5. Steady supply lifts coal-fired power output to new high in 2012-13 Coal-fired power generation in the country grew by 12.73 per cent in 2012-13. This is the highest ever growth, say industry watchers.Electricity generation (from all sources) rose 4 per cent in the period compared to the previous year. Coal-based power generation grew from 584.787 billion units in 2011-12 to 659.231 billion units in 2012-13, Central Electricity Authority (CEA) data show. Last year, the capacity addition as well as generation was higher. Generation was higher because Coal India nearly met its commitment. It was in the last few days that some problems happened, otherwise Coal India would have over-achieved its dispatch to power companies, Power Secretary P. Uma Shankar told Business Line. At present, Coal India supplies fuel to 92 of the 99coal-fired power stations in the country that sustains 1,02,438 MW of installed electricity generation capacity. India had a total of 1,30,370.89 MW of coal-fired capacity as on April 30. The public sector miner could achieve 32.10 million tonnes of incremental coal off-take in 2012-13. This is the highest ever jump in a single year for Coal India. Thermal power utilities of the country were major beneficiaries of this increase as coal supplies to them rose by additional 33.36 million tonnes compared to the previous year. Capacity addition Arup Roy Choudhury, Chairman and Managing Director of NTPC, said that increase in generation is attributable to capacity addition. Coal generation capacity grew 16.25 per cent to 1,30,221 MW in 2012-13 from 1,12,022 MW in the previous year. Yes, Coal India supply has marginally helped in more generation. Coal supply to NTPC from Coal India grew 14 per cent in 2012-13. At the same time, the capacity growth of NTPC was around 11 per cent,

Choudhury told Business Line. Coal India supplies to all power utilities during 2012-13 grew by 10.7 per cent at 345.43 million tonnes in 2012-13 against 312.07 million tonnes in the previous year. The increase in coal dispatch was primarilydue to almost 13 million tonnes of ground stocks being liquidated and better coordination with the Railways, resulting in more rakes being loaded. During the last financial year, Coal Indias average loading per day increased by 18.7 rakes. On average, 186.4 rakes were loaded per day against 167.7 rakes/day in the previous year. For 2013-14, Coal India has set an off-take target of 492 million tonnes, which is 27 million tonnes higher than last year. The miner is looking to supply 377 million tonnes to power utilities in the current fiscal. To achieve the target, the Maharatna firm would liquidate 18 million tonnes of pithead stock and has sought 212.2 rakes a day. 6. Fiscal deficit, a black hole Open market operations are meant to stabilise money supply, and not provide credit to the Government. Monetisation of the deficit continues through the backdoor. Newspapers are carrying reports on the progress made in cutting down fiscal and revenue deficits from their previous levels. They do not tell the whole story. Certainconceptual issues are glossed over in the attempt to create a favourable public opinion on the Governments fiscal management. One of the reasons for the so-called stringency of liquidity in the banking system in the last quarter of 2012-13 was the accumulation of Governments cash balances in the Reserve Bank of India (RBI) to bring down fiscal deficit by restraining planned expenditure. The Government says that such constraints amounted to only around Rs 15,000 crore. However, there was also a further restriction like delaying tax refunds, settlements of government bills, and so on. Pernicious practice This pernicious practice is an annual feature that is facilitated by the cash flow accounting in Government under which only actual inflows and outflows are recognised. The ideal is the accrual system under which transactions are recorded at the time when economic value is created, exchanged, transferred or impaired, irrespective of whether cash is actually exchanged or not. Following the recommendation by theTwelfth and Thirteenth Finance Commissions for a gradual shift to accrual-based accounting, operational guidelines were issued more than two years ago for the transition to the new system in the interests of greater transparency and accountability of departments. The real extent of fiscal deficit can be known only if the liabilities due to be discharged during the year but not done are revealed along with the revenue receipts (not under litigation) expected but not realised. There is no information available on the progress of the transition to the new system in the Budget papers. There is another aspect of fiscal deficit about which I wrote in this daily (The Fiscal Deficit Conundrum, February 7, 2002). While the central bank lending to Government is considered as deficit financing, the interest paid by the latter and returned to it by the RBI at the end of the year as part of a transfer of the surplus of income over expenditure is treated as revenue receipt. No doubt, the interest paid and the corresponding annual transfer together have a neutraleffect in their consolidated balance sheet. However, the impact on the economy is substantial because while the payment of interest is mere book entry, the year-end transfer is a real transaction generating funds for the Government. Substantial underwriting In the past, before the central bank was prohibited from entering the primary market for Government securities, there was a substantial underwriting by the former although there evolved a practice of unloading them later on the market when conditions were favourable. Still, the interest paid by Government when the securities were held by the RBI should have been substantial. When I wrote my article in 2002, at one point of time, the RBI was holding Rs 1.4 trillion worth of securities. As on May 24, 2013, the holdings of rupee securities

(including treasury bills) add up to Rs 6.3 trillion. The Fiscal Responsibility and Budget Management Act prohibiting the central bank from purchases in primary market has made little difference to the monetisation of fiscal deficit. Substantial volumes of the securities have been added to the portfolio through the debt buyback operations in the secondary market. The Government does not get the money to finance the current years deficit as there is only a change in the ownership of the gilt-edged paper from the seller to the RBI. This led to a former Finance Secretary claiming that buybacks were not monetising fiscal deficit. However, it does imply a retroactive monetisation of fiscal deficit, since the net RBI credit to Government goes up as a consequence. One may even take the view that the current years deficit is also financed by RBI credit through the medium of banks and other institutions participating in the buyback scheme a case of backdoor financing. Time to come clean Elsewhere I have called the so-called Open Market Operations (OMO) as Debt Management Operations (DMO). It is important for the Government and the RBI to come clean and become transparent on the matter and reveal the total interest paid by the former to the latter, including the amount paid on Ways and Means Advances, which is now treated as revenue receipt. In reality the RBI is financing the interest payment and it should be included in fiscal deficit. Monetary experts may argue that what I say may be true of all OMOs, in which case the rationale for its being an instrument for the implementation of monetary policy is compromised. But the distinction between OMOs and DMOs is clear. The former has a monetary objective of regulating money supply; the latter has the fiscal objective of helping the Government in its borrowing programme. Interestingly, whether outright monetary transaction, i.e., open market purchases of sovereign debt, is compatible with the Treaty on the European Central Bank, which prohibits its lending to governments but allows open market operations, has been a subject of intense debate in academic circles in the US and Europe. I came to know of this during an interaction with Martin Hellwig, Director of the Max Planck Institute for Research on Collective Goods, Bonn, consequent to my review of his book entitled The Bankers New Clothes co-authored jointly with Anat Admati of Stanford. 7. Golden tangle Govt raises import duties again, misses the point Given the extreme stress that India's current account is under, it came as a great relief when international gold prices declined sharply over the past several weeks. Gold imports have been a huge contributor to the widening of the current account deficit. It was believed that lower prices would dampen the enthusiasm of buyers who were lured by the prospect of endless appreciation. But, unfortunately, this didn't happen; lower prices apparently induced even more buying, as people presumably felt that this was atemporary decline and it was a good time to build up holdings. As a result, the total value of imports shot up. An extremely worried policy establishment has responded with several measures, essentially imposing quantitative restrictions on imports. These come on the back of a series of increases in import duties on gold, taking them from 0 to 6 per cent over the past year - and further up to 8 per cent on Wednesday. Unfortunately, while the government needs to be seen to be responding and has done so in some measure, its latest actions are virtually guaranteed to fail. The compulsion to act may justify the steps taken, but it must be recognised that these will in no way address the fundamental reasons why people are flocking to gold. India's long experience with quantitative restrictions on imports suggests that parallel channels will rapidly emerge; indications are that this has already happened after the imposition of duties. The case is not helped by the fact that Bangladesh and Nepal, both with extremely porous borders with India, impose no duties on gold imports. As more demand is satisfied through these channels,

the visible current account deficit may narrow, but the true picture will be revealed by the hawala rate on foreign currencies, which will now begin to deviate from the rate in the organised market. There are three components to a robust solution. First, increase access and real returns on basic bank deposits. This implies both bringing down inflation and expanding the reach of banking services, not just in name but in substance. Second, promote the development and offering of gold-linked financial products, which will give savers the financial returns from gold but not require physical ownership and, consequently, imports. Several such products are available globally and have been proposed in a recent report by a working group set up by the Reserve Bank of India. A significant move in this direction is the introduction of inflation-indexed bonds, which werelaunched this week. Although their linkage to the Wholesale Price Index (WPI) dilutes their attraction as retail instruments somewhat, since these should logically be linked to the Consumer Price Index (CPI), this is a good beginning and should be reinforced with larger volumes and the resultant market liquidity. Third, as also proposed by the working group, the very large stock of gold already in the hands of Indian households - estimated at 20,000 tonnes (annual imports are around 1,000 tonnes) - should be brought into the market by encouraging these households to convert them into financial products. Both product design and marketing have important roles to play in thisprocess. Absent these initiatives, it won't be very long before the gold smuggler as arch-villain makes a comeback in Bollywood.

CURRENT AFFAIRS (08.06.2013)

1. Repression is no solution Perhaps no other chain of events in the recent past has had a more direct and substantial impact on the life of human beings across the world than acts of terror. Terrorism has not only affected our lives directly, but has also allowed the state to intrude in our lives like never before. Fundamental obligation Since the security of the individual is a basic human right (and a fundamental condition of the social contract underpinning society), the protection of individuals is a fundamental obligation of the state. In recent years, however, the measures adopted by states to counter terrorism have themselves sometimes been found wanting in terms of compliance with human rights norms. The means and methods adopted by the state have posed serious challenges to human rights and the rule of law, and often this is on account of the zeal of the law-enforcement agencies to give a commensurate response to the terrorist. The state cannot legitimately respond by resorting to mechanisms that overstep the limits of the law. Thus, a reason why it is important for the state to ensure that none of its measures transgresses the limits of the law is any transgression may have the effect of eroding both its legitimacy and the rule of law, thereby fomenting further unrest and erosion of faith in the Constitution. In the name of combating extremism, repressive measures are also used to stifle the voice of human rights activists, advocates, minorities, indigenous groups, journalists and civil society. There is another dimension: by being able to build up a perception of threat, the state may be able to get away with channelling the funds normally allocated to social programmes towards strengthening the police force and the army. The talked-up threat perception of terrorism (and a few encounters) may well be used to justify the acquisition of more weapons. As Professor Simon Bronitt of Australian National University has summed up there is almost a new genus of law: post 9/11 law. Although 9/11 has become a significant force in justifying

these laws, the truth is that there is an element of opportunism [by some law-enforcement and state agencies] behind these claims ofnecessity for new powers and offences. While militarisation and the strengthening of police forces are important in their own right, it is equally necessary to understand the genuineness of the security reasons presented by the state as a ground for abridgment of human rights, many of which are fundamental. Frisking, for example, which used to be considered a grave intrusion upon ones privacy at one point of time, is today normalised and we are all fine with being frisked everywhere. Existential realities Little or no attention is paid to the true causes of resort to violent methods. It is as if the deafening sound of explosions and landmines is used to attract the attention of the state to existential realities. There are grim realities of existence as tribals in this country, and the unfortunate aspect is that their unheard voices fail to make a din in the power corridors. From their perspective, extremism, violence and terrorism become a means to attract the attention of the state. Governments have been non-responsive to peaceful protests and have, in fact, come down heavily on peaceful protesters as they did at India Gate when they relentlessly beat up women protesting in the aftermath of last Decembers gang rape in Delhi. The state turns a blind eye to the violence committed by state actors, and private actors in connivance with state actors, which results in irreversible psychological damage. It is evident that the state has misplaced priorities. Since there is little that the state seems to have done, one can safely say that it does not seem to be aware of the abysmal conditions in which the tribals of Chhattisgarh live. The state does not seem to be aware that tribals in Madhya Pradesh eat the poisonouskesari dal which is reported to have a paralytic impact. The state also does not seem to be aware that tribal women and other villagers in Maharashtra have to walk miles before they can get drinking water. This feeling of bein g parentless makes people vulnerable to anti-state ideologies. Having said this, I am not legitimising violence against innocentsby invocation of oppression; I am only suggesting that oppression is one of the reasons of unrest which manifests in the resort to violence against the state and insignias of the state. In the Mahanadi Coal Fields Case (2010), the Supreme Court took strong exception to the manner in which the Central government and the Mahanadi Coal Fields Limited had acquired the lands of tribals in the Sundargarh district of Odisha and not compensated them even 23 years later. In fact, 20 years after dispossessing them, the government noted that the land was actually not required! The Supreme Court observed: the whole issue of development appears to be so simple, logical and commonsensical. And yet, to millions of Indians, development is a dreadful and hateful word that is aimed at denying them even the source of their sustenance. It is cynically said that on the path of maldevelopment almost every step that we take seems to give rise to insurgency and political extremism [which along with terrorism are supposed to be the three gravest threats to India's integrity and sovereignty] The resistance with which the states well meaning efforts at development and economic growth are met makes one think about the reasons for such opposition to the states endeavours for development. Why is the states perception and vision of development at such great odds with the people it purports to develop? And why are their rights so dispensable? Listen to people The Supreme Courts identification of the issue is not off the mark, and I believe it is quite perceptive of the reality. Studies establish that absolute deprivation by the state has a psychological impact on its people. Therefore, any attempt to combat violence by the state must have within its fold the measures to eliminate the conditions conducive to the spread of extremism, which must include (a) strengthening the rule of law; (b) fostering respect for human rights and provision for reparation for violations; (c) reversing ethnic, national and religious discrimination, political exclusion, and socio-economic marginalisation; (d)

listening to the people and (e) becoming more responsive to society. The recent events of violence are tragic without a doubt but they contain the seeds of rejection of political structures. Political structures need to build confidence by dialogue, working on the ground for the uplift of the poor, and must work with an attitude of inclusiveness. While mourning the loss of human life, we must devise innovative systems of engagement, based not on power or hierarchical administration but equality. One wishes ardently that new mechanisms of review with deep and meaningful engagement with the local communities suggested in the Verma Committee on crimes against women be quickly operationalised and deployed. Violence against the state is tragic but it contains the seeds of rejection. Only an inclusive approach that respects human rights can eliminate extremism 2. No stopping her now Well before the non-uniformed generals ruling Myanmar can start planning for the 2015 presidential election, Nobel laureate and opposition leader Aung San Suu Kyi hasannounced her intention to contest. I want to run for President, and I am quite frank about it, she told the Asian edition of the World Economic Forum held at Naypyitaw on Thursday. Obviously, Daw Suu Kyi had planned the announcement for the first such gathering of business and political leaders from around the world to be held in Myanmar since the recent thaw. Of course, Daw Suu Kyi and her National League for Democracy know full well that the present Constitution specifically disqualifies her from contesting an election for the post of president. Article 59(f) says any candidate who is married to a foreign citizen or has children who are foreign citizens is barred from becoming president or vicepresident of Myanmar. Daw Suu Kyis husband, Michael Aris, who died in 1999, was a British citizen, as are her two children. By declaring her intent despite this prohibition, she has raised the expectations of her supporters and also put the countrys military rulers on the defensive. The NLD won the 2012 parliamentary by-elections decisively but can do little to drive the process of political change in parliament because 312 of the 440 seats in the Pyithu Hluttaw, or House of Representatives, are held by the pro-military Union Solidarity andDevelopment Party and other military nominees. Two years ago, Thein Sein, the Senior General who ruled Myanmar, hung up his uniform and became President. If Daw Suu Kyi wants to be president, the NLD and the various ethnic groups represented in parliament will have to work towards amending the rigid constitution. But unless a section of the military party is willing to work for a political settlement and reconciliation, such a major challenge cannot be met. This is where Myanmars neighbours, including India, need to play a constructive role. By going public with her plan at the World Economic Forum and stating that she wishes to be honest to my people, Daw Suu Kyi has prepared the military and the wider world for the changes and challenges that lie ahead. Now that the international community has become fully engaged with the government in Myanmar President Thein Sein recently visited Washington and was welcomed by Barack Obama in the White House the work can begin to effect a smooth and negotiated transition to real civilian rule. The arbitrary exclusion of Daw Suu Kyi from the 2015 presidential contest does the Myanmar military no credit. It has already gone further than anyone had imagined in opening up the system to change. It mustnt stop half-way now. 3. Monsoon, key to determining monetary policy: Subbarao The central bank is keeping track of growth and inflation The monsoon outlook is going to be an important factor in determining Reserve Bank of Indias monetary policy in the next three months, according to Reserve Bank of India (RBI) Governor D. Subbarao. Delivering the Institute of Public Enterprises (IPE) golden jubilee lecture on Indias macro-economic challenges: Reserve Bank perspectives here on Friday, he said the RBI was keeping track of growth, inflation and balance of payments. And

importantly, it was chasing the monsoon. Referring to Indias growth story, he said the story was promising and credible as the pre-crisis drivers were still there. The promise of increased productivity, demographic dividend, decent legal system, and the enormous depth of capacity would be the big growth drivers. He said the average growth during pre-crisis period was 8.7 per cent, and it started fraying beginning with the global financial crisis of 2008-09. In the current macro-economic situation, he said the growth had significantly moderated, inflation came off from the peak but there were several upside risk factors, balance of payments was under stress and investments had decelerated. Describing as disturbing the deceleration in investments, he attributed the slowdown to external and domestic factors. Dr. Subbarao said there were three macro-economic policy challenges managing growth-inflation, mitigating vulnerability of the external factor, and managing the political economy of fiscal consolidation. He said that inflation, which was in double digits in 2010-11, came down to below 5 per cent in 2012. Inflation was driven by food inflation (both cyclical and structural), global commodity prices, depreciation, and demand pressures. He said the growth-inflation dynamics of pre-crisis growth was quite different from post-crisis. Referring to criticism of RBIs management of growth-inflation dynamics, he said it was not fair to say that tight monetary policy had not reined in inflation. He pointed out that inflation had come down from double digits. Admittedly, growth had moderated, and it was inevitable to sacrifice growth to manage inflation, he added. Emphasising the need to reduce current account deficit (CAD) to sustainable levels, he stressed the need for controlling fiscal deficit. He said fiscal deficit exacerbated inflation pressures, impeded monetary transmission, and inhibited supply response to inflation by crowding out the private sector. 4. Panel to assess competitiveness of financial sector The government on Friday constituted a Standing Council of Experts under thechairmanship of the Department of Economic Affairs (DEA) Secretary to assess the international competitiveness of the Indian financial sector. The council, set up in accordance with the announcement made by Finance Minister P. Chidambaram in his Budget speech for this fiscal, will examine various pecuniary and non-pecuniary transaction costs and burdens of doing business in the Indian market and make recommendations for enhancing its competitiveness. Apart from the Economic Affairs Secretary as Chairperson, the Chief Economic Advisor (CEA) in the Finance Ministry as member and alternate chair, and DEA Joint Secretary (Capital Markets) as Convener-Member Secretary, other members of the council include Prime Database ChairmanPrithvi Haldea, GTI Group board member Madhav Dhar, CARE India Chairman Nachiket Mor, Booz and Company ex-CEO Shumeet Banerji, Jahangir Aziz of JP Morgan, NSE Vice-Chairman Ravi Narain, VSG Capital Advisors CEO Vikram Gandhi, Susan Thomas of IGIDR, Shubhashis Gangopadhyay of India Development Foundation, and V. Ravi Anshuman of IIM Bangalore. According to a Finance Ministry statement here, the Chairperson may also invite any such person for any of the meetings of the council whose presence is deemed necessary for achieving the objectives of the council. As for the terms of reference of the council, the standing panel of experts will analyse the international competitiveness of the domestic financial sector and comprehensively examine various pecuniary and non-pecuniary costs of doing business through Indian capital/financial markets. These include transactions costs such as brokerage fee, applicable tax rates and documentation requirements as compared to other competing destinations and accordingly make recommendations aimed at achieving competitiveness. Besides, the council will examine related policy and operating frameworks and the performance of various segments of the Indian capital and financial markets, and make its recommendations aimed at improving competitiveness and efficiency, as also the completeness of these markets in terms of fully meeting client needs as per global standards through provision of requisite services and financial instruments. Alongside, the council will

also suggest reform measures aimed at enhancing transparency, promoting development of and strengthening governance in the Indian capital markets and the financial sector while ensuring that risks are contained and investor interests are protected. According to the statement, while the council is expected to hold meetings at least once in two months to meet the stated objectives, the government would have the right to reconstitute/discontinue the council at any time, without any notice or attribution of any reasons. The council will examine pecuniary and non-pecuniary transaction costs 5. New chapter in Sino-Indian ties The Chinese Premier Li Keqiang has rightly indicated that linkages between our vast markets could be a game changer for the world. The recent visit of Chinese Premier Li Keqiang to India was not business as usual. There was a lot of nostalgia as he recalled the Chinese youth delegation that he had led to India 27 years ago and the warmth and friendship of the Indian people. There was appreciation of how India, one of the fastest growing economies of the world, was playing an increasingly notable role in the global arena and there was applause for Indias enormous achievements. Most importantly, there was a strong underlining of Indias priority today in Chinas foreign policy with Premier Li Keqiang making New Delhi the first stop of his maiden official trip after assuming office. Both sides willing, Sino-Indian ties would be the most important bilateral partnership of the century, Li Keqiang promised. Bilateral trade See it as Premier Li Keqiangs response to changing global economic dynamics or simply a desire to bring the two countries closer, the fact is that the economic engagement between India and China is one of the most rapidly evolving bilateral relationships today. As Indias Prime Minister Manmohan Singh also pointed out, the relationship between our two countries is of growing significance and essential for our peaceful development and sustained economic growth, as well as for stability and prosperity in our region and the world. China today is our largest trade partner. Bilateral trade, totalled $75 billion in 2011-12, is projected to touch $100 billion by 2015. This is no mean achievement considering that just 11 years back, trade between the two countries was merely $3 billion. India is also the largest market for project exports from China with current execution orders estimated at over $55 billion. Over the years, India has also become an attractive destination for about 100 Chinese companies across a wide range of sectors, while Indian investments into China are marked by the presence of companies in areas such as IT, auto components, banking and pharmaceuticals. There are complementarities of size and strength between the two economies which make India and China natural partners. With a combined population of 2.5 billion and a growing middle class, India and China are the fastest growing major economies offering a huge market and rich human resources. Between us, we have the finest and most efficient manufacturing and services companies and these should work together. The Premier has quite rightly indicated that linkages between our vast markets could be a game changer for the world. Issues to be addressed No doubt, India is enthused by the encouraging statements from the Chinese leadership. However, on the ground, there are bottlenecks that need to be tackled and issues that need to be addressed. Foremost among these is the growing trade asymmetry that has become unsustainable for India since it has implications for our current account. India mainly exports raw materials to China and imports a large quantum of finished goods which has led to a swelling trade deficit from $17 billion in 2007-08 to $39 billion in 2011-12. This must change. India needs to shift its export profile towards finished and value-added products and see a sizable jump in shipments to bridge the growing trade gap. The Chinese Premier has assured us that he understands our concerns over the trade deficit and has promised greater

market access to Indian products. China would like to see more competitive Indian products enter its market and stands ready to provide facilitation. CEOs forum While we welcome these views and would work towards opening up a new chapter in bilateral relations, India would be watching to see how the Chinese Government acts on its promise related to market access. The formation of the India-China CEOs forum, of which FICCI is the secretariat from India, is an important initiative that will play a key role in stepping up engagement between the two countries. The first meeting of the CEOs forum which was held on the sidelines of the Premiers visit, has already identified the opportunities. The Indian side urged its Chinese counterpart to consider investing in our Special Economic Zones (SEZs) from where they can export to third countries as well. The upcoming National Investment and Manufacturing Zones (NIMZs), which will be the pivot for us to enhance the share of manufacturing in overall GDP, also present a good opportunity for Chinese companies to evaluate. Indian companies are large customers for Chinese firms in ICT/telecom and power sectors. Perhaps it is time that the Chinese side looks at indigenising production of some of the products exported to India by way of setting up manufacturing plants in India. In the energy sector, companies from both sides agreed to work together and laid particular emphasis on sharing technologies in the renewable areas. Another important suggestion that came up was to consider giving a fillip to the rupeerenminbi trade as this would help minimise the exchange risk and give a further boost to trade. There was also a suggestion to enable banks on both sides to open more branches in each others countries to facilitate trade and investment. These are all interesting ideas to be pursued and will add a new facet to our relationship that has long gone beyond bilateral scope and has acquired regional, global and strategic dimensions. 6. Inflation is still the lesser evil Central banks worldwide should continue to focus on growth, not on inflation orthodoxy The world's major central banks continue to express concern about inflationary spillover from their recession-fighting efforts. That is a mistake. Weighed against the political, social, and economic risks of continued slow growth after a once-in-a-century financial crisis, a sustained burst of moderate inflation is not something to worry about. On the contrary, in most regions, it should be embraced. Perhaps the case for moderate inflation (say, 4-6 per cent annually) is not so compelling as it was at the outset of the crisis, when I first raised the issue. Back then, against a backdrop of government reluctance to force debt write-downs, along with massively over-valued real housing prices and excessive real wages in some sectors, moderate inflation would have been extremely helpful. The consensus at the time, of course, was that a robust "V-shaped" recovery was around the corner, and it was foolish to embrace inflation heterodoxy. I thought otherwise, based on research underlying my 2009 book with Carmen M Reinhart, This Time is Different. Examining previous deep financial crises, there was every reason to be concerned that the employment decline would be catastrophically deep and the recovery extraordinarily slow. A proper assessment of the medium-term risks would have helped to justify my conclusion in December 2008 that "It will take every tool in the box to fix today's once-in-a-century financial crisis." Five years on, public, private, and external debt are at record levels in many countries. There is still a need for huge relative wage adjustments between Europe's periphery and its core. But the world's major central banks seem not to have noticed. In the United States, the Federal Reserve has sent bond markets into a tizzy by signalling that quantitative easing (QE) might be coming to an end. The proposed exit seems to reflect a truce accord among the Fed's hawks and doves. The doves got massive liquidity, but, with the economy now strengthening, the hawks are insisting on bringing QE to an end. This is

a modern-day variant of the classic prescription to start tightening before inflation sets in too deeply, even if employment has not fully recovered. As William McChesney Martin, who served as Fed chairman in the 1950s and 1960s, once quipped, the central bank's job is "to take away the punch bowl just as the party gets going." The trouble is that this is no ordinary recession, and a lot of people have not had any punch yet, let alone too much. Yes, there are legitimate technical concerns that QE is distorting asset prices, but bursting bubbles simply is not the main risk now. Right now is the US' best chance yet for a real, sustained recovery from the financial crisis. And it would be a catastrophe if the recovery were derailed by excessive devotion to anti-inflation shibboleths, much as some central banks were excessively devoted to the gold standard during the 1920s and 1930s. Japan faces a different conundrum. Haruhiko Kuroda, the Bank of Japan's new governor, has sent a clear signal to markets that the BOJ is targeting 2 per cent annual inflation, after years of near-zero price growth. But, with longer-term interest rates now creeping up slightly, the BOJ seems to be pausing. What did Kuroda and his colleagues expect? If the BOJ were to succeed in raising inflation expectations, long-term interest rates would necessarily have to reflect a correspondingly higher inflation premium. As long as nominal interest rates are rising because of inflation expectations, the increase is part of the solution, not part of the problem. The BOJ would be right to worry, of course, if interest rates were rising because of a growing risk premium, rather than because of higher inflation expectations. The risk premium could rise, for example, if investors became uncertain about whether Kuroda would adhere to his commitment. The solution, as always with monetary policy, is a clear, consistent, and unambiguous communication strategy. The European Central Bank is in a different place entirely. Because the ECB has already been using its balance sheet to help bring down borrowing costs in the euro zone's periphery, it has been cautious in its approach to monetary easing. But higher inflation would help to accelerate desperately needed adjustment in Europe's commercial banks, where many loans remain on the books at far above market value. It would also provide a backdrop against which wages in Germany could rise without necessarily having to fall in the periphery. Each of the world's major central banks can make plausible arguments for caution. And central bankers are right to insist on structural reforms and credible plans for balancing budgets in the long term. But, unfortunately, we are nowhere near the point at which policymakers should be getting cold feet about inflation risks. They should be spiking the punch bowl more, not taking it away. 7. How to really stem the rupees slide One dollar is now worth Rs 57, down 5% since January. The weak rupee is denting debt and equity markets, forcing some foreign institutional investors to head for the exit, as they see dollar returns erode. After being net purchasers of Indian stocks for 12 months in a row, FIIs turned net sellers, dumping around $50 million worth of stock in the first four trading days of June. A falling rupee could translate into higher inflation, because India imports most of its fuel and higher pump prices could filter through as higher transport costs. People who were hoping that the RBI could now start softeninginterest rates to prime growth could, therefore, be in for a nasty surprise: rates could stay at the same level or go up marginally to offset the anticipated rise in inflation. The rupee is falling because India's current account deficit is at a historic high: 6.7% of GDPin the third quarter of the last fiscal and an estimated 5% for the year as a whole. In Hyderabad on Friday, Reserve Bank of India governor Duvvuri Subbarao pointed to this number to say that the high deficit makes it tougher to implement monetary policy. He is correct. The depreciation could take some edge off the external deficit by making relatively inessential imports dearer and exports more competitive. Exporters need to diversify into fast-growing markets such as those in Africa. The government should give them the diplomatic heft they need in these new markets.

This summer will see several large inflows of foreign exchange to India, such as from Unilever into its India arm and from McGraw Hill into Crisil. But investment inflows are a function of economic vigour and policy clarity. Both remain works in progress. For that to change, the government must start clearing projects, lift investment ceilings in most sectors and move decisively into reform mode. State-sponsored investment, such as in railway projects and the Mumbai-Delhi Infrastructure Corridor, must crystallise without delay. The world outside remains an uncertain place, where the yen is being talked down, the eurozone wobbles and the US alone grows. What India can do is to get its own act together. 8. RBI norms for corporate debt recasts must not stifle enterprise The Reserve Bank of India (RBI) has tightened the prudential guidelines for corporate debt recasts. This is welcome. So, banks have to set aside more money to cover restructured assets. However, higher provisioning 5% in 2016 from 2.75% will be phased in. Also, only loans restructured after 2015 will be called non-performing assets. This is pragmatic, given that banks may need to infuse more capital to meet these new norms that are on par with developed market standards. Regulatory forbearance on asset classification and provisioning on restructured loans is a huge problem, especially for state-owned banks, that are often arm-twisted by promoters who have clout with the political class. So, the RBI's move to dispense with it, as recommended by theMahapatra panel, after two years makes sense. What is not welcome is the norm that promoters should furnish personal guarantees for a loan to be recast. This militates against the principle of limited liability: shareholder liability is limited to what they have invested by way of fullypaid-up shares. But it is fair to ask the promoter to bring in additional funds as a condition for restructuring the loan. However, the RBI says that stipulating a personal guarantee will ensure promoters "skin in the game" or commitment to the restructuring package. True, it is concerned over the surge in corporate debt recasts to over Rs 2.29 lakh crore as of March 2013. Non-performing assets too have grown dramatically due to a host of factors: aggressive lending during the time of easy money, reversal in interest rates and the economic slowdown. But bankers cannot just do book-keeping. They should have the ability to assess risks and lend only to viable projects. Speedy procedures must also be in place to foreclose sticky loans. The point is not to stifle enterprise. 9. Bring gold to market, curb black money In a knee-jerk reaction to the surging demand for gold that threatened to widen the countrys current account deficit, the government has for the second time this year raised the import duty on the metal by a third to 8 per cent. While it is true that India cannot afford to spend so much foreign exchange to import gold, the countrys long experience with quantitative restrictions on imports suggests this would only lead to a spurt in smuggling. Indications are that this is already happening through Indias porous borders with Nepal and Bangladesh. The government must keep a watch on gold banks which can be used to convert black money. With strict vigilance on creation ofunaccounted money through other means, people are finding it cheaper and easy to hoard gold in these banks and get loans. Gold shouldnt be allowed to become another source of tax evasion. A more robust strategy would be to bring the large stock of gold in the hands of Indian households estimated at 20,000 tonnes into the market by encouraging people to convert it into financial products. The government should promote the development and offering of gold-linked financial products, which will give savers the financial returns from gold but not require physical ownership and, consequently, imports. Issuing of inflation-linked bonds by the RBI this month is a right move in this direction though linking it to the wholesale price index does not fully neutralise the impact of inflation. Linking such products to consumer price index may indeed be a better option.

A crucial element of the solution is to increase access and real returns on bank deposits. It implies both bringing down inflation and expanding the reach of banking services. It is also heartening that a RBI-instituted panel is looking into devising some alternative routes. The plan to link the Gold Exchange Traded Fund (ETF) with gold deposit schemes holds promise as it will enable mutual funds to unlock their physical gold held in ETF and invest in golddeposit schemes of banks. 10. Dont leave poor patients to fend for themselves The Centres decision to shelve the plan to supply free of cost generic medicines worth Rs 6,000 crore every year through government hospitals is unfortunate, to say the least. The reasons advanced for the decision financial constraints and inability to procure drugs during the last 18 months are unbelievable, as the plan was one of the cornerstones of the 12th Five Year Plan. Now, the Centre expects the states to do what it could not and use the funds at the disposal of the National Health Mission for the purpose. This amounts to an admission of the Centres failure to meet the expectations of the people, after they had been aroused. India is the worlds largest producer of generic drugs, which cost only a fraction of branded drugs. At a time efforts are made to popularise prescription and use of generic drugs worldwide, it is tragic that the Government of India is unable to popularise such drugs. True, some state governments have been asking its doctors to prescribe only generic drugs, also supplied free of cost. The campaign would certainly have got a fillip if the Centres Rs 6,000-crore plan had fructified. Had the Centre succeeded in organising a national generic drug procurement programme, it would have reduced corruption inherent in decentralised procurement and distribution. Better late than never, the Centre should revive the plan, which will go a long way in making treatment affordable to the common man. Studies have shown that the cost of medicine accounts for 50 to 80 per cent of the out-of-pocket expenditure patients incur. Again, nearly 40 per cent of those needing hospital care have to borrow money or sell assets to afford the cost. Illness is one of the main causes of pauperisation in India. Besides, over 20 per cent of the sick do not seek medical help because the cost of medicines is unaffordable to them. Given the chilling statistics, it will be cruel if the Centre abandons its plan and leaves the patients to fend for themselves.
CURRENT AFFAIRS (10.06.2013)

1. Moving down the ladder to go up Like someone forced to negotiate the stairs in one of those impossible Escher sketches, many middle and most backward castes in Uttar Pradesh are struggling to move down the ladder of caste in order to rise up from the accumulated disadvantages that centuries of social oppression have saddled them with. Because of the benefits that the lowest social categories enjoy now in terms of State policies, reservations and quotas, many Other Backward Class (OBC) castes wish to acquire Scheduled Caste (SC) status, while some SCs want to be included as Scheduled Tribes (ST) since they are not getting the desired benefits of the SC quota. 2014 a factor The Samajwadi Party (SP) government in Uttar Pradesh is in the process of sending its recommendations to the Centre for including 17 OBC castes in the SC category. These are the Kahar, Kashyap, Kewat, Machuwa, Manjhi, Mallah, Nishad, Kumhar, Prajapati, Dheevar, Bind, Bhar, Rajbhar, Biyar, Batham, Gond and Tairaha castes. The SP had included them in the SC category by managing to intrude in the Centres right to change quotas and categories. The party accused the previous Chief Minister and Bahujan Samaj Party (BSP) chief Mayawati of depriving these castes of their rights in order to protect her own political

interests. A previous SP government, led by Mulayam Singh Yadav, had issued a government order (GO) in October 2005 providing these 17 OBCs the same entitlements as Scheduled Castes. This move was stayed by the Allahabad High Court following a writ filed by the BSP. Ms Mayawati quashed the GO on June 6, 2007 soon after she returned to power; she also asked the Centre to increase the Scheduled Caste reservation quota by another eight per cent before these 17 castes could be included. The view in Samajawadi circles is that these 17 castes, constituting 15 per cent of the total population of U.P., are capable of tilting the forthcoming Lok Sabha election results in favour of the SP, and this is why Mayawati was against it. Independent of the impact of quotas on the forthcoming Lok Sabha elections, these 17 OBCs are eager to be notified as SCs, while some that are included as SCs such as Musahar, Nat, Kanjar, Bansphor, etc are demanding to be included in the ST category. Their demand was heard at a recent conference held at Varanasi. They reasoned that some big and influential castes within the Scheduled Caste category had usurped all the benefits meant for the entire section, and that they had been left empty-handed. Issue of numbers This problem is not unique just to the castes that wish to move into the ST category now, but one that faces 62 of the 66 Dalit castes in U.P. The Mushahars number around 10 lakh in U.P. But each of the other castes, such as Dushad, Bansphor, Kanjar, Kharbar, accounts for less than two lakh people. Not only are their numbers small, literacy among them is also very low. Few among them have passed intermediate exams. Many of these castes are engaged in traditional vocations. Furthermore, they have neither diversified nor modernised their caste-basedprofessions. They are hardly engaged in any jobs. The benefits of government schemes do not reach them because they are not educated. They lack political leadership, which adds to their woes. Unable to make their presence felt in the discourses and debates within their communities, these castes are largely invisible. State government officials, like district magistrates, subdivisional magistrates and block development officers are hardly aware of them. In such a situation it is doubtful that people from these castes would get any benefits even by changing reservation categories. Their problem is one of invisibility, which has only increased over the last decade, even during the reign of Ms Mayawati, and her Dalit Bahujan party. Threat to vocations State government benefits meant for them do not reach them. Second, the bazaar and modernity have made their traditional vocations redundant. Castes like Bansor, Bansphor and Dharikaar, engaged in making bamboo-based articles of daily use like baskets, winnows, etc from pre-modern times, remain threatened as their traditional vocation faces extinction. Plastic plates are steadily replacing the tradition pattal (leaf plates) in the markets. Bamboo forests have shrunk. Bamboo is now being sold by middlemen. Having failed to develop their identity, these castes have not reached a stage where they can give adequate voice to their political and developmental aspirations. They have not been able to use their identity or their aspirations for politics and thus use these as resources of growth. In such a situation, what they need is not a shift in category, but a politics of presence. And that can come only with community leadership and education. Conscious of the advantages the lowest social categories in the State enjoy, middle and most backward castes are pushing for change in their reservation categories. Political parties are keen to cash in 2. A Syrian fire that could consume all Under way for over two years, the Syrian civil war has already claimed close to 80,000 lives. In and of itself, this should have been sufficient to stir the conscience of the international

community to redouble efforts to persuade the Assad regime and anassortment of rebels armed to the teeth, to walk back from the violence and commence a Syrian-led negotiating process for an acceptable outcome. Unfortunately, maximalist positions of the two sides President Assads exit demanded by the West, Turkey and the Gulf states, and treating the crisis as a security issue by the Assad regime has prevented any serious attempt at reconciliation. Geneva 2 Despite agreement between the United States and Russia to convene Geneva 2, some time in the second half of June, the facts on the ground clearly suggest that the initiative is unlikely to succeed. In fact, the actions of the international communitys major stakeholders are continuing to exacerbate the crisis. The simplistic fig leaf that this was a brutal and repressive regime targeting innocent and helpless civilians, demanding their democratic rights as part of the Arab Spring, needs to be shed in favour of more clinical assessments. Drawing inspiration from the three easy steps for regime change in Libya a Security Council Resolution, arming of rebels and NATO military action, the rebels, who were armed quite openly by Qatar and covertly by Saudi Arabia and clandestinely by others the West and Gulf states expected the same in Syria. Given the Libyan experience and strategic interests of Russia, however, the Security Council failed to oblige. Russia and China vetoed three draft resolutions in 2011-12. Unilateral military action by NATO or Coalition of the Willing did not materialise either. More important still, there are increasing doubts on whether arming the rebels was such a good idea given the proliferation of extremists groups, one of which, the Al-Nusra Front, had to be banned by the U.S. How does one ensure that arms go only to the good rebels? Even the description of good is subjective. Turkey and Qatar, it would appear, have no hesitation in supporting rebels drawing inspiration from the Islamic Brotherhood; Saudi Arabia favours Salafist groups. Hopefully, they all agree that al-Qaeda does not qualify for assistance. With sectarian fault lines within Syria now opened threadbare, the possibility of the present compact that has ruled Syria comprising 12 per cent Alawites, 10 per cent Christians and some Sunni business class continuing to exercise power in any post-Assad dispensation, is a non-starter. Given the brutality of the violence on both sides, the prevailing sentiment among the Sunnis backed by Turkey, Qatar and Saudi Arabia and sections of the political class in the West not fully educated in the sectarian tensionsof the region, is to send the Alawites to their graves and the Christians to Lebanon. Clearly, no post-Assad dispensation in Syria will be viable unless effective security guarantees can be provided for the safety of nearly 20 per cent of the population. Who will provide these? The top down model for a negotiated settlement on which Geneva 1 was based last year and on which Geneva 2, if it has to have better luck than Geneva 1, has to be predicated on all parties to the conflict agreeing to participate. That is the easiest part. Agreement can also perhaps be reached that both Saudi Arabia and Iran, given their stake in the civil war, should be invited. Now comes the more difficult part. Militias The just concluded battle for Qusayr shows that this is now a full-fledged war in which the Lebanon-based Shiite group, Hezbollah, is openly and fully involved. Any residual doubts were removed when the Hezbollah leader, Nasrullah, explicitly so announced on May 25. With 12,000 Hezbollah fighters now reportedly fighting along with Assads troops and paramilitary militias drawn from his Alawite sect against an assortment of rebels, mostlySunnis with varying degrees of radicalisation, a negotiated settlement would appear less likely than at any time in the last two years. For Hezbollah, established to fight Israel, this is clearly a gamble. Apart from fighting the Syrian rebels, they will have to confront pan-Arab sentiment. In the process, tensions

between the Shia crescent from Iran, covering Iraq, Syria and the Hezbollah in Lebanon and the Gulf states and their western backers can only increase. A desire to weaken the Irandominated crescent cannot but open the sectarian fault lines throughout the region. Hezbollahs more direct involvement, rather the timing of the announcement coincides with Russias decision to supply the Assad regime with more sophisticated weaponries. The Russian decision constitutes, in a sense, an insurance just in case the U.S. is persuaded by the British and the French to consider the imposition of a no-fly zone and aerial action. Israeli strikes in Syria, in turn, want to prevent the sophisticated weapons falling in to the hands of Hezbollah for use against Israel. The European Union announced on May 27 that it has decided not to renew the embargo on supply of lethal arms to the Syrian rebels. Internal divisions The humanitarian tragedy unfolding for Syrias 22 million people, with close to four million internally displaced and the increasing brutality of the sectarian violence would appear to point towards a prolongation of the civil war. Even the fall of President Assads regime is now unlikely to restore peace and security in Syria. Sectarian war will not only continue, but result in the countrys de facto division into three largely autonomous regions dominated by the Alawites, Kurds and Sunnis, the internal boundaries of which will be determined by the prevailing military balance on the ground. The assessment that while Libya imploded, Syria will explode with unimaginable consequences will prove to be right. The unfolding scenario constitutes the biggest threat to international peace and security in recent times. The continuing paralysis and helplessness of the Security Council constitutes, in a sense, also the most comprehensive statement of its irrelevance. The simplistic assessment of the crisis being only about a repressive regime needs to change 3. A prolific populist Well-known Scottish writer Iain Banks died on Sunday, barely two months after revealing that he had been diagnosed with terminal cancer of the gall bladder and had only a few months to live. Shortly after being told by doctors that it was unlikely he would live beyond a year, the 59-year-old writer asked his long-term partner Adele to marry him, or, as he put it in a poignant statement, Ive asked my partner Adele if she will do me the honour of becoming my widow (sorry but we find ghoulish humour helps). By the time this goes out well be married and on a short honeymoon. Banks also requested his publishers to bring forward the publication of his last novel, The Quarry , and they obliged. Just three weeks ago, he was presented with finished copies and enjoyed celebration parties with old friends and fans across the publishing world, the publishers Little, Brown said, describing him as one of the countrys best-loved novelists and an irreplaceable part of the literary world. The book, to be released next month, is said to detail the physical and emotional strain of cancer. It describes the final weeks of the life of a man in his 40s who has terminal cancer, the BBC said. Best-known for his novels, The Wasp Factory , The Crow Road and Complicity , Banks also wrote science fiction under the name Iain M. Banks. The Wasp Factory , his debut novel published in 1984, was rated as one of the best 100 books of the 20th Century in a 1997 poll. In a recent post on his website, Banksophilia, he wrote that he was greatly moved by the public support.

Still knocked out by the love and the depth of feeling coming from so many people; thank you, all of you. 4. Time to recalibrate India's China policy That China has sinister designs on controlling the seas was being speculated for long but a blue book released on the region on Saturday has, for the first time, spelt out the contours of its strategy to secure its interests in the Indian Ocean. It warns that the Indian Ocean could end up as an ocean of conflict and trouble if countries like India, the US and China failed to engage more constructively as their interests begin to overlap. Significantly, it has not mentioned Japan though it is difficult to believe that the recent axis developing between Japan, the US and India had nothing to do with its new prognosis. The blue book published by the official Social Sciences Academic Press laments that while India has its own Look East policy and the US has put in place its pivot or rebalancing in Asia policy, China has no Indian Ocean strategy. The attempt to camouflage its own deviousness is hardly surprising. It is time New Delhi took serious note of Chinas ominous intentions. China is trying to establish posts in countries like Sri Lanka and Seychelles and emerge as a patron of smaller nations like Maldives. Given Chinas territorial claims, which have expanded from Tawang to entire Arunachal Pradesh and its activities in Pakistan-occupied Kashmir, India should recalibrate its strategy towards China. Apart from acquiring berthing facilities for the navy in Vietnam, India would be well advised to provide Vietnam the ability to protect its maritime interests, by the supply of BrahMos cruise missiles, much like China provides Pakistan ballistic and cruise missiles. It is time the prime minister and the external affairs minister summoned the courage to speak,particularly in forums like the East Asia Summit, on the South China Sea issue and such other matters. They have a bearing on our national security. While making common cause with Japan, this country must also reach out to countries in South-East Asia which are being sought to be bullied by China. Indias foreign policy indeed is up against a major challenge. 5. No room for vacillation on Telangana issue The disqualification of 15 MLAs nine of the Congress and six of the Telugu Desam Party in Andhra Pradesh for violating their party whips has not surprised anyone. They have invited the punishment when they voted for the no-confidence motion moved against the Kiran Kumar Reddy government by the Telangana Rashtra Samiti. While the Congress leadership wanted its MLAs to vote against the motion, the TDP wanted its members to abstain from the voting. Under the anti-defection law, the Speaker could not have taken any other decision, particularly when the MLAs had admitted to violating the whip. The Speakers decision is a setback for both the ruling Congress and the opposition TDP. The development is a virtual replay of the political drama enacted in March 2012 when 17 Congress and TDP MLAs were disqualified in similar circumstances. The incident should also be seen as a measure of the popularity enjoyed by the YSR Congress led by Y S Jaganmohan Reddy, facing trial in a disproportionate assets case. It is very clear that a political polarisation on the issue of Telangana has been in the making in the state. Unfortunately, the Congress has not been able to take a decision, either in favour ofcreating a separate Telangana or keeping Andhra Pradesh united. Under the circumstances, the MLAs cannot be blamed for the revolt. With less than a year left for Andhra state Assembly elections, it remains to be seen whether the Election Commission decides to hold byelections to these seats. However, even if these are held, the results will not radically alter the political situation. The Congress is scared of taking a forthright stand as it does not want to lose ground in the Andhra region by supporting the Telangana demand. What it does not realise is that a vacillator does not

command respect. It does not redound to the credit of the Congress not to take a stand on Telangana and allow such political dramas to play out. 6. CCI: Government's big idea to revive investment cycle is yet to hit the ground running At two separate venues in Mumbai last Thursday, India's biggest industrialist, Reliance Industries Limited chairman Mukesh Ambani and finance minister P Chidambaram were talking about lakhs of crores of investments. But the contexts they spoke in, couldn't have been more contrasting - at least on the surface. The RIL chief announced the largest capex plan by any enterprise in India's history to invest Rs 1.5 lakh crore in three years, while Chidambaram outlined the government's latest action plan to resuscitate 341 investment projects worth Rs 10.5 lakh crore held up in red tape for almost historic periods. But Ambani implicitly raised the very same concerns the finance minister was seeking to allay, calling its investment plans "an expression of the faith of Reliance in India and in her potential" at a time when manufacturing growth had hit the lowest point in a decade. But few other captains of India Inc have either RIL's faith or the cash reserves to dream as big in an economy crashlanding after years of high growth. NOT GAME CHANGER, PER SE The Cabinet Committee on Investment or CCI was the government's big idea to revive the investment cycle, with a mandate to fast-track projects over Rs 1,000 crore running behind schedule for want of some statutory approval or another. In its six months of existence, the CCI has just met five times and its diktats have pertained largely to public sector investments, though a few processes have been tightened for expediting public private partnerships (PPPs) in ports (by streamlining security clearances of bidders) and highways. India Inc is far from impressed by the CCI's performance, through which the government claims to have cleared investments of over $27 billion. A lot more needs to be done if the country wants to dispel the sentiment of doom and gloom, industry bigwigs say. "The committee should meet more often than once a month and have a process to review projects that it had cleared earlier and check if they have gotten off the ground," HDFC chairman Deepak Parekh told ET. The HDFC chief, who heads the Centre's high-level committee on Infrastructure Financing, also referred to the policy paralysis induced by the flurry of damaging CAG reports and CBI actions on retired babus, as a problem area. "Decisions are not being taken as bureaucrats are concerned about the environment," said Parekh. "The CCI has cleared a few projects in oil and gas and other sectors and issued an ultimatum to a couple of ministries like defence (to ease project hurdles), but how much of this has translated into actual investments needs to be assessed," he stressed. While the CCI has cleared projects, there is no clear uptick in activity related to such projects, notes a research paper called "Smoke and Mirrors" issued by Barclays last week. "We believe that activity/investment related to such projects could remain subdued, given the weak momentum and sentiment in the economy... the CCI clearance, per se, is not the "game changer" the government see it as being," Barclays said. The global bank's conclusions assume significance since they are based on interactions last week with telecom and law minister Kapil Sibal, Congress general secretary Digvijaya Singh and Planning Commission deputy chairman Montek Singh Ahluwalia and Raghuram Rajan, the chief economic advisor in the ministry of finance. "The government has already taken some steps such as the diesel price hike, which clearly indicates it has the will and intent to act. However, we would like to see some major steps on the infrastructure front that will help kick-start the growth momentum," said Uday Kotak, founder and managing director of Kotak Mahindra Bank.

The slowdown in investment is not a policy issue, but more of an implementation problem, a senior Congress politician told the Barclays' research team, which said that investments are unlikely to look up anytime soon as the "slow-moving bureaucratic machinery" would combine with "the normal preelection slowdown in both private and public investment spending." The head of India's largest lender, State Bank of India, said that there's no silver bullet as each stalled project has its own unique problems. "There's no single solution to get all projects going. All interested players including banks are working towards resolving these issues," said SBI chairman Pratip Chaudhuri. TASK CUT OUT FOR NEW PANEL Industry believes salvaging bigticket projects can be the best driver for growth in the short as it doesn't require legislative action, but executive orders. CII president and Infosys Technologies CEO Kris Gopalakrishnan called for a special focus on PPP projects that are running into a lot of problems."If the government wants to build an infrastructure asset under PPP mode, why can't it get all clearances in advance and then invite bids so that they are focusing on execution rather than running around for paperwork?" he asked. "Most of the projects which are stuck are in the domain of private sector and it is important that they are also considered on priority by the CCI," said FICCI president and HSBC country head Naina Lal Kidwai. "Many of these projects are very large and have the potential to stimulate economic activity and generate employment," she said, adding that the industry body recently urged Cabinet Secretary Ajit Seth to help push forward private sector projects. Some course correction has begun. Last Thursday, Chidambaram said that Prime Minister Manmohan Singh has approved the creation of a new panel in the cabinet secretariat to identify and help restart 241 stalled projects worth Rs 7 lakh crore, where banks have already disbursed over Rs 53,000 crore. The new panel is to be steered by indefatigable bureaucrat Anil Swarup, who has been implementing one of the world's most effective health insurance schemes - the Rashtriya Swasthya Bima Yojana. "The idea is to first pick up those projects where there are minor issues and can be quickly resolved. For example, there are some projects where 90% financial closure is done, and there are some minor issues which can be easily resolved by the banks," a seniorfinance ministry official said. So projects, where 90% of the land has been acquired, or permissions from a single body are pending, would be taken up on a priority basis. The finance ministry is doing the prepartaory work so that the CCI can clear these issues in a single meeting or two, the official added. Kidwai has some hopes from the new panel led by Swarup, which she said filled the need for "some kind of dedicated institutional mechanism" to track and follow-up on the progress of delayed projects with individual departments. Apart from this panel, the CCI has set up three committees in its short tenure, starting with one to recommend improvements in the environmental clearance process for mining brick earth and ordinary soil from areas less than 5 hectares. Former space scientist and Planning Commission member K Kasturirangan heads the other two committees to review the environmental impact assessment norms for buildings, roads and special economic zones; and the "resolution of unresolved bottlenecks" in the road sector. ET VIEW: What counts is politics, not committees Projects remain stalled essentially because of a crisis in politics, one that transcends the UPA. In India, politics is funded almost exclusively by the proceeds of corruption. Creating a maze of clearances in the path of any project is part of political funding: every hurdle is a rentseeking opportunity. At the same time, institutions of transparency (RTI) and accountability (the Courts, popular protest) are maturing, to penalise the corrupt. But the logical extension is not, of creating a non-corrupt way of funding politics. So, the hurdles remain, but the babus

are too scared to help projects cross them. Stasis results. A systemic solution is to fund politics transparently.

CURRENT AFFAIRS (11.06.2013)

1. Reserve Bank slaps fine on three banks The Reserve Bank of India (RBI) has imposed fine on three private sector banks Axis Bank, HDFC Bank and ICICI Bank for violation of KYC (know your customer) norms. The RBI, after investigation into the matter, on Monday, imposed monetary penalty of Rs.5 crore on Axis Bank, Rs.4.5 crore on HDFC Bank and Rs.1 crore on ICICI Bank for violating its instructions on KYC norms. The RBI had carried out a scrutiny of books of accounts, internal control, compliance systems, and processes of these three banks at their corporate offices and some branches during March and April 2013 to investigate into the allegations of contravention of KYC/AML guidelines against them. The scrutiny revealed violation of certain regulations and instructions issued by the RBI which includes non-observance of certain safeguards in respect of arrangement of at par payment of cheques drawn by co-operative banks; non-adherence to certain aspects of KYC norms and anti-money laundering (AML) guidelines such as risk categorisation and periodical review of risk profiling of account holders; and non-adherence of KYC for walk-in customers, including for sale of third-party products, omission in filing of cash transaction reports in respect of some cash transactions, and sale of gold coins for cash beyond Rs.50,000, the RBI said. The banks had also violated RBIs norms by not-obtaining of permanent account number card details or form 60/61 as required, non-verification of source of funds credited to a few non-resident ordinary accounts, and failure to re-designate a few accounts as NRO accounts though required, non-submission of proper information called for by the RBI, it added. The investigation did not reveal any prima facie evidence of money laundering. However, any conclusive inference in this regard can be drawn only by an end-to-end investigation of the transactions by tax and enforcement agencies, the RBI said in a statement. Based on the findings of the scrutiny, the RBI issued a show-cause notice to each of these banks, in response to which the individual banks submitted written replies. Afterconsidering the facts of each case and individual banks reply, as also personalsubmissions, information submitted and documents furnished, the RBI came to the conclusion that some of the violations were substantiated. 2. Rupee hits record low, makes it difficult for RBI to cut rate In toay's opening trade the partially convertible rupee was at 58.35 per dollar, a life low The rupee on Monday hit a record low to close at 58.14 a dollar, as foreign institutional investors (FIIs) withdrew from the country and the outlook on Indias current account deficit continued to be bleak. The fear that the US Federal Reserve might lower the pace of quantitative easing also weighed. After opening at Rs 57.26 a dollar on Monday, the rupee touched an intra-day high of Rs 57.16 before closing at Rs 58.14 down 1.87 per cent from Fridays close of 57.07. On Mondays closing level beat the Indian currencys previous worst of 57.32 per dollar on June 22 last year. This was also the sharpest single-day fall of the rupee since September 22, 2011, when it had weakened 2.57 per cent (124 paise) against the dollar. FIIs have withdrawn $ 2.7 billion from the Indian debt market since the end of May. The government, however, tried to play down the rupees depreciation, calling the panic among investors unwarranted.

There is weakening of all currencies vis--vis the dollar. So, the rupee, too, is affected. But there is a panic in the market that is unwarranted. This started off with a misinterpretation of what the Fed chairman spoke of in terms of quantitative easing. They have now more than clarified that this (early withdrawal of quantitative easing) is not imminent, said Economic Affairs Secretary Arvind Mayaram. According to bankers, the rupees weakness will make decision-making difficult forRBI, which expected to further ease its stance in its mid-quarter review of monetary policy on June 17, to revive growth. After Indias economy grew at the slowest rate in a decade last financial year, the central bank has cut the repo rate by 75 bps this year. The sharp and sustained weakening of the rupee will make it difficult for RBI to cut rates in June. It complicates nearterm macro management pushing up inflation, increasing fuel subsidies, and putting pressure on unhedged corporate balance sheets, said JPMorgan India Economist Sajjid Chinoy. Market participants see the rupee weakening further on dollar demand from importers and as FIIs continue to withdraw from India. The rupee will continue to trade weak till RBI is able to recoup the $60 -billion forex (including forwards) sold since 2008. Keeping rates high will only defer recovery, deter FII equity inflows and delay re-accumulation of forex reserves, said Indranil Sen Gupta, India economist, Bank of America-Merrill Lynch. 3. Rupee responses Address the current account deficit with concrete steps Given recent tendencies, it was only a matter of time before the rupee fell below its previous low, touched a little under a year ago. When the downward trend first began in August 2011 and then intensified later that year, there was a strong opinion that the Reserve Bank of India (RBI) should take on the responsibility of containing the decline. Many stakeholders, including, prominently, companies that had borrowed large sums abroad, were taking a beating because they had not hedged their foreign currency exposures. The costs of a large depreciation are unquestionably high - but, as the experience of several countries teaches, probably not as high as the costs imposed by a failed defence of the currency. This was the RBI's position during that episode and remains its stance during the current one, as articulated by RBI Governor D Subbaraorecently. And it is a legitimate one. The trigger for the recent bout of depreciation was the statement by the chairman of the US Federal Reserve, Ben Bernanke, that they would have to start thinking of rolling back liquidity now that macroeconomic conditions were showing signs of improving. In a global marketplace buoyed by successive infusions of liquidity over the past four years, this statement signalled a return to normalcy in the US monetary policy stance and a consequent revaluation of the dollar. All currencies were devalued by the markets as a consequence. There is absolutely no case for any country to draw down its foreign exchange reserves to defend its currency against the dollar in these circumstances. This would simply add to the vulnerability of the currency to persistent pressure. And stakeholders seem to have accepted this: there is far less clamour to resist the depreciation. However, even though there are global forces at work here, the contribution of domestic factors should not be underplayed. While all currencies are depreciating against the dollar, the ones that have declined the most are from countries with large current account deficits. India is, unfortunately, a leader in this category and looks like it will remain so for a while. Despite all the public handwringing about the size of the current account deficit, very little

has actually been done to rein it in. While domestic fuel prices are gradually being corrected, consumers are yet to pay the full rupee price of diesel andliquefied petroleum gas for domestic use. Measures have been taken to dampen demand for gold, but these are widely perceived to be misdirected and unlikely to have any real impact. And on the mineral front, little has been done to revive the once substantial iron ore exports, while the country's power sector will remain dependent on imported coal for some time to come. All of these will combine to keep the current account deficit at dangerous levels, with the inevitable downward pressure on the rupee. The risks of a spiral between currency depreciation, a widening current account deficit due to more expensive critical imports and declining capital inflows due to lower dollar returns are tangible. Rather than trying futilely to talk the rupee up, the government needs to take credible actions to address each of the threats of the current account deficit. Even if they take some time to have an impact, the signalling effect will be worth something.
CURRENT AFFAIRS (12.06.2013) Part 1

1. The state of real estate The principle of buyer beware has never been an adequate protective measure in real estate. Lack of transparency, information asymmetry and a maze of transactions have put consumers in an unfairly disadvantageous position. Even the most vigilant among them find home buying an agonisingly risky venture. While many countries have improved their regulations and climbed up the global real estate transparency ladder, India has been sliding steadily. From a poor 41st position in 2010, it has slipped further to reach 48th among the 97 countries reviewed. Self-regulation has clearly failed. Realising the urgent need to protect home buyers, the Union Cabinet has recentlyapproved the Real Estate (Regulation and Development) Bill. This legislation, first conceptualised in 2011, is applicable only to residential projects. The full text of the updated bill has not yet been released, but the details circulated by the government indicate that it has largely retained the original objectives. A State-level regulatory authority will be set up, and developers will have to disclose all the details of their projects and submit approvals obtained to the authority, which in turn would make them public. Developers can advertise projects only after getting clearance, and must compulsorily deposit 70 per cent of the amount collected from buyers in a separate bank account. This would help prevent misuse of funds. Penalties for non-compliance include imprisonment. The new draft includes the activities of real estate agents. The proposed legislation has also improved on the previous version in terms of applicability. Now, projects on plots larger than 1000 square metres in size will be covered by the new rules; this reduced threshold will help bring a greater number of projects under monitoring. Some may argue that new regulations would increase the time and costs of projects, and burden buyers. This objection is invalid since the bill is about presale checking, and projects cannot commence without clearance. Second, the gains clearly outweigh the costs. Regulatory measures are common even in mature property markets. For instance, the Property Misdescriptions Act 1991 in Britain makes it a criminal offence to provide misleading or false information. Benami holdings abound in the real estate sector and clean up measures must address these. Perhaps the use of UID numbers which is insisted upon even in disbursements of subsidies for the poor should be made mandatory for property deals to track the money trail. The risks involved in property transactions would further reduce when land record management, building approval systems and enforcement mechanisms are also improved. 2. From park to nation The continuing public protests in Turkey, which started in Istanbuls Gezi Park but spread to several other cities, and the violence of the police crackdown, with three people killed and

about 5000 injured, have exposed domestic fragilities that have surprised many around the world. The protests started on May 27, when small groups of people gathered to protest against plans to bulldoze the park, one of Istanbuls few remaining green spaces, for a shopping mall, and rapidly snowballed as scenes of police violence went viral on the internet. The rapid urbanisation of Turkeys main cities, with the construction of huge and ill-served residential complexes on the outer edges of urban sprawls, is one cause of discontent. Such unchecked expansion has also given rise to a new elite in the construction business; politically and socially conservative, many of the owners are natural supporters of Prime Minister Recep Tayyip Erdoans Freedom and Justice Party (AKP). They have, moreover, benefited from the lax implementation of building regulations; allegations of corruption abound. The building boom, in addition, may be more of an AKP political strategy than good business; 11 malls have already closed in Istanbul alone. Furthermore, the influx into Turkish cities of substantial numbers of building labourers from rural areas has caused tensions between the socially conservative labourers and longer-established urban residents, who for the most part strongly defend Turkeys strict constitutional separation of faith and the state. The crackdown, with Mr. Erdoan dismissing the protests as anarchy, nevertheless confirms how much the Prime Minister stands to gain by it and by continuing tointimidate the Turkish press. He does not need the support of secularists while the AKPs funding base and vote banks are secure; the party won half the vote in the last election. Secondly, Turkeys geopolitical situation favours his authoritarianism. He is very bitter about the European Unions message that Turkish accession is on indefinite hold, and will ignore EU opinion. Thirdly, Ankara can rattle Nato by even hinting at the closure of Nato bases, many of which were installed by Turkish military dictators in the Cold War and which the west may now see as a possible front against Iran. In addition, Turkey is too profitable for western businesses to stay away from, even if the protests are currently hitting tourism revenues. Yet the countrys long democratic traditions are now resurfacing, with AKP seniors expressing doubts about the repression and the police pulling back from occupied squares and streets. Mr. Erdoan cannot and must not maintain his intransigence indefinitely. 3. India surprised by U.S. spy programme reports India on Tuesday voiced its concern at and surprise over reports that it was the fifth most tracked country by the American intelligence apparatus, which reportedly used a secret datamining programme to monitor worldwide Internet data. We feel that the Cyber Security Dialogue coordinated by the National Security Councils on both sides is the appropriate forum to discuss such issues. We intend to seek information and details during consultations between interlocutors on both sides on this matter. If Indian laws relating to privacy of information about ordinary Indian citizens have been violated, surely we will find it unacceptable, External Affairs Ministry spokesperson Syed Akbaruddin said. Yes, we are concerned and surprised over it, he said noting that reports about the spy programme was an evolving situation. We will take it as it evolves and have a better understanding and a clearer paradigm of how to tackle this issue once broader parameters in its entirety are available for us, he said. According to the Guardian newspaper, India was the fifth most tracked country with 6.3 billionpieces of information being collected from the countrys computer and data networks in one month alone. The daily claims to have acquired top secret documents about the U.S. National Security Agencys data-mining tool, called Boundless Informant. Khurshids Norway visit On External Affairs Minister Salman Khurshids current visit to Norway as India embraces the Arctic Council, the spokesperson said India was also wooing the $ 700 billion sovereign wealth fund of Norway. He said the Minister would take forward discussions that Fund officials had here with senior government officials, includingFinance Minister, P. Chidambaram and Deputy Chairman of Planning Commission Montek Singh Ahluwalia in

April. The Minister will see how to facilitate investments in to the country, including in the infrastructure sector, the spokesman said. The sovereign wealth fund, reportedly one of the richest in the world, was a governmentpension fund. During the visit, Mr. Khurshid would also have a bilateral meeting with the Norwegian Foreign Minister and other senior officials, including the Prime Minister. 4. India disputes Pakistanis claim on Roerich paintings Legendary Russian artist Nicholas Roerich could not have imagined that two of his precious paintings would one day become a bone of contention between a Pakistani, who claims matinee idol Devika Rani gifted them to his grandfather Nazir Ahmed Khan, a known actor in the pre-Partition Hindi film industry, and the Indian government in a British court of law. There are interesting twists and turns in this whole drama. The name of actor Devika Rani, daughter-in-law of Nicholas Roerich, cropped up and was used by Zahid Nazir to bolster his claim that the late actor had gifted Roerichs two outstanding artistic impressions to his grandfather Nazir Ahmed Khan, who was brother-in-law of filmmaker K. Asif. Indeed, Nazir Ahmed Khan worked in a number of Indian and Pakistani films. He was one of the first successful heroes in pre-PartitionIndia and later migrated to the then newly formed Islamic country after his studio in Bombay was burnt down during the Partition riots. Devika Rani was married to the famous Russian painters son Svetoslav Roerich and naturally as daughter-in-law of the famous artist she must have inherited his prized possessions art works. While there is a possibility that she may have gifted the two artistic impressions to actor Nazir Ahmed Khan, the two paintings titled Himalaya Kanchenjunga and Sunset Kashmir were the prized possessions of the Indian Agricultural Research Institute(IARI) on Pusa Road before they were stolen in 2009. Subsequently, the work of art landed up at auction house Sothebys. Talking to The Hindu , a former Indian Council of Agricultural Research (ICAR) Secretary rubbished the Pakistanis claim. We cannot take Nazirs claim that Roerichs paintings had been lying at his Lahore house in seriousness because they were our property till they were stolen. Roerich Museum (St. Petersburg) director Krylov had seen the paintings at IARI in 1999 and Roerich Museum New York curator Tepsa had also testified that the paintings were the property of IARI. However, the IARI came to know about the disappearance of the two paintings when Sothebys sent a letter either in 2010 or 2011 informing that it had verified from the Roerich Museum of New York that the two paintings indeed belonged to the IARI. But the IARI did not inform the ICAR. When we came to know through informal sources we jumped into action. To pursue the matter in all seriousness, a team comprising the CBI, IARI and ICAR went to the United Kingdom to meet lawyers and work out modalities to bring the national heritage back home. The matter is in the British court even now. We are fighting the case, says IARI Director H.S. Gupta. Each of the priceless treasure trove costs over 2 million. In fact, a Delhi court recently asked the U.K. Home Department to allow the CBI to probe the case of Roerichs paintings being stolen from the IARI and presented to a London auction house by a Pakistani and a British resident. It came to the IARIs notice that the two paintings were presented to Sothebys for auction by Zahid Nazir, a resident of Pakistan, and his father Rafay Nazir Khan, who lives in London. After the matter came to the notice of Indian authorities, the attorney of Zahid Nazir and Rafay Nazir Khan wrote to the IARI Director on May 16, 2011, claiming that they were the owners and consignees of the two paintings. And the paintings have been in the family ownership since at least late 1960s or early 1970s and were kept at their family home in Lahore until they were shifted to Sothebys in 2010. 5. India ranks 141 of 162 countries in peace index, even lower than Sri Lanka Indias ranking was brought down by militarisation, conflicts and corruption

India ranks low at 141in this years Global Peace Index (GPI) that measured peace in 162 countries, according to 22 qualitative and quantitative indicators of the absence and fear of violence. The major indicators that bring down Indias ranking are militarisation, domestic and international conflicts, and corruption. However, despite an increase in military expenditure, India made positive gains in its level of peace after reductions in deaths from internal conflict and the level of perceived criminality in society, according to the 7th edition of the annual GPI released on Tuesday. In the South Asian region, Sri Lanka is one notch above India at rank four while Bhutan is the most peaceful country. It is followed by Nepal, Bangladesh, Sri Lanka, India, Pakistan and Afghanistan, in that order. Globally, a dramatic rise in the number of homicides and 59 more countries increasing their military expenditure as a percentage of Gross Domestic Product were the key drivers in making the world a less peaceful place, according to the 2013 GPI. This years findings underline a sixyear trend showing a deterioration of five per cent in global peace. In this time, 110 countries have seen their score deteriorate while only 48 became more peaceful. The economic impact of this five per cent loss in peace came at a cost to the global economy of $473 billion last year. Rise in homicides The sharp increase in the number of homicides up eight per cent over the last year can be almost entirely attributed to Latin America and Sub-Saharan Africa with, for example, the homicide rate in Honduras further increasing by almost 10 per 100,000 people becoming the highest in the world at 92 homicides per 100,000 people. Steve Killelea, founder and Executive Chairman of the Institute for Economics and Peace (IEP), said: The migration of populations to urban areas in developing countries has been a key driver in the rise of homicides worldwide. This has also led to an increase in violent crime. It is essential for the police to gain the trust of those living in city slums; to achieve this, addressing police corruption would be a first important step. The overall deterioration of the military spending indicator in the GPI is primarily due to a large number of low-middle income countries, typically authoritarian regimes like Iran, Iraq, Oman, Zimbabwe and Afghanistan, Cote dIvoire and Democratic Republic of the Congo having increased their expenditure to more than seven per cent of GDP. In contrast, some slight improvements were evident over the last year on the indicators of the likelihood of violent demonstrations and the Political Terror Scale, a measure of State-sponsored terror, with improvements in countries such as Kenya, Kyrgyz Republic, Zambia, and Tunisia. Syrias descent into civil war recorded the greatest score deterioration in the history of the Index. Additionally, many Middle Eastern and North African countries continue to be affected by the fallout from the Arab Spring with violent demonstrations and further political instability. The data also revealed evidence of countries being able to make significant gains in peace. Libya, for example, experienced the greatest rise in peace as its newly elected government and recovering institutions were established following the turmoil of the recent revolution and civil war. North Africa also had more to celebrate as Sudan and Chad experienced the second and third most substantial gains as their respective conflicts eased. Europe remains the most peaceful region comprising 13 of the top 20 countries, including Iceland, which continues to rank first. However, several high debt countries including Spain, Greece, France and Portugal experienced less peaceful conditions amid challenging economic circumstances during the last year. This also reflects the six-year trend data, which shows that countries that suffer from recession decrease in peace at a greater rate than the rest of the world. 6. Rupee sinks to a new low, banks step in to stem slide It recovered to close at 58.39/40 per dollar against 58.15/16 Breaking all barriers, the rupee fell to an all-time low of 58.98 per dollar intra-day on Tuesday at the foreign exchange market. . However, dollar selling by public sector banks and

exporters prevented the Indian currency from dipping below the 59 per dollar mark. The rupee recovered to close at 58.39/40 per dollar compared to its previous close of 58.15/16. ``Re-surfacing of concerns on widening trade and current account deficit (CAD) has lead to a sharp fall in the rupee, said Ajay Bodke, Head ofInvestment Strategy & Advisory at Prabhudas Lilladher. Dollar is continuing to strengthen against other currencies due to the belief that the U.S. economy is on the firmest footing among developed markets. This has rekindled concerns about taperingof bond purchases by the U.S. Fed sooner rather than later, potentially impacting FII flows to emerging markets, said Mr. Bodke. With Indias massive dependence on fickle FII flows to bridge its large CAD, India remained particularly vulnerable to this potential development, he added. In June itself, in few short days, the Indian rupee has depreciated over 4 per cent against the dollar, and more so against the other currencies such as Euro and Pound, said Anindya Banerjee, Currency Analyst, Kotak Securities. Fear of QE (quantitative easing) unwinding by the U.S. central bank and overly short positioning in dollar could have been the reason behind the movement of rupee. A weak rupee does not augur well for corporates who have un-hedged foreign currency loans or large concentration of net imports, said Mr. Banerjee. However, he said that ``over the near-term, we could see a range bound action in rupee / dollar between 57.50 and 59.00, as recent spate of depreciation has been too fast, and a consolidation is warranted ahead of the U.S. Fed meeting on June 19. Stocks close lower A weak rupee and also a strong yen have triggered a sell-off in the domestic equity market. The Bombay Stock Exchange (BSE) 30-Share Sensitive Index (Sensex) lost 298.07 points or 1.53 per cent. The midcap and smallcap stocks lost 1.60 per cent and 1.82 per cent, respectively. The fall was led by consumer durables, which tumbled by 6.36 per cent, followed by metals 4.13 per cent, realty 3.68 per cent, banks 2.24 per cent, power 2.07 per cent and PSUs 2.04 per cent. All sectoral indices ended in the negative territory. A broader National Stock Exchange (NSE) Nifty ended at 5788.80 with a fall of 89.20 or 1.52 per cent. Other broader indices too were down. BSE 100 lost 1.56 per cent. BSE 200 and BSE 500 lost 1.59 per cent each. Markets were weak largely because of the weakness in rupee and also the weak opening of European markets. We expect normal monsoons further to which fiscal reforms from Government of India on the core sector will provide support to the markets going ahead, said Mr. Banerjee. The rupees sudden depreciation has led to some outflows and correction in the equity markets as well. The fact, however, is that in the past few months Indias fundamentals have improved, with inflation declining from 8 -9 per cent in the last few years to about 5 per cent levels, said Lalit Thakkar MD- Institution , Angel Broking. Because of temporary surge in gold buying as well as global jitters regarding QE, markets have not yet factored in the domestic positives, said Mr. Thakkar. In my view, in the coming weeks the market is likely to reverse its losses, he added. 7. Curbs on gold imports showing results: Mayaram The Governments recent measures to curb gold imports have started showing results, with the demand for foreign exchange for gold purchase going down significantly in the past fiveseven days, Arvind Mayaram, Economic Affairs Secretary, said here on Tuesday. It (the demand for foreign exchange for gold purchase) has come down from a peak of $227 million to $7 million in a particular day. The average has been $41 million, Mayaram said. Steps.taken on gold. They have started showing results, he added. RECENT STEPS Spiralling gold imports this fiscal had added pressure to the widening current account deficit, which is estimated to have touched five per cent of gross domestic product as on March 2013. To tackle this situation, the Centre had on June 5 hiked import duty on gold to eight per cent, from six per cent earlier. On its part, the Reserve Bank of India extended certain existing

restrictions on gold imports by banks to nominated agencies and premier trading houses. The central bank had stipulated that gold imports onconsignment basis by banks and nominated agencies shall be permissible only to meet the needs of exporters of gold jewellery. The RBI had also stipulated that all letters of credit to be opened by nominated banks/agencies for import of gold under all categories will be only on 100 per cent cash margin basis. It appears all these steps seem to have cumulatively helped moderate demand for foreign exchange to buy gold. NO NEW MEASURES Meanwhile, Raghuram Rajan, Chief Economic Advisor to the Finance Ministry, said heexpected a significant drop in gold imports in June, mainly due to the joint efforts of the Government and RBI. We are not contemplating any additional restrictive measures on gold and there is no reason for speculating on this basis, Rajan said here on Tuesday. He said gold imports for the first 13 business days, till May 20, averaged $135 million a day. However, in the 14 subsequent days till Friday of last week, the average was only $36 million. Indias gold import bill in the first two months of the current fiscal was earlier estimated at $15 billion. It was about $7.5 billion in April. The average quantum of monthly gold imports so far this fiscal was 150 tonnes. This is almost double the monthly average of about 70 tonnes last fiscal. 8. India allows exports of imported products to Iran against rupee payment India has allowed export of imported products to sanction-hit Iran under the rupeepayment mechanism provided 15 per cent value addition takes place in the country. The move is aimed at fuller utilisation of the rupee payments accumulated in Indias UCO Bank for oil purchased from Iran. Exports of such goods to Iran which have been imported against payment in freely convertible currency would be permitted against payment in Indian Rupees also, subject to at least 15 per cent value addition, a notification by the Directorate General of Foreign Trade said. Now that the entire payment to Iran for its oil is being made by India in rupee, it is much more than what can be paid to our exporters for the merchandise exports being made to Iran. By allowing imported items to be re-exported, the Rupee balance could be used up substantially, a Commerce Department official told Business Line. Iran is facingeconomic sanctions from the US and the EU for its alleged nuclear activities, and has been boycotted by most companies in the West. Since foreign banks refused to handle payments to and from Iran fearing crackdown by the US, India put in place a rupee payment mechanism last year to continue trading with the country. The mechanism allows payments for Iranian oil to be deposited in Indias UCO Bank in Indian rupees. The money is then used to make payments to Indian exporters to Iran thereby avoiding payments in dollars and through foreign banks. There is a substantial amount of rupee balance in Irans account lying idle which the Government hopes would be used up now that it has relaxed the condition of origin of goods for exports. Indian exporters have welcomed the move but cautioned that there should be limits placed on the re-exports. The move will benefit Indian exports and we can look forward to sizeable growth in the countrys exports to Iran in the current fiscal. However, the Government should put a cap on such exports so that the basic idea of promoting manufactured exports remains the focus, FIEO President Rafeeque Ahmed said. According to FIEO, the opening of Letter of Credit from Iran under the rupee payment mechanism has been impressive touching about $400 million on a monthly basis. With the new provision being put into place, we can look for exports close to $6 billion in 2013-14, Ahmed added. Indias exports to Iran in 2012-13 increased 39.4 per cent to $3.36 billion from $2.41 billion in 2011-12, mainly due to the concerted efforts made by both countries to increase Indias exports. While Indias oil purchase from Iran went down to 13.3 million tonnes in 2012-13 from 18.1 million tonnes the previous year because of the Western sanctions, Iran still has a trade surplus of about $8 billion with India.

9. The mechanics of money Can ideas from the realm of science be applied in financial markets? A recent book puts the issue in perspective. Let me start with an admission which is that I dont read as much as is commonly believed. Its just that I refer to books in my speeches whichconveys the impression that I am reading almost every book that is being printed. (Printed? Yes. Not sure whether I will, or indeed will ever want to, get into the kindlemode). That is guff; the reality is much less flattering. These days, I read much less than I should or I need to. I lived in Addis Ababa in Ethiopia for two years when I was in the World Bank; my family stayed back in India. After the job offer was made to me, my prospective manager took me out to the best Italian restaurant in town and marketed the job to me all through the dinner. Best advice As we were finishing, he asked, Do you have any concerns? I said, All that you said about the job is very good, Fred. But, what do I do over the weekends? His reply was one of the best pieces of advice I ever received: Subba, think of all the books you wanted to , but could not read. Plunge into them. Thats exactly what I did for all of two years until I moved to Washington and all its distractions. It is not that as Governor I dont get the time to read. I do. But the time that I get is irregular not the most conducive for book reading. I keep telling myself that I must read for at least half an hour every day, but have failed so far. So, when I finish reading a book, it feels like a big accomplishment. Its also comforting because I am at least trying to live up to the hype that the RBI Governor is a well-read person. Finance is people Ive just finished reading The Physics of Wall Street by James O. Weatherall, a PhD in physics, and now an Assistant Professor of Philosophy in the University of California at Irvine. We all know that post-crisis, use of quantitative techniques in finance has come for a lot of harsh criticism, even ridicule. The charge is that the so-called quants brought in sophisticated mathematical modelling to finance, ignored the limitations of the assumptions underlying their models and made predictions with beguiling precision, all of which encouraged excessive risk-taking and brought on the eventual meltdown. Forgotten in this euphoria was the fact that finance deals with people, not physical objects. The laws governing financial markets are not immutable like the laws of physics. The most high-profile, if also the most strident of such critics, has been Nassim Taleb (Black Swans, Antifragility) who argues that the world is just too random and any attempt to find a structure is futile, and any claim to finding one is hubris. But there is another side to this debate. The use of quantitative techniques contributed enormously to the growth of the financial sector. The Black-Scholes options pricing model, for example, was more than a piece of geeky mathematics; it was transformational. It ended the anti-intellectualism of American finance, demonstrated that a more scientific approach to speculation is possible and converted financial markets from bull rings to quantitative power houses. Engrossing history That story needed to be told and The Physics of Wall Street does that. But the book is more, indeed much more, than a spirited defence of the value that quantitative frameworks brought to the financial sector. It is an engrossing history of several mathematicians and physicists who made a foray into finance with their different mental constructs and tool-kits. Some of these transitions were serendipitous, others were more deliberate and structured but all of them were interesting and fascinating. The history that Weatherall tells starts much before Black-Scholes, actually with the French mathematician Louis Bachelier, and his 1900 paper which argued that stock prices capture all available information and move randomly. This was in essence what later came to be formulated by the Chicago School as the efficient market hypothesis except that Bachelier didnt call it that. In a just world, says the author,

Bachelier would be to finance what Newton is to physics. After taking us through the history of several other scientists who brought fresh thinking, concepts and techniques to finance, the book ends with a rallying cry by the author for an Economics Manhattan Project calling on the advanced economies, particularly America, to invest intellectual and financial resources in an inter-disciplinary project with a lofty goal of generating ideas for making the financial sector an aid to real sector growth. Making things happen The use of quantitative techniques in finance has perforce to reckon with the quirks of human behaviour. As The Economist asked some years ago, is a hurricane more likely to hit because more hurricane insurance has been written? Common sense says no. But in the financial world, that common sense does not hold. The more financial insurance is written, the more likely that the insured event will occur because people who benefit from that contingency can make it happen. Can mathematical models replicate complex human behaviour? If they cant, are they any good at all? The books answer is that making simplifying assumptions in building models leads to solutions to problems that are otherwise intractable. But those solutions are valid only as long as the assumptions underlying the model hold. The difference between physicists and finance professionals, according to the author, is that physicists are trained to ask: When do the assumptions of my model fail and what happens then? The post-crisis response should then be not to shun quantitative modelling but to be conscious of the limitations of quantitative models. And, of course, to improve them to approximate reality as closely as possible. 10. Micromanaging the chain Is government serious about FDI in retail or not? It was not so long ago that the United Progressive Alliance staked its survival on allowing foreign direct investment (FDI) in the retail sector. The point then made was that FDI would help the modernisation of India's leaky farm-to-plate chain for produce and empower local producers at the expense of middlemen. This logic has been assailed by many, but still seems essentially sound. The government then went out of its way to ensure that 100 per cent FDI in single-brand retail faced no more hurdles, making concessions to Swedish household goods giant IKEA in particular. It is puzzling, therefore, that the same dedication does not seem to be in evidence when it comes to FDI in multi-brand retail - where the supply-chain argument applies most strongly. Indeed, with the issue of recent "clarifications" by the Department of Industrial Policy and Promotion, or DIPP, the government seems to have decided to ensure that few, if any, actual foreign investors choose to enter the sector. The DIPP has set out several restrictions. For one, all structures need to be owned by the company - which means that franchises won't be permitted. In addition, 50 per cent of the total investment has to go towards back-end infrastructure - but buying existing infrastructure, however poorly used, won't go towards that total. This will tie up capital uselessly in unprofitable enterprises, rather than freeing it to go elsewhere in investmentstarved India. Further, the clarifications make it appear to most observers that wholesale companies won't be able to sell their products to retailers from the same group, anunnecessary restriction if the ends of the policy are to ensure that corporate investment flows into the entire supply chain. Some retail business models would also require the operation of the back-end to be outsourced to more local operators - and the new definition of "group companies" appears to rule out that possibility. The law also stated that 30 per cent of goods had to be sourced from small and medium enterprises; the DIPP has further insisted that these sourced goods should not be agricultural and must be sold in newly constructed stores, not through the acquisition of existing stores or through exports. On the one hand, it can be argued that these are merely attempts at closing the loopholes in

the law and ensuring that retailers invest their money where the government intends them to. However, that isn't a market-oriented way of going about things. If the point of higher FDI in retail was to trust capital to get to work at declogging India's supply pipe to its cities and towns, the government should get out of the way and not micromanage things. Instead, it seems to have decided to allow bureaucrats excessive power over where and what companies decide to buy and invest - which defeats the entire purpose of the legislation. Unsurprisingly, both domestic and foreign retailers are extremely unenthusiastic about the DIPP's actions. Prime Minister Manmohan Singh, at the time the Congress decided to make an issue of FDI in retail, had addressed Indians on television; his party president spoke with him at a rally called on that very issue in Delhi. Dr Singh should now ask if it is his own administration's statist instincts, and not reluctant state parties, which are causing this forward-looking reform to face unnecessary hurdles. 11. Urbanise, smartly Clearances will be key to new towns on Delhi-Mumbai corridor The concept of the smart city, planned to provide employment and high-quality services to residents, is attractive. Instead of the usual pattern of haphazard growth, smart cities provide for adequate housing, transport, power, water and sanitation. Besides, they pay due attention to energy efficiency, sustainable use of natural resources, railway connectivity and so on. The government has grandiose plans to set up such cities across 28 states. The proof of that concept depends on seven clusters along the Delhi-Mumbai Industrial Corridor, or DMIC. The DMIC connects the industrial heartland to ports on the Arabian Sea, running some 1,500 kilometres across seven states. This region contributes 43 per cent of GDP and over half of industrial production and exports. The Dedicated Freight Corridor project will provide capacity to move goods at much higher speeds. Industrial production in the DMIC is projected to expand at a compounded annual growth rate (CAGR) of 13 per cent by 2020 and lead to massive employment generation. The seven smart nodes are planned to cater to populations of between 1.3 million and 2.25 million, with commensurate employment. What of the cities themselves? The master plans of the DMIC Development Corporation, or DMICDC, have certain common concepts. Each city will be governedfrom a command centre where information technology will be used for the real-time monitoring of energy, public safety, water, transport and logistics. The plans are polycentric, with multiple industrial zones and city business districts. Mixed land use is encouraged. Housing will be located near industrial zones with high-access mass transit corridors, thereby reducing personal vehicle use. Renewable energy capacities will be integrated to ensure power self-sufficiency. Water demands will be met by a combination of river water, new aquifers, reservoirs, desalination and water harvesting. Wastewater and solid waste will be recycled. Environmental damage will be minimised and agricultural land conserved, with extant villages integrated into the master plan. All this will cost upwards of Rs 55,000 crore. As far as possible, required investments in infrastructure are proposed to come through the publicprivate partnership mode. The DMICDC projects that break-even should occur around year 13. Given differences in state laws and differential levels of administrative efficiency in the seven states, land acquisition will take place through different modes in each node. Environmental and other statutory clearances would have to come from the Centre.These two issues - land and clearances - could be the make-or-break factors. Financing, especially private investments, will come only if these two elements fall in place - and they must. Projects like these must work if India is to undergo an orderly migration of population. Otherwise India's urban infrastructure will be overwhelmed. By 2030, over 40 per cent of Indians will live in urban clusters and contribute about 70 per cent of GDP.The sheer scale of India's internal migration dwarfs anything outside much better prepared China. Existing urban infrastructure is already stretched beyond its limit. Planned cities could provide an

alternative to the miserable, under-provisioned urban clusters that are fast becoming the norm in India.
CURRENT AFFAIRS (12.06.2013) Part 2

12. China's latest "sacred" manned space mission blasts off A Chinese manned spacecraft blasted off with three astronauts on board on Tuesday on a 15day mission to an experimental space lab in the latest step towards the development of a space station. The Shenzhou 10 spacecraft was launched from a remote site in the Gobi desert in China's far west at 5:38 p.m. (0938 GMT) under warm, clear blue skies, in images carried live on state television. Once in orbit, the craft will dock with the Tiangong (Heavenly Palace) 1, a trial space laboratory module, and the two male and one female astronauts will carry out various experiments and test the module's systems. They will also give a lecture to students back on Earth. Chinasuccessfully carried out its first manned docking exercise with Tiangong 1 last June, amilestone in an effort to acquire the technological and logistical skills to run a full space station that can house people for long periods. President Xi Jinping oversaw Tuesday's launch personally, addressing the astronauts before they blasted off to wish them success, saying he was "enormously happy" to be there. "You are the pride of the Chinese people, and this mission is both glorious and sacred," Xi said, according to state media. This mission will be the longest time Chinese astronauts have spent in space, and marks the second mission for lead astronaut Nie Haisheng. It is China's fifth manned space mission since 2003, and was accompanied by the usual outpouring of national pride and Communist Party propaganda, including children dressed as happy ethnic minorities waving off the three at the space centre. However, some wondered why China was spending so much money exploring space when it was still a developing country with a plethora of more pressing issues, from food safety and pollution to the prevalence of workplace fire disasters. "Why don't they spend this money solving China's real problems instead of wasting it like this?" wrote one user on China's popular Twitter-like service, Sina Weibo. China's space programme has come a long way since late leader Mao Zedong, founder of Communist China in 1949, lamented that the country could not even launch a potato into space. But China is still far from catching up with the established space superpowers, the United States and Russia. Rendezvous and docking techniques such as those which China is only testing now were mastered by the United States and the former Soviet Union decades ago, and the 10.5 metre-long Tiangong 1 is a trial module, not a fully fledged space station. Still, the Shenzhou 10 mission will be the latest show of China's growing prowess in space and comes while budget restraints and shifting priorities have held back U.S. manned space launches. China also plans an unmanned moon landing and deployment of a moon rover. Scientists have raised the possibility of sending a man to the moon, but not before 2020. While Beijing insists its space programme is for peaceful purposes, a Pentagon report last month highlighted China's increasing space capabilities and said Beijing was pursuing a variety of activities aimed at preventing its adversaries from using space-based assets during a crisis. Fears of a space arms race with the United States and other powers mounted after China blew up one of its own weather satellites with a ground-based missile in January 2007. 13. Concerted war only answer to Maoists Shocked over the recent audacious Maoist attack in Chhattisgarh, political parties on Monday unanimously rejected the pernicious Maoist doctrine and endorsed a stronger, sustained and unified operation against them without any compromise. This line had found support from the chief ministers of the states affected by Maoist depredations during the CMs conference also. Now that there is a political consensus, it is time to translate the resolve into action on the ground. Joint operations by security forces of the different states and the Centre have been

on for quite some time, but what has been missing is a total collaborative exercise where each of the Naxal-affected states becomes a stakeholder in any anti-Naxal programme anywhere. Apart from training and equipping security forces with the latest weapons, the political resolve should not be allowed to weaken. The Centre and the states must ensure that unlike earlier occasions, when momentum was lost after similar brainstorming sessions, a coordinated attack against Maoists is stepped up. While it is crucial that intelligence on the movement of top Maoists must be strengthened by winning the confidence of tribals and village folk, the secrecy of co-ordinated operations must be protected. News suggesting a major operation will soon be launched in Chhattisgarh has been doing the rounds for days, in a typical reflection of poor secrecy. With the porous borders between states, it is not difficult for Maoist leaders to shift from a state where an operation is on way tocomparatively safer hideouts in the jungles of a neighbouring state. On test in the coming weeks would be the sincerity of state governments to work in unison. The unfortunate tendency of some states has been to pay lip service to co-ordination but to neither share intelligence nor come to the rescue of another state. While the Union home secretary has time and again ruled out an army operation, it would be foolhardy not to fall back on this if the coordination of police forces proves illusory. 14. Security should not compromise privacy The United States is engaged in a debate over the right balance between security and privacy in the light of news reports, based on leaked government documents, that revealed details about the surveillance programmes run by the National Security Agency. While the defenders of surveillance, authorised by the questionable Patriot Act, claim that it has disrupted plots and prevented terrorist attacks, its critics debunk the argument that a programme to collect huge amounts of information about Americans phone calls and Internet activity has led to foiling any terrorist plot. Until the leaks, Americans had no clue that their telephone calls were being monitored and, thus, their right to privacy was being throttled. If a comparatively free society with strong privacy laws like the US can have a security agency apparently running amok, there is no guarantee that the right to privacy will be respected in any other country. Such thoughts have arisen over reports that India is in the process of creating a multi-agency body called the National Cyber Co-ordination Centre, which will monitor all aspects of Internet use. With the use of Internet by individuals, outfits and companies increasing by leaps and bounds for professional, business and entertainment purposes, any agency which can monitor such activities will be privy to data that can compromise the Internet users interests. It will strike at the roots of the right to privacy. The Supreme Court has said that the right to privacy is part of the right to protection of life and personal liberty, enshrined in Article 21 of the Constitution and fundamental to the wellbeing of a nation. While the recent arrest of cricketers, based on the tapping of their phone calls, might have been justified, it is also a pointer to the eavesdropping capabilities of police. To prevent US-style scandals in India, it is necessary to ensure all agencies involved in surveillance are governed by mechanisms that consider citizens right to privacy sacrosanct. 15. Patents must balance profit with social cost The US Supreme Courts verdict on a rather unique case, which seeks to answer the question if human genes can be patented, will soon be available. The case relates to theclaims of Myriad Genetics, a biotech company that has patented two genes, BRCA-1 and BRCA-2, which are responsible for breast cancer. According to a plaintiff in the case, the Myriads monopoly on the BRCA genes makes it impossible for women to access other tests. As a result, this monopoly has prevented the use of bettertechnologies and pushed up costs. The rationale for patents is to ensure that the inventors discoveries, or intellectual property rights, are not negated by other researchers. Normally, the rights relate to an invention that is totally new. In the present case, however, the question is whether the genes, which are natural, fall in

this category. The BRCAs are, of course, not normal genes but mutations that cause the ailment. Even then, to claim that the company has discovered them is stretching the point, for the mutations are a natural process which may or may not take place. However, Myriad has a point when it says that firms which develop a process to identify the mutations have the right to patent it. Otherwise, investments in genetic research will be discouraged. Lower courts have been unable to decide if the process of isolating a mutated gene is creative enough to be patented since nature itself cannot patented. The judgment will be known in a few weeks even as film star Angelina Jolies mastectomy operations followed the discovery that she carried the faulty BRCA-1 gene. However, since not everyone who is prone to cancer is a celebrity, a balance has to be achieved between the commercialisation of research and its social purpose. Also, the publicly funded human genome project would have made the Myriads discovery possible any way. 16. NCTC only after consensus: Shinde Union Home Minister Sushilkumar Shinde on Tuesday made it clear that the Centrewould not take any unilateral decision regarding the setting up of the National Counter Terrorism Centre (NCTC). Speaking at the Union Ministry of Home Affairs (MHA) monthly media briefing, Shinde said there were certain issues that needed to be resolvedand he would soon consult all the opposing states in order to evolve a consensus. When such opposition is there we will think over it and then decide. We need to evolve a consensus on it. I have said many a time that both the Centre and the states need to work together. We cannot do it alone, he said. The minister also mentioned several vexed issues that were resolved following consultations between the Centre and the state governments,which resulted in the revised Standard Operating Procedures (SOP) being incorporated in the NCTC draft. First, the CMs objection that it should not be under the Intelligence Bureau (IB). So we took it off. They also said its operationalisation should not be under the IB and that also we did. I will only say that we tried to have a Central intelligence agency but they said a multi-agency centre is there, he said. On whether the Centre was planning to take the NCTC to the Cabinet Committee on Security (CCS), Shinde said the MHA had received several inputs from the opposing states, which were being looked into. Hence, a decision on whether to take the issue to the CCS will be taken only after the due process. As of now there is no question of taking the NCTC to the CCS, the minister said. Chief Ministers like Mamata Banerjee (West Bengal), Nitish Kumar (Bihar), Jayalalithaa (Tamil Nadu), Narendra Modi (Gujarat), Raman Singh (Chhattisgarh), Shivraj Singh Chouhan (Madhya Pradesh) and Punjab Deputy Chief Minister Sukhbir Singh Badal have opposed even a watered-down proposal for NCTC during a recent meeting on internal security here. The Home Minister Sushilkumar Shinde had earlier said his Ministry was not exploring the option of bringing a Bill in Parliament for the purpose. After the 26/11 Mumbai terror attack, the then Home Minister P Chidambaram had announced the governments intention to set up NCTC. According to the February, 2012 executive order, which faced strongopposition from non-Congress Chief Ministers, NCTC will work as an integral part of Intelligence Bureau and its director will report to the IB chief. Besides, the anti-terror body was given power to carry out operations, including arrest, search and seizure, while keeping the state police concerned in the loop. 17. Rise in financial savings signal lower gold imports, safer rupee With anxiety growing in proportion to the rupee's fall, resurgent investor interest in financial instruments is good news. Investors have started putting their money in mutual funds and insurance, says the latest data from markets regulator Sebi and insuranceregulator Irda. This is welcome diversion of savings from gold. Sebi's data shows net inflows of Rs 1.06 lakh crore into mutual fund schemes during April, the highest in two years. Independently, Irda sees a 19 per cent increase in the first-year premium collections of life

insurers in April at Rs 1,334 crore against Rs 1,125 crore in the same month last year. This is a welcome sign that investors are regaining confidence in financial savings. To keep the momentum going, the government needs to come out with more products like inflationindexed bonds (IIBs) and raise the foreign direct investment ( FDI) limit in insurance, so that private insurers can continue to grow their business prudential norms call for growing capitalisation of insurance companies as their premium collections grow. Gold imports have been a major factor in widening the current account deficit and weakening the rupee. The weakening of the global price of gold has already seen an erosion in gold's appeal as an investment option. When investors regain confidence in the ability of financial instruments to yield returns at least on par with what gold offers, they would ditch gold. The April data suggest early signs of that happening. The government has been battling to curb the demand for gold. It has raised import duty to 8 per cent from 2 per cent. The RBI has disallowed import of gold on credit and directed banks not to import gold on a consignment basis for domestic use. The rupee's slide might seem to refurbish gold's sheen. But this would be transient. A lower rupee would make imports in general more expensive, leading to a lower current account deficit. And the rupee's slide could well reverse, making gold cheaper in the process. Gold remains a riskier option as compared to, say, IIBs. Household financial savings must return to double digits. 18. Why the RBI Governor D Subbarao is wrong on regulating risk Last week, RBI governor D Subbarao spoke for the first time on the Financial Sector Legislative Reforms Commission (FSLRC) report. He focused on one aspect of the draft financial code, systemic risk, and made three points: > The Financial Stability and Development Council (FSDC), chaired by the finance minister, will have statutory status and the responsibility for safeguarding systemic risk. > This runs counter to the post-crisis trend around the world. > In a bank-dominated financial sector like India, the RBI as the central bank and lender of last resort is best placed to do systemic risk regulation and the FSDC should only coordinate. In the field of regulation, three phrases are used: systemic risk, macroprudential regulation and financial stability. Of these, "systemic risk" is the soundest phrase technically. The question of the appropriate regulatory mechanism for systemic risk and the role of government in it have been debated in the last five years. The current RBI Act does not envisage the central bank doing systemic risk regulation. Prior to FSLRC, the Raghuram Rajan Committee recommended the creation of a statutory Financial Sector Oversight Agency (FSOA), chaired by the FM, to work on systemic risk. Later, in 2009, the Advisory Panel on Financial Stability and Stress Testing, constituted by the RBI as part of the Committee on Financial Sector Assessment, recommended formalising the existing multiagency arrangement. FSLRC's positions are spelt out in the FSLRC report and in the draft Indian Financial Code. A careful reading of the two reveals the following. FSDC will run a "financial data management centre", a database on the financial system, similar to what is being done in Canada (by their central bank) and the US (by a Treasury agency). This comprehensive data does not exist in a single place. As a result, systemic risk-thinking in India is quite weak. The reforms will enable FSDC to detect sources of systemic risk. Microprudential regulation requires thinking about one financial firm at a time. As the world discovered during the global crisis, this perspective blinds microprudential regulators to the system perspective. A different agency and approach is required to think about the financial system as a whole, to see the woods and not the trees. The global consensus is that microprudential and systemic risk work should not be within the same organisation. Hence, there are good reasons why the RBI should not be the primary systemic risk management agency: (a) RBI would do microprudential regulation for banking and payments,

and (b) RBI is a sectoral regulator for these two sectors and would generally favour them. Under the FSLRC proposal, FSDC does no microprudential regulation, and looks at the full financial system without sectoral biases. Under the draft code, the FSDC secretariat will draft regulations for designating some financial firms as systematically-important financial institutions (Sifis). These can be issued once they are approved by the FSDC board. The FSDC board comprises the FM, RBI chairpersons, Unified Financial Authority (UFA) and Resolution Corporation, and the FSDC chief executive. Thus, the FSDC board is primarily made up of the regulatory agencies. Designation of Sifis is the only executive function envisaged for FSDC in the IFC, one that is a data and research exercise, which looks neutrally at all sectors. So, the FSDC is not a regulator in the standard sense and has no other executive power. Once the regulators and the FM discuss and decide at the FSDC board, individual regulators would implement the decisions. The legal powers come from microprudential law, not systemic risk law. Hence, if one asks, "who would safeguard systemic risk under IFC", the answer is: RBI, UFA, Resolution Corporation, finance ministry and FSDC. It will be acollegial effort, as in most countries. Systemic risk regulation is an evolving field and, hence, IFC is deliberately tentative in this field, unlike a field like consumer protection where the IFC is specific. This humility is appropriate, given how little is known about the field. This is a healthy departure from the vague idea that some have, that systemic risk regulation requires a super-regulator, with powers to override all financial regulators. 19. Rupee fall: Indian exporters fret as counterparts in emerging economies gain currency Indian exporters are facing stiff competition from their counterparts in emerging economies such as Indonesia and South Africa, as a sharper fall in their currencies has erased the cost advantage of a lifetime-low rupee. Indonesia and South Africa compete with India in its main export markets the US and Europein textiles, agri-products, engineering goods, electronics and chemicals. Similarly, Thailand is India's biggest rival in the field of gems and jewellery exports, while Bangladesh competes with it for a share of Europe's readymade garments market. On Tuesday, the rupee touched a lifetime low of 58.98 against the dollar, recording a more than 7% fall since May. In contrast, South Africa's rand has depreciated by about 10% against the greenback during the period, while Thailand's baht has slipped by about 7% since April. Indonesia's rupiah, which is witnessing volatility like the rupee, recorded a 1.988% drop on Monday. The Bangladeshi tacca has appreciated 5% against the dollar over the last one month that will give some competitive advantage to Indian garment makers. "With the rupiah and rand depreciating more, the plunge in the Indian rupee is not translating into gains for Indian exporters. In fact, for sectors involving high imports, the benefits have been nullified," said Ajay Sahai, director-general and CEO of Federation of Indian Exports Organisation. According to Sahai, Indian exporters are facing intense competition for new orders from rivals in these countries as they too enjoyed cost advantage due to their currency depreciation. "South African rand has depreciated as much as the rupee, but its import dependence is less in terms of steel, which makes it gain much more in stainless steel and also engineering components to some extent, compared with India. It can be more cost competitive compared to us", said Pankaj Chadha of Jyoti Steel industries. Appreciation in China's yuan has brought some joy, though. Chinese currency has gained 0.6% in value against the dollar this calender.Experts say Indian exporters had the competitive edge and should be able to translate it to their benefit. "India could take the advantage of China's yuan appreciating...Most South East Asian countries dealing with China could switch to India looking to cut their sourcing dependence on China," said Biswajit Dhar, Director-General, Research and Information System for Developing Countries.

CURRENT AFFAIRS (12.06.2013) Part 3

20. Rupee's decline: Commodity imports turn costlier in local market Indian consumers have not been able to take advantage of a fall in global commodity prices due to a weak rupee. Though prices of gold, crude palm oil, soya oil and pulses have dropped in the global market, rupee depreciation has made imports of these commodities costlier in the domestic market. Edible oil is one of the important commodities imported for meeting a growing demand in the domestic market. Crude palm oil, which cost $973 per tonne in June last year, now costs $840 per tonne. "But the full impact of this drop cannot be passed on to the consumer as the rupee has weakened against the dollar, thus pushing up the landed price of edible oil," said BV Mehta, executive director, Solvent Extractors Association of India. He added that importers were working on a margin of 2% -3% and if the rupee devaluates further, there may even be a price hike. In last June, the rupee was at 55.53 as against the dollar. India needs 175 lakh tonne edible oil to meet its annual domestic demand. In the current oil year (November 2012 - October 2013), it is expected that India will need to import nearly 107 lakh tonne oil. In the last one week, the rupee has devalued by 4%. On June 5, the rupee closed at 56.70 against dollar. On Tuesday, the rupee devalued to 58.98 against dollar in early trade to close finally at 58.39. A weak rupee has forced pulses importers to stay away from the market for a while. KC Bhartia, chairman emeritus of All India Pulses & Grain Association, said importers were not placing any orders now. "They are on a wait-and-watch mode for the time being. Internationally, pulses price is hovering between $1,200 and $1,500 per tonne, which is somewhat less than last year. But a depreciated rupee will make pulses costlier," he said. India imports around 3-4 million tonne of pulses to meet its annual domestic demand. Pulses are generally imported from the US, Myanmar, Turkey and Australia. "It is an unusual thing that we are seeing now. The government should come up with measures to make the rupee strong. Globally, commodity prices have fallen but prices are ruling high in India," said CP Krishnan, director, Geojit Comtrade. Gold traders and dealers said the government's move to curb imports to strengthen the rupee and bring down the current account deficit has not worked well. Internationally, gold prices have climbed down to $1,370 per ounce from $1,660 per ounce in January. In January, 10 gm of gold would cost Rs 29,800 even though the rupee was at 53.20 level. Today, the price is around Rs 27,700 per 10 gm even though international prices have come down by $290 per ounce. "We had told the government that a check on the supply side will not arrest the current account deficit. And that has come true with the rupee devaluating further. The government should immediately take steps to stop the usage of gold as an investment product," said Bachhraj Bamalwa, director, Nemichand Bamalwa and Sons. India imported 864 tonne of gold last year. Kishore Narne, head (commodity & currency), Motilal Oswal Commodity Broker, said movements in domestic commodity markets have largely been due to the volatility in the rupee and global markets are showing signs of nervousness before the German Constitutional Court hearing on the legality of the Outright Monetary Transactions. "European peripheral yields inch higher and with no major data releases, the volatility in currency markets will drive commodities," he said. 21. Arrest that fall: Unleash a new round of reforms to reverse the rupee's slide The official view on the sharp depreciation of the rupee is that this is a temporary phenomenon, that there is no cause for panic. After all almost all developing country currencies have been experiencing downward pressure because the dollar is gaining, with a reviving US economy pushing the Federal Reserve to taper quantitative easing earlier than planned. But the fact is that the rupee is the most battered of the Asian currencies, its broader weakness attributable to India's significantly larger current account deficit. So the government must abandon its business-as-usual attitude and actually create conditions to

narrow the deficit, instead of just talking about this. Thefalling rupee has been a sustained phenomenon for more than two years now, forcing the currency to lose almost a third of its value against the dollar. This has largely been on account of growing trade imbalances, with exports slowing sharply while imports remain shored up by oil and gold. The current downward spiral of the rupee indicates either that trade imbalances continue to widen or that dollar inflows have further softened. But the RBI must desist from intervening to prop up the rupee. The falling rupee is emblematic of our economy's troubles where dollar payments exceed dollar inflows, growth has slowed and inflation grown. Further depreciation may lie ahead. First, this could work in India's favour, helping correct trade imbalances by making exports more competitive and imports costlier. Bills for oil and other imported raw materials will also go up unfortunately. But pushing growth rather than imports has to be the priority when fighting back a serious imbalance on the trade front. Second, the scale of the rupee market now makes it increasingly unfeasible for the RBI to influence the exchange rate sustainably. Government should focus on controlling its runaway current account deficit, which would organically strengthen investor sentiment, the economy and the rupee. A number of policy options are available for this. Government could begin by easing foreign investment restraints in retail, insurance, pension funds, defence, energy and other sectors. It could buoy exports by pushing up investments in infrastructure and utilities as well as expediting project clearances. India must exploit the erosion of its currency to regain competitive advantage in manufacturing and exports. 22. In the age of unlimited bytes, Uncle Sam shapes up as Big Brother Some months back, a young entrepreneur of Indian origin co-founded a company that, to oversimplify its expertise, reads your mind. Moninder Jheeta's Silicon Valley-based Expect Labs has introduced an app that can listen to an eight-person conversation, a virtual babble, glean sense from it, and suggest information that speakers may want to see or pursue even as they are conversing. Jheeta, who is the chief technology officer of Expect, calls it "anticipatory computing". In time, the app can reside in devices ranging from your cell phone to your refrigerator to your car, instantly and constantly crunching data it gathers from around it, including the spoken word or conversations, to provide a stream of contextual information. Already, many US stores and corporations are using such breakthrough technologies to anticipate or capitalise on consumer behaviour. Several large US retailers use a service called Euclid that lets them track individuals' in-store movements through their smartphones' in-store connections, the same way website analytics track your online footsteps when you browse the internet. From airport lounges to theme parks to movie theaters, tracking technologies, embedded and overheaded, are everywhere in your face and behind your back. Across the US and other digital-savvy parts of the world, they are gathering and generating vast amounts of data. Data, tons of it, is coming from computers, microphones, radio-frequency identification readers, remote sensing equipment, and other modes. Data also comes from scientific research from astronomy and atmospheric sciences to genomics and particle physics. There is an innocuous sounding term for all this. Big Data. And it is getting bigger every day. The world's per capita capacity to store such data has roughly doubled every three years since the 1980s. It is estimated that internet traffic will move up from the current Age of Exabyte (10 raised to 18) bytes to the Zettabyte Age (10 followed by 21 zeroes) in 2015, when 100 exabytes of data (equivalent to 30 billion DVDs) will be generated every month. That's a billion DVDs a day. And these are early days yet in the saga of Big Data. Next up is the yottabyte. Eventually, Big Data will encompass all spheres of activity, human and beyond. Social data relating to humans, including medical records,commerce, security surveillance etc, the kind that has us so agitated today because of its potential misuse, will form only a small part of Big Data, much of it generated by private companies aiming to

monetise it. However, it appears the biggest purveyor of this data is government, and none more than the US government, simply by virtue of its role in engendering the internet and many related technologies. As the principal host to the world's internet architecture and infrastructure, the US is also in a unique position to monitor all data passing through it, despite expanding the data pie. News that Uncle Sam is playing Big Brother, and has indeed established a lock over digital data passing through the American gateway, has sent tremors across the free world, including in the US itself, where there is long and healthy distrust of big government. Lost in the rising crescendo of suspicion and disquiet is the fact that governments, including the Obama administration, were just starting to get the hang of big data analytics, especially from government generated data, for problem solving. From spotting outbreaks of disease and infections to better delivery of services, from code enforcement to combating crime, Big Data is enabling things that could not be grasped using smaller packets of information. The growing access of government data to entrepreneurs and innovators, a commitment Washington renewed this year under an open data policy, has already shown spectacular results. Two familiar examples cited by Big Data gurus: public release of weather data from government satellites and ground stations generated an entire economic sector that today includes the Weather Channel, commercial agricultural advisory services, and new insurance options. Similarly, the US government's decision to make the GPS, once reserved for military use, available for civilian and commercial access, gave rise to GPS-powered innovations ranging from aircraft navigation systems to precision farming to location-based apps, contributing tens of billions of dollars in annual value to the American economy. So what does the US government do amid such promise? Shoot itself in the foot with an ominous overreach that, even accounting for the hyperbole of privacy advocates, is way over the top. Looking for terrorist activity in big data is clearly a needle-haystack situation. The intrusive US enterprise even if legal under domestic law potentially has a more sinister end-use. How to extract the benefits from Big Data while not succumbing to overwrought paranoia will be a challenge in the days and weeks ahead, particularly at a time when privacy is not really prized by GenX. After all, it wasn't too long ago that cellphone numbers were jealously guarded. Now, people lay out their life on Facebook without fear. But to what purpose Big Brother will use all the information he is vacuuming into his vast data farms is something that ought to engage the rest of the world, particularly when the principle actor is a government that is not particularly known for wise decision-making in matters of war and peace, and which has a well-chronicled record of marching to folly. So let the Americans know: No data grab. Not on our watch. 23. Bilateral trade slows in 2013; analysts optimistic about long run Mechanical engineering, nuclear power, aviation, metals and precious stones, identified as areas with high potential for bilateral trade. The first four months of 2013 witnessed a fall in bilateral trade between Russia and India with the Russian Ministry of Economic Development putting the number at $3.2 billion, a decline of about 27 percent from the previous year. Financial analysts, however, believe that the two countries are on the right track and have the potential to reach the $40 billion in the next few years. Exports from Russia to India fell by 37 percent in from January to April 2013, while imports actually rose by 12.7 percent. There are two factors that explain the downturn in bilateral trade, according to Narek Avakyan, an analyst with Aforex. There is a general decline in business activity in Southeast and South Asia, and Indian purchases of Russian-made weapons are effectively drying up. I am somewhat perplexed by the failures of Russian arms on the Indian market. The two countries have a long history of military cooperation, and India has been purchasing Russian-made defence products for years. Russian military products are some of the most

competitive in the world, even outstripping the United States. It could have something to do with the desire to cut costs (its well known that European manufacturers are lowering their prices because of the crisis), Avakyan said. Away from the defence industry, Russian exports are suffering because of poor trade routes and reduced economic activity. All the same, $1516 billion in bilateral trade is hardly through the roof for such large economies. In spite of all the difficulties, I believe that trade between Russia and India has the potential to reach $40 billion, and this should happen within the next three to four years, assuming a favourable macroeconomic climate in both countries, Avakyan said. One important factor in bilateral trade is the Indo-Russian Bilateral Investment Promotion and Protection Agreement (BIPA), which was signed in 1994. Moscow has requested New Delhi to amend the agreement with clear safeguards to protect large scale Russian investments. We actually suggested that our Indian colleagues modernise our current agreement to some extent, Ekaterina Mayorova, a senior official of the Russian Ministry of Economic Development told RIR. This agreement was signed in 1994, and since that time our approaches towards concluding agreements on protecting investments have changed several times, and the standard text with which we start negotiations has changed too, Mayorova added. Bilateral Investment Promotion and Protection Agreements with various countries, including Russia, are currently under review by the Ministry of Finance, Indias Minister of State for External Affairs E Ahamed said in May. The fall in trade is nothing more than an illusion, as it is largely connected to the fact that India made substantial payments for Russian military goods and services in the first quarter (of last year), giving the impression that bilateral cooperation between the two countries is far less favourable than is actually the case, RBS President and investment expert Timofey Sholtes told RIR. Sholtes believes that trade relations continue to develop at a high rate thanks to active dialogue and coordinated activities. The fact that we have a long trade history with India is certainly important, but we cant ignore the fact that each country has its own specific ways of doing business one country has a high level of corruption, for example, while the other is not exactly transparent with its business processes. This creates some serious obstacles and hinders the development of joint business, Sholtes said. Current state of bilateral trade Russian exports to India currently sit at around $8 billion per year, with imports in the region of $3 billion per year. According to the Ministry of Economic Development, the main Russian exports over the first four months of this year were automobiles, machinery and technical equipment. Significantly, their share of the export market increased from 53 percent in 2012 to 57.9 percent in 2013. Exports of pearl and precious stones and metals also increased (from 8.1 percent to 12.9 percent), while decreases were recorded in the supply of chemicals (from 18.2 percent to 5.9 percent) and metals and metal-based products (from 7.8 percent to 4.4 percent). India increased exports of chemicals, textile and footwear to Russia, and provided fewer automobiles, machinery and technical equipment. Analysts like FIBO Groups Anatoly Voronin share the general optimism about Indo-Russian bilateral trade. There is room for increased cooperation in the military-industrial complex as well as in mechanical engineering, including nuclear power plant construction and the supply of technical and aviation equipment, and pearl and precious stones and metals, Voronin said. In return, India can supply medicines (one of the biggest areas), tea and coffee. They can also help set up joint enterprises (investment) in various fields including oil production enterprises such as Sakhalin-1. Sakhalin-1 remains the main Russian-Indian joint investment project on Russian soil, with ONGC Videsh Ltd owning the rights to 20 percent of the production. The main Russian projects in India are the Kamaz truck assembly plant, which opened in February 2010 and the under-construction butyl rubber plant (jointly owned by SIBUR Holding and Reliance Industries), which will have a production capacity of 100,000

tonnes a year. Aviation is another area of strong potential between the countries. A preliminary agreement has been reached with Aviotech on the delivery of ten Sukhoi Superjets to India, with the end users assumed to be Air India and Go Air. The Russian side has also expressed interest in cooperating in the production of individual components for the Irkut MS-21. 24. India and the Boundless Informant It transpires Indians are being spied on by the USs top intelligence agency as a nation of naked apes. The Guardian newspapers startling disclosures regarding United States National Security Agencys top-secret data-mining tool called Boundless Informant pose a big intellectual challenge for Indian strategists and political class. Simply put, it transpires that we are being spied on by the USs top intelligence agency as a nation of naked apes. Just consider that James Clapper, Director of the NIA knows everything that is needed to know about our political class. Our senior politicians and the elites as a whole almost without exception use Blackberry; they google; they do social networking; they converse over Skype. Conceivably, the movers and shakers of Indias power calculus be it Rahul Gandhi, Narendra Modi, P. Chidambaram, A.K Antony, L. K. Advani, etc. all depend on the US-based internet servers. In fact, the government has freely distributed iPads to our parliamentarians to improve their efficiency at work. Most certainly, our top intelligence czars and army commanders use cellphones. Conceivably, US knows more about Maoist leader Muppala Lakshmana Raos daily routine than Home Minister Sushil Kumar Shinde does. So, what does it all add up to? Clearly, the damage to national security and our dignity and self-respect as a sovereign nation is incalculable. Yet, President Barack Obama rationalizes the US cybercrime on the world community. He says, In the abstract you can complain about Big Brother and how this is a potential programme run amok, but when you actually look at the details, weve [US] struck the right balance. Pray, what is the right balance? In Obamas own words, You cant have 100 percent security and also then have 100 percent privacy and zero inconvenience. Were going to have to make choices as a society. There are trade-offs involved. Obama thinks it is fine that for the US absolute security, it has the prerogative to invade the privacy of the world community. But then, the US also has a deplorable record of double speak when it comes to counter-terrorism. Didnt Headley use a cell phone? Didnt he use email? There can be no beating around the bush now that the US didnt know anything about what David Headley spoke and did during his numerous covert missions to India for planning the horrendous terrorist strike in Mumbai in November 2008. The Big Brother used the information carefully, discreetly and selectively to the extent that it impacted on the US national secu rity interests. Period. Without doubt, Boundless Informant challenges the very foundations of the US-India security partnership. India happens to be one of the principal targets in the Boundless Informants global heat map where countries are graded in colours green (for the least amount of surveillance), yellow, orange and red. India is coded orange and out of the total 97 billion pieces of information culled out by the Boundless Informant in March alone, India accounts for 6.3 billion. That works out to around 7 percent of all information being tapped worldwide by the US ace spy agency. It is time our pundits reworked their trade and learned to view the paradigm shift in world politics through the Indian prism. They are focused on Chinas rise rightly so but they blithely assume the US and India are natural allies. Yet, India is a key target country for the US surveillance. Clearly, the US factors in Indias future potential to become at least half a superpower. Suffice to say, going up the greasy pole is not going to be easy for India, as evident from the reluctance of the world powers to admit it as a permanent member of the United Nations Security Council or from the Pentagon project to establish

amilitary base in the Maldives so as to replace India as that islands provider of security. The Boundless Informant comes as a wake-up call to the effect that what are Beijings woes today from the USs containment strategy might as well be Delhis tomorrow if and when India begins to get its act together as a booming economy and world power. Make no mistake that the West hopes to perpetuate the flow of modern history since the Industrial Revolution. That is at the core of the struggle for the control of cyber space. Therefore, dont ask against whom is the USs missile defence system being deployed in the Persian Gulf. The Americans may tell the Sheikhs the ABM will contain Iran, but its radars and interceptors will also monitor Indias rapidly growing missile capabilities, which Washington consistently disapproved. The Boundless Informant reminds us that history has not ended.
CURRENT AFFAIRS (13.06.2013) Part 1

1. UPA all set to push for ordinance on Food Bill today Ignoring concerns expressed by allies and civil society groups, the United Progressive Alliance government is all set to push for an ordinance on the Food Security Bill. The revised Bill along with Food Ministrys 81 amendments will be tabled for approval in the Union Cabinet meeting on Thursday. Food Minister K.V. Thomas and key ally and NCP chief Sharad Pawar are known to have expressed concern over taking the ordinance route. Some of the allies have also let it be known that the proposal for an ordinance was moved during the previous Cabinet meeting without prior consultation. The Cabinet however, did not take it up. It is learnt that Mr. Thomas met Congress president Sonia Gandhi last week after which he spoke to UPA allies, including Mr. Pawar, Rashtriya Lok Dal chief Ajit Singh and Farooq Abdullah of the National Conference to get them on board. Both Mr. Pawar and Mr. Ajit Singh have made it a point to attend Thursdays Cabinet meeting. Despite his reservations, Mr. Pawar stated recently that he was not against the Bill, indicating his willingness to go along with whatever the Cabinet decides. The government has justified an ordinance on the ground that the Opposition had thwarted all its attempts to bring the Bill in Parliament (although the revised Bill was brought on the last day of the budget session) and that the rollout would take at least six months. There is also a view that in case the principal Opposition party, the Bharatiya Janata Party, does not allow Parliament to function and the ordinance cannot be ratified by Parliament, then the UPA will go to the polls with the claim that the BJP did not allow a rights-based bill to be passed. Parties stand On its part, the BJP wants to show its support for the Bill by seeking an early monsoon session or a special session to debate it. The Left parties will move amendments mainly for a universal public distribution system. The Trinamool Congress, Biju Janata Dal and AllIndia Anna Dravida Munnetra Kazhagam will also move amendments. The Samajwadi Party, which supports the UPA from outside, has opposed the Bill terming it anti-farmer. However, it appears that the UPA, particularly the Congress, wants to go it alone, this being an election promise. Already some of the States have enacted rights-based food Bill and several others are providing foodgrain through the public distribution system. The Food Bill seeks to provide rice at Rs. 3 per kg, wheat at Rs. 2 per kg and millets at Re. 1 per kg per month to 67 per cent of the population to be identified by the State governments. Each beneficiary will be entitled to 5 kg per month as against 35 kg per household at present. 2. Stunting a country Indias paradox of fast economic growth across several years and chronic malnutrition in a significant section of the population is well known. It has vast numbers of stunted children whose nutritional status is so poor that infectious diseases increase the danger of death. About 34 per cent of girls aged 15 to 19 are stunted in the country, according to a major review of

global undernutrition by The Lancet . These adolescents, part of the post-liberalisation generation, have benefited the least from economic growth. Without active intervention to improve their access to appropriate food, the young women are bound to face complications during pregnancy and many are certain to deliver stunted babies, continuing the distressing cycle. What these insights underscore is the need for the political class to make the struggle against malnutrition a national priority. It is evident that in the absence of scaled-up programmes to build the health of the child and the teenager, and to provide opportunities for education and skill-building, India cannot really reap the so-called demographic dividend of a large young population. Neither can it substantially reduce its shameful levels of maternal and childmortality, attributable in good measure to lack of nutrients in the diet. A quarter of all maternal deaths occur due to anaemia, and 19 per cent due to calcium deficiency, both of which cause often-fatal complications at childbirth, as The Lancetdata confirm. Although India has some intervention programmes in place to provide iron supplements to women, there is evidence to suggest that this has not been scaled up in rural areas. Supplemental nutrition efforts are also hampered by superstition and rumour about effects on unborn children. These are communication challenges that theNational Rural Health Mission must pursue vigorously. The broader task would be to improve universal access to nutrients through a basket of commodities including pulses, fruits and vegetables that can be supplied through a variety of channels. Clearly, the Public Distribution System and community-run not-for-profit institutionswould form the backbone of such an effort. What is often forgotten in the discussion is the importance of early childhood nutrition crucially, the first 1,000 days for life-long health. Given this causality, the UPA government should have come up with a Food Security law that provides universal access to nutritious food, and such legislation should have received wide support across the political spectrum. Regrettably, most politicians have failed to grasp the importance of this social investment. It is now for civil society to press the agenda 3. An innovation that changed the poll landscape The Election Commission of India has emerged, over the last 63 years, as one of our most respected institutions. Over these six decades, this constitutional body has developed new skills almost with each general election, and latterly even with each election to the State Assemblies, to remain not static but evolutionary; constantly striving to widen the inclusive and egalitarian framework, aiming thus for the widening of the voting processes. India is a caste-based society with deeply rooted socialhierarchies. However, universal adult franchise proved to be a game-changer, for each vote carries equal value. Democratic elections have enabled the traditionally marginalised groups to take the democratic route towards empowerment. Indeed, the process of democratisation of castes has turned out to be the most significant social development of 20th century India. Both political parties and individual candidates have had to accept a policy of reconciliation rather than confrontation. The constitutional provision reserving seats for the Scheduled Castes and the Scheduled Tribes has given them a minimum guarantee of participation in governance. From the first election itself, this worked wonders in levelling the playing field, which in turn led India to witness the growth of major leaders from the erstwhile marginalised sections occupying key elected positions in many States. Largest liberal democracy By virtue of holding its first national election in 1951-52, India achieved the status of theworlds largest liberal democracy. Dr. B.R. Ambedkar and the other founding fathers believed universal suffrage was a necessary pre-condition, although Indias literacy level was an abysmal 16 per cent in 1947. The success of that election, which was also its first marker of equality, belied the many sceptics who felt that the electoral exercise was doomed to

failure. A natural extension of this basic approach was the inclusion of universal adult franchise with the raison detre that man or woman, rich or poor, upper caste or lower, irrespective of creed or religion, the voter was brought through the electoral roll on to a common platform. The age-old inequalities were, at one stroke, sought to be eliminated or at least substantially diminished by conferring political equality. This amongst other measures reflected a very enlightened, mature and significantly bold vision, particularly if we recall that in many countries different groups, especially women, had to struggle long and hard to obtain franchise. Anticipating that the caste based social hierarchy would play a restricting role in ensuring the equality of citizenship rights in the elections, the lawmakers made specificprovisions in law. Accordingly, undue influence at elections is an electoral offence under Section 171C of the Indian Penal Code. Any voluntary interference or attempt at interfering with the free exercise of any electoral right constitutes the crime of undue influence at an election. Section 123 (2) of the Representation of Peoples Act 1951 defines any direct or indirect interference with the free exercise of any electoral right as a corrupt practice. Special provisions were also made to safeguard the interests of voters belonging to the Scheduled Castes and the Scheduled Tribes. Thus, forcing or intimidating a member of a Scheduled Caste or Tribe not to vote or to vote (for) a particular candidate or to vote in a manner other than that provided by law is an offence under Section (3) (1) (v) of the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989. Notwithstanding these legal provisions, almost every election after Independence witnessed violence, threats and intimidation of SC voters. Reporting on the Indian elections a journalist of Associated Press was to write: Armies formed by local politicians have intimidated villages during every election in the underdeveloped farmland of northern India ... on election day, hired thugs prevent many voters from reaching polling stations. Other voters arrive to find their ballots have already been cast (Arthur Max, Private Armies, Associated Press, April 12, 1996) The conduct of elections in Indias largest state, Uttar Pradesh, has always been one of the Commissions biggest challenges, given its size and social complexities. While preparing for the 2007 Assembly elections, the Commission used technology and its now computerised rolls to find out which areas (townships, villages and tolas) had not voted for long periods in previous elections. This gave us many valuable insights on how to approach this mammoth problem. Our preparation began with a bye-election to the Aurai Assembly in December 2005. During the campaign period, voters from the weaker sections complained to the Election Observer that in the past they had difficulties in accessing the polling stations due to intimidation by local musclemen. The observer brought this to the notice of R. Balakrishnan, then Deputy Election Commissioner in charge of Uttar Pradesh. On the forenoon of the poll day, the observer noticed that in one particular polling station, voters from the weaker sections had not come to vote. The observer went to the particular village and saw a few hundred voters being prevented by a handful of armed men from casting their votes. Taking the help of the local police, the voters were enabled to proceed to the polling station. This was the observers report: Towards end of the polling, I visited a few villages where there had been complaints of stopping of Dalit voters. There appears to be some truth in such allegations. I met several Dalit voters who showed me their I cards issued by the Election Commission and complained they had been unable to vote because the dominant castes had warned them not to proceed to the polling booths. There was no intimidation in or near the polling booths as such ... No immediate remedy in this regard suggests itself, since it is not possible for the electoral officers or police to patrol the villages so intensively as to provide security/escort to every voter from his doorstep to the polling booth. The same situation would be faced even if a repoll were to be ordered in such areas.

DEC Balakrishnan submitted the details of these incidents to the Commission. Clearly, the traditional approach of safeguarding only the 100-metre periphery around a polling station would no longer suffice. Here then lay the genesis of a search for an institutional method to identify the areas likely to be affected by such threats as also to track the people who are likely to create such disturbances. This meant stepping out of the traditional crease to address the problem at source. A detailed concept paper emerged which the Commission endorsed. From this was born a new methodology which we named Vulnerability Mapping, borrowing the term from Disaster Management. Now we aimed at the identification of habitats and segments of voters vulnerable to intimidation in the past, with a view to taking advance measures to prevent the commission of such offences. This method brought a new focus to ensure clear accountability, give visibility to institutional intervention and send a nononsense message about the seriousness of elections. It proved to be an effective confidence building measure. A watershed In the process of mapping vulnerability, the election managers during the mammoth 2007 U.P. elections identified as many as 27,831 polling stations (out of 1,10,763 polling stations spread over 403 constituencies) as vulnerable on the basis of past incidents and current feedback. As many as 15,000 habitats were identified as especially vulnerable. More than one lakh people were identified as potential trouble makers. Proper accountability was created within the security system to monitor them, and various preventive measures were initiated under preventive section of law. Typically, we found that a vulnerable voter had to walk through areas of intimidation to cast a vote. We then created auxiliary polling stations and parked them in at the vulnerable pockets themselves. Now there was no need to walk through hostile territory. Several hundred new auxiliary polling stations proved to be a game-changer which is why I termed the 2007 U.P. election a watershed. The impact was clearly visible on poll day. The ECI observers did a marvellous job. They tracked every vulnerable location. As the electoral administration had identified the potential trouble makers by name and forewarned them there against violence, there was no threat or intimidation on the poll day. The U.P. elections, for the first time in years, were violencefree. Vidya Subrahmaniam, writing in Frontline on May 19, 2007, summed it up thus: In Lucknow, where I start my journey, local journalists breathlessly talk about an election that has not been this free and fair in decades. They eulogise the Election Commission of India for making this possible and speak of Dalits in the remotest villages trooping out to cast their votes in many cases for the first time since Independence. This is a miracle, they say.Vulnerability mapping ensured accountability, gave visibility to the Election Commissions work, and sent a no-nonsense message to trouble makers 4. The politics of Myanmar versus Burma A three-day conference of the World Economic Forum for East Asia concluded last week in Naypyitaw. It was the first time Myanmar had hosted an international gathering of such magnitude. It was attended by around 900 participants from over 50 countries, including political and business leaders. Myanmar President Thein Sein opened the forum. Though the forums objective was to discuss the issues facing developingeconomies in the region, a great interest in the socio-economic reforms of the host country was quite evident. On the sidelines of the forum, a globally televised BBC debate was held on the subject, Myanmar: What Future? Panellists included Opposition leader Aung San Suu Kyi, U Soe Thein, Minister of the Presidents Office, and Zin Mar Aung, ex-poli tical prisoner and activist.Besides other issues, the debate was divided on the very name of the country. Though they all refer to the same country, some used Burma and others used Myanmar. For example, the BBC moderator, Aung San Suu Kyi, and Zin Mar Aung preferred Burma, while Minister Soe Thein and the majority of questioners from the audience used Myanmar. Does

the name matter in Myanmar politics? Is there any significance of using one over the other? And why does this issue still linger 13 years after the country was renamed in 1989? Circumstances First of all, the issue is historical as well as political. The controversy surrounding the name started with the political circumstances under which it was renamed. It was the State Law and Order Restoration Council military government that renamed the country from Union of Burma to Union of Myanmar. Similarly, the name of the capital city was changed from Rangoon to Yangon. During British rule, the name of the country was Burma. At the 1947 Panglong conference, and in the preceding months, the majority Burman group led by General Aung San made several attempts to convince the frontier people, who are today designated as the countrys ethnic minorities, to join the Union. Since British colonial administration, there has been deep mistrust toward the majority Burman group by other ethnic nationalities. It was under such circumstances that the term Union of Burma was coined in an attempt to give a sense of unity and belonging to the diverse ethnic groups under a new independent Burma. Had the frontier people not agreed to join the Union of Burma, the countrys independence could have been either delayed or only territories occupied by the Burman ethnic group may have been recognised as Burma by the British. On past and people There are two basic arguments about the name change. First, the military leaders argue that as the name Burma was given or used by the colonial rulers, it should be replaced with an indigenous name. This also implies that using a different name symbolises freedom from the legacy of colonial administration. The second argument is that the term Burma refers to only one group of people and the usage of Myanmar is inclusive of all ethnic nationalities of the country. In Burmese or Myanmar language, Burma is known as either Myanma or Bama. Myanma is the written, literary name of the country, while Bama is the spoken name of the country. In terms of meaning, there is no difference. Both names still refer to the majority group of people in the country, who are also referred to as Burmans. Though the name was changed in 1989, the people of Myanmar and the international community continue to use two different names. For example, most democracy activists and some Western countries, particularly the United States and Great Britain, continue to use the old name. On the other hand, the Myanmar government and its supporters and sympathisers, and a vast majority of the international community, including the U.N., use the new name. Those who prefer Burma, argue that it was an undemocratic government that changed the countrys name without the consent or mandate of the people. They also argue that there is no fundamental difference between the two names, since both still refer to one group of people. To them, the name change should only happen if a democratically elected government decides to do so with majority approval in Parliament. They also argue that the term Burma is easier to pronounce and remember. However, with the gradual democratic reforms in the country, the new name has become more popular than ever before and the international community has gradually recognised it. Democracy and name If the current pattern of democratic transition continues and the international community establishes normal diplomatic relations with the country, it is likely that the new name will eventually be used for all official diplomatic dealings, including by the U.S. and the United Kingdom. Nevertheless, the old name may not easily be forgotten or abandoned by some in Myanmar society, especially among the older generation and within the expatriate community. Until a democratically elected government officially mandates and recognises the name change permanently, the countrys old name will still linger in Myanmar politics in the foreseeable future. Since the issue is historical as well as political, the usage of one name over the other still carries political significance although both names basically refer to one

particular group of people. Even 13 years after its renaming, Burmans continue to be divided over how to call their country 5. Giving teeth to the serious fraud office The recent scam involving the Saradha group of companies has once again brought into sharp focus the need for effective investigation and prosecution of corporate fraud. The Saradha group allegedly utilised a consortium of companies with multiple cross linkagesto set in motion an elaborate Ponzi scheme. The scheme was touted as a realty business and there were frequent changes in its operational strategy in an attempt to avoid scrutiny by regulatory authorities. In addition to the Saradha group, it is suspected that several companies are currently running fraudulent chit fund schemes in West Bengal. In an attempt to rein in the operations of such companies, the Central government has announced a probe by the Serious Fraud Investigation Office (SFIO). The genesis The SFIO was established in 2003, as a body of the Ministry of Corporate Affairs, on the basis of the recommendations in the Naresh Chandra Committee Report on Corporate Audit and Governance. The committee felt that there was a need to establish a multi -disciplinary team that not only uncovers the fraud, but is able to direct and supervise prosecutions under various economic legislations through appropriate agencies. As per its charter, the SFIO is to investigate those cases that are complex in nature and involve inter-departmental and multi-disciplinary ramifications. Accordingly, the staff of the SFIO includes experts in varied fields such as accountancy, forensicauditing, investigation, law, taxation, information technology, capital markets and financial transactions. Among the high profile cases investigated by the SFIO, the Satyam scandal is perhaps the most notorious. The SFIO has also probed the alleged Rs.870 crore fraud in Reebok India. It has also spearheaded the investigation into Sesa Goas alleged over and under invoicing of exports and imports worth over Rs.1,000 crore. Under the Companies Bill Despite the tough remit set for the SFIO and the complex nature of the cases handled by it, the functioning of this non-statutory body is hemmed in on many sides. Its powers are largely restricted to examination of documents and it does not have the powers of search, seizure and arrest. The SFIO also operates within an elaborate matrixof investigating bodies with overlapping authority over such cases; the CBI, the Central Economic Intelligence Bureau, the Reserve Bank of India and the Securities and Exchange Board of India (SEBI) being some of the other bodies which have also been granted investigative roles and powers. Keeping these shortcomings in mind, the Companies Bill 2012 (which was passed in Parliament in December last year) has attempted to strengthen the SFIO. In its newavatar , the SFIO will be a statutory body with the ability to initiate prosecution when directed by the Central government. The investigation report filed by the SFIO with the criminal court, for framing of charges, will be deemed to be a report filed by the police under the Code of Criminal Procedure. This measure will avoid duplication of duties and delay. The director of the SFIO will have the power to arrest persons if he has reason to believe that such persons are guilty of certain offences, including fraud under the Companies Bill. An investigator of the SFIO will have the powers vested in a civil court under the Code of Civil Procedure with respect to discovery and production of books of accounts and other documents, the inspection of books, registers and other documents and the summoning of and enforcing of attendance of persons. Significantly, the Bill attempts to pre-empt the confusion caused by multiple agencies investigating the same case. Where a case has been assigned to the SFIO, no other investigating agency of the Central or the State government is to proceed with investigation. Further, any other investigating agency, State government, police or income tax authority

having information or documents with respect to an offence being investigated by the SFIO is required to make such documents available to the SFIO. Adequate? While the new framework is a definite step forward, the dependence on the Central government to institute investigations is of some concern. Under the Companies Bill, in order for the SFIO to investigate a company, the Central government must be of the opinion that such investigation is necessary. Additionally, the SFIO may initiate prosecution only when the Central government directs it to do so. The allegedinvolvement of politicos in the Saradha scam, as well as the recent uproar over the governments interference with the CBI investigation into Coalgate, sharply highlights the danger of such dependence. Further, the efficacy of the SFIO will also be determined largely by the adequacy of resources and manpower devoted to it by the Central government. It is interesting to note that SEBI also has the powers of a civil court with respect to production of documents powers which have been granted to the SFIO under the Companies Bill. The Saradha group, nevertheless, allegedly avoided providing pertinent information to SEBI by doing a document dump of cartons of irrelevant information. The absence of adequate resources and manpower could, thus, quite easily thwart the new SFIO. It remains to be seen whether SFIOs authority to arrest will act as a sufficient deterrent to such attempts to cloud the investigation. One must also keep in mind that the changes contemplated by the Companies Bill are of import only after a scandal breaks out. These measures are not pre-emptive in nature and they are not likely to have a significant effect on the stage at which the government becomes aware of a fraudulent scheme in motion. There is, therefore, an imperative need to strengthen scrutiny at the level of the Registrar of Companies the first level of detecting the problem. A company is required to submit various documents to the Registrar as a part of the compliance requirements under law. An SFIO investigation may be based on a Registrars report that a companys affairs are being carried out in an unsatisfactory manner. It is also essential to create linkages between complaints made at the first instance by private individuals with the police and other regulatory bodies, on the one hand, and investigative bodies such as the SFIO, on the other hand. Effective corporate governance is, thus, predicated on coordinated action of the various enforcement agencies. While recent attempts to strengthen the investigation agency probing major fraud are welcome, its dependence on the Central government to initiate action is cause for concern 6. Women seeking ante-natal care more likely to go in for ultrasound scan: study Ultrasonography is not done only for sex selection Contrary to the general belief that a majority of pregnant women undergo ultrasonography (USG) only for sex selection, a study shows that 80 per cent of them have given live birth and the remaining had either undergone a pregnancy loss or both live births and abortion. Only 5.4 per cent women who had reported at least one pregnancy loss including still birth, spontaneous abortion and induced abortion, had also undergone an ultrasound test during the reference period. Statistics also revealed that women seeking ante-natal care and those who were alerted for any pregnancy complications were more likely to undergo USG test. Women who were alerted for any complications were significantly more likely to have undergone an ultrasound test. The analysis has also shown a higher likelihood of use of ultrasound among women with only one daughter compared to those having only one son. In a paper Understanding the role of ultrasound in improving maternal care in India,

Sushanta K. Banerjee of Ipas-India and Sanjay K. Mohanty of International Institute for Population Sciences have examined the linkages between pregnancy loss (including induced abortions, spontaneous abortions and still births) using the data of the third round of National Family Health Survey, and concluded that increased use in USG is predominantly due to increase in prenatal care and to identify pregnancy complications. The study is based on 41,376 women who were pregnant anytime during the past five years. Among them, 80 per cent had given one or more births in the given period without any pregnancy loss while 20 per cent had at least one pregnancy loss. No pregnancy loss Of those who had at least one USG for any of their pregnancies during the reference period, 80 per cent had one (51 per cent) or more (29 per cent) live births without any pregnancy loss, 9 per cent had one live birth and one loss, 5 per cent had one loss and two or more live births, another five per cent had one or more loss and no birth and one had two or more losses and one or two more births. In other words, the majority of the women who had undergone at least one USG had at least one live birth in the reference period. Among women who had only a live birth, 29 per cent had a USG done compared to 36 per cent among those who had at least one loss or both live births and loss. However, the analysis based on NFHS data has some limitations as it cannot be identified whether the loss is due to induced abortion, spontaneous or still birth. On doctors advice Results also show that among women who had given live birth and did not have any loss, a significantly higher proportion (45 per cent) of them availed the USG test. These women were not seeking USG for identification of sex of the foetus but were possibly interested in its progress based on a medical practitioners advice. An analysis of 16,000 women also found that among those who were alerted for pregnancy complications like vaginal bleeding, 64 per cent of them were likely to go for USG compared to 38 per cent who were not alerted. Similarly, those who were alerted to any kind of three complications (vaginal bleeding, convulsions but not due to fever and prolonged labour), 60 per cent had undergone USG compared to 37 per cent of their counterparts who were not alerted for any complications. 7. Child domestic work suffers from statistical invisibility: ILO The world over, around 15 million children work as paid or unpaid domestic workers, of which at least 10.5 million are below the legal minimum age, according to an International Labour Organization (ILO) report titled Ending Child Labour in Domestic Work , released on the occasion of World Day Against Child Labour. These children work under conditions either hazardous or tantamount to slavery says the report. Not surprisingly, in these slavery-like conditions where physical, mental and sexual abuse is rampant the report establishes through individual case studies from across the world girls far outnumber boys. In fact, 71.3 per cent of children employed between the ages of five and 17 in domestic work are girls (2008 statistics). The report looks at the many factors that

contribute to the abusive situation around domestic child labour; the vulnerability to physical and sexual abuse, the impact on health, how they move far from their homes and families leading to isolation and discrimination. Collection of data Significantly, the ILO observes that this sector in general suffers from statistical invisibility, and emphasises the need to work toward collecting data on child labour, an imperative to policy-making. This, it notes, has hindered action in this sector. The ILO recommends stepping up research efforts particularly by public institutions to improve methodologies to capture and monitor the number of child domestic workers and working conditions, with a focus on those at the bottom rung. The report notes that worldwide only 10 per cent of all domestic workers are covered by general labourlegislation, while a fourth are completely excluded from national labour legislations. As a policy instrument, it suggests that the inclusion of domestic workers in labour law can make a substantial contribution to the creation of decent work opportunities and the professionalisation of the growing domestic workers sector. Education key The ILO reiterates the role of governments in providing more accessible and quality education, and ensuring this is a realistic and attractive option for those at risk of labour situations and their families. The report states: Measures to improve education and make it more accessible range from building schools to the reduction or elimination of direct and indirect costs, improved teacher training and curriculum reform. It adds that a common theme among all interventions to date has been linking trade union child labour efforts to broader national and international initiatives to ensure education for all and improve education quality. In its recommendations, the ILO calls for increasedregulation through inspections, more labour laws that deal with legal working age and working conditions, and punitive action.
CURRENT AFFAIRS (13.06.2013) Part 2

8. Solar Mission-II projects to have 75% local content Bidding for 750 MW to start next month The Government has decided that 75 per cent of 750 MW solar projects, to be offered under the second phase of Jawaharlal Nehru National Solar Mission, will be built with local content. This has put to rest all uncertainties pertaining to the use of local content in the Mission because of US pressure. We want to encourage domestic industry also. The bidding would start in the coming month, said Farooq Abdullah, Ministry of New & Renewable Energy (MNRE). The US has dragged India to the World Trade Organisation (WTO) over mandating of domestic sourcing in the first phase of the Mission. WIND POWER The MNRE would move a proposal to the Cabinet to re-instate accelerated depreciation benefit to wind power generators. We hope in the next couple of weeks, it will go to the Cabinet. We want to give accelerated depreciation for two years. At the same time, Generation Based Incentive Scheme would continue for a longer period, said Abdullah. The scrapping of accelerated depreciation benefit to wind power generators has hit the competitiveness of small and medium enterprises sector, the largest investors in captive wind power projects, according to the Indian Wind Power Association. Frances Solairedirect unit Solairedirect Energy India Private Ltd, the subsidiary of Paris-based Solairedirect Group, on Wednesday announced the commissioning of its 5-MW solar park in Rajasthan. This is the first project of the European company in India. We have bid under Punjab policy for 20

MW. The bids are likely to open on Friday and we expect our bid to be competitive, said Gaurav Sood, Managing Director for the Indian unit. We are also looking to sign power purchase agreements with private developers, Sood told mediapersons. The company bagged the Rajasthan project under Jawaharlal Nehru National Solar Mission in December 2011 at Rs 7.49 per kWh. 9. Patnaik seeks special status for Odisha; slams Centres politicaldiscrimination After Bihar Chief Ministers show of strength in Delhis Ramlila Grounds in March, Odisha Chief Minister Naveen Patnaik too, brought his demand for special status for the State at the Centres doors on Wednesday. Addressing a rally of thousands of Biju Janata Dal (BJD) workers here, Patnaik accused the Manmohan Singh-led UPA Government of following a policy of political discrimination in grant of Central assistance and reiterated his demand for special category status. The UPA Government is following different policies for different States, Patnaik said, alleging that the self-interest of the Congress party had become the sole criteria for Central assistance ignoring the just demands of States like Odisha that fulfil all the criteria required for grant of special status. The Central Government has been giving funds to different States on political considerations. Should the money paid by crores of taxpayers be used for a narrow interest of a political party? he said. Pegging his demand for special status with Oriya dignity and aspirations of the four crore people of the State, Patnaik attacked both the Congress and the BJP in Odisha for describing the Delhi gathering as an amusement rally. Speaking in Odiya, which he said to be not too comfortable with, Patnaik also invoked the cause of the poor tribals living in and around mining areas and blamed the Centre for their neglect. I strongly believe if Odisha is given special category status, we can root out poverty from Odisha in less than a decade, he added. 10. French nuclear reactors to be tested in China prior to supply for Jaitapur The nuclear reactors of French company Areva will go into production first in China before being supplied to Jaitapur in Maharashtra. Areva will supply China two reactors that are under construction, said French Ambassador to India Francois Richier. You will see for yourself how safe the reactors are when they work in China, he said to clear apprehensions on safety. France is also going to build similar reactors in Jaitapur. He was speaking to members of the CII here in an interactive session. The Jaitapur Nuclear Power Project in Maharashtra comprises 6X1,650 MW light water reactors to be built in cooperation with France to generate 9,900 MW of power. If built, it will be one of the largest nuclear power generating stations in the world by net electrical power rating. Areva and Nuclear Power Corporation of India have signed a multi-billion contract worth around $9.3 billion for the project. There is no French nuclear equipment or reactor in India. This will come in the future but is still in the concept stage, he said. This will lead to joint collaboration in future in nuclear energy, which will be critical forIndias power needs, he said. Negotiations on supply of reactors for the Jaitapur plant are going on as several issues are stake. This includes the price of equipment and financial details of the project that is valued at close to $10 billion. It takes time, but we are confident that at the end, this will fly. It (deal) should be finalised in a matter of months, but how many, I do not know. But they (officials) are working hard, he said. Richier said that the reactors that are supposed to be supplied to Jaitapur nuclear power plant are Fukushima resistant, provided some things are modified. However, this no big deal, he said. France gets nearly 80 per cent of its electricity from nuclear power. And after the Fukushima incident in Japan, in which the reactors were damaged due to a Tsunami, the French government has decided to audit all its reactors on safety, he told newspersons on the sidelines of the meeting. Maharashtra is in need of more electricity and nuclear reactors will provide it in bulk and cheap. Each mode of power generation comes with its own risks but nuclear power is the safest in the world, he insisted. The Areva Group, which reported annual revenues of 9.342 billion for 2012, has delivered 98 nuclear reactors worldwide, and

four of its EPR reactors are under construction at Olkiluoto 3 (Finland), Flamanville 3 (France), Taishan 1 and 2 (China), and one is planned at Hinkley Point in the UK. On Tamil Nadu, Richier said that the State was a hot spot for French companies to set up their operations. There are nearly 75 CEOs of French companies located in the State. In India, France has a total investment worth $18 billion of which nearly 25 per cent is in Tamil Nadu, he said. 11. GST won't be a game-changer, only a name changer The Empowered Committee of State Finance Ministers' design squeezes out the politics from the new tax but makes it unacceptable as an alternative to the existing structure "There is no politics in GST... It will not fetch any votes to any political party." This is how Sushil Kumar Modi, Bihar's finance minister and chair of the Empowered Committee (EC) of State Finance Ministers, summarised his description of the designof the Goods and Services Tax (GST) at a recent meeting with national chambers and tax professionals. The price he had to pay to win consensus of the foot-dragging states was to make it so banal and insipid that it would largely preserve the status quo of the taxes that they levy. He might succeed in making GST inevitable, but it will not be a "game-changer", only a "name changer". It is not something that will set the Indian economy free from the cage of the Hindu rate of growth. Under the EC model, GST will have two components: one levied by the Centre (CGST), and the other by the states (SGST). Both will apply to a common base of goods and services. Goods will be classified in four baskets: exempt from tax, taxable at a nominal rate (mainly precious metals taxable at one to two per cent), taxable at the concessional rate, and taxable at the standard rate. The base for goods, as well as their division into the four baskets, will be the same as what it is under the value-added tax (VAT) currently levied by the states. The status quo will also prevail for the base for services. The current base for the service tax levied by the Centre will be adopted for both CGST and SGST, except that it will be broadened to include those services currently under the exclusive domain of the states (for example, movie admissions). This status quo for the base would mean no tangible reduction in tax-cascading that occurs through taxation of raw materials, parts, and capital goods acquired for use in production and distribution in exempt sectors. GST has been estimated to provide a boost to the gross domestic product of 0.9 to 1.7 per cent, but all of this is critically dependent on a substantial reduction in cascading. There will be no GST on real property and, thus, no credit or offset allowed for the building materials and equipment acquired for use in commercial and industrial construction. Petroleum will come within the scope of GST under the Constitution, but is kept outside the GST law at least initially. There will be no credit for the taxes on exploration, development, refining or distribution of petroleum. The alcohol industry will continue to suffer the pain of cascading in perpetuity since it will be excluded (exempted) from the GST domain within the Constitution itself. Exemptions are rampant in the service sector, as well. The most notable is the exemption for virtually the entire infrastructure sector. This means no offset for the taxes that get embedded in the cost of highways, bridges, railways, and international shipping. There is speculation that electricity generation and distribution may also meet the same fate. Health and education sectors are also exempted, but the amount of cascading in these sectors is relatively small. The Central Sales Tax (CST) and the entry tax are other major sources of cascading under the current system. Both of these were to be subsumed under GST, except for an entry tax levied and collected by municipalities. The states have now sought a broader exception for the entry tax, i.e., for any entry tax in lieu of Octroi levied by the state. The states also remain

apprehensive of revenue loss from the elimination of CST. They are actively considering options to continue it at two or four per cent. With neither a pruning of the exemptions nor any change in the composition of the concessional rate basket, the revenue-neutral rate for SGST is being worked out to be close to the current rate, which is approximately 12.5 per cent. Assuming full harmonisation of CGST and SGST tax bases, the CGST revenue-neutral rate could also be in the 10 per cent-plus range, yielding a combined rate of 22.5 per cent-plus. A tax at this rate would be bad economics and bad politics. It would erode compliance, and be susceptible to leakages and intense pressures for further exemptions. It would be a drag on the service tax, which would experience a near doubling of the tax burden from the current rate of 12.36 per cent. For goods, the combined CGST+SGST rate would remain approximately the same as the current VAT plus the central excise rate. However, with conversion of the invisible central excise into a visible CGST, consumers would find GST twice as painful. Little wonder that Modi is soliciting advice from the national chambers on creative ways of hiding the tax from the consumers. GST may be inevitable, but few would be enthralled by the model the EC has developed. State governments would be well advised to go back to the drawing board and put some politics back into the GST design by broadening its base and lowering the rates. Without it, GST will remain a mirage - a squandered opportunity for visionary reform of our tax system. 12. Interests in conflict Coal probe shows business in politics needs to be tackled The Central Bureau of Investigation on Tuesday raided, and registered a first information report against, two Congress politicians. They are Naveen Jindal, who owns Jindal Steel and Power Ltd (JSPL) and is a member of the Lok Sabha; and the Andhra film maker-turnedRajya Sabha member Dasari Narayana Rao, once minister of state for coal. Essentially, a company in Mr Jindal's group is alleged to have bought, through an intermediary company, shares in Mr Rao's Saubhagya Media at prices more than three times the market rate. The difference, it is being argued, was the payment for allowingthe allocation of several captive coal mines to JSPL's operations, which vastly helped that company's bottom line. On the one hand, this is a fairly straightforward accusation of corruption and bribery; if it is proved, there exist laws to deal with it. On the other hand, it throws up further knotty questions. After all, it is worth noting that Mr Jindal and Mr Rao were both men of business and both were from the same party. Nor are they alone; an increasing number of members of Parliament (MPs) are businessmen who have entered politics, or senior politicians who have extensive business interests in either their own names or in those of close associates and family members. In this case, if an attempt was indeed made to pay off Mr Rao, it was thought possible to try and conceal it under the cloak of regular business transactions. Matters can get even worse when the direct pay-offs are replaced with more complex transactions perhaps business favours of one sort or another, or crucial information. Yet India's thinking on conflict-of-interest issues remains sadly backward. This is not to say that India has no regulations on the books. Lok Sabha members, for example, are expected to declare their assets and liabilities - if not their actual interests. Before joining a debate, an MP is expected to declare all personal or pecuniary interests in the matter at hand. Ministers are forbidden to have any connections with businesses that are related to the work they conduct for the government. The Rajya Sabha maintains a register of members' interests, which includes lists of consultancies and majority shareholdings, but it is far from exhaustive. It is not made public. The primary check on any overlap between business and political interests of an MP is his or her fellow parliamentarians - Lok Sabha members' votes can be "challenged" by another member if a conflict of interest is perceived; the House ethics committee is expected to investigate any declarations of conflict.

The sad truth, however, is these genteel systems have not evolved enough to match the rapidly changing ways in which administrative processes can be subverted. Even in theUnited States, where a substantial ethics staff examines declared interests of Congress members and federal employees to discover conflicts and require divestiture of officials' holdings, loopholes are regularly discovered - most recently, regarding insider trading. In India, no declarations or challenges have been issued in many years. Meanwhile, the Election Commission is supposed to take up complaints of unethical behaviour by ministers; it has long failed to do so, or even to make the Rajya Sabha's book of interests public - which might have made Mr Jindal and Mr Rao more cautious. The mechanisms exist, but it seems they do so only on paper. If there are loopholes in the current regulatory system, they need to be plugged. Politicians and bureaucrats need to realise public opinion will not sit by while the regulatory system rusts. 13. Tightening constraints to inclusive development Rapid and inclusive growth in the medium term does not look too likely if one examines the array of unattended constraints The current economic discussion focuses on managing the ongoing stresses on our external finances and an almost desperate search to revive economic growth from itsmeagre five per cent annual rate. As I wrote recently, neither of these is going to be easy ("BoP: Zero Dark Thirteen?", March 14, and "Early exit from economic stress?", May 9). Today, let us lift our gaze beyond these short-run exigencies and assess theprospects for reverting to a high (and inclusive) growth trajectory in the medium term. The outlook does not look too promising if one examines the array of unattended constraints that are getting sharper by the year. To keep it manageable, let me focus on just four such constraints, which have strong sociopolitical roots that render them especially intractable. Anti-employment laws Twenty years after a draft Cabinet note was readied to loosen our exceptionally restrictive labour laws (one of Indira Gandhi's most damaging, anti-poor economic legacies), no progress has been achieved. The consequences continue to be profoundly (and increasingly) negative. Sixty-five years after Independence, over 90 per cent of our 500million strong labour force ekes out its living in "informal sector" occupations with scant job security and low incomes. Industrial employers have every reason to avoid taking on new "regular" employees and to shy away from large-scale operations in labour-intensive sectors like textiles, garments, leather products, toys and electronics, which were the hallmark of hugely successful employment-intensive industrialisation in East Asia since 1970. Little wonder that formal sector wage employment has stagnated, total employment has grown little in the most recent period (2004-05 to 2009-10) for which reasonable data are available and the share of agriculture in total employment has remained unusually high (around 50 per cent) despite the sharp drop in the sector's share in GDP (to 15 per cent). The much-touted "demographic dividend" of a youth bulge is being frittered away by our benighted labour policies and could easily morph into a massive, intractable problem of job scarcity, unemployment and underemployment. The huge disincentives to employ workers in large and medium-sized industrial units have also seriously stunted the growth of our manufacturing sector, which has stagnated at 15 to 16 per cent of GDP for many years, compared to 30 per cent plus in most East Asian nations including China. Of course, other factors have also mattered but probably less than our exceptionally restrictive labour laws. With the stagnation of labour-intensive manufacturing, where will the "youth bulge" find low-skill employment? In sum, our labour laws continue to grievously weaken the most effective mechanism forassuring "inclusiveness" in the development process for our most abundant resource of low-skill labour.

Fiscal populism Broadly defined, the second major constraint on rapid, broad-based growth is the penchant for fiscal populism, fuelled by competitive, short-horizon politics at all levels of government. This has at least two dimensions: a propensity for premature launching of ill-designed entitlement programmes (for example, legal rights to work, education, food and so on); and a widespread "subsidy culture". The first has been massively strengthened during the last nine years of the United Progressive Alliance government, without first undertaking the reforms necessary to make these programmes effective and efficient. This means continuation of massive leakages (for example, estimated at 50 per cent and higher in the public food distribution system), rampant corruption and rent-seeking and strong vested interests against reform (to, say, conditional cash transfers or voucher systems). Both types of fiscal populism spawn high fiscal deficits with their attendant growth-retarding dangers of high inflation, large external imbalances and high interest rates and debt. The second, "the subsidy culture", has a longer history and continues to undermine the economic viability of key sectors. Electricity subsidies (especially for agriculture) have contributed majorly to the parlous situation of our electric power sector. They have also led to over-pumping and falling water tables in much of North and West India, amplifying the looming crisis in water availability. Foodgrain subsidies have distorted the agricultural economy and retarded the development of non-food crops. The growing subsidy on urea fertiliser has seriously weakened soil fertility. The massive dieselsubsidy (now declining) has weakened energy security and hurt the environment. The explosive growth of mobile telephony in the last 15 years has demonstrated that subsidies are unnecessary for high growth and inclusive reach of a sector. But old habits die hard. Weaknesses in governance and administration Governance and administration are huge subjects. They clearly affect all dimensions of economic and social life, especially for poorer segments of society. They determine the quality of personal safety, justice, property rights, contract enforcement and the delivery of publicly provided goods and services. Worryingly, there are clear signs that governance has been deteriorating over time. There are at least two broad reasons for this. First, over time, politics has become more of a "business" and less about public service and ideological commitment. Huge sums are raised and spent on campaigning for office and "politicking" between elections (mostly under the table), which have then to be paid off by various subversions of public policies and decisions. "Crony capitalism" has increased greatly, especially in resource sectors, such as mining, land allocation/use, telecom spectrum and large government contracts. Secondly, it is generally agreed that the quality and probity of civil services have worsened over time for many reasons, including: the quality of entrants (for decades, many of the best people have opted for the growing opportunities outside government services); the ramping up of caste-based reservations or quotas since 1990, which has severely diluted the meritocracy principle; the increasing "politicisation" of public administration at all levels and the growing spread of bribery and corruption in government-citizen transactions. Taken together, the entropy in governance is likely to hurt future development. The challenge of urbanization Normally, development experience worldwide suggests that urbanisation is associated with higher productivity and growth. However, in India, this association may be diluted by the well-known weakness of governance institutions in our cities and towns. Can anyone recall the name of a prominent mayor? Until the early 1990s the Indian Constitution did not recognise sub-national governments below the level of state governments. The "third tier" was missing. The passage of the 73rd and 74th Amendments in 1993 corrected this lacuna

and accorded a role to panchayati raj rural elected institutions and urban local bodies (ULCs). Although this was a major step forward, municipalities and other ULCs remain largely fledgling institutions with limited powers for mobilising and allocating resources. Against this background, the expected increase in India's urban population by over 200 million between 2010 and 2030 poses a daunting challenge for urban governance. While there are some signs of hope, the general outlook is far from reassuring. Without a much more serious effort at urban institution building by the central and state governments, the realistic prospect is for rapid expansion of ill-governed and under-financed urban habitations, which impede the reaping of the economies of agglomeration associated with wellfunctioning cities and towns. Such inchoate urbanisation may prove less an asset and more a drag on rapid, inclusive developmentin the long term. So, all things considered, the return to high growth with inclusion poses arduous challenges in the years ahead. 14. Stem coal scams by scrapping captive mining The CBI has filed a first information report (FIR), formally charging Congress MP industrialist Naveen Jindal and the former junior minister for coal, Dasari Narayana Rao, in the coal mines allocation case. They are charged with fraud and corruption: the CBI alleges that Jindal's firms misrepresented facts and paid an amount of Rs 2.25 crore into Rao's company to get the coal mines allocated to them. In the past, many coal mines have been allocated in fairly dubious circumstances by the government to private players. The government's auditor reckons that between 2005 and 2009, over 15,350 million tonnes of coal under the ground, worth about Rs 1.86 lakh crore, have been allocated. This valuation may not be accurate. But the fact remains that unless India overhauls its entire policy governing coal, such instances of arbitrary allocation will continue. Coal mining was nationalised by law in 1973, creating one state-owned behemoth Coal IndiaBSE -2.09 % (CIL) to mine and sell coal. Today, CILBSE -2.09 %is a listed company but is plagued by inefficiencies and being probed by the Competition Commission of India for abuse of its monopoly powers. Meanwhile, the government decided that to speed up growth, captive coal mines could be allocated for companies generating power or making metals or cement. Thus was born the flawed policy of arbitrary allocation of coal mines. This policy must change. The government must first scrap the Coal Mines Nationalisation Act of 1973. It should then allow qualified mining companies from India and overseas to mine coal in the country. The most transparent way of deciding who will get these licences would be to auction the revenue share or royalty that will go to the Centre and states. For each mine, the company that quotes the highest revenue share should get to exploit it. A dedicated portion of the governments' share of revenues should be used to compensate locals affected by mining, rehabilitate them to lead a dignified life. This policy will bring dividends for all stakeholders in society and eliminate graft.
CURRENT AFFAIRS (14.06.2013) Part 1

1. A trojan horse at the judiciarys door Even so, the creed of judicial independence is our constitutional religion and, if the executive use Article 222 to imperil this basic tenet, the Court must do or die Justice Krishna Iyer A recent proposal for a Judicial Appointments Commission as structured by the government poses a grave threat to the independence of the judiciary. According to media reports, the Commission is likely to consist of seven members the ChiefJustice of India and two senior-most judges of the Supreme Court, the Law Minister, two eminent jurists nominated by the President, and the Leader of the Opposition.

If past experience is a guide, eminent jurists enjoying or aspiring to enjoy political power, or beguiled by official patronage, have displayed little warmth and much hostility to the independence of the judiciary and the rule of law. The present proposal will require a constitutional amendment. Draft Bill In April 2013, media reports indicated that the government was contemplating reform proposals regarding appointment of judges to the Supreme Court and the High Courts. A draft Bill by the Law Ministry then headed by Ashwani Kumar was to submit the Judicial Appointments Commission Bill to the Cabinet by April 22. On April 15, 2013, a letter signed by many senior lawyers (including Fali Nariman, M.N. Krishnamani, Shanti Bhushan, Ashok Desai, K.K. Venugopal, P.P. Rao, K.N. Bhat, Mukul Rohtagi and the author) was sent to the Law Minister, requesting him to make available to the public and the Bar the draft of the proposed Bill to ensure a robust, informed and critical debate. The plea fell on deaf ears and the draft Bill remains a well-guarded secret. In the first week of June, the new Law Minister, Kabil Sibal, is reported to have said: Just as judges have enormous stake in the appointment of judicial officers in the higher judiciary [the Supreme Court and the 24 High Courts], the government has an equal stake. Since both of us have stakes in the appointments of members of the higher judiciary, the consultation of both of them is absolutely necessary. The government must have a say. ( The Hindu , June 2, 2013) The collegium system This article deals only with the government proposal. It does not deal with how to reform the collegium system. The principal criticism against the collegium system is that it is nontransparent; personal likes and dislikes and prejudices weigh with individual judges in the collegium; the mandatory effective consultation process is wholly opaque and unknown to the public; and meritorious candidates from the Bar and the High Courts are overlooked for undisclosed reasons. It must be highlighted that the collegium system has not attracted any significant criticism that political favourites or pliant judges have been appointed. Supreme Court judgment The current appointment mechanism is the result of two judgments of the Supreme Court viz Presidential Reference No. 1 of 1998 (unanimous) and SCAORA vs. UOI(seven against two). The two judgments overruled in part the majority view in S.P. Gupta vs. UOI by holding that in case of a difference of opinion, the CJIs view as reflected through the collegium would have primacy over the view of the Central government. The concern of the judgments was to eliminate political interference at the stage of appointment. The court observed that it was obvious that the provision of consultation with the Chief Justice of India was introduced to eliminate political influence even at the stage of the initial appointment of a judge, since the provisions for securing his independence after appointment were alone not sufficient for an independent judiciary. The judgments laid down a mandatory consultation process between the constitutional authorities, including the Central government which has inputs from various intelligence agencies. The complaint that the Central government is not consulted or has no say in the matter is misleading and incorrect. Current scenario The government is upset because the executive does not now have the primacy it enjoyed earlier. The vigorous judicial scrutiny and oversight of executive misdemeanours in the 2G scam and Coalgate litigations (apart from many others) has rattled the executive. The present administration is smarting under these decisions and has been consistently attacking all

constitutional authorities such as the Comptroller and Auditor-General, the Chief Election Commission and the judiciary which acts as a check on executive power. Historical background For the new generation of citizens, it is necessary to recall the experience of the past resulting in the collegium mechanism. Congress administrations have been in power for over 52 of the last 63 years of constitutional governance. Consistent attempts have been made to undermine and subvert the independence of the judiciary and the rule of law. On April 25, 1973, a day after the delivery of the judgment in the Fundamental Rights case ( Kesavananda Bharati ), the Indira Gandhi government, departing from earlier conventions, superseded three of the senior-most judges (who had decided against the government) and appointed A.N. Ray as Chief Justice of India. Justice Ray had decided three major cases in favour of the Central government though in the minority namely the Bank Nationalisation case, the Privy Purse case and the Kesavananda Bharati case. The government stand was to appoint forward looking judges who shared its philosophy a euphemism for compliant judges. This led to vigorous public protests all over India. J.C. Shah (former CJI), M.C. Setalvad, C.K. Dapthary (two former Attorney-Generals) M.C. Chagla (former Chief Justice of Bombay), V.M. Tarkunde, (former judge of the Bombay High Court), K.T. Desai (former Chief Justice of Gujarat) and N.A. Palkhivala condemned the supersession as a grave threat to judicial independence. After the declaration of Internal Emergency in June 1975 (as a sequel to the disqualification of Indira Gandhi who lost her election petition and could not obtain a complete stay from the Supreme Court), a calibrated, predetermined attack on judicial independence was organised and implemented. Mass transfers of 16 independent High Court judges, including A.P. Sen, Chinnappa Reddy, B.J. Divan, Sankalchand Sheth, J.R. Vimadalal and P.M. Mukhi, from their parent High Courts were made. Additional Judge U.R. Lalit was not confirmed. Justice S. Rangarajan was transferred to Sikkim because he delivered a judgment in favour of Kuldip Nayar (preventively detained) and a Service Judge R.N. Aggarwal who concurred was reverted as a Sessions Judge (after four years in the Delhi High Court). These were all punitive measures to intimidate independent and fearless judges and undermine their morale. During the Emergency, the Constitution was extensively amended. Judicial review was almost eliminated and a two-third majority of judges was mandated for invalidating legislation. The press was censored and Opposition leaders were preventively detained without trial. After the fall of the Janata government, Indira Gandhi came back to power in 1980. Law Minister Shiv Shankar issued a circular claiming power to transfer High Court judges and attempted to transfer some existing judges and refused to confirm some additional judges. This led to the famous case of S.P. Gupta vs. UOI in which, by a majority, the Supreme Court held that in case of a difference of opinion, the government view would have primacy over the view of the Chief Justice of India on appointments and transfers. Post-1980 (till the evolution of the collegium mechanism), many quipped: Better to know the Law Minister than the law. It was widely believed that the executive was blocking appointments recommended by the CJI unless its nominees were cleared by a trade-off. Further, it was the perception of many that favourable orders could be obtained by the executive from compliant judges for dubious considerations. Failed system The collegium system is now current since 1993 (a span of about 20 years) and several criticisms and shortcomings have surfaced as mentioned above. Reform of the above system is necessary but that should not be brought about by restoring a failed system which posed a threat to the independence of the judiciary and the rule of law. The Judicial Appointments Commission is so structured as to revive the dominant voice of the political class by

including the Law Minister, two eminent jurists nominated by the government and the Leader of the Opposition. In sum, with all its shortcomings, the present collegium system is definitely superior to the earlier one. The attempt to restore the predominant voice of the political class in judicial appointments and transfers will amount to subverting the basic structure of the Constitution and will be a recipe for disaster. Each one of us must strongly resist this attempt. The present proposal is a poisoned chalice, an ill-concealed wolf in sheeps clothing. To conclude, I quote the venerable Justice Krishna Iyer hands off judges is too sacred to be sacrificed. The governments attempt to restore the predominant voice of the political class through the Judicial Appointments Commission is a recipe for disaster 2. Dealing with inequalities Developing and emerging economies may not exactly be dazzling in the current overall grim global economic climate of joblessness and sluggish growth. But the region has registered rising employment and narrowing income inequalities, relative to their richcounterparts, since the 2007-08 meltdown, says the International Labour Organisations World of Work Report 2013. The backbone of this promising story are the middle income groups in these countries, which have expanded from 263 million at the turn of the century to 694 million a decade later. In stark contrast is the shrinking middle class of the advanced world, illustrated, for example, by a 4 percentage point drop in Spains middle-income group to 46 per cent between 2007 and 2010. The challenge for the developing world, however, is presented by the sections just above the poverty line. Their numbers have nearly doubled in the span of a decade to 1,925 million. Sustaining whatever modest progress has been made will depend critically on governments preventing such a huge segment from slipping back into the less than $2 a day income level. Indias Mahatma Gandhi National Rural Employment Guarantee Act has come in for particular mention for ensuring minimum wages for unskilled labour in rural areas, thus enabling a narrowing of income inequality. A highlight in the report is a 20 percentage point rise in the proportion of workers receiving minimum wages between 2004-5 and 2009-10. With elementary education a legally enforceable universal right now, a logical next step would be for the UPA government to give additional thrust to augmenting the skills set of the population in the working age. With some 25 per cent of the population under 25 years of age, India would be better placed to take advantage of the demographic transition of the industrialised world marked by manpower shortages. Indeed, Germanys readiness to train Indians in engineering and other technologies, as well as in the German language, could open up a win-win scenario for both Berlin and New Delhi. While over 14 million jobs are needed to return global employment rates to pre-crisis levels, a little more than that number are said to have attained working age in 2013. Thus the case to put jobs uppermost on the reform agenda cannot be over-stated. Noteworthy in this context is the ILOs emphasis on entrenched negative perceptions that public intervention in questions of redistribution and workers rights are somehow antithetical to growth. The catastrophic consequences of the post-2008 policies of economic austerity, especially in the Eurozone countries, provide a lasting lesson on the virtues of stimulus-oriented policies for the current times. 3. The retreating global divide on same sex bonding The stunning victory of Blue is the Warmest Colour, winning this years Palme dOr Cannes prize, reflects the sea change in the attitudes around sexuality and same sexrelationships globally. The Steven Spielberg-led jury selection of an extremely intimateportrayal of love, sex and joy between two young women, marks a triumph for gay cinema, and also for Adellatif Kechiche, the films Tunisian born French director. Extraordinarily, Steven Soderberghs film, Behind the Candelabra , the closest competitor to Kechiches film, also took on a gay theme. Bringing megastars Michael Douglas and Matt

Damon into a lip-locking embrace in the representation of a six-year affair between Liberace, a flamboyant over the top diva and pianist, and his much younger lover in the 1980s, the film leaves one wondering whether the likes of Amitabh Bachchan and Ranbir Kapoor could pull off such a pairing in a manner that helps to build respect for gay relationships in India. This years award is even more poignant as it was given on the same day as thousands in France protested against the countrys recently enacted same-sex marriage law that also protects the rights of gay couples to adopt. France became the 14th country to legalise same sex marriage. In the U.S. Attention now turns to the U.S. Supreme Court, which recently heard a challenge to two laws restricting marriage to a man and a woman. A decision is expected soon. Nothing in the American Constitution explicitly requires invalidation of a law denying gay marriages, but Chief Justice John Roberts, a Conservative, will not want to deliver a decision that will look retrograde in two years. Whether he votes to uphold either or both laws, his decision will be analysed for his views on gay marriage and currenttrends. In India, a senior counsel argued in support of a Delhi High Court decision to read down the scope of the sodomy provision in the Indian Penal Code, to apply only to non-consensual sexual conduct (whether straight or gay) more than a year ago. The Supreme Court has yet to deliver its decision, which will have significant ramifications on gay citizens and their fundamental rights in India. The courts position becomes all the more significant given that the subject of sex and sexuality continues to be addressed in separate registers, with an out of touch generation of politicians expressing prejudices openly and shamelessly, as witnessed in the parliamentary debates on the reform of the rape law in March, and a younger generation that is already exhibiting public displays of affection, and demonstrating a healthy level of comfort with its sexuality and sexual preferences. Global standards Responding more openly to these global cultural shifts is critical if neo-liberal India seeks to be taken seriously. Diversity in the workplace, including representation of women, gays and lesbians has come to be regarded as a good business practice by corporations everywhere. Sheryl Sandberg, Facebooks chief operating officer in her recent book Lean In : Women, Work, and the Will to Lead , argues that women must take leadership positions in todays global economic structures, which demands that men step up to their duties at home as equal domestic partners. On issues of sexuality, Beth Brooke, global vice-chair at Ernst and Young, or Ashley Steel, vice-chairperson of KPMG (U.K.) and Lord Browne, former chief executive of BP, have all spoken openly about their same sex relationships, reflecting a more gender and homo-friendly environment in corporate culture. Several global companies, such as Amazon, Microsoft and Google have made public statements in favour of lesbian, gay, bisexual, and transgender (LGBT) rights, including same-sex marriage. These very workers may end up stationed in the new emerging economies. Discriminatory practices and laws in countries like India will be forced to change if investment is at stake. If India continues to toot its horn as a global player, then it must play by global standards. Changes in the workplace must reflect the changes in wider public attitudes, and the increasing culture of openness of a Facebook generation of young people. There will always be resistance to change. And the courage of the politician is clearly not found in sycophancy and vote bank politics that characterises todays political environment. It rests in doing the right thing, as French President Franois Hollande has done in the face of some of the largest protests seen in France since the 1960s, including by a far-right essayist, Dominique Venner, who shot himself dead at the altar of Pariss famous Notre-Dame, in protest against the vile law legalising same-sex marriage. The courage to do the right thing, whether by the Spielberg committee at Cannes or Hollande culminated in the performance of the first same-sex

wedding in France on May 29. In his wedding speech, one of the grooms recognising his marriage as a political act as well as of love,quoted Martin Luther King: The law may not be able to make a man love me, but it can keep him from lynching me. His spouse added: After the hatred, its time to talk of love. With several countries becoming more receptive to the idea, India needs to re-examine its discriminatory laws and practices on the subject 4. Action plan to unlock Rs. 7 lakh crore investments stuck in projects Manmohan sets up Project Monitoring Group Faced with prospects of a continued decline in economic activity, a tumbling rupee and falling investor interest, Prime Minister Manmohan Singh on Thursday directed the fasttracking of infrastructure projects and unlocking of Rs. 7 lakh crore worth bank funded projects stuck for various reasons and lack of clearances at the Central and State level in a bid to investment sentiment. The government had identified nearly 40 such projects and all hurdles in the shape of approvals and clearances would be completed by next month to kickstart the process of giving a big boost to infrastructure projects. Dr. Singh, who chaired a meeting on the issue, directed the constitution of a Project Monitoring Group within the Cabinet Secretariat for monitoring all such projects whose total number comes to around 215. The Prime Minister directed that a special cell be created immediately in the Cabinet Secretariat. This cell would be in the nature of a Project Monitoring Group for all large projects, both public and private and would pro-actively pursue them so that these investment projects are commissioned on time, astatement issued by the Prime Ministers Office said. Briefing journalists about the status of these projects, Finance Minister, P. Chidambaram said the cell to be set up in the Cabinet Secretariat would fast-track all the stalled projects. The Finance Ministry had identified 215 projects where nearly Rs. 7 lakh crore of bank money was stuck. Push will be given to these projects, what we call low hanging fruits among 215 projects, so that they can quickly take off the ground. We will push that in the remaining period of June and I am sure by July, we will tell you which are the projects we pushed. We have identified around 30 to 40 such projects. Mr. Chidambaram listed out the time and cost overruns being faced by these projects as well as an action plan to remove implementation bottlenecks. While some of the bottlenecks being faced were in the domain of regulatory authorities at the Central level, a large number of impediments lay in the domain of State governments and local bodies. Mr. Chidambaram stressed need to have an institutional mechanism that has sufficient authority to coordinate with the authorities concerned and get these projects moving on the ground. The Prime Minister has directed that suitable officers be identified at the earliest and priority projects quickly identified to be taken for tracking, the PMO statement said. Similarly, the Administrative Ministries, in consultation with the Finance Ministry, and the Finance Ministry on its own also were tasked with the identification of such priority projects. The Cabinet Secretariat was directed to hold a meeting with Chief Secretaries of States to have State governments on board with this new mechanism. Commerce and Industry Minister Anand Sharma said his Ministry had done a compilation of projects in the manufacturing sector that were stalled due to various inter-agency bottlenecks. He also emphasised need to sensitise the State governments in order to elicit their cooperation. Pulok Chatterjee, Principal Secretary to the Prime Minister, said a list of projects of the public sector from various Ministries such as Coal, Power, and Shipping had been compiled. FICCI had also submitted a list of 52 projects in the private sector with an investment greater than Rs.1000 crore, which were delayed due to various bottlenecks. The Cabinet Secretary apprised that the Cabinet Secretariat has prepared an Online CCI Projects Tracking System portal for tracking projects of over Rs.1000 crore. 5. Cabinet clears Mental Health Care Bill

The Union Cabinet on Thursday cleared the Mental Health Care Bill, 2013 that makes access to mental health care a right of all persons. Such services should be affordable, of good quality and available without discrimination, it said. The proposed lawdecriminalises suicide. The Bill, in consonance with international laws, has the provision of Advance Directives described as a progressive and far-sighted step. No person who has recorded an Advance Directive to State that he or she should not be admitted to a facilityy without consent can be so admitted. A rights-based Bill also has a provision wherein a person with mental illness can appoint a nominated representative to take decisions for him or her. Under the provisions of the Bill, government has an obligation to provide half way homes, community caring centres and other shelters for mentally ill people. This has been planned under the District Mental Health Programme in the 12th Plan. In 2005, the National Commission on Macroeconomics and Health reported that 10-12 million or one to two per cent of the population suffered from severe mental disorders such as schizophrenia and bipolar disorder, and nearly 50 million or five per cent from common mental disorders such as depression and anxiety, yielding an overall estimate of 6.5 per cent of the population. The prevalence of mental disorders was higher among women, those who were homeless, poor and living in urban areas, Union Health and Family Welfare Minister Ghulam Nabi Azad told The Hindu . The new Bill, once approved by Parliament, will repeal the Mental Health Act, 1987, which had vested extraordinary power in the hands of the treating psychiatrists. There was enough evidence of misuse and unscrupulous families collaborating with psychiatrists in addition to badly functional or non-functional Central and Mental Health Authorities primarily because of lack of funds. Under the proposed new law, there is provision for voluntary admission with supported admission limited to specific circumstances; appeals can be made to the Mental Health Review Commission, which will also review all admission beyond 30 days and free care for all homeless, destitute and poor people suffering from mental disorder. The Bill provides right to confidentiality and protection from cruel, inhuman and degrading treatment, in addition to right to live in a community and legal aid. It bans the electric-convulsive therapy without anaesthesia and restricts psychosurgery, Mr. Azad said. He said the Bill tries to address the needs of the families and caregivers, and the needs of the homeless mentally ill. It provides for setting up Central and State Mental Health Authorities, which would act as administrative bodies, while the Mental Health Review Commission would be a quasijudicial body to oversee the functioning of mental health facilities and protect the rights of persons with mental illness in mental health facilities. 6. Indigenous navigation satellite set to fly on July 1 It is the Indian equivalent of the GPS satellite Indian Space Research Organisation has replaced a faulty component in the PSLV-C22 rocket and rescheduled the flight of the IRNSS-1A satellite, Indias first regional navigation satellite, on it for 11:43 p.m. on July 1, according to an informed ISRO official. The 1450-kg IRNSS-1A was earlier set to be sent up on June 12. It forms the countrys new and third category of multi-use spacecraft-navigation along with the older communication and remotesensing (or earth observation) satellites. It will offer motion and location information over the sub-continent just as the popular US Global Positioning System, or GPS, has done across the world for several years. ISRO says data from the indigenous system will be superior to information coming from GPS. The ISRO official told The Hindu that scientists replaced the defective part, an actuator that helps in the motion of the launcher, in the last few days. A catastrophe has been averted for the tried and tested PSLV, the official added. They noticed the problem with the actuator which helps in the motion of the launcher late last month during routine electric checks while assembling the second stage at the Sriharikota launch site. On June 1, ISRO said it would be late by a fortnight. The scientists have resumed integrating the vehicle; details of the problem with the actuator would be

known in subsequent days, the official said. Over the next days the four stages of the vehicle will be put together; the spacecraft mated with it at the top bay and finally fuel will be filled in the system a couple of days before flight. IRNSS-1A is one of the seven regional navigation satellites that will guide civil and military services on position of people or objects in the coming years. The next one, IRNSS-1B, is due in early 2014 and the full constellation is planned to be completed in 2015. The services cannot begin until the other navigation spacecraft are also up in orbit, according to ISRO officials. 7. Chidambaram hints at more reform measures Coal as well as gas pricing and FDI limit on various sectors will be resolved before this month end. Taking the cue from Fitch Ratings prescription advocating an acceleration in economic reforms that leads to a material improvement in potential growth rate consistent with stable consumer price inflation and external balance as one of the main factors that could trigger positive rating action, Finance Minister P. Chidambaram, on Thursday, provided a curtainraiser on a host of reform measures and policy decisions that were in the pipeline aimed at spurring investment and growth. I could not agree more with Fitch when it said more reforms are needed, said Mr. Chidambaram at a press conference the day after Fitch revised Indias credit rating outlook from negative to stable and went on to present the governments assessment of the state of the economy and the number of policy decisions that are to be taken during this month and the next on coal and gas pricing, review of FDI (foreign direct investment) caps on various sectors, including defence, to accelerate the process of investment and growth. I am looking forward to more reforms... I expect a number of decisions in the next few days and weeks... In June, you can expect a number of decisions taken and implemented that will accelerate reforms and spur investments in critical sectors, he said. Among them is the governments intent to give a push to 30-40 low hanging fruits out of the 250 private sector projects that can quickly take off the ground and, thereby, boost economic growth. I would think the following issues will be resolved before the end of June: Firstly, on coal pricing and coal allocation to power plants. Secondly, gas pricing. Thirdly, on FDI limit, and fourthly, on a number of steps that the Securities and Exchange Board of India (SEBI) is contemplating based on the Chandrasekhar Committee report, which was submitted on Wednesday, Mr. Chidambaram said. The Finance Minister indicated that the government was in favour of the panels recommendations on which the market regulators board was to take a view on June 25. We think the Chandrasekhar committee report is extremely positive, and they deserved to be accepted, of course, after discussion, he said. No need for panic over rupee fall On the more immediate concern in stock and exchange markets, Mr. Chidambaram held out an assurance to investors that there was no need for panic over the rupee depreciation. He pointed out that what was happening was not unusual to India as countries with large current account deficits (CADs) such as South Africa, Brazil, Mexico and Turkey had taken hits on their currencies. We are concerned about the volatility. I think steps are being taken to ensure that there is no volatilityThe rupee will find its level, and it is quite possible that it will regain some of the losses suffered in the last few days. I dont think we need to panic about what is happening in the rupee. It does put pressure on inflation, subsidy bill, especially on imported commodities, he said. Despite the pressure on CAD, the Finance Minister ruled out any further increase in import duty on gold saying I dont want to become too unpopular. We will see and appeal to the nation to stop buying gold as each ounce of the yellow metal has to be paid for in dollars while the customers buy it in rupees. On the issue of interest rates on loans, Mr. Chidambaram agreed that banks should pass on the rate cut to

borrowers and stated that he would call a meeting with bank chiefs to discuss the issue. While the RBI till date had eased rates by 130 basis points, the banks have passed on a mere 30 basis points to customers. On easing of caps on FDI, Mr. Chidambaram said the process of decision-making was on the last lap as the report of the committee headed by DEA Secretary Arvind Mayaram would be available early next week, and the matter would then be taken to the Prime Minister. 8. To go ahead with CIL disinvestment Finance Minister P. Chidambaram, on Thursday, maintained that the government would go ahead with the proposed divestment in Coal India Ltd. (CIL) after the voices of protest in the trade union is sorted out through discussions with the Ministry of Coal. A stake sale of 10 per cent of the Centres equity is expected to fetch Rs.20,000 crore to the exchequer. CIL disinvestment is on the list of companies that we have to disinvest in. But, the Ministry is talking to the union. There are some voices of protest. We will explain to them, Mr. Chidambaram said at a press conference here. While theCentre currently has a 90 per cent stake in the coal major, an inter-ministerial panel had last month had approved a 10 per cent offloading of the governments holding. 9. Let the rupee slide, and fast The rupee is overvalued. The RBI should allow it to fall rapidly to about 70 to the dollar, as an effective solution to the current account deficit. It is the duty of policy helmsmen to build confidence in the macroeconomic policy to say that there would soon be a return to the halcyon days of 8 per cent growth; inflation will be back to acceptable levels of less than 5 per cent; fiscal consolidation will be on track to around 3 per cent of GDP and that the balance of payments current account deficit (CAD) would be down to the safe level of 2.5 per cent of GDP. Furthermore, we would take comfort from green shoots in the global economy recovery which should raise alllifeboats. An article of faith appears to be that lower interest rates are a panacea for all the problems. Global Situation What would global economic policymakers do if it ultimately dawns on them that the world is in the midst of a long cycle of low growth? This view was brilliantly articulated in a pathbreaking work by a Russian economist Nickolai Kondratieff entitled Long Waves in Economic Life (1926) with each cycle lasting 50-60 years. While I have, for many years, written on the possibility of the long cycle of low growth ( Business Line, November 7), it is not very comforting to recall that poor Nickolai was shot for what was considered as a veiled attack on Stalins policies! Domestic impasse When the financial crisis hit the world economy in 2008, India was enjoying a 8-9 per cent growth rate, but it was soon hurt by lower and lower growth rates till ultimately in 2012-13, the growth rate fell to 5 per cent and consumer price inflation was in double-digits. With the Indian policy of lower and lower interest rates and a widening of the gap between savings and investments, the balance of payments current account deficit (CAD) rose to 5 per cent of GDP. Added to this, the rupee was kept relatively strong.Historically, in India, effective revival of the economy has been through a step up in public sector investment which, then, triggered private sector investment and a revival of industrial growth. In the current context, with the constraints on fiscal expansion, the authorities lay great store by offering lower interest rates to stimulate private investment. A corollary of lower bank lending rates is lower interest rates on deposits and other forms of financial savings. The exchange rate is clearly unsustainable, given the high CAD and relatively high inflation rate. It is an article of faith that capital inflows will continue uninterrupted, that inflation will come down and that the large CAD will shrink.

A gloomy possibility is low growth around 5 per cent, close to double-digit consumer price inflation, a 5 per cent fiscal deficit and a CAD of 5 per cent of GDP. Large capital outflows could put the economy into a tailspin. The policymakers focus on the Wholesale Price Index (WPI) is one of convenience as it shows a rate below 5 per cent; the more relevant index for the masses is the Consumer Price Index (CPI) which is slightly below double-digits. Essential to tackling the domestic side of the problem would be to provide for sufficiently attractive interest rates to encourage savings. The Government seems to erroneously believe that low interest rates and ample liquidity will step up investment. Hopefully, the RBI would not be too enthusiastic about the early break of the monsoon and refrain from cutting policy interest rates on June 17. There is irrefutable evidence to show that bans on gold and raising import duties do not help reduce the CAD, as all that happens is that gold comes through the unofficial channel financed by lower invisible inflows such as remittances. Again, the Government took comfort that the decline in international gold prices would reduce payments on account of gold; all that happened was that more quantities of gold were imported and there was no reduction in the amount spent on gold imports. The effective solution for the CAD would be to allow a depreciation of the rupee. It is best to allow the rupee to depreciate quickly rather than periodically support the rupee by forex sales by the RBI. The authorities should not be unnerved by the depreciation of the rupee during the past few days. Tackling CAD A premature intervention would halt the depreciation for a while, but still leave a disequilibrium. It is only when the rupee correction goes too far out of alignment, than warranted by inflation rate differentials, should the RBI intervene. The present rate of Rs 5859 is still heavily overvalued and intervention at this stage would be premature. A very slow depreciation encourages large capital outflows. While most observers are arguing how soon the rate will move to $1 = Rs 60, the correct question is how soon it will move to Rs 70, which indeed is the appropriate rate given the inflation rate differentials. To curb gold imports and correct the CAD, what is required is very attractive instruments which would be better than the return on gold. A 3 per cent real rate plus the consumer price inflation of, say, 9 per cent would yield a nominal return of 12 per cent plus inflation adjustment for the capital such an instrument would knock cold the demand for gold. As the CAD and inflation come down, the cost of such an instrument would also come down. Disequilibrium trap There is a strong possibility that if we persist with the present macroeconomic policy, we could end up with a disequilibrium trap of a 5 per cent growth, a 10 per cent consumer price inflation and a 5 per cent CAD a situation which would sooner or later explode. Early corrective action is imperative. 10. After the stimulus phase-out Govt errs in focusing only on financing current account deficit The US Federal Reserve has dropped clear hints that its long phase of quantitative easing, in which it bought bonds in an "open-ended" manner, will come to an end. It will not cease abruptly - which is why it is now being called a "tapering". However, even theprospect that the end of the Fed's massive stimulus, which flushed global markets withliquidity, is on the horizon has been enough to cause jitters among investors. The question that many should now ask is: what will be the medium-term fallout of the shift in the Fed's stance? In particular, how will it affect emerging markets - especially India? So far, under the influence of easy money, the stock market index in India has run up 4,000 points to around 19,000; bond markets, too, were long buoyed by one-wayinputs. The Sensex has taken a few losses. But it's the debt market that has seen the real action, with well over $3 billion of foreign money flowing out of Indian government bonds in the last two weeks. The rupee, in its recent rapid depreciation to close to 59 against the dollar, has suffered a fate similar to the

currencies of other growth-challenged emerging market countries - both Brazil and South Africa have seen their currencies hit a four-year low against the dollar. India, however, has a particularly large current account deficit, around five per cent of GDP, making it particularly dependent on foreign investors being willing to take on emerging market risk so that their inflowsfinance India's imports. On Thursday, Finance Minister P Chidambaram spoke obliquely about this situation when he called for a "long-term view" on the part of investors, and promised more reform that would address the problem. There weren't too many details on offer, but even the broad hints that Mr Chidambaram dropped suggest the government is looking at the problem primarily from a limited perspective of financing the current account gap, without addressing the fundamental cause of the deficit. He referenced, in particular, the reviewing of caps on foreign direct investment (FDI) in various sectors. Meanwhile, the Securities and Exchange Board of India on Wednesday raised investment limits for long-term foreign investors in government debt by another $5 billion to $30 billion. These two measures are, broadly, more of the same approach that the government has tried so far. They are not in and of themselves a problem, and should even be welcomed. But measures to promote FDI and FII holding of debt merely paper over the current account deficit problem - they do not solve it. As long as there is an imbalance on India's books with the rest of the world, these steps will never be enough. The focus on financing the current account deficit is, thus, the wrong focus. What is needed instead is to boost exports, and to improve India's macroeconomic fundamentals. The latter is complicated by the fact that the effects of the end of quantitative easing elsewhere may well upset India's monetary schedule, making the Reserve Bank of India less likely to reduce interest rates. The space to do so has to be provided from somewhere, however, and thus fiscal correction must accelerate - allowing borrowing rates to come down and investment to rise. Without that, investment-led growth - as well as consumption in rate-sensitive sectors like automobiles, real estate and so on - will not recover. Meanwhile, the lopsided balance of trade shows the need for fundamental reform. A good proportion of the current account deficit, for example, is due to imports of pulses and cooking oil. Pushing foodgrain-specific food security will make this problem worse, not better. And promoting exports will need basic labour law reform. This is where the government should be looking. 11. Turkish treatment The message from Taksim Square: religion and politics don't mix well In many ways, Recep Tayyip Erdogan's Justice and Development Party (AKP) has been good for Turkey. Ever since it came to power in 2002, the Turkish economy has grown quickly: average per capita income increased from $2,800 in 2001 to $10,000 in 2011; foreign direct investment expanded; and access to healthcare and housing improved. Far from being the "sick man of Europe" of the early 20th century, Turkey is among the healthiest countries in the region. The AKP has won three consecutive victories, the last one with nearly 50 per cent of the vote. It remained immune to the brief Arab Spring of popular protest that spread through North Africa and West Asia. Indeed, Turkey was hailed a beacon of "moderate Islamist" governance in a turbulent sea of religious and military autocracies. Now, ironically, Mr Erdogan and his government are being branded a civilian dictatorship by their domestic opponents. Popular feeling on this issue is running so high that overblown similarities with the Arab Spring are being made. A local protest against the demolition of an Istanbul park to make way for an "Ottoman style" shopping centre has expanded into a countrywide protest against Mr Erdogan's government. Judging from the violence of the crackdown in Taksim Square - reports say over 1,000 people were injured in Tuesday's police operations involving tear gas and rubber bullets - the government is clearly worried. And

worse, questions are now being asked whether the modern form of political Islam that Mr Erdogan was trying to establish can be as successful as earlier claimed. Despite his impressive economic performance, there has in fact been festering discomfort within liberal opinion at the growing de-secularisation with each electoral victory. From 2006 onwards, for instance, the AKP sought to lift the ban on wearing headscarves in schools and colleges, end discrimination against graduates from Islamic schools, criminalise adultery and restrict alcohol sale. All this was compounded by appointing conservative bureaucrats and then the notably devout Abdullah Gul as president, a ceremonial post considered a bastion of secularism. This precipitated a face-off with the powerful and aggressively secular military that ended with the AKP returning with a bigger mandate. A narrow constitutional victory has strengthened Mr Erdogan's hands - and, many think, his Islamic agenda. That is the real message from Taksim Square: a battle between religion and modernisation familiar from Turkey's post-1830s history. Kemal Ataturk's radical programme of westernisation dragged the truncated Ottoman Empire into the 20th century but since it benefited a minority (the business community and the army), he left a legacy of conservative discontent. The AKP's project is caught between these same forces. The lessons are universal, though: religious identity may bring in the votes, but it can never be a proxy for enlightened governance. 12. Assert political will to clear stalled projects Six months after setting up the Cabinet Committee on Investment (CCI) to remove hurdles in clearance of long-stalled mega projects, the UPA government has now announced formation of yet another panel under a senior official of the PMO to help the former restart 215 infrastructure projects where 90 per cent of the land has been acquired, or permissions from a single body are pending. This will be yet another committee to resolve a deadlock the government has failed to break even as 341 projects with a total investment of Rs 10.5 lakh crore are waiting clearance. The CCI has met only five times during the last six months without making much headway except appointing three committees to review the environmental clearance process for mining, the environmental impact assessment norms for buildings, roads and special economic zones, and unresolved bottlenecks in the road sector. How the formation of yet another panel will help is anybodys guess. Instead of appointing more committees, the CCI should meet more often than once a month and have a process to review projects that it had cleared earlier. There is need to put in place systems and processes with limited or no discretion at the hands of ministers and bureaucrats. The CCI must ensure that its decisions have gotten off the ground. It is not merely the bureaucracy that is holding back projects but also the politics behind it. Projects like Vedanta and Posco, for example, are caught in the political crossfire between a Congress-led Centre and an opposition-ruled state. What we need is minimum governance agreement between the major parties, not new laws, new ministers and new committees. This is something the National Investment Board (NIB) mooted by P Chidambaram sought to achieve before it was shot down due to interministry turf war. The NIB had powers to overrule ministries which the CCI does not have. It is now for the prime minister to assert his political authority and get things going. 13. Agency to probe Ponzi frauds is toothless Better late than never, the government has asked the Serious Fraud Investigation Office (SFIO) to inquire into the charges that some companies in West Bengal have been running fraudulent chit fund and Ponzi schemes, cheating tens of thousands of ordinary people. The office is a multi-disciplinary agency that not only investigates cases which have substantial involvement of public interest but also suggests improvement in systems, laws or procedures. Given the objective of reining in companies like Saradha, which enjoyed political patronage and ran its operations for several years until it collapsed like a house of cards, the Centre could not have entrusted the job to a better agency. Set up 10 years ago, the

SFIO suffers from several legal and structural inadequacies. For instance, it was constituted on the basis of the recommendations made by the Naresh Chandra committee report on corporate audit and governance. However, instead of giving it a statutory status as recommended, the government had made it an appendage of the ministry of corporate affairs. Whats more, its powers were restricted to examination of documents and lacked the powers of search, seizure and arrest. Though a half-hearted attempt was made to strengthen the SFIO when the Companies Bill, 2012, was passed by Parliament, it still can launch probe and prosecution only on the directions of the government. Unless the SFIO is given powers to start investigations, politicians in power can always prevent it from doing its duty. Those running fraudulent money schemes take advantage of the loopholes in the banking and company laws and that is why agencies like the Reserve Bank of India are unable to take preventive action. Even the Central Bureau of Investigation does not actually have the expertise to handle cases of the nature of Saradha scam and Coalgate. There is, therefore, an urgent need to give the SFIO teeth and greater functional autonomy. 14. World Bank sees India's growth touching 6.7% in two years The World Bank, on Thursday, lowered India's growth outlook for the current fiscal to 5.7% from 6.1% estimated earlier and also lowered the growth projection for the world economy to 2.2% from 2.4% that it estimated in January this year. Citing slower-than-expected expansion in China, India and Brazil, and a stubborn contraction in Europe as reasons for the slower growth, the bank said that India's gross domestic product in factor cost terms is projected to grow 5.7% in the current fiscal (ending March 2014), and then accelerate to 6.5% and 6.7%, respectively, in the subsequent two financial years. In its latest 'Global Economic Prospects' report, which comes twice a year and had last come in January, the World Bank has predicted developing countries would collectively expand by 5.1%, less than the 5.5% it estimated in January. This will be on the back of lower growth in China at 7.7% now vis-avis the 8.4% projected in January while Brazil's economic growth has been cut to 2.9% from 3.4% estimated earlier. Exports and private investment, which slowed sharply in 2012, are projected to strengthen between 2013 and 2015 and boost growth. However, how robust that recovery will be, will depend on the pace of policy and fiscal reforms, and remains subject to significant uncertainty and downside risks, it said, adding that some upside risks to the outlook include a faster-thanprojected pick up in global demand and a larger than expected decline in commodity prices. According to the report, India's greater dependence on foreign investment inflows to finance its significantly larger current account deficit compared to the past has increased its vulnerability to a sudden reversal of investor sentiment. "Several factors could result in a slowing or reversal of investment inflows -- an unanticipated monetary tightening in some high income countries; resurgence of debt tensions; escalation of geopolitical conflict; and even disenchantment with the pace or nature of domestic reforms," it said. The bank, however, feels that the continued progress in implementing reforms that relieve supplyside constraints, such as reducing energy supply bottlenecks, labour market reforms, improving the business climate, and investing in education, health and infrastructure would be the key to growth. Slower Growth the New Normal The Indian economy is expected to grow at 5.7% this year, according to World Bank's twiceyearly Global Economic Prospects report that had pegged the country's growth rate at 6.1% in January. The report also cut its outlook for global growth, citing a deeper-than-expected recession in Europe and a recent slowdown in some emerging markets. 15. The Food Bill will not serve the purpose, even for Congress The Congress-led UPA wants to make the right to food into law. Its strategists feel that this will send a powerful message that the Congress cares for the poor. They are wrong. Most

states already provide heavily subsidised food grain to the poor; some likeChhattisgarh and Punjab also distribute discounted pulses as a protein supplement to the poor. At last count, 14 states distribute subsidised food in some form or the other to the poor. This includes all four southern states. In fact, rice at Re 1 has been a staple of Tamil politics since 1967, when the DMK stormed to power on this simple, but effective, slogan, besides its opposition to imposition of Hindi. If the food security Billis finally implemented, all it will do is to supplement part of what these states spend on food subsidy with money from New Delhi. In the states, this could free up funds to spend on other projects, like subsidising edible oil. Where will the credit for that go to? To state governments, not to the Centre or the Congress party. The food procurement, storage and distribution system, operated by state-owned Food Corporation of India (FCI), is inefficient and riddled with corruption. India now has 77 million tonnes of grain in storage, more than double the required buffer stock for July 1. Much of this food mountain could be fiction: pilferage, spoilage, wastage and diversion to the open market are rife. The distribution system is expensive and inefficient. So, it might be a good idea to rethink the physical delivery and storage of food grain. The UPA's most ambitious scheme is to transfer most subsidies directly into bank accounts of the poor. Include the food subsidy in this scheme and revamp the FCI completely. It could have a limited role of trading in grain futures and options to ensure command over a minimum quantity of grain at any point of time. 16. Foreigners seem to be more upbeat on India Ratings agency Fitch has upgraded India from negative to stable. This development comes as the latest episode in what has become a trend. Foreign observers and investors continue to see India as a positive growth story, even as domestic players cower in the shadow of their own pessimism. Finance minister P Chidambaram has promised more reforms, is keeping the fiscal deficit on track and is optimistic that things will turn around. The World Bank is even more optimistic about the long term. The Bank's latest Country Strategic Partnership envisions India sustaining growth in excess of 8 per cent over the next 17 years to reduce its absolute poverty rate to a little over 5 per cent. Sure, the Bank wants happy scenarios on poverty, to meet its ownMillennium Development Goals, of which only one, halving global poverty by 2015, has actually been achieved in totality. India has the largest pool of the world's remaining poor and only by growing fast can the target of eliminating poverty by 2030 be achieved. The Bank observes a close correlation between, on the one hand, reducing both poverty and vulnerability to relapsing into poverty, and, on the other, growth of secondary towns. It wants to focus on urban development: the physical planning of efficient urbanisation and governance to make it participative and efficient. The Bank also wants to relocate its resources deployed in India to favour the least developed states. Both are sound initiatives. New Delhi can do a couple of things toleverage the Bank's strengths. The Bank can right now raise 10-year money at close to 2 per cent. India should present credible projects to utilise this window and lock in commitments vastly larger than the current $5 billion. Two, the Bank's expertise can be tapped to identify key challenges in the use of information technology and communications to address assorted problems in governance, financial inclusion, cyber security and privacy. Once the right questions are asked, it is easy to work on the answers. Addressing these long-term issues would serve to boost confidence in political commitment to stable growth.

CURRENT AFFAIRS (15.06.2013)

1. Rain will be copious in current monsoon, says IMD

Country to get 98 per cent of long period average for the season as a whole In what should come as a big relief to policymakers who are grappling with a slowdown of the economy, monsoon forecast models of the India Meteorological Department (IMD) have indicated that rainfall during the current monsoon would continue to be copious in the coming months, with a fairly uniform distribution across the country. Releasing an update of the long range forecast, IMD Director-General L.S. Rathore said the re-run of the models with fresh data obtained since the last forecast of April had reconfirmed the prediction that the country could get 98 per cent of the long period average for the season as a whole. In addition, they have shown that rainfall in July would be 101 per cent of the normal and that for August 96 per cent of the normal. The southern peninsular region Tamil Nadu, Kerala, Karnataka, Andhra Pradesh, Lakshadweep and Andaman and Nicobar Islands is likely to top the table with a rainfall of 103 per cent for the season as a whole, followed by central and north-east India with a rainfall of 98 per cent each and north-west 94 per cent. Central India comprises Maharashtra, Gujarat, Goa, Madhya Pradesh, Odisha and Chhattisgarh and the north-east region includes West Bengal, Bihar, Jharkhand, Sikkim, Assam, Nagaland, Tripura, Meghalaya, Manipur and Mizoram. The north-west region includes Delhi, Haryana, Punjab, Chandigarh, Uttar Pradesh, Rajasthan, Jammu and Kashmir, Himachal Pradesh and Uttarakhand. At a press conference, Dr. Rathore emphasised that though compared to south India, north-west India is likely to get lesser rains in absolute terms, it will certainly not be insignificant. Meanwhile, with the monsoon steadily progressing northward, the country as a whole has so far received 28 per cent more rainfall than normal. 2. The persisting problem of malnourishment India has higher rates of malnourished children than in sub-Saharan Africa One of the most significant critiques of the Indian economic growth model is that it has failed to encourage social development in its wake. It is well known that the country has higher rates of malnourished children than in sub-Saharan Africa. Malnutrition remains an enormously pervasive across the States. However, data put out by the Integrated Childhood Development Services (ICDS) that were compiled by the State governments reveals that there has been a significant improvement in the normal category of childnutrition. The proportion has gone up from 48 per cent in 2009-10 to 65 per cent in 2012-13, an increase of 16.6 percentage points over the four-year period. Severalinterventions have been made by the government, including the restructured ICDS that been rolled out in 200 districts, said Sayeeda Hameed, member, Planning Commission, in-charge of malnutrition. Ms. Hameed noted that these findings were preliminary and well be subject to more refinements. However, she maintained that this was certainly an encouraging step forward. Except the governments main effort to tackle child malnutrition, the ICDS has faltered for rather different reasons. An evaluation report on the ICDS, prepared by Program Evaluation Organisation of the Planning Commission (2011), observed a wide divergence between official statistics on nutritional status, registered beneficiaries and grass roots reality regarding core indicators. The study also revealed that official statistics on nutritional status of children generated departmentally do not represent grass-roots reality. Additionally, the inter-State comparison of child malnutrition throws up some perplexing findings. Only 18 per cent of Bihars children fall in the normal category, against the all -India average of 65 per cent. Surprisingly, only 53 per cent of Delhis children fall in the normal category a score that is third from the bottom. While Bihars growth story has received much attention, less known is the fact Bihar reports the highest proportion (26 per cent) of severely undernourished children, the highest proportion ( 56 per cent) of mild to moderately undernourished children and the lowest proportion (18 per cent) of children who fall in the normal category. Bihar is making a lot of effort in the social sector. Even after heroic efforts, it is lagging behind. The State has a lot

of catching up to do. Even States like Gujarat are better off, Ms. Hameed said. Interestingly, Andhra Pradesh, despite having a much higher per capita income, reports a higher proportion of mild to moderately undernourished children at 38 per cent than Jharkhand (35 per cent) and Rajasthan (34 per cent). Paradoxically, many high income States also report relatively high proportions of severely undernourished children. For example, the proportion of severely malnourished children in Haryana (5.2 per cent) is much higher than in Odisha (3.7 per cent). Additionally, 47 per cent of Delhis children are mild to moderately undernourished despite being one of the richest States in terms of per capita income. These findings confirm that high income alone is not a sufficient measure for ensuring that children are well nourished. Much greater attention needs to be paid to a host of other factors, including public provision of primary healthcare, water and sanitation and food security. Moreover, high growth rates do not necessarily translate automatically into improvements of the nutritional status of children. 3. A case of misplaced euphoria In a protracted period of gloom and persistent recession with feeble signs of recovery in a large part of the developed world, the World Bank, Brookings Institution and others can be forgiven for their euphoria over the accomplishment of a key Millennium Development Goal (MDG) of halving extreme poverty in the developing world five years ahead of the 2015 deadline. Average of 15 poorest countries Extreme poverty is measured with reference to a threshold of $1.25 per capita per day (in terms of 2005 dollars adjusted for purchasing power differences). This poverty line is the average of the 15 poorest countries. Those below it are condemned to a wretched, brutish and short existence. Yet, 970 million people will remain poor in 2015, with 84 per cent of them concentrated in South Asia and Sub-Saharan Africa. The latter is also the only region that will not achieve this MDG by 2015. Global poverty remains a rural problem with more than three-fourths of the extremely poor located in rural areas. However, as global poverty fell, so did the gap between rural-urban poverty. It reducedby half in East Asia and the Pacific by 2008, while in Sub-Saharan Africa, Latin America and the Caribbean, and South Asia, there was less progress. Projections differ but various scenarios suggest that poverty estimates in 2030 will range between three and nine per cent. Most projections, however, pay lip service, if any, to market and natural catastrophic risks. Rates of GDP growth observed in recent years are extrapolated withad hoc assumptions about changes in income inequality to arrive at poverty estimates in 2030. As policy buffers against the food price surge and financial crisis that followed in quick succession are far from adequate, vulnerability to such shocks remains a major concern. Besides, the havoc wreaked by natural disasters and conflicts often wipes out years of development. The Kashmir earthquake in 2005, for example, more than offset the gains from three years of development assistance. So while such shocks will continue to occur with the frequencies observed in the past, those associated with natural catastrophes may rise as global warming rises. It is indeed odd that while last years Global Monitoring Report (GMR 2012), prepared by World Bank researchers, drew pointed attention to vulnerability to food price and related shocks specifically the dire consequences for undernourished women and children the MDG projections in GMR 2013 gloss over this issue and paint a rosy picture of banishing extreme poverty and other deprivations in the next two decades (i.e. 2010 to 2030). Ad hoc assumptions about income inequality widen the range of projected poverty in 2030. With high growth and low income inequality, extreme poverty is likely to be about three per cent while the combination of low growth and high inequality yields a much higher incidence of extreme poverty (nine per cent). Neither the GMR 2013 nor studies by Brookings offer a definitive account of how growth and inequality interact. In fact, recent estimates point to a

worsening of income inequality in many countries (China and India) and improvement in a few (like Brazil). The important point is that if growth widens income inequality, ad hoc assumptions about inequality undermine the plausibility of projected poverty in 2030. The actual may well be outside the range projected. For poverty reduction, some forms of inequality matter more than others. Important ones include inequality in the distribution of assets, especially land, human capital, financial capital and access to public assets such as rural infrastructure. The fast growing economies of East and South-East Asia had the advantage of low asset inequality compared to other Asian and Pacific economies. In some countries, this followed land reforms and a better distribution of educational services. So, moderation of current income inequality while facilitating access to income-generating assets and the promotion of employment opportunities for the poor are imperative. Missing women Gender inequity is given short shrift in the MDGs and the focus is confined to differences in primary and secondary education enrolments. But gender disparities continue from birth to adulthood. The cycle of maternal and child malnutrition, morbidity and mortality, tends to perpetuate poverty over generations: a vicious cycle of low investment in women and in girls. Gender discrimination in access to health facilities, nutrition, education and security exacerbates this process further. Arguably, a more appropriate indicator of gender inequity is Amartya Sens measure of missing women. It is intuitive and appealing as it captures womens multiple deprivations over a life span. Comparison of census results for India in 2001 and 2011 points to a slight increase in the sex ratio a rise from 933 to 940 females per 1,000 males. But there is considerable variation in this ratio across different States. Haryana has the lowest sex ratio (877 females per 1,000 males) while Kerala has the highest (1,084). It is one of the two States (Puducherry being the second) where the number of women exceeds that of men while a few others (Karnataka and Andhra Pradesh) show higher sex ratios in 2011 relative to 2001. Female foeticide and infanticide are stark illustrations of discrimination that begins in the womb and continues thereafter lowering female/male sex ratio. Recent studies have drawn attention to the important role of institutions in growth acceleration and poverty reduction. Unfortunately, none of the recent studies (including GMR 2013) examines these links critically despite easy access to World Banks rich and up-to-date database on key governance/institutional quality indicators (voice and accountability, political stability and absence of violence, control of corruption, rule of law, and an aggregate index of institutional quality). Since institutional improvements evolve over time, in complex ways, extensive experiments were carried out in a study that one of us did. Even modest improvements in institutional quality are associated with significant effects on income and, consequently, on poverty. For example, with the voice and accountability index assumed to take on the average value of this index among the top 30 performers, and the historic growth rate of agricultural income, the poverty head-count index (or the proportion of poor) shows marked reductions in China, Bangladesh, India, Sri Lanka and Indonesia, relative to the base line. A key issue is institutional triggers that induce institutional quality improvements. A case in point is the right to information that has had remarkable effects in terms of transparency and accountability in India. Small cities The GMR 2013 (as well as a series of recent papers by World Bank researchers) make(s) a powerful case for rapid and well-managed urbanisation as key to overall poverty reduction. It rests on efficient rural-urban migration and better utilisation of agglomeration economies. Indeed, it is argued that these could also result in speedier rural poverty reduction. An important link in the chain are small cities (somewhat misleadingly referred to as the missing middle given their rapid growth). Their weak infrastructure, and poor hygiene and

sanitation are likely to turn them into slums with growing rural-urban migration. So the refrain is that investment must be directed to such cities to better exploit their growth potential. A premise is that more rural-urban migration will have a substantial pay-off in terms of higher wages in rural areas and greater diversification of rural economies. Fine, except that if this premise is turned on its head, more efficient land, labour and credit markets and better infrastructure in rural areas would not only help raise agricultural productivity but also enable diversification of rural economies and, consequently, discourage rural-urban migration. This dynamic overturns the World Bank thesis. In conclusion, neither the process of poverty reduction nor the projections for 2030 are plausible. So the prospects of eliminating extreme poverty remain fragile, grim and distant. In spite of the rosy picture painted by the World Bank, the prospect of eliminating extreme poverty remains distant 4. Elders need a fair deal Another World Elder Abuse Awareness Day comes up today, even as a steady stream of reports of elders being denied care and aid, indeed abused and attacked, comes in from different parts of India. The problems of the elderly are primarily economic, marked by the loss of independent incomes. Health-related problems typically dog them too. Lack of safety and security are added perils, especially in urban settings. Pan-Indiasurveys have revealed that almost 30 per cent of the elderly are subjected to some form of abuse or neglect, abandonment, and physical, financial or emotional abuse, often by their own family members. Many are left lonely. Yet, the absence of detailed data on crimes against the elderly in official compilations is striking, and points to inadequate focus on the issue. With improvement in life expectancy, the number of seniors in India is expected to reach 177 million in the next 25 years and 324 million by 2050 and women will constitute a majority of that cohort. By 2050, the global population of seniors above 60 is set to exceed the number of younger people. The challenges posed by an ageing population are clearly upon us. The Maintenance and Welfare of Parents and Senior Citizens Act, 2007, placed a legal obligation on children and relatives to enable the elderly to live a normal and dignified life. Senior citizens who are unable to maintain themselves financially shall have the right to apply to a maintenance tribunal for an allowance from their children and relatives. The tribunal may initiate the process suo motu . The Act also has provisions to ensure the state takes care of them, but in practical terms these are hardly of any help. Overall, this legislation is too narrow and ineffective to serve as the primary legal channel for guaranteeing the rights of the elderly. India now needs to set new priorities as its demographic profile undergoes a rapid change. It ought to put in place a comprehensive policy and programme interventions for older persons. Meanwhile, free healthcare, more old age homes, other kinds of affordable housing, and financial assistance in the form of pension and other payouts, especially to widows, have to be provided for. The right of an elderly citizen to live a life of dignity must be made justiciable. Programmes to enhance skills and knowledge in geriatric care are needed. According priority to the needs of senior citizens in development plans, including in infrastructure facilities, is essential. It is time separate ministries at the Central and State levels were set up to deal with issues concerning senior citizens. The government has a responsibility to protect the elderly and must take this job seriously. 5. On rape, from silence to justice Recently, the National Crime Records Bureau (NCRB) released its annual Crime in India report for 2012. It reported 24,923 police-registered rape cases across India, a slight increase of three per cent compared to last year. In Delhi city, the increase was much sharper: there were 585 reported rapes, an increase of 29.1 per cent from last year. No doubt in the coming days, headlines will exclaim a rise in rape across India, especially in Delhi. Perhaps they will report that Delhi remains the rape capital of India. While this may or may not be true, these

types of headlines do not tell the full story. Yes, rapes reported to police have increased. But it is wrong to assume that more reported rapes mean actual rapes have increased too. In India, as is the case across the world, sexual assaults reported to police reflect the tip of the iceberg of the reality of sexual assault beneath societys cold, murky waters. Children as victims Frankly speaking, in a country with 1.2 billion people, the NCRBs statistic on reported rape cases is a very low number. In contrast, a 2007 Ministry of Women and Child Development study surveyed 12,447 children across 13 States in India. The study revealed that 20.9 per cent of the children surveyed had suffered severe forms of sexual abuse, which includes sexual assault, making a child fondle private parts, making a child exhibit private body parts and being photographed in the nude. Given that children comprise more than one-third of Indias population, you begin to understand the tremendous gap between reported and actual incidents of sexual assault across all sectors of society. This gap points to a culture of silence that resists reporting, or even acknowledging, that sexual assault has occurred. Keeping this in mind, there is a more hopeful way to look at the higher reported rapes in 2012: more victims and their families overcame the pressure to keep quiet about sexual abuse. They preferred justice to silence. The media plays a powerful role in changing this culture of silence towards sexual abuse. For example, the medias focused coverage on the rape and eventual murder of the 23 year -old physiotherapy student on December 16, 2012 keyed massive public outcries, which pressured the government to strengthen sexual assault laws. As a result, the government enacted the Criminal Law (Amendment) Act, 2013, which broadens the definition of rape, increases protection for rape victims and makes punishments harsher. In the same way, if the media responsibly highlights the wrongs of sexual assault and the importance of acknowledging that it occurred, more victims will be encouraged to demand justice. But this leads to another problem. Overburdened One fact safely drawn from the NCRBs statistic on reported rapes is that more rape cases are entering Indias criminal justice system. It is a system overburdened and ill -equipped to effectively investigate and adjudicate its cases, which results in weak police investigation, long delays for courts to complete trials, low conviction rates and insensitive treatment of victims. In fact, according to the NCRB, in 2012 there was only a 23.3 per cent conviction rate for rape cases in India. Making matters worse, a large number of elopement cases clogs the criminal justice system: cases where a young girl and boy fall in love and run away together. The girls unhappy parents file kidnapping charges, police track down the wayward couple, and the parents compel their daughter to claim she was raped. Generally speaking, elopement cases become apparent soon after they are reported to police. An organisation called Counsel to Secure Justice conducted an informal study on rape cases in Delhi that analysed over 350 rape trial judgments from 2011. Interestingly, nearly onethird of the cases it analysed were elopement cases. The average case took approximately 32 months to wind its way through the criminal justice system and reach judgment. Not surprisingly, these cases had a less than an eight per cent conviction rate. The victim girl, who is the key witness in the case, would often recant her story when she testified, destroying the case. Ultimately, extensive media coverage and strong laws do not mean much if victims who report sexual assault have no faith in the system that delivers justice. The media should look more deeply into the NCRB statistics and report on stories that prevent justice; the stories to which the statistics point. That way, the media can pressure the government to ensure that the criminal justice system works for victims who have the courage to report sexual assault

crimes. They can play an invaluable role in breaking down the culture of silence that shrouds sexual abuse. While it is wrong to assume that more reported rapes mean an increase in assault, the media must examine national crime data in greater detail and expose events that prevent justice 6. Legal net can secure Katchatheevu claim There is no doubt an order issued by the Supreme Court of India is not binding on Sri Lanka, as Mr. Raju has said, but it must not be forgotten that the courts jurisdiction extends up to the contiguous zone (up to 24 nautical miles) of India. In his article in The Hindu, Chasing a boat we missed long ago (Op-Ed, May 27, 2013), Deepak Raju has criticised the futility of the pending litigation on Katchatheevu island and has described claims to retrieve the island as weak in international law. There is no doubt an order issued by the Supreme Court of India is not binding on Sri Lanka, as Mr. Raju has said, but it must not be forgotten that the courts jurisdiction extends up to the contiguous zone (up to 24 nautical miles) of India. Section 5 of the Maritime Zones Act specifically provides Indian courts with powers in the contiguous zone in matters where the security of India is involved. Therefore, matters pertaining to Katchatheevu which is 18 nautical miles off the Indian coast, fishing in the waters around it and the safety of fishermen could be argued to be well within the ambit of Indian courts. Also, the petition filed recently by M. Karunanidhi (former Chief Minister of Tamil Nadu) specifically lists as respondents the Union of India, through its Cabinet Secretary and Foreign Secretary, all of whom are accountable to the courts of the country. As Mr. Raju has pointed out, the Government of India has to amend the First Schedule of the Constitution to confirm the cession of territory, in accordance with the judgment in the landmark Berubari Union case. But, the governments failure to table the 1974 and 1976 agreements in Parliament has raised questions about its intention. Also, Mr. Raju points out that the treaties state that they are subject to ratification. According to Article 14(1)(b) of the Vienna Convention, ratification of a treaty is necessary when negotiating states have agreed that ratification is required. But there is no indication that the India-Sri Lanka agreements have beenratified by the President of India, once again leaving us to wonder whether there is a bona fide intention by the government in giving any legal effect to the agreements. Historical evidence Interestingly, he raises the question of whether the island was comprised in the Province of Madras as central to the claims on Katchatheevu. Historical evidence abounds that Katchatheevu was the zamindari of the Raja of Ramnad, and subsequently became a part of the State of Tamil Nadu. The Memoirs of the Governor of Ceylon from 1757 to 1762 clearly establishes the control of the Raja of Ramnad over the island. In 1921, a meeting of British officials in Colombo to discuss maritime boundary issues has referred to Indias territorial claim on Katchatheevu. After independence, the island was listed as a part of Ramanathapuram district in the 1972 Gazetteers: Ramanathapuramby the Government of Tamil Nadu. Apart from this, Mr. Raju has committed two serious omissions in his analysis. First, he has failed to explain the contents of the agreements, which is important to understanding their constitutional maintainability. The 1974 agreement between the Prime Ministers of India and Sri Lanka allows the vessels of India and Sri Lanka to enjoy in each others waters such rights as they have traditionally enjoyed but that each country shall have sovereignty and jurisdiction and control over the waters. The words of the agreement sow the seeds of legal confusion. Simply put, as per this agreement, our fishermen can legally fish in Sri Lankan waters but they can be arrested for the same under Sri Lankan laws. On the 1976 agreement

Second, he has neglected to cover the historical events leading up to the 1976 agreement. In June 1975, Emergency was imposed all over India. Consequently, the Tamil Nadu Government was dismissed in January 1976. While there was no parliamentary or legislative functioning or civil society activism possible, the Exchange of Letters on March 23, 1976 between the Foreign Secretaries of India and Sri Lanka constituted the 1976 agreement. It was agreed that fishing vessels and fishermen of India shall not engage in fishing in the Exclusive Economic Zone of Sri Lanka, but it made no mention of the traditional fishing rights guaranteed in the previous agreement. The contradictory and conflicting positions espoused by the two agreements, created in the background of political upheaval and uncertainty, have caused immense hardship to Tamil Nadus fishermen. According to reports, an estimated 500 fishermen have been killed in India-Sri Lanka waters over the past 30 years. It is not disputed that India must be bound by her international commitments, but the violations of international maritime and humanitarian laws by Sri Lanka and its navy have left India with no other choice but to review the agreements of 1974 and 1976. If the Government chooses to do so, it would be well within the purview of the Supreme Court to adjudicate the way forward. 7. U.S. to provide weapons to Syria rebels The U.S. toughened its line on Syria, promising rebels weapons for the first time, saying it had evidence the regime had used chemical weapons, a charge Damascus dismissedon Friday as lies. Britain and France, which had already said publicly that they believed the Syrian government had resorted to use of its chemical weapons stockpiles, welcomed the U.S. announcement. However, neutral countries such as Sweden, which warned of the risks of an arms race between the rival foreign supporters of the regime and the rebels, expressed concern. President Barack Obamas administration announced late on Thursday that it had reviewed intelligence reports and concluded that Syrian regime forces had used banned weapons, including sarin, in attacks that killed up to 150 people. U.S. officials refused to rule out moving toward arming rebels or imposing a no-fly zone, and said they would provide backing to the rebel Syrian Military Council. The President has made a decision about providing more support to the opposition. That will involve providing direct support to the SMC. That includes military support, deputy national security adviser Ben Rhodes said. But Damascus asked how Washington could continue to be regarded as an honest broker in U.N.-backed preparations for the proposed peace conference. The American decision to arm armed terrorist groups demonstrates... the direct involvement of the United States in the Syrian bloodbath, state news agency SANA quoted a Foreign Ministry official as saying. The New York Times cited U.S. officials it did not identifyas saying shipments to the rebels would include small arms and ammunition, and anti-tank but not anti-aircraft weapons. The Wall Street Journal reported that U.S. military proposals also include a limited no-fly zone over rebel training camps that could stretch up to 40 km into Syria from neighbouring Jordan. But France said such a plan would not be viable without U.N. authorisation, which would not be forthcoming given Russias strong opposition. Mr. Rhodes said the increased involvement of Lebanese Shia militant group Hizbollah in the conflict had added an element of urgency to calls for a tougher response from the U.S. and its allies. Gazas Hamas Prime Minist er Ismail Haniya denied reports the Palestinian Islamist movement too had fighters taking part in the conflict. 8. Policymakers, regulators to discuss Indian Financial Code in Patna today Top policymakers, several regulators in the financial sector and stock exchange representatives will debate the proposed Indian Financial Code in Patna on Saturday. The ongoing debate on the proposed code is being taken to the Eastern region by The Institute of Company Secretaries of India (ICSI) and BSE Ltd, which are organising a national seminar.

This is the fourth in the series of seminars being organised by the institute as part of its efforts to spread awareness on the proposed Indian Financial Code, after similar sessions in Hyderabad, Mumbai and Delhi. This seminar at Patna is being organised in keeping with the exhortation by the Union Finance Minister to hold more such seminars and discussions on the Indian Financial Code, S.N. Ananthasubramanian, ICSI President, said. He said ICSI had also offered to conduct focused workshops on the Indian Financial Code to generate and distil views across the regulatory spectrum. The Indian Financial Code was drafted by the Financial Sector Legislative Reforms Commission (FSLRC) headed by Justice (retd) B.N. Srikrishna. The Panel, which was set up in March 2011, submitted the report to Finance Minister P. Chidambaram in March. The Finance Ministry has now sought comments/suggestions on the report from various stakeholders by July 15. 9. Not force but inclusive growth can undercut the Maoist support base The Maoists have struck again, attacking a train in Bihar and killing kidnapped corporate executives in Maharashtra. They will continue to strike. These strikes must be rebuffed, perforce with the use of force. But it would be intellectual dishonesty and abdication of democratic imperatives for the state to act as if force alone can destroy the Maoist threat and provide industry with the security it needs to operate in areas close to forest lands. The jungles offer Maoists cover, shelter and refuge. Forest dwelling tribes are their recruitment pools and reservoirs of tacit support. Unless this changes, repression of Maoists would amount to a bloody war on some of the most vulnerable, defencelesssections of Indian society. When a farmer breaks new ground, tills the soil and readies it for planting a fresh crop, he rarely worries about the rodents, vermin and weeds he kills in the process. Similarly, miners do not bother about tribal people who occupy the surface of the land they intend to mine. They are swept aside, shunted off to new settlements to lead uprooted, purposeless lives amidst squalor, poverty, alcoholism and exploitation of multiple kinds. Their bitterness often wells into rage that makes them easy converts to Maoism. To defeat Maoism, this rage has to be pre-empted. To feed India's growth, coal, iron ore, bauxite and other minerals have to be mined, in large quantities. This often entails encroaching on tribal lands. But it must be done in the spirit not of expropriation that is dominant today but of accommodation and partnership prescribed by law and policy. The village council must be consulted, a sizeable share of the revenue of the mine must be shared with the displaced community, tribal youth must be trained for jobs that offer decent work and their collective sense of dignity left intact. If this means reduced profits for the miner or higher mineral costs or both, so be it. Such a change in development thinking is essential, to undercut the Maoist support base. For the diverse country thatIndia is, the only sustainable growth possible is inclusive growth. And that has to cover the most vulnerable ones as well. 10. Government must take up the responsibility to spur growth If only reviving economic growth were as simple as revising statistical numbers! TheCentral Statistical Office has corrected the figures for industrial output in April twice. However, even after an upward revision in electricity output, growth in the index of industrial production remains tepid: 2.3 per cent overall, 2.8 per cent in manufacturing, -3.0 per cent in mining and 4.2 per cent in electricity. Volatile capital goods production, which grew 1 per cent after recording 9 per cent growth in the preceding two months, has pushed down the index. The figures also reveal a decline in the growth of consumer durables bad news in a slowing economy. So, cries for the Reserve Bank of India(RBI) to ease monetary policy will grow louder, especially as the wholesale priceinflation has climbed down to 4.7 per cent for May. But, with food prices acting up and the rupee weak, the RBI would think twice about cutting its policy rates further. In any case, leaning on the RBI alone to revive investment is not a good idea. The government should act to end dither on clearances and clarify policy. It

is not enough to create fresh monitoring mechanisms. Individual babus and departments that fail to materialise clearances accorded by the Cabinet Committee on Investment must be penalised. The point is to cut red tape and fix responsibility for project clearances. Further, state-owned enterprises must spend their reserves to create infrastructure. The Centre must intercede with the courts to liberate iron ore mining from judicial bans. State monopoly in coal should end to enhance supplies for power production. Allocation of natural resources must cease to be opaque, in general. Subsidies should be trimmed to remove macroeconomic imbalances that deter investors. The government also needs to hire bright young number crunchers to make official statistics accurate. 11. Where are the doers? A multitude of advisors is no substitute I've ruminated once before about Lee Kuan Yew's dismissive comment on the India-China comparison: "Chinese do, Indians talk". Looking today at the government struggling to get projects off the ground, it is hard to disagree. The prime minister has plenty of advisors, but is desperately short of doers. He has the benefit of wisdom from the National Manufacturing Competitiveness Council, the National Knowledge Commission, the National Skill Development Council, the National Advisory Council, the Prime Minister's Economic Advisory Council, the National Innovation Council, and the National Security Advisory Board, besides plenty of individual advisors, with and without prefixes. That's a lot of people giving advice, writing reports and occupying sundry "bhavans" and multi-acre homes in Lutyens' Delhi. But look for the doers in the system, and they are scarce. The Delhi Metro's E Sreedharan stands out as a rareexception, perhaps alongside Nandan Nilekani. As for the rest, the less said the better. Has the National Manufacturing Competitiveness Council delivered a more competitive manufacturing sector? Negative. The rupee has fallen substantially in value against virtually any currency of substance over the last decade, yet the country has a record current account deficit and most Indian companies have a deteriorating balance sheet when it comes to net foreign exchange earned or spent. That means the problem with the current account deficit goes beyond gold, and lies in a competitiveness gap. Has India's knowledge sector improved? If you look at how Indian universities score in the international rankings, you wouldn't think so. By common consent, the skill development initiative has not worked out as hoped. And as for the National Advisory Council, its leading lights ignored warnings that the national roll-out of a rural unemployment guarantee programme would lead to largescale diversion of funds. Now the same leading lights complain that the programme has been poorly implemented. There must be a Chinese saying that good intentions are not good enough; if there isn't, we should invent one. Or take defence, where the effort has been to make up for past deficiencies in preparedness. Yet the fact is that the defence posture is undermined by delays and poor execution. In Daulat Beg Oldie, the Chinese had superior mobilising capability because a road from Ladakh's capital of Leh to DBO, sanctioned in 2003, was yet to be completed 10 years later. Indeed, the entire border roads programme admittedly sought to be put into higher gear - contrasts poorly with the pace at which transport infrastructure is being built on the other side of the Line of Actual Control. The sagas surrounding the indigenous development and/or manufacture of tanks, light combat aircraft, nuclear and conventional submarines and aircraft carriers, all of them behind schedule by many years, some by decades, add to the story. There is a desperate scarcity of people who can deliver what is promised - or, if the people exist, the system neutralises them. It was never very different; the doers were always a mere handful in a sea of mediocre nonperformers. In the history of the railways - whose maximum speed today is the same as it was in 1969, while China has built tens of thousands of kilometres of high-speed track - the only effective manager who improved performance dramatically was M S Gujral, railway board

chairman in the early 1980s. V Krishnamurthy did well at the Steel Authority of India before he took to the advisor's role, so did D V Kapur as the founder of a National Thermal Power Corporation that set new benchmarks in performance. So how about getting rid of many of the advisors, and finding some doers instead - if, that is, the government wants to avoid getting swamped by the hype about a certain doer in the Bharatiya Janata Party?
CURRENT AFFAIRS (17.06.2013)

1. MiG-21bis likely to serve IAF until 2019 Decommissioning of fighter will be two years later than scheduled The first supersonic fighter jet of the Indian Air Force Russian MiG-21bis which completed 50 years in service this April despite facing criticism following a substantialnumber of accidents, is likely to remain operational in its upgraded version until 2019 two years later than they were originally scheduled to be decommissioned. The Air Force took the decision owing to the delay in the commissioning of Indias own Tejas Light Combat Aircraft (LCA) and the purchase of 126 Rafale fighters from France for which the official contract is yet to be finalised. The Defence Ministry had stated that the Mig-21bis would be decommissioned in 2017. However, there has been nearly three-year delay in Tejas programme and the Air Force is yet to give operational clearance to it. According to IAF chief Air Chief Marshal N.A.K. Browne, India purchased 874 MiG-21s of various modifications since 1964. Of them, 264 are still flying. The MiG-21bis super Kopyo multimode radar system and French-made Totem 221G ring-laser gyro aiming-navigation system were sufficient for the Air Force to keep using the MiG-2bis until 2019. As things stand today, MiG-21 fleets upgraded Bison variant still forms a major chunk of the IAF fighter strength. While three out of the 69 Indian MiG-29 B/S fighters have been modernised in Russia as part of a $964 million contract inked in 2009, three more are scheduled to be delivered to India later this year. The remaining jets will be modernised at Hindustan Aeronautics Limited (HAL) in Nashik. These fighters will be fitted with the new Klimov RD-33 KM engine, the Zhuk-ME phased array radar and the Vympel R-77 beyond visual range air-to-air missile. After a number of accidents and its eventual two-year grounding, Defence Minister A.K. Antony had said plans to phase out equipment approaching redundancy were in place and non-upgraded MiG-27s and MiG-21s were being phased out progressively by 2016 and 2018 respectively. Till April last year, the IAF lost more than half of its MiG-21s, he told the Rajya Sabha. As many as 482 MiG-21s had been involved in accidents and as many as 171 pilots, 39 civilians and eight persons from other services lost their lives in these accidents. At that time, Mr. Antony had stated that both human error and technical defects were responsible for the crashes. Even now, MiG-21s account for nearly 10 squadrons of the IAF and the upgraded fighters present a cost-effective option to the Air Force as compared to other fighters.Several former ace fighter pilots swear by the versatility and safety of the MiG-21, which in the 1971 war emerged as a clear winner against the American F-104 Starfighter in air combat. The MiG-21 again proved its capability and prowess during the Kargil war in 1998. The induction of the first MiG-21s into 28 squadrons began in 1963 but in the years to come the Russian fighter came to be the mainstay of the IAF. In its long operational service, along with kudos it also attracted a fair share of criticism and avoidable media scrutiny.with its sleek frontal profile, fast acceleration and a high degree of flexibility in terms of role employment for both air-to-air and air-to- ground missions it remains the mainstay of the

IAFs combat fleet for a long time, recalled Air Chief Marshal Browne in the foreword which he wrote for the commemorative book to mark 50 years of the MiG-21s with the IAF, written by Air Marshal Philip Rajkumar (Retd.) and Pushpindar Singh. The IAF chief noted that post its upgrade to MiG-21 Bison in 2000, this aircraft continues to shoulder an important share of the IAFs operational responsibilities; something which we expect to continue for some more time in the future. Then, there is Air Commodore (Retd.) S.S. Tyagi, the former station commander of the IAF bases in Naliya and Jamnagar, who has done 6,316 sorties with the MiG-21, the maximum by any Air Force pilot. According to him, the MiG-21 is a very demanding aircraft that can help a pilot exalt his capabilities to the end of the skies but even a transitory lapse could be disastrous, more so during hard manoeuvring. 2. Muslims that minority politics left behind Pasmanda, a Persian term meaning those who have fallen behind, refers to Muslims belonging to the shudra (backward) and ati-shudra (Dalit) castes. It was adopted as an oppositional identity to that of the dominant ashraf Muslims (forward castes) in 1998 by the Pasmanda Muslim Mahaz, a group which mainly worked in Bihar. Since then, however, the pasmanda discourse has found resonance elsewhere too. The dominant perception is that Islam is an egalitarian religion and that Indian Muslims on the whole, especially in the post-Sachar scenario, are a marginalised community. The pasmanda counter-discourse takes issue with both these formulations. In terms ofreligious interpretation, Masood Falahis work Hindustan mein Zaat Paat aur Musalman (2006) has convincingly demonstrated how the notion of kufu (rules about possible marriage relations between groups) was read through the lens of caste by the manuwadi ulema and how a parallel system of graded inequality was put into place in Indian Islam. Caste-based disenfranchisement As far as the social sphere is concerned, Ali Anwars Masawat ki Jung (2000) has documented caste-based disenfranchisement of Dalit and backward caste Muslims at the hands of self-styled ashraf leaders in community organisations like madrasas and personal law boards, representative institutions (Parliament and State Assemblies) and departments, ministries and institutions that claim to work for Muslims (minority affairs, Waqf boards, Urdu academies, AMU, Jamia Millia Islamia, etc). The book also underlines stories of humiliation, disrespect and violence on caste grounds that various pasmanda communities have to undergo on a daily basis, at least in northern parts of India. Thus, pasmanda commentators contest the two key elements of mainstream Muslim or minority discourse Islam as an egalitarian religion and Indian Muslims on the whole as an oppressed community. Islam may be normatively egalitarian but actual-existing Islam in Indian conditions is deeply hierarchical. Similarly, all Muslims are not oppressed, or not to the same degree, at any rate: Muslims are a differentiated community in terms of power, with dominant (ashraf) and subordinated (pasmanda) sections. Consequently, the so-called minority politics, which has been quite contentin raising symbolic and emotional issues so far, is really the politics of dominant caste Muslims that secures their interests at the expense of pasmanda Muslims. Not surprisingly, a recurrent theme in pasmanda narratives is that minority politics has singularly failed to address the bread-and-butter concerns of the pasmanda Muslims, who constitute about 85 per cent of the Indian Muslim population and come primarily from occupational and service biradaris . The notion of minority and majority communities in India read primarily in terms of religious identity is of modern origin and linked with the emergence and consolidation of a hegemonic secular nation-state project. In this sense, while secular nationalism becomes

the locus of legitimate power and violence, Hindu and Islamic nationalisms become the sites of illegitimate power. The seemingly epic battles that are constantly fought within this conceptual framework around communal riots or Hindu/Islamic terror more recently in the post-9/11 world have been instrumental in denying a voice to subordinated caste communities across religions and in securing the interests of secular, Hindu or Muslim elites respectively. In this sense, the pasmanda articulation has highlighted the symbiotic nature of majoritarian and minoritarian fundamentalism and has sought to contest the latter from within in order to wage a decisive battle against the former. As Waqar Hawari, a pasmanda activist, says: While Muslim politicians like Imam Bukhari and Syed Shahabuddin add the jodan[starter yoghurt], it is left to the Hindu fundamentalists to prepare the yoghurt of communalism. Both of them are responsible. We oppose the politics of both Hindu and Muslim fanaticism. Faith and ethnicity The structures of social solidarity that pasmanda activists work with are deeply influenced by the entangled relation between faith and ethnicity. The domains of Hinduism and Islam are quite complex, with multiple resources and potentialities possible: in various ways they exceed the Brahminism and Ashrafism that have come to over-determine them over time. On the one hand, the pasmanda Muslims share a widespread feeling of Muslimness with the upper-caste Muslims, a solidarity which is often parochialised by internal caste and maslak based (sectarian) contradictions. On the other hand, pasmanda Muslims share an experience of caste-based humiliation and disrespect with subordinated caste Hindus, a solidarity which is equally interrupted by the discourse around religious difference incessantly reproduced by upper caste institutions. Since the express object of the pasmanda movement has been to raise the issue of caste-based exclusion of subordinate caste Muslims, it has stressed on castebased solidarity across religions. As Ali Anwar, the founder of Pasmanda Muslim Mahaz, says: There is a bond of pain between pasmanda Muslims and the pasmanda sections of other religions. This bond of pain is the supreme bond That is why we have to shake hands with the pasmanda sections of other religions. This counter-hegemonic solidarity on caste lines is effectively encapsulated in the pasmanda slogan Dalit-Pichda ek saman, Hindu ho ya Musalman (All Dalit-backward castes are alike, whether they be Hindu or Muslim). At the same time, birth-based caste distinctions are sought to be transcended from the vantage point of an egalitarian faith: We are not setting the Dalit/Backward Caste Muslims against the so-called ashraf Muslims. Our movement is not directed against them. Rather, we seek to strengthen and empower our own people, to enable them to speak for themselves and to secure their rights and justice We welcome well-meaning people of the so-called ashraf background who are concerned about the plight of our people to join us in our struggle. It is in the midst of such complex negotiations, the punctuated nature of faith and caste-based solidarities, that the pasmanda emerges as a political factor. Overall, pasmanda politics has relied on transformative constitutionalism and democratic symbolism to attain its social justice goals the deepening of existing affirmative action policies, adequate representation of pasmanda Muslims in political parties, state support for cottage and small-scale industries, democratisation of religious institutions and interpretative traditions, etc. Obviously, it confronts all the challenges that any counter-hegemonic identity movement faces in its formative phases: lack of resources and appropriate institutions, cooption of its leaders by state and other dominant ideological apparatuses, lack of relevant movement literature, internal power conflicts, and so on. Also, as Rammanohar Lohia said: The policy of uplift of downgraded castes and groups is capable of yielding much poison. A first poison may come out of its immediate effects on mens minds; it may speedily antagonise the Dvija without as speedily influencing the Sudras. With his undoubted alertness

to developments and his capacity to mislead, the Dvija may succeed in heaping direct and indirect discredit on the practitioners of this policy long before the Sudra wakes up to it. These are the challenges that the pasmanda activists face while confronting the ashrafiyadominated minority politics. However, their struggle for a post-minority politics is on and one hopes it will democratise Indian Islam in the long run by triggering a process of internal reform. The pasmanda critique of the majority-minority or the secular-communal dyad will also contribute to a democratic deepening that will benefit all of Indias subaltern communities in the long run. The pasmandas quest for empowerment will help democratise Indian Islam and deepen democracy in the country 3. Irans golden moment The vibrant elections that have unexpectedly thrown up Hassan Rouhani a moderatecleric as Irans next President have once again exposed those quick to label Iranian democracy a sham. Mr. Rouhanis victory following an electoral landslide, brushing aside his supposedly favoured conservative rivals, has demonstrated that the expression of popular will and its capacity to breathe fresh life into the system is far from extinguished. These elections are also important for another reason: they impart a sense of closure by healing the wounds left behind by the 2009 presidential elections, which had triggered unprecedented street protests after many Iranians suspected those polls had been rigged to give Mahmoud Ahmadinejad a second term. Four years on, the Islamic Republic appears more politically unified and ready to engage with the rest of the world. Mr. Rouhanis victory is the product of the complex, competitive dynamics that the managed pluralism of the Iranian political system sometimes generates. The Guardian Council overseeing the elections disqualified Mr. Ahmadinejads nominee, Esfandiar Mashaei, as well as the former President, Ali Akbar Rafsanjani. While Mashaei supporters had no one place to turn to, the latters centrist supporters promptly joined the reformists in rallying behind Mr. Rouhani as their sole candidate. Mr. Rafsanjani and another former President, Mohammad Khatami, deserve special applause for their nimble footwork in forming this unprecedented coalition which, in the end, unlocked a surge of youthful energy that energised the polls. Supreme Leader Ayatollah Ali Khameneis appeal to the people to come out and vote irrespective of their electoral choice seems to have played a significant part in generating voter participation on an astounding scale. Above all, the Iranian people deserve credit for not allowing their hopes to extinguish and keeping faith in the capacity of their political class to carry out a critically important course correction. Mr. Rouhanis emergence as President offers a unique opportunity for the establishment of a mutually beneficial relationship between Iran and the West, especially the United States. The U.S. has to understand that the moderates in Iran can consolidate themselves only if they deliver on the economy a question that is inextricably linked to the lifting of sanctions and progress on the nuclear table. The mantra of regime change will have to be replaced by a doctrine of pervasive engagement if meaningful progress is to be achieved. For India, Mr. Rohanis rise rekindles hopes of revival of the Khatami era, when the relationship between the two countries was at its peak. 4. At G-8 meet, the big test for U.S.-Russia relations Russian President Vladimir Putin will meet U.S. President Barack Obama on the margins of the G-8 summit in Northern Ireland for their first bilateral since Mr. Obama embarked on his second term six months ago. The meeting may be crucial in deciding whether they can build a constructive partnership after the much-vaunted reset launched when Mr. Obama entered the White House in 2009 ran aground towards the end of his first term. Moscow struck a hard tone on U.S. criticism of its crackdown on the opposition after Mr. Putin reclaimed presidency in May 2012; relations between the two countries dipped to a low

point at the turn of the year when they adopted legislation penalising each other for alleged human rights abuses. Missile defence In the past few months, Moscow and Washington have since sought to rebuild ties focussing on strategic issues. Mr. Obama and Mr. Putin have recently exchanged confidential letters formulating their proposals for enhancing bilateral cooperation. Experts have identified two key issues that may help revive the spirit of the reset. One is U.S. plans for a global missile shield, which remains a sticking point in bilateral ties. If we find common language [on missile defence], we could speak of a beginning of new positive dynamics in U.S.-Russian relations, said Alexei Pushkov, head of international affairs at the State Duma, lower house of the Russian Parliament. Two years ago, Mr. Obama told then Russian President Dmitry Medvedev that he would have greater flexibility on issues of discord with Russia, particularly missile defence, after winning a second term ticket. Following Mr. Obamas re-election, the Pentagon announced a shift in its missile defence plans from Europe to Asia that would involve scrapping deployment of more powerful missile interceptors near Russias borders from 2018. Mr. Obama reportedly also offered to give Moscow political assurances that the U.S. missile defence would not target Russia. The pledge would come in the form of an executive agreement, which does not require congressional approval. The Kremlin however rejected the offer reiterating its demand for legally binding security guarantees. Russias position [on missile defence] differs in many respects from the U.S. vision, said Yuri Ushakov, Mr. Putins foreign policy aide. I do not think agreement can be reached o n the missile defence issue in Lough Erne. Syria The other key issue where Russia and the U.S. are struggling to find common ground is Syria. Moscow and Washington have backed opposite sides in the conflict, but last month they agreed to co-sponsor an international peace conference to stop the bloodshed in Syria. It is for the first time in recent years that Russia and the U.S. have come up with a joint initiative that may have a lasting effect on international relations globally, said Prof. Veniamin Popov of the Institute of International Relations, Russias premier diplomatic school. However, the idea of bringing the warring sides in the Syrian conflict to the negotiating table has run into serious disagreements over the list of participants and the terms of peaceful settlement in Syria. Moscow wants all main opposition groups, and not just the West-backed National Coalition Council to attend the proposed forum. It is also pushing for Irans participation, which is opposed by the U.S. Moscow and Washington also differ on whether Syrian President Bashar al-Assad can be part of a peaceful transition in Syria. Some experts have called these differences insurmountable, but Mr. Putin expressed optimism that positions can be bridged. I hope very much that our joint work will give a chance for settlement in that country [Syria], he said earlier this week. In an interview to the Russia Today TV channel, the Russian leader also set out his overriding task in dealing with the U.S. help it climb down from its grandstanding as the worlds master. The collapse of the Soviet Union left America as the worlds single leader. But there was a catch associated with it in that it began to view itself as an empire An empire cannot afford to display weakness, and any attempt to strike an agreement on equitable terms is often seen domestically as weakness.

I think that the current [U.S.] administration realises that it cannot solve the worlds major issues on its own. But first, they still want to do it, and second, they can only take steps that are fit for an empire Otherwise they would be accused of weakness It certainly takes time to change those patterns of thinking, Mr. Putin went on to say. I dont think that its impossible. I think weve almost come to that point. I very much hope we will reach it soon. In their search for a constructive partnership, Washington and Moscow will have to overcome differences on the global missile shield issue and Syria 5. A Kao-boy till the end B. Raman, one of Indias first external intelligence agents, died here on Sunday after a battle with cancer. He was 77. Raman served for 26 years in the Research and Analysis wing, right from the day it was carved out of the Intelligence Bureau in September 1968 on Indira Gandhis orders, until his retirement in 1994. An IPS officer of the 1961 Madhya Pradesh cadre, Raman was on deputation to the Intelligence Bureau when he was handpicked by Rameshwar Nath Kao to join R&AW, set up in the aftermath of the wars with China and Pakistan. He retired as Additional Secretary in the Cabinet Secretariat. In the last six years of his career, he headed R&AWs counter-terrorism unit. Throughout his career, he was, in his own words, known as a man with a poker face. As someone who showed no emotion or passion on his face. The first assignment that Kao, who headed R&AW, gave him was to be in charge of the agencys Burma branch. He was there for five years handling analysis as well as clandestine operations, an early phase in his career that earned him the sobriquet BurmaRaman. In his book, The Kao-boys of R&AW Down Memory Lane (2007), Raman gave a detailed account of the external intelligence agencys work that contributed to the liberation of Bangladesh. Kao had given the agencys operatives two priority tasks to strengthen its capability for the collection of intelligence about Pakistan and China and for covert action in East Pakistan. In a rare foray by a spook into writing about field operations, Raman disclosed that providing intelligence to policy makers and the armed forces, to train Bengali freedom fighters in clandestine camps, to network with Bengali public servants from East Pakistan posted in West Pakistan and in Pakistans diplomatic missions abroad to persuade them to cooperate with the freedom fighters and mount a special operation in the Chittagong Hill Tracts where Naga and Mizo hostiles had sanctuaries and trainingcamps. He recorded the secret negotiations Rajiv Gandhi had on behalf of Indira Gandhi with Sikh leaders before Operation Bluestar in 1984. Indira Gandhi was keen that these be recorded so that posterity would know how she tried in vain for a negotiated solution before she sent the Army into the Golden Temple. Raman was entrusted with this task. He says he had the negotiations secretly recorded and spent endless hours transcribing them. These records were handed over to the organisations archives, but nobody knows where these are now. Raman strongly believed that covert capability was an indispensable tool for any state that had external adversaries. He served as the head of RAWs counter-terrorism division from 1988 to 1994. He declined an offer by the Narasimha Rao government to be the intelligence coordinator for the north-east after his retirement, preferring to return Chennai. He was a member of the special task force appointed by the government in 2000 to revamp the intelligence apparatus and a member of the National Security Advisory Board. He was also a member of the committee set up to examine the intelligence failure that led to the Kargil incursion. In his retirement, especially in the last 10 years, he was active in writing about strategic affairs, touching on a range of internal and external issues. He spoke with precision and clarity. He was quick to respond to sudden and developing events such as terror attacks,

posting his perspective and preliminary views on anti-terrorism portals and social media sites. He believed that all strategic thinking and discussion should have the national interests in mind, even though his analysis always took into account the political and social underpinnings of conflicts and crises. He was active on Twitter as @sorbonne75, and despite his illness, continued to post messages on his timeline on issues of current national interest. In the last week of May, he tweeted that Ind-Japan shd make Chinas seeming strengths into strategic vulnerabilities. He also talked about his illness on Twitter, saying he wanted to create awareness of cancer and its treatment. In his very last tweet, on May 31, he spoke optimistically about returning from hospital soon. Raman was associated with the Chennai Centre for China Studies and was a regular contributor to the South Asia Analysis Group. He was also Director, Institute for Topical Studies, Chennai. 6. Iran verdict boost for India's trade prospects The decisive victory of moderate cleric Hasan Rouhani over conservative hardliners in Irans presidential elections without the need of a second round run-off is promising news for India and the world. The outcome may not immediately transform Irans long tense ties with the West as the matters of national security remain the domain of supreme leader Ayatollah Ali Khamenei, but the president runs the economy and wields important influence in decisionmaking. Besides, Rouhanis meteoric rise could offerlatitude for a thaw in Irans foreign relations and more social freedoms at home after eight years of confrontation and repression under hard-line president Mahmoud Ahmadinejad. Coming a week after the US announcement of a 180-day exemption to India and eight other countries from sanctions, the development could help India boost its exports to Iran. The election result reflects the broad public desire to correct the insular, right-wing trajectory of Iranian political discourse and bring the country out of the severe economic and diplomatic isolation imposed by world powers due to Irans nuclear programme. Rouhani, who has pledged greater engagement with Western powers, said: This victory is a victory for wisdom, moderation and maturity... over extremism. But he also urged the world to acknowledge the rights of Iran. Iran has been battered by economic sanctions imposed by the US and its allies over its nuclear activities, resulting in soaring inflation and unemployment. While Iran maintains it will not develop nuclear arms, it has refused to curb what it says is its rights to nuclear power. There will be hope tinged with caution that Rouhani can progress nuclear talks. But with Ali Khamenei deciding state policy, Rouhani will face hurdles. Besides, Iranians may have to wait for change because of the countrys multi-tiered power structure under which the office of the president has worn away over the last two decades.
CURRENT AFFAIRS (18.06.2013)

1. Monetary policy and rupee volatility The Reserve Bank of India in its mid-quarter monetary policy review on Monday effected no changes in either the repo rate or the Cash Reserve Ratio. This was entirely anticipated by the market participants. The sharp rupee depreciation in relation to the dollar over the past one month has loomed large in the RBIs calculations. Traditional policy dilemmas relating to growth and inflation do exist but they acquire a new edge in the light of the rupees fall. Between April 1 and June 14 the rupee declined by 5.8 per cent. It fell by 6.6 per cent between May 22 and June 11 and is threatening to race downwards towards new lows. What is particularly worrying is that the rupees aggravated decline has been caused by a sell-off by foreign institutional investors who were reacting to as yet unconfirmed news of a possible tapering off of quantitative easing by the U.S. Federal Reserve. At a very basic level, this has

exposed the serious vulnerabilities of Indias balance of payments, especially in the context of a persistently high current account deficit. Even the most optimistic predictions do not place the CAD significantly below 5 per cent of GDP at the end of March 2013. Adding to the governments woes, the trade deficit is expected to remain high in the foreseeable future. Higher tariffs and administrative measures to curtail its demand have not significantly reduced gold imports. Fortunately, there has been some good news on the inflation front. Having eased for three months in a row, headline WPI inflation is down to 4.7 per cent in May and is considerably below the 7.4 per cent average of 2012-13. All constituent categories, with the major exception of food, have moderated. While the closely watched non-foodmanufactured inflation too has ebbed, the inflation outlook going forward is by no means benign. The rupee depreciation is a major reason: dearer dollars mean higher prices for imported fuel and edible oil. Other factors dampening the outlook are possible revisions in administered prices, including minimum support prices of various commodities. Retail inflation remains high at 9.3 per cent in May. In the RBIs view it is only a durable receding of inflation that will open the space for monetary policy to address growth risks. Therefore, despite the obvious evidence of a slowdown that would normally invite supportive measures, it believes prudence lies in pausing and not continuing with the monetary easing that appeared to have taken hold over the past few policy statements. Framed in the shadow of the rupees sharp depreciation, the mid-quarter monetary policy review is a dissertation that transcends more conventional arguments for or against monetary measures. 2. What Rouhanis election should mean for Washington Fridays presidential and local council elections in Iran show that the Islamic Republic is far more stable and politically dynamic than western conventional wisdom commonly acknowledges. Moreover, the election of Hassan Rouhani who headed the Islamic Republics Supreme National Security Council for 16 years and was Tehrans chief nuclear negotiator with the West for much of that period presents Washington with an opportunity, for Mr. Rouhani understands the U.S.-Iranian diplomatic agenda in an existential, granular way. If, though, the Obama administration wants to engage a new Rouhani administration effectively, and to put the U.S.-Iranian relations on a more positive trajectory, it will need to overhaul U.S. policy in four fundamental ways: Accept it First, Washington must accept the Islamic Republic as an enduring political entity representing legitimate national interests. Virtually since the Islamic Republics creation out of the Iranian Revolution, American elites have declared it is an illegitimate order, so dysfunctional and despised by its own population as to be at imminent risk of overthrow. In reality, the Islamic Republic is a legitimate order for most Iranians living in Iran. Its animating idea the ongoing project of integrating Islamist governance and participatory politics appeals not just in Iran, but to Muslim societies across the Middle East. Despite decades of military, clandestine, and international economic pressure, it has achieved more progressive developmental outcomes e.g., in alleviating poverty, delivering health care, expanding educational access, and (yes) improving opportunities for women than the Shahs regime ever did, and has done better in these areas than its neighbours (including U.S. allies like Saudi Arabia and Turkey). The Islamic Republic isnt going anywhere. Even among those Iranians who want it to evolve significantly, most of them still want it to be, at the end of the day, an Islamic Republic of Iran. Washington needs to accept this reality if it wants to negotiate productively with Tehran. Among other things, acceptance would mean calling off the dirty war America is conducting against the Islamic Republic including economic warfare against civilians,

threatening secondary sanctions against third countries in violation of U.S. WTO commitments, cyber-attacks, and support for groups doing things inside Iran that Washington elsewhere condemns as terrorism. When President Richard Nixon took office in 1969, believing it was strategically vital for America to realign relations with the Peoples Republic of China, he ordered the CIA to stand down from covert operations in Tibet, and ordered the Seventh Fleet to stop aggressive patrolling in the Taiwan Strait. Nixon did these things so that when he reached out diplomatically to the Chinese leadership, it would know he was serious. The Iranian leadership needs to see comparable steps from President Obama, rather than the farce of Mr. Obamas dual track policy, whereby Iran is threatened with the stick of open-ended intensification in Americas dirty war if it wont surrender its internationallysafeguarded nuclear programme for the carrot of perhaps beingallowed to buy airplane spare parts from the West. Second, Washington must deal with the Islamic Republic as a system, and stop trying to play Irans public against its government. On a positive note, the White House press statement about the Iranian presidential election refers to Iran by its official name Islamic Republic, something the Obama administration has refused to do since 2009. But the statement does not congratulate Mr. Rouhani; it congratulates the Iranian people for their participation in the political process, and their courage in making their voices heard against the backdrop of a lack of transparency, censorship of the media, Internet, and text messages, and an intimidating security environment. Such a posture will not facilitate productive diplomacy after Mr. Rouhani takes office. A failing tactic Similarly, Washington should stop looking for Iranian moderates who, by U.S. definition, are moderate only because American officials believe they might be willing to subordinate some of Irans sovereign prerogatives for more economic ties to the West. The Clinton administration tried working around Ayatollah Khamenei and dealing only with reformist President Mohammad Khatami during Mr. Khatamis first term. A decade later, the Obama administration tried working around President Mahmoud Ahmadinejad and dealing directly with Mr. Khamenei. Every time, the tactic fails and will fail again if Mr. Obama repeats it on a newly inaugurated President Rouhani. The Islamic Republic was designed to encompass multiple, competitive power centres e.g., the Supreme Leader, the presidency, parliament. As Leader, Mr. Khamenei has allowed three Presidents Ali Akbar Hashemi Rafsanjani, Mohammad Khatami, and Ahmadinejad to pursue very different, self-defined agendas, but has also restrained them when he judged their agendas might weaken the Islamic Republics identity and long-term security. Mr. Khameneis relationship with President Rouhani is likely to play out in similar fashion. Washington does not help its cause by trying to manipulate one power centre against another. In Tehran, deciding to realign relations with America will take a consensus a consensus encompassing both Leader and President. Third, Washington must recognise Irans legal right, as a sovereign state and as a party to the Nuclear Non-Proliferation Treaty, to enrich uranium under international safeguards. As we wrote in The Hindu last month, If Washington recognised Irans right to enrich, a nuclear deal with Tehran could be reached in a matter of weeks; but as long as Washington refuses to acknowledge Tehrans nuclear rights, no substantial agreement will be possible (http://thne.ws/106Lx5V). This will be no less true under President Rouhani than it has been previously. There is a strong consensus in Iran cutting across the factional spectrum, ratified by Ayatollah Khamenei, and supported by public opinion that the Islamic Republic should not surrender its nuclear rights. In this years election campaign, Mr. Rouhani was criticised for his approach to nuclear diplomacy with the West; in 2003-2005, during Mr. Rouhanis

tenure as nuclear negotiator, Tehran agreed to suspend uranium enrichment for nearly two years, and got nothing from the West in return. Mr. Rouhani who holds advanced degrees in both Islamic law and civil law vigorously defended his record, arguing that his approach helped Iran avoid sanctions while laying the ground for subsequent expansion of its enrichment infrastructure. Looking forward, he explicitly committed himself to defending the Islamic Republics right to enrich. There will be no nuclear deal absent U.S. acknowledgement of that right. Ill-conceived strategy Fourth, Washington must stop cooperating with Saudi Arabia and others to spread violent, al Qaeda-like Sunni extremism across the Middle East as part of an ill-conceived strategy for containing Iran. This strategy is currently on display in Syria, where, from the onset of unrest in 2011, the Obama administration has sought to use an opposition increasingly manned and supported by foreigners to overthrow the Assad government and damage Tehrans position. The administration is now stepping up support for the opposition saying explicitly this is intended to prevent Tehran and its allies from winning in Syria. The Islamic Republic has demonstrated that it can be a constructive partner in fighting the spread of violent Sunni extremism. By escalating the conflict in Syria, Washington will, first of all, enable the deaths of tens of thousands more Syrians; it will also as it has done before (e.g., in Afghanistan and Libya) incubate a long-term security threat to itself and to all countries with an interest in Middle Eastern stability. The only way out of the Syrian conflict is serious diplomacy that facilitates a political settlement between the Assad government and its opponents. Iran is critical to achieving this. If Washington really wants better relations with Tehran following Mr. Rouhanis election, the course is clear. If it wants to negotiate productively with Iran, the U.S. needs to accept the reality that the Islamic Republic is a political entity that represents legitimate national interests 3. Right place, wrong arrangement The targeted attack by Maoists in Chhattisgarh against the State Congress leadership in which V.C. Shukla, Mahendra Karma and the partys other top leaders were killed has rekindled a familiar debate on the military aspects of counterinsurgency. However, the continuing cycle of violence in the State underscores the need for a closer examination of the social and political impact of the Fifth Schedule of the Constitution through which the tribal areas of peninsular India are governed. Indias population consists of 100 million tribal people who have constitutionally been addressed via two distinct avenues. The Fifth Schedule applies to an overwhelming majority of Indias tribes in nine States, while the Sixth Schedule covers areas that are settled in the northeastern States bordering China and Myanmar. Bastar district in Chhattisgarh is governed by the Fifth Schedule, but it wants to move into the Sixth Schedule. The Sixth Schedule gives tribal communities considerable autonomy; The States of Assam, Tripura, Meghalaya, and Mizoram are autonomous regions under the Sixth Schedule. The role of the Governor and the State are subject to significant limitations, with greater powers devolved locally. The District Council and the Regional Council under the Sixth Schedule have real power to make laws, possibility on the various legislative subjects, receiving grants-in-aids from the Consolidated Fund of India to meet the costs of schemes for development, health care, education, roads and regulatory powers to state control. The mandate towards Devolution, deconcentration and divestment determines the protection of their customs, better economic development and most importantly ethnic security. The Fifth Schedule on the other hand fails because it has never been applied. Recent parliamentary moves to provide greater autonomy within the Fifth Schedule have not had the desired results. The 1996 PESA or Panchayats (Extension to the Scheduled Areas) Act should have been a landmark for the tribal communities. It mandates the state to devolve certain political, administrative and fiscal powers to local governments elected by the communities.

This became exclusive to the Fifth Schedule areas, to promote tribal self-government. PESA was meant to benefit not only the majority of tribals but also extended to cover minority nontribal communities. It guarantees tribes half of the seats in the elected local governments and the seat of the chairperson at all hierarchical levels of the Panchayat system. Samatha judgment PESA was considered the most logical step in the Fifth Schedule areas to ensure tribal welfare and accountability. But, alas, it has not been properly implemented. Tribal communities have progressively been denied self-government and rights to their communities natural resources that should have been provided under the legislation. In its 1997 Samatha decision, the Supreme Court ruled that the Fifth Schedule enjoined Governors to bar purchase of tribal land for mining activity by any entity that was not state-owned. This judgment however, led to an opposite reaction from the Ministry of Mines, and subsequent appeals from the Andhra Pradesh government claiming that Samatha would have an adverse effect not only on the mining sector but also on non-agricultural activities especially industrial activity and hence would impact the economic development throughout the country. In response, the Governors were then given unfettered authority in the transfer of Scheduled Tribe land to the government and allotment to non-tribals, altering the balance of power and undermining the stated goal of tribal autonomy. Other examples abound, including the Scheduled Tribes and Other Traditional Forest Rights Act of December 2006, which ostensibly recognises the right of communities to protect and manage their forests (as does PESA), but only if the state decides whether a certain region is denoted as Village Forest or Reserved Forest. In this process, many communities are evicted without a proper channel of rehabilitation. For these reasons, it is evident that PESA and the Fifth Schedule have been counterproductive, inconsistent in addressing issues regarding tribal rights and the propensity of failure justifies serious debates on the existing endeavours. Many tribal voices are therefore demanding introduction of the Sixth Schedule in Chhattisgarhs Bastar district, which would give them a special status to participate directly in governance as in the North East States currently under the Sixth Schedule. Furthermore, the Sixth Schedule has certain features that can be implanted in any governance model for tribal areas, particularly concepts of constitutional and legislative subjects that are exclusive to local governments. An autonomous district council will give greater role in directing administrative requirements without depending on the Central State structure. However, the working of a system is always different from the Idea of it. The Sixth Schedule that embodies autonomy has its own shortcomings; breakdown of laws, elections not being contested, rather than empowerment there is exclusion that fails to provide much-needed protection to tribes in the absence of political will, and, live by the mercy of government funds. But in spite of the negatives underlying the Sixth Schedule, Bastar district envisages a true form of local bodies like the District Council and Regional Council that have provided a fair degree of autonomy. Moving governance of tribal areas in central India from the Fifth to the Sixth Schedule will help address the demand for autonomy 4. From devolution to the deep blue sea A political battle of major proportions, perhaps the most portentous in years, is looming in Sri Lanka this year and is being preceded by a debate amounting to a battle of ideas. The matter at hand is the much delayed and deferred election to the Northern Provincial Council. Political forces are arrayed in four positions on the battlefield. On the Tamil side there are those who hold that the existing 13th amendment to the Constitution under which the Northern Provincial Council was established, was inadequate from the start and that therefore, contesting the election and holding office would be of no positiveconsequence, and may even have the negative consequence of legitimising theinstitution. The other position occupied within the Tamil political spectrum is of those who regard the 13th amendment to

be flawed and deeply unsatisfactory, but grasp the value of contesting and winning the election, and occupying the political real estate that remains. On the Sinhala side are those who wish to abolish the system of provincial autonomy, those who do not and support the system of limited provincial autonomy, and those who seek to retain the bare bones of the system for fear of the external repercussions of abolition, while gutting the provinces of any real measure of autonomy. Lost opportunity At the moment, the predominance on the Tamil side is of the more pragmatic mainstream politicians who would like to occupy whatever political space that opens up, and on the Sinhala side, of those unhappy with provincial autonomy but seek to dilute rather than dismantle it in its entirety. The major error on the Tamil side was and remains the failure to grasp that the 13th amendment was the best that could be achieved even when the political, or more accurately politico-military, balance was far less in Colombos favour. It proved the best deal achievable even with a far more overtly, robust Indian role and power projection. When the liberal administration of Chandrika Bandaranaike Kumaratunga sought perhaps imprudently to range well beyond the 13th amendment in the form of three political packages in 1995, 1997 and 2000, the effortswere opposed as expected by Sinhala hardliners, but more fatally by the conservative United National Party (UNP) Opposition headed by Mr. Ranil Wickremesinghe. Most crucially, President Kumaratungas risky, politically ambitious quasi-federal initiatives did not have the acceptance, still less the support, of the parties and personalities (most prominently at the time, the TULF) currently grouped in the Tamil National Alliance. Affected talks In its sporadic and ultimately abortive discussions with the administration of President Rajapaksa, the Tamil National Alliance (TNA) urged that these drafts of 1995, 1997 and 2000 be taken up for discussion, but those deals were no longer on the table, the Tamil politicians having proved that what was once said so famously by the liberal intellectual Israeli Foreign Minister, Abba Eban, of the Palestinian political leaders was also true of them, namely that they never missed an opportunity to miss an opportunity. Having failed to put sufficient daylight between themselves and the LTTE before the war ended with a decisive disaster for the latter, the Tamil nationalist politicians might have been expected to realise that the 13th amendment was the only fall back available, and that it should be defended doggedly against attempts by the triumphant Sinhala hawks in Colombo to roll it back. However, the TNA not only declined to take the 13th amendment as the explicit basis of negotiations, it initially rejected that structural reform as the starting line. The keynote speech by Mr. R. Sampanthan, the leader of the main Tamil parliamentary party (TNA) at the 14th Convention of the Ilankai Tamil Arasu Katchi (ITAK) [the main constituent of the TNA] in May 2012 was in many respects a landmark event. It played into the hands of the neoconservative hardliners within Colombos power elite and ruling troika, bringing the bilateral talks to an abrupt halt. Absolute authority Mr. Sampanthans convention address not only stated clearly that the political project lay outside the parameters of both the 13th amendment as well as the structural form of a unitary state, but also provided considerable evidence to the Sri Lankan political leadership that the goal of a sovereign state of and for the Tamils, one in which they enjoy absolute rather than shared or devolved authority, remained the goal. The ITAK/TNA leaders speech said we must prove to the international community that we will never be able to realize our rights within a united Sri Lanka. Colombo seems to believe that with such a strategic obj ective in mind, it is logically inevitable that Tamil nationalism will reject, discredit and undermine any solution proposed or arrived at within a united Sri Lanka, especially a solution within a

unitary state such as is the 13th amendment. Mr. Sampanthan, the most prominent local leader of the Northern Tamil community, reiterated at his partys annual convention its commitment to achieving with the support of the international community, the same soaring aspirations that could not be achieved through armed struggle. By the time the TNA collected its collective wits, the Government had commenced the siege and attrition of the 13th amendment, while the hardliners within and outside were campaigning for outright abolition. On the Sinhala side, the drive for rollback of provincial autonomy or crippling by means of the removal of any powers with regard to land and its utilisation, fails to grasp the possible blowback of such unilateralism; a unilateralism based on the assumption that the Tamil question in Sri Lanka is a purely internal matter for a sovereign state, and oblivious to the Kissingerian category of intermestic issues; those at the interface of the internal and the international. Rajapaksa factor New Delhi, which failed to militarily support an unambiguously pro-devolution President Kumaratunga during the Tigers siege of Jaffna in 2000, did not extend the requested and requisite degree of military support to Mahinda Rajapaksa in an equation that would have linked such support to political progress in lockstep as it were. Instead of simply insisting on the implementation of Sri Lankas own constitutional provisions (obviating the need for protracted, problematic talks with the TNA and the reinvention of the wheel), it was persuaded into echoing President Rajapaksas promise of 13 Plus. No wonder it finds itself in a dilemma on the next steps. The anti-Sri Lankan hysteria in Tamil Nadu is reminiscent of the foaming at the mouth in Florida for decades at any mention of Castros Cuba. What takes Tamil Nadu beyond Florida is the ubiquity of Tiger symbolism including portraits of Velupillai Prabhakaran, in the pan-Tamilian agitation. In a rich irony of future history, that wave of agitation which rises higher during election year and its aftermath in India may well be exactly what sweeps away his UNP competitor and gifts President Rajapaksa all he needs for re-election to a third term. Given that he is increasingly a human shield for the Sinhala hawks in his ranks or a George Dubya to their Cheney-Rumsfeld, this cannot but have decisive repercussions on Delhis protracted efforts to secure a modest if authentic measure of provincial self-rule for the Tamils. By pitching their political ambitions higher than the Sri Lankan constitutions existing provisions on provincial autonomy under the 13th amendment, Tamil nationalists have played into the hands of Sinhalese hardliners 5. Chinas Tianhe-2 is fastest supercomputer The machine is set to break U.S. monopolyin strategic technology, says survey Development of a Chinese supercomputer, reported to be fastest in the world, will have farreaching ramifications in the cyber world and is sure to break the U.S. monopoly in the field of strategic technology. According to a survey results announced on Monday, Tianhe-2, a supercomputerdeveloped by Chinas National University of Defense Technology, achieved processing speeds of 33.86 petaflops (1000 trillion calculations) per second on a benchmarking test. It earned the supercomputer the number one spot in the Top 500 survey of supercomputers, agency reports said. The tests show the machine is by far the fastest computer ever constructed. Its main rival, the U.S.-designed Titan, had achieved a performance of 17.59 petaflops per second, the survey said. Five of the worlds 10 fastest computers are installed in the U.S., the survey said, with the two in China, two inGermany and one in Japan. Responding to reports of Chinese supercomputer, the former chief of the Defence Research and Development Organisation (DRDO), V.K.Saraswat described it as a big breakthrough. He said it would greatly augment the Chinese capabilities in the field of very advanced cyber systems development. Talking to The Hindu , Dr. Saraswat said China had mounted efforts to develop such a machine long

ago with the help of IT companies there and achieving such high speed in a supercomputer would boost its capabilities in both scientific and defence fields. It would not be easy for the rest of the world to get to share such highly advanced computing technology from China. Generally, such supercomputers are meant for use in defence and scientific areas and are not commercially available. China is likely to use it for both offence and defensive purposes, he added. Dr. Saraswat said such a supercomputer could also be used for communication purposes, giving it access to high bandwidth. Asked about Indias efforts in this direction, the former DRDO chief said the country suffered from a handicap in the area of all high-end computing systems which had to be imported and that was where our vulnerability lies. Dr. Saraswat said India needed huge investments in research in this field as the world was moving to new technologies such as silicon and photonic systems. Agency reports said that unlike some of its Chinese predecessors, most of the Tianhe-2s parts are developed in China, except for its main processors, which are designed by the U.S. firm Intel. But the U.S. still dominates the overall supercomputer rankings, with 252 systems making the top 500. 6. Rouhani wont halt nuclear activity but promises transparency Irans newly-elected president Hassan Rouhani ruled out on Monday any halt to the nuclear activity that has drawn U.N. sanctions but said he hoped an early deal could be reached to allay the concerns of major powers. The moderate cleric pledged greater transparency in the long-running talks. Addressing his first press conference since winning the vote, he said there would be no change in Irans longstanding alliance with Syrian President Bashar al-Assad, a source of additional Western concern. However, he said he would seek to thaw relations with the key Gulf Arab backers of the rebels fighting to oust Mr. Assads regime for more than two years. The leader of the nuclearnegotiating team under reformist former President Mohammad Khatami from 2003-05, Mr. Rouhani said there could be no return to the moratorium on uranium enrichment that Iran accepted at the time. This period is over, he said. He said the EU and U.S. sanctions against Irans oil and banking sectors that have sent the economy into freefall were unjust but promised transparent talks to try to resolve the underlying issues. Ties with U.S. He has repeatedly promised to restore diplomatic relations with the U.S., broken off more than three decades ago after the storming of the U.S. embassy in Tehran by Islamist students. He has also expressed readiness for bilateral talks without preconditions with Washington. He told supporters on Monday that he would do all in his power to bring about the change they desired after eight years of conservative domination under outgoing President Mahmoud Ahmadinejad. God willing, this is the beginning of a move that will bring the change demanded by the people in the fields of economy, culture, social and politics, he said, cautioning that could not happen overnight. 7. Russia, Turkey snooped on by U.K. at G20 Moscow and Istanbul protest, demand explanation Britain was on Monday embroiled in a growing diplomatic row with Russia and Turkey following revelations that their leaders were spied on and bugged by British and American intelligence agencies during the 2009 London summit of G20 countries. The disclosure is likely to cause tensions at the summit of G8 leaders which got under way in N. Ireland with Russian President Vladimir Putin expected to demand an explanation from his host, the British Premier David Cameron, and the U.S. President Barack Obama, who is also attending the conference. Russian officials were reported as saying the surveillance claims would strain the already tense U.S.-Russian relations, while inAnkara the Turkish Foreign Ministry summoned the British Ambassador for a dressing down. Earlier, The Guardian revealed that world leaders who attended G20 conferences in London in April and

September 2009 had their top secret communications intercepted on the instructions of their British government hosts with delegates being tricked into using internet cafes set up by GCHQ, U.K.s intelligence hub. Among those specifically targeted were the then Russian President Dmitry Medvedev, the Turkish Finance Minister Mehmet Simsek and delegates from South Africa with the aim of getting an advantage in negotiations over dealing with the international financial crisis. The Guardian claims were based on documents leaked by the U.S. whistleblower Edward Snowden. The documents suggest that the operation was sanctioned in principle at a senior level in the government of the then Prime Minister, Gordon Brown , and that intelligence, including briefings for visiting delegates, was passed to British ministers, it said, adding that the GCHQ used what one document described as ground-breaking intelligence capabilities to intercept the communications of visiting delegations. Tactics The tactics included setting up internet cafes where they used an e-mail interceptionprogramme and key-logging software to spy on delegates use of computers; penetrating the security on delegates BlackBerrys; and supplying intelligence analysts with a live round-the-clock summary of who was phoning who at the summit. The Turkish Finance Minister and possibly 15 others in his party were among those targeted while in a separate operation U.K.-based American spies intercepted top-secret communication of Mr. Medvedev. The details of the intercept were set out in a briefing paper prepared by the National Security Agency and shared with high-ranking officials from Britain, Australia, Canada and New Zealand, it said. American intelligence agencies also reportedly planned to spy on delegates to the Commonwealth Heads of Government Meeting (CHOGM) in Trinidad in 2009. 8. Reserve Bank leaves rates unchanged, warns of inflation risk The Reserve Bank of India (RBI), on Monday, kept its policy rates unchanged. The central bank decided to keep the cash reserve ratio (CRR) unchanged at four per cent. CRR is the portion of the total deposits that banks must keep with the central bank. The repo rate, the rate at which banks borrow funds from the central bank- too is unchanged at 7.25 per cent. The RBI had cut the CRR in the last one-and-a-half years by 200 basis points from a peak of 6 per cent, and it had cut the repo rate by 125 basis points till May 3, from a high of 8.50 per cent, in the last one year. After cutting the repo rate by 50 basis points in April 2012, the central bank cut it by 25 basis points each since last January. Even though wholesale inflation had moderated, upside pressures on the way forward from the pass-through of rupee depreciation, recent increases in administered prices and persisting imbalances, especially relating to food, pose risks ofsecond-round effects, said the RBI in its first midquarter policy review. Last week, the rupee touched its historic low of 58.98 a dollar, and it was the hardest hit currency among the emerging markets, which witnessed a sudden sell-off. The rupee depreciatedby 5.8 per cent against the dollar during the current financial year up to June 14. It fell by 6.6 per cent during May 22-June 11 due to sell-off by foreign institutional investors (FIIs). As recent experience had shown, shifts in global market sentiment can trigger sudden stop and reversal of capital from a broad swath of emerging economies, swiftly amplifying risks to the outlook. India is not an exception, the apex bank said On the domestic front, the central bank said the macro-economic conditions remained weak, hamstrung by infrastructure bottlenecks, supply constraints, lacklustre domestic demand and subdued investment sentiment. Though the wholesale price index (WPI)-based inflation eased for three months in succession with the May reading at 4.7 per cent, down from an average of 7.4 per cent in 2012-13, the RBI said elevated food inflation, particularly in respect of cereals and vegetables, sustained upside pressures on overall inflation. The Reserve Banks monetary policy stance would be determined by how growth and inflation

trajectories and the balance of payments situation evolved in the months ahead, it said. It is only a durable receding of inflation that will open up the space for monetary policy to continue to address risks to growth, said the RBI. While several measures have been taken to contain the current account deficit (CAD), we need to be vigilant about the global uncertainty, the rapid shift in risk perceptions, and its impact on capital flows, it added. The inflation outlook, going forward, would be determined by suppressed inflation being released through revisions in administered prices, including the minimum support prices (MSP) as well as the recent depreciation of the rupee. The RBI said that CAD continued to be a concern. Softer global commodity prices and recent measures to dampen gold imports were expected to moderate the CAD in 2013-14 from its level last year. The main challenge is to reduce the CAD to a sustainable level; the near-term challenge is to finance it through stable flows, it said. The most recent number on the Centres fiscal deficit, at 4.9 per cent of gross domestic product (GDP) for 2012-13, had turned out better than expected and instilled confidence in the governments commitment to contain the fiscal deficit for 2013-14 at 4.8 per cent. Perseverance with this consolidation should help in mitigating the twin deficit risks to the outlook, the RBI noted. The apex bank said that key to reinvigorating growth was accelerating investment by creating a conducive environment for private investment, improving project clearance and implementation and leveraging on the crowding-in role of public investment. 9. A weak rupee holds RBI from cutting key rate Future cuts to depend on durable receding of inflation; Wait for lower EMI gets longer Despite the rate of headline inflation falling within its comfort zone in May, the Reserve Bank of India (RBI) on Monday decided to keep the key policy rate unchanged, mainly because of the rupees recent fall against the dollar. In the mid-quarter review of itsmonetary policy, RBI maintained the repo rate at 7.25 per cent. The cash reserve ratio the proportion of deposits banks have to mandatorily park with the central bank in cash was also left untouched at four per cent. The Indian currency has depreciated more than 7.5 per cent against the dollar since May, due to heavy sell-off by foreign institutional investors on concerns the US Fed might lower the pace of its quantitative easing.Upside pressure on the way forward from the pass-through of the rupees depreciation and recent increases in administered prices and persisting imbalances,especially relating to food, pose risks of second-round effects, RBI said while explaining Mondays policy decision. The biggest concern for RBI came from the external front. It observed capital flows, which met the external financing requirement in April and May, moderated in June. The trade deficit in May sharply rose to $20 billion, mainly on account of a 90 per cent increase in imports of gold and silver. RBI, however, acknowledged that gold imports might moderate soon, as the import duty on the yellow metal had been raised by two percentage points to eight per cent. The central bank declined to give any indication on possible future rate cuts. It said: Only a durable receding of inflation will open the space for monetary policy to continue to address growth risks. Banks were quick to point out that they would not cut lending rates immediately, as the cost of funds had yet to come down. Net interest margins are already under pressure. The cost of funds has yet to come down certificate of deposit (CD) rates are still above eight per cent. More than Rs 3 lakh crore worth of CDs will be rolled over at this rate, State Bank of India MD & CFO Diwakar Gupta told Business Standard, explaining why lending rate cut was not possible at this juncture. India Inc also expressed its disappointment over the status quo. RBIs decision to hold policy rate is disappointing. At a time when both growth and inflation dynamics call for an accommodative monetary policy, RBI has taken a cautious approach of attending to the prospect of a possible resurgence in inflation over reviving growth in the economy, said CII

Director-General Chandrajit Banerjee. Market participants, however, expect RBI will cut rate as factors turn more favourable. We still believe the possibility of 50-75-bp rate cuts over the rest of the year remains. We also wouldnt rule out the possibility of a couple of cuts in CRR as liquidity tightens sometime in the second half of the financial year, said HDFC Bank Chief Economist Abheek Barua. RBIs decision to hold policy rate is disappointing. At a time when both growth and inflation dynamics call for an accommodative monetary policy, RBI has taken a cautious approach of attending to the prospect of a possible resurgence in inflation over reviving growth in the economy, said CII Director-General Chandrajit Banerjee. 10. End of the cycle? RBI decides inflation concerns trump growth payoffs The Reserve Bank of India (RBI) essentially lived up to the market's expectations, if not the government's, by reducing neither the repo rate nor the cash reserve ratio. The decision could be viewed as being somewhat contrarian, given that the latest inflationreading was within the RBI's comfort zone, providing it some basis for shifting its emphasis towards the rather worrisome growth situation. However, the RBI has observed that, as a consequence of the movements in the rupee over the past few weeks, inflation risks that appeared to be abating have reappeared. Also, there was little comfort on the retail inflation front. Finally, the RBI obviously continues to believe that it is unclear how much stimulus a small reduction in the policy rate can provide for demand, particularly investment, when there are so many other constraints at work. For the central bank, inflation risks clearly trumped growth payoffs. The question that obviously arises is: what next? Over the past three years, the monetary policy cycle has witnessed pauses on two occasions. In December 2010, the RBI paused before resuming its tightening cycle in January 2011. Subsequently, after having surprised observers with a reduction of 50 basis points in the repo rate in April 2012, there was a relatively long pause until January 2013, when the rate reductions resumed. Going by these two precedents, yesterday's pause does not in and of itself signal that the rate cutting cycle has ended; further cuts could be in the offing, presumably when some of the factors that contributed to this decision reverse or, at least, become less significant. Should potential borrowers and investors, then, build up expectations of a resumption in the cycle in the quarterly review due on July 30? Putting the inflation projections made in the annual policy statement of May 3 together with the guidance provided in yesterday's mid-quarter review, this expectation may be unwarranted. In the annual statement, which preceded the recent decline in the rupee, the RBI indicated that it expected inflation to firm up in the second half of the year. After this depreciation, that projection can only be reinforced. The guidance provided in yesterday's review indicated that the RBI would look for a "durable receding of inflation" to justify further rate reductions. Since its own projections, particularly after the recent rupee depreciation, don't suggest that there will be a durable receding, the reduction of 25 basis point in the repo rate on May 3 might well have been the last one in this cycle. If so, this has two significant implications. One, the responsibility of reviving growth now rests exclusively on the government, which must then focus on de-clogging the investment pipeline. In this regard, the Cabinet Committee on Investment, much hyped, has so far been a disappointment. This was implicitly admitted to last week when the setting up of yet another special cell to monitor progress on large projects was announced. Two, further shocks to the currency, which precipitate relatively quick and large depreciation, will aggravate inflationary pressures. Would these induce the RBI to increase the repo rate, notwithstanding the sluggishness in growth? The already limited room for monetary stimulus may have become even smaller.

CURRENT AFFAIRS (19.06.2013)

1. Taliban ready for peace talks with Karzai government U.S. officials likely to meet the group in Doha on Thursday After years of conflict, hopes of negotiations as the way forward to end the fighting inAfghanistan were kindled on Tuesday when the Taliban announced that it was ready to hold peace negotiations with the Afghan government. Representatives of the U.S. will likely meet with the Taliban in Doha on Thursday, a senior U.S. official said on Tuesday. Reuters is quoting a senior Taliban official as saying that peace talks will certainly take place between the Taliban and the High Peace Council. The High Peace Council was set up by Afghan President Hamid Karzai in 2010 to find a negotiated end to the conflict. The Talibans announcement breaks fresh ground after more than a decade of fighting as the group had so far rejected talks with Kabul, disparaging the Karzai government as a stooge of the Americans and the West. The dramatic turnaround in the position of the Afghan militant group coincided with the opening of its office in Doha, the capital of Qatar, and the nationwide takeover of security duties by the Afghan forces from NATO.In Kabul, Mr. Karzai seemed to be on the same page as the Taliban on starting talks. He announced that his government would be sending a delegation to Qatar for talks with the militant group. He, however, stressed that, in the end, talks with the Taliban must be Afghan-controlled. With the opening of office the peace negotiations between High Peace Council and Taliban must start soon. Once talks start in Qatar the process should be transferred to Afghanistan immediately, he observed at a news conference. Calibrated enthusiasm The Talibans declaration appeared to generate calibrated enthusiasm in Washington. Senior officials in the Obama administration were quick to pronounce that the U.S. will meet Taliban officials in Doha. Yet, they warned that there were no quick-fixes to resolve the crisis, and a lengthy process of negotiations was in the offing. This is but the first step in what will be a long road, one U.S. official was quoted as saying. In Doha, Mohammed Naim, a Taliban spokesman, announced over television that his groups political and military goals were confined to Afghanistan alone, and would not cover other countries. The Talibans declaration was apparently timed to bring about internal reconciliation ahead of the withdrawal of U.S.-led NATO forces from Afghanistan by the end of 2014. On Tuesday, Afghan forces were on the eve of assuming full responsibility for providing security cover to the entire country, marking a milestone ahead of the pull-out of NATO forces next year. 2. TRAI set to regulate corporate control of media Restrictions on cross-media ownership in offing too Telecom Regulatory Authority of India (TRAI) is all set to recommend the creation of an institutional buffer between corporate owners and newspaper management to the government. TRAI, which is also the regulator for the broadcasting industry, will also suggest ways to restrict cross-media ownership in line with practices in most other established democracies. TRAI chairman Rahul Khullar told The Hindu his recommendations would be based on the principle that corporate ownership of media must be separated from editorial management, as the media serves public interest. Mr. Khullar said he had no problem with corporates investing in or owning media houses for profits. But the problem arises when the corporate wants to abuse the media it controls to project a coloured point of view for vested interests. There is conflict of interest here. Mr. Khullar plans to recommend a special organisational structure in which the corporate owner who may have multifarious business interests would have only a financial interest in the company, restricted to owning of shares. The editorial operations would be done under a different structure where the corporate owner would have little say. TRAI has earlier flagged the issue of a growing number of

undesirables, including builders and politicians acquiring media interests. Mr. Khullar pointed out that even Vice President Hamid Ansari had spoken out about the paid news menace recently. The idea is to create an institutionalised buffer between the corporate owner and newspaper management to ensure the independence of TV channels and the print media to articulate impartial, free and fair editorial policy, said Mr. Khullar. He, however, admitted that the process was still in the works. The creative challenge for TRAI was evolving the precise design.Mr. Khullar categorically rejected objections from media houses that any such restriction would violate the right to freedom of speech under Article 19 of the Constitution: All robust democracies have some restrictions on cross-media ownership. This is absolutely necessary to maintain the plurality and diversity of media. Let us see what form it takes. 3. Law, sex and dicta It is not rare in the Indian judicial oeuvre to see sound justice being mixed up with irrelevant obiter dicta , for some of the judges in our superior judiciary do tend to pontificate and sermonise when required only to reason, or seek refuge in social mores when law, precedent or practice is available to fall back upon. However, even with some allowance for superfluous observation, the Madras High Courts view that pre-marital sex between an unmarried man and woman, otherwise unencumbered by any third party interest, amounts to marriage is truly outrageous. The remarks of Justice C.S. Karnan cannot be ignored as mere obiter dicta , as much of what he says is in some way related to his ultimate decision allowing monthly maintenance to a woman sought to be disowned by a man with whom she had lived and begotten two children. Physical consummation between a man above 21 and a woman above 18, arising out of sexual cravings would be considered a valid marriage and they become husband and wife, he argues. Also, he adds a strange observation that when a couple seek to separate after being in a sexual relationship, the husband cannot marry anyone without getting a divorce from the wife. None would disagree with the judge for placing co-habitation above customary or religious rites when it comes to assessing the status of a relationship. Or for concluding that there was enough in the mans conduct to say that he can no more disavow his relationship. It may even be seen as progressive that the Court takes note of the essence of a relationship which resulted in sustained co-habitation and the birth of children rather than its technical or legal status in granting maintenance. Yet, the problem with Mr. Justice Karnans assertions is two-fold: they seek to incorporate a highly personalised view of sexual behaviour into the concept of marriage, a concept that is based on law and practice and not on social or personal opinion. Also, marriage involves specific rights and responsibilities and these cannot be lightly conferred based on mere sexual behaviour. Such an approach limits the legal notion of marriage to just sexual union; and assumes, as it were, that any sex ought to be marital to emancipate it from its baser connotation. Secondly, none of what the judge has said has any basis in law, either modern and codified or customary. Nor is it based on any precedent, although a Supreme Court verdict in 2010 was available for support: the Court had then specifically recognised a live-in relationship as one akin to a marriage in the context of the Protection of Women from Domestic Violence Act, 2005. 4. In Bangladesh, a year of living dangerously Bangladeshs War Crimes Tribunal (WCT), set up to try Bengalis who committed war crimes along with the Pakistan Army during the 1971 war, has reopened unhealed wounds. Though everyone more or less agrees that the perpetrators must be brought to book, the desire of the two major political parties to use the tribunal to further their own political ends has created unexpected consequences. The Bangladeshi people are struggling to choose between two quarrelling Begums who head parties that have between them ruled the country for the past two decades, each successive government worse than the one it replaced. For both these

parties, sustaining an ideological division among people is critical for diverting attention from other issues such as corruption. For the Awami League, keeping up the division between pro- and anti-liberation forces is critical for sustaining its political grip. The Bangladesh Nationalist Party (BNP), meanwhile, claims to be the one that will save Islam and rides the tide of nationalist sentiment. Barring this superficial debate, the two parties are practically two sides of the same coin. The Awami League government under Prime Minister Sheikh Hasina, which started off well, had begun to look vulnerable from its fourth year in office. The World Bank-Padma Bridge fiasco, the share market collapse, and bank loan scandals have all rocked the government. In the midst of this came the rumour that the government was making a secret pact with the Jamaat to wean them away from their electoral alliance with the BNP. When Jamaat member Kader Molla, convicted in one of the most notorious cases before the WCT, was given a life sentence instead of the death penalty, the suspicions of a back door deal grew. Outrage over the verdict led urban youth to gather in Shahbag square in Dhaka, demanding nothing less than the hanging of convicted war criminals. The movement had all the elements of an anti-establishment revolution. In the first few days water bottles were hurled at government ministers who tried to get on the central podium. But the Awami League displayed great political acumen in eventually appropriating the Shahbag movement. Influential members of the intellectual elite worked to channel Shahbags message in ways that the governments own narrative was not disrupted. Thus was a potential revolution hijacked by the ruling party. In traditional Bangla style, when the Awami League appropriated Shahbag, the BNP took on the role of delegitimising it. Mahmudur Rahman, editor of the daily Amar Desh , took over the role of portraying the Shahbag Movement as an anti Islamic movement. The opportunity came with the discovery that a murdered member of the Shahbag movement was an atheist blogger writing as Thaba Baba. Rahman was successful in getting religious scholars all worked up by reprinting Thaba Babas blogs, which had sentences and words directly insulting the Prophet and his family. These articles were photocopied and distributed in villages. People across the country were agitated that the Prophet had been insulted, and a counter-Shahbag movement brewed. More unrest Bangladesh was poised for a showdown and the occasion was provided by the next verdict at the tribunal, against Delowar Hossain Sayedee. Though Sayedee is a member of the Jamaate-Islami, he has a huge personal following as a cleric who regularly criss-crosses the country to address mass congregations. After the death sentence was given to Sayedee, countrywide protests erupted, which led to the burning of government offices, the killing of policemen, and firing by the police that took many lives. But it was difficult to discern what had set it off his popularity, the anger over the defamation of the Prophet, or the Jamaat taking advantage of the situation to create anarchy. The subsequent turn of events included the arrest of Mahmudur Rahman, and the closure of his paper, the arrest of a few bloggers to appease the Islamists, and the rise of a new Islamist movement under the banner of Hefazat-e-Islam. It is a generally held belief that due to their association with the 1971 war crimes and its perpetrators, Islamists would never gain grassroot popularity. The Jamaat-e-Islami especially would always have to depend on either the BNP or the Awami League for survival. But the Hefajat-e-Islam, which consists of the students of the Kawmi Madrasa, do not have the anti liberation force stigma attached to them. They are also known to have ideological differences with the Jamaat-e-Islami. For its protest against the Shahbag movement during which it also presented an Islamist wishlist the group was able to gather huge numbers of supporters. However, there are analysts who claim that the Hefajat is just a front for the Jamaat. There was a midnight crackdown by the police and paramilitary forces on the Hefazats protest. Two television channels were shut down by removing their transmission

machinery. Interestingly, on the same night, the government also demolished the podium of the Shahbag protesters. Insecurity The volatile environment has given rise to all kinds of rumours about a third force that could be the military, or a select civil society group preferred by India, or Pakistan, or even Dr. Muhammad Yunus of the Grameen Bank, backed by America. But in reality, it is the strong undertow of election year politics that lies beneath these chaotic events especially the wrangling between the Awami League and BNP over the appointment of a neutral caretaker government to oversee the elections that should be held at the end of 2013. Despite runaway capitalism and a feudal democracy, the people of Bangladesh have worked hard to maintain a GDP growth rate of over six per cent even during a global recession. But, in these uncertain times, imports have seen a drop of 25 per cent, and orders in the key export sector of garments are dwindling after the collapse of the Savar building that killed more than 1,000 workers. No one in Bangladesh is sure how things will unfold from now on. All that the people have is a deep sense of insecurity and the fear of the unknown. Beneath the chaotic events that have convulsed the country in recent months is the unmistakeable undertow of election year politics 5. India to step up cyber security India to step up cyber security The world may acknowledge India as an information technology superpower, but its very own official cyber security workforce comprises a mere 556 experts deployed in various government agencies. How grossly inadequate is Indias cyber security manpower can be gauged by the fact that China has 1.25 lakh experts, the U.S. 91,080 and Russia 7,300. The existing combined strength of cyber security experts in all organisations in the government domain is 556, which is grossly inadequate to handle cyber security activities in a meaningful and effective manner, says a secret note prepared by the National Security Council Secretariat (NSCS), which is engaged in creating an elaborate cyber security architecture. Waking up from a deep slumber, the government has decided to recruit 4,446 experts to be deployed in six organisations that would take care of Indias cyber security infrastructure. These are the Department of Electronics and Information Technology (DEITy), which includes Indian-Computer Emergency Response Team (CERT-In) and the National Informatics Centre (NIC); the Department of Telecom (DoT); the National Technical Research Organisation (NTRO); the Ministry of Defence; the Intelligence Bureau (IB); and the Defence Research and Development Organisation (DRDO). Of the 4,446 posts, the armed forces will get a majority of the experts (1,887), followed by NTRO (695), DEITy (590), IB (565), DoT (459) and DRDO (250). The experts will take care of traffic scanning and mitigation, system audit and forensics, assurance and certification, research and development, and coordination.An internal study conducted by the NSCS revealed that all major countries have established mechanism and organisations dedicated to cyber security, a field where India has fared poorly. China shows the way For instance, in 2010, Chinas Central Military Commission approved Information Support and Safeguarding Base to serve as Peoples Liberation Army cyber command to address potential cyber threats and safeguard national security. Interestingly, China makes little distinction between hackers who work for the government and those who undertake cyber adventures on its behalf. Chinas cyber workforce is composed of various components of military, national security, public security, propaganda militia and academia. It now has an estimated strength of 1.25-lakh personnel which includes regular troops (30,000), specialists from various universities, research institutes and states enterprises (60,000), and militia (35,000), the note adds.

U.S. cyber command Similarly, the U.S. has 91,080 experts in its cyber security workforce, of whom 88,169 are in the Department of Defense alone. Significantly, in May 2010, Pentagon set up the U.S. Cyber Command (Cybercom) headed by the Director of the National Security Agency (NSA), which was recently in the news for clandestine Internet snooping operations in various countries, including India. The U.S. has also set up a 24x7 National Cyber Security and Communications Integration Centre (NCCIC) that is responsible for generating a common operating picture for cyber and communications across the federal, state and local governments, intelligence and law enforcement communities and the private sector. During a cyber or communications incident, the NCCIC serves as the national response centre able to bring to bear the full capabilities of the federal government in a coordinated manner, the note adds. Security architecture Now, India is also setting up its own cyber security architecture that will comprise the National Cyber Coordination Centre (NCCC) for threat assessment and information sharing among stakeholders, the Cyber Operation Centre that will be jointly run by the NTRO and the armed forces for threat management and mitigation for identified critical sectors and defence, and the National Critical Information Infrastructure Protection Centre (NCIIPC) under the NTRO for providing cover to critical information infrastructure. The government is also coming up with a legal framework to deal with cyber security. The NSCS has identified over a dozen critical information infrastructure sectors/facilities requiring protection. These include the civil aviation sector (Air Traffic Control or ATC), Railways passenger reservation system and communication network, port management, companies and organisations in power, oil and natural gas sectors, banking and finance, and telecom sectors. 6. Afghans take over security from NATO Taliban opens office in Doha as venue for talks Afghan forces have assumed responsibility for providing security cover to the entire country, marking a major milestone ahead of the pull-out of U.S.-led NATO forces at the end of next year. At a ceremony in Kabul on Tuesday, Afghanistans President Hamid Karzai announced that the fifth and final phase of security transition from NATOtroops to Afghan forces was about to commence. From tomorrow, our defence forces will be in the lead. From here, all security responsibilities and all security leadership will be taken over by our brave forces. Analysts say around 65,000 American troops alone within the ranks of NATO are still present in Afghanistan, but their intervention in direct combat has already receded substantially. NATO Secretary-General Anders Fogh Rasmussen, present during the ceremony, clarified that the main effort of our forces is shifting from combat to support. Mr. Rasmussen said that NATO forces would assist Afghan troops if needed, but would no longer plan, execute or lead those operations. Observers say Afghan forces, which will now take over the remaining 95 districts from the western military alliance, are already suffering heavy casualties in their combat with the Taliban, because foreign forces havedrastically scaled down back-up support. For instance, the U.S.-led forces are showing considerable reluctance in providing air support to Afghan troops in the heat of battle. Air evacuation of casualties is becoming difficult because foreign commanders have decided that barring exceptional circumstances, Afghan troops must learn to fend for themselves. Afghan officials say 276 Afghan soldiers have been killed over the last three months the flow of casualties keeping pace with last years record of 1,170 killed. A reminder that Afghanistan contained a vast reservoir of violence came on Tuesday when a roadside bomb targeted senior Afghan parliamentarian Mohammad Mohaqeq. Mr. Mohaqeq survived the attack, but the explosion killed three civilians and injured dozens. With the security situation far from certain, the Taliban is moving

the diplomatic pieces by opening an office on Tuesday in the Qatari capital Doha. Afghanistans Tolonews.com has reported that the Taliban has announced the opening of its office during a press conference. In a statement, Taliban spokesman Zabiullah Mujahid said the Doha office would support a peaceful solution to the crisis and bring stability to Afghanistan. It would also become a venue for the groups meetings with Afghan officials as well as the international community, local organisations and non-governmental organisations. 7. Russia blocks call for Assad ouster at G8 President Vladimir Putin blocked any mention of the fate of Syrian President Bashar al-Assad in a final G8 summit communique, said a top Russian official. Deputy Foreign Minister Sergei Ryabkov told reporters in Lough Erne, Northern Ireland on Tuesday that Russia had insisted no demands for the resignation of Syrian President Bashar al-Assad be included in the G8 final document on the Syrian conflict. Apart from being completely unacceptable for Russia, this would be deeply wrong, harmful and wouldtotally destroy the political balance that is being established so painstakingly to bring the warring sides to the negotiating table, Mr. Ryabkov was quoted by the Itar-Tass news agency as saying. Earlier, British sources at the summit said Prime Minister DavidCameron had sought to isolate Russia suggesting that seven Western members of the G8 could sign a communique calling for the ouster of the Syrian leader if Mr. Putinrefused to join in.We cannot dictate to participants of the future [Geneva-2] conference how it is going to end, otherwise it makes no sense to even start it, said Mr. Ryabkov. Mr .Ryabkov lashed out at Canadian Prime Minister Stephen Harper, who called the Group of Eight G7 plus one, meaning that Russias positions were too far apart from the other members.Moscows stance on resolving the Syrian crisis was completely in line with other G8 members, said Mr. Ryabkov. He said progress had been made at the G8 summit toward convening the Syria peace conference, adopting a comprehensive, serious and concrete document. 8. Egypt, Ethiopia to resolve Nile dispute The Foreign Ministers of Egypt and Ethiopia sought to defuse a brewing diplomatic row over the construction of a dam on the Nile, by promising to swim rather than sink together. In a joint statement issued in the Ethiopian capital of Addis Ababa, they agreed to further consultations on the environmental, social and down stream impacts of the Grand Ethiopian Renaissance Dam. We are for the development efforts of Ethiopia, we are ready to help them out, said Egyptian Foreign Minister Mohamed Kamel Amr, adding the Egyptian private sector had invested nearly $2 billion in the Ethiopian economy. In the meantime we are sure that Ethiopia is also very determined not to hurt Egypt in anyway. We have only the river Nile, we get about 86 per cent of our water from the Blue Nile, Mr. Amr said, [We agreed] to further studies to ascertain the effects of the dam. Ethiopia insists that the 6000 MW $4.7 billion hydroelectric project near the source of the Blue Nile is crucial for development, while Egypt has expressed fears over the potential loss of fresh water. Ethiopia is the source of the Blue Nile, a tributary that accounts for nearly 60 per cent of Nile water. Earlier this month, an international panel of experts delivered a report on the effects of the dam for Ethiopia and lower riparian countries Sudan and Egypt, but all three have chosen not to reveal the contents. Ethiopian officials expect the dam to begin producing electricity as early as next year. 9. Our law is a fact, says Mathai on Nuclear Liability Act Foreign Secretary Ranjan Mathai, in Paris on Tuesday for talks with his French counterpart, told The Hindu that there had been good progress in discussion between Dassault and Hindustan Aeronautics Limited on the contract to purchase 126 Rafale multi-role combat aircraft from France. Discussion on the multi-billion dollar deal (an estimated $15 billion) had reportedly run into heavy weather with Dassault expressing doubts over HALs ability to

avoid delays and other glitches. Dassault had said it was prepared to take outright responsibility for the 18 aircrafts it would deliver but had expressed doubts about its liability for the remaining jets that are to be produced assembled and delivered in India under the stewardship of HAL. Asked if there was progress on this, Mr. Mathai said: Our own consultations showed that both Dassault and HAL had not thought through what their working together would mean. Under the RFP [Request for Proposal], the responsibility is that of Dassault but HAL has to do the next batch of 108 aircraft after the outright delivery of the first 18 planes. The development, production, delivery is a joint project and HAL has to be the partner that takes it forward. The feeling now is that they have discussed these issues and they are much closer to an understanding of where each of them stands. Dassault is entitled to have partners but they have to work with HAL. As the contractor they are liable for the aircraft but HAL is the agent who will work with them in India to deliver it, Mr. Mathai said. Mr. Mathai, who met French Foreign Minister Laurent Fabius during his short halt in Paris, said he had also talked to his counterpart about the SR-Sam (Maitri) contract for the purchase of surface-to-air missiles and the civil nuclear project in Jaitapur. Asked about talks between AREVA and the Nuclear Power Corporation of India (NPCIL) , Mr. Mathai replied: In the civil nuclear area we discussed the current state of play in the Jaitapur project [to build six EPR nuclear reactors, each with a capacity to produce 1650 Megawatts of energy]. On the issue of Civil Nuclear Liability Act, he said India has had fairly intensive dialogues with other countries and will have similar discussions bilaterally with France. Our law is a fact. Among the three partners we have in the civil nuclear field the French asked the least number of questions when the issue seemed very much alive for the others. The Americans sent a team of lawyers last year to go into the legal aspects and similar steps can be taken with France. But irrespective of who the partner is, the fact of the matter is that the people who will judge the law, whatever explanations we might give, are the courts and that is true anywhere in the world, the Foreign Secretary said. Mr. Mathailaid the foundation stone for the new building of the Maison de lInde, the Indian students hostel in the French capital. 10. Govt panel for hiking FDI limits in defence, telecom Mayaram committee suggests major changes to investment regime A sweeping relaxation in foreign direct investment limits could be round the corner. According to sources, a government panel has also recommended allowing FDI in most sectors under the automatic route, thereby doing away with the need for government approval. The exceptions are sectors where the cap is statutorily fixed and can be increased only with a Parliamentary nod. According to the sources, the FDI limit may be raised for joint ventures in defence, broadcasting, telecom and private banks, if the recommendations of the Arvind Mayaram Committee, which was given the task of examining the issue, are anything to go by. Mayaram is the Union Economic AffairsSecretary. The committee has submitted its report to the Finance Minister. Mayaram said that the report can only give recommendations, it will be up to the Department of Industrial Policy and Promotion (DIPP) to take action. However, the Government is not willing to make the report public at this time. The committee was constituted after Finance Minister P. Chidambaram announced in his Budget speech that steps will be taken to remove ambiguity in the definition of foreign investment. Last week, Chidambaram had said that after the submission of the report, he will meet the Commerce and Industries Minister (under whom the DIPP falls), followed by a final meeting with the Prime Minister. According to the sources, the FDI limit in the defence sector is likely to be raised to 49 per cent from 26 per cent now. Similarly, telecom and private banking could see FDI up to 100 per cent against the current 74 per cent. Print and broadcasting media might have FDI limit up to 49 per cent from 26 per cent now. There is also a move to axe the requirement for approval from the Foreign Investment Promotion

Board (FIPB) for FDI of up to 49 per cent in various sectors. However, FIPB approval could be retained for sensitive sectors so that strategic interests are not compromised. Merging FDI, FII cap One key proposal is also setting a single cap of 49 per cent merging Foreign Direct Investment and Foreign Institutional Investment. Currently, the FII, or portfolio investment, limit in various sectors (excluding public sector banks) is 24 per cent. 11. G-8 summit turns focus to clampdown on tax-dodging Leaders from eight of the world's wealthiest countries spent the final hours of their summit today focusing on how to make sure that multinational companies can no longer rely on shelters and loopholes to avoid paying the tax they owe. British Prime Minister David Cameron, host of the two-day G-8 summit at a remote lakeside golf resort in Northern Ireland, promised "significant developments on tax" in a tweet before heading into amorning discussion on the subject with the leaders of the United States, Germany, Russia, France, Italy, Canada and Japan. British lawmakers have sharply criticisedGoogle, Starbucks and other US multinationals operating in Britain for exploitingaccounting rules by registering their profits in neighbouring countries such as Ireland, which charges half the rate of corporate tax, or paying no tax at all by employing offshore shell companies. But Britain itself stands accused of being one of the world'spremier links in the tax-avoidance chain. Several of the UK's own island territories including Jersey, Guernsey and the British Virgin Islands serve as shelters and funnel billions each week through the City of London, the world's second-largest financial market. "Of course Britain's got to put its own house in order," said Britain's treasury chief, Chancellor of the Exchequer George Osborne, who was invited to address the G-8 meeting on corporate tax reform. Before the summit, Britain announced a provisional agreement with the finance chiefs of nine of its offshore dependencies to improve their sharing of information on individuals and companies banking cash there. Many of the world's leading companies, ranging from Apple to the management company of U2, employ complex corporate structures involving multiple subsidiaries in several countries to minimise the tax bills in their home nation. One such manoeuvre, called the "double Irish with a Dutch sandwich" allows foreign companies to send profits through one Irish company, then to a Dutch company and finally to a second nominally Irish company that is headquartered in a usually British tax haven. The US said it was committed to reforming the global accounting rules and collecting more of US companies' profits banked outside American shores. "The goal of cracking down on tax avoidance, bringing greater transparency to it, this is something we've pursued in the United States, and we agree with Prime Minister Cameron that we can work together multilaterally to promote approaches that achieve those objectives," said Ben Rhodes, President Barack Obama's deputy national security adviser. 12. Flaws in Koodankulam plant The Koodankulam Nuclear Power Plant (KKNPP) in Tamil Nadu is owned and will be operated by the Nuclear Power Corporation of India Limited (NPCIL). The Atomic Energy Regulatory Board (AERB) is to oversee and regulate nuclear safety, while the ministry of environment and forests (MoEF) and the Tamil Nadu Pollution Control Board (TNPCB) also have well-defined regulatory roles to play in non-nuclear safety aspects. Recently, the Supreme Court (SC) reviewed previous lower court judgements and heard fresh affidavits on issues of KKNPP safety. In its final judgment on May 6, 2013, the SC directed AERB, NPCIL, MoEF and TNPCB to (collectively) oversee each and every aspect, including safety of the plant, its impact on environment and the quality of various components and systems in the plant, before commissioning it. The SC has also directed that a (joint) report to that effect be filed before it prior to commissioning of the plant. To understand the overall problems in their right perspective, one has to see how the total project responsibility at KKNPP is shared

between India and Russia. Under the 1998 inter-governmental supplementary agreement, the Russians are to provide the reactor designs and supply the major equipment. The instrumentation and control (I&C) design package, including installation details, were also to come from Russia. The NPCIL and its Indian contractors would build the reactors, but a small team of Russian specialists (advisers) would stay at the site to render technical assistance at all stages of construction, in the installation of reactor equipment and in the commissioning and operation of the reactors, until NPCIL takes over. KKNPP reactors are pressurised water reactors (PWRs) of the Russian VVER type, of 1000 MWe rating. The past Indian experience is entirely on pressurised heavy water reactors (PHWRs), India having built only a very small PWR for a submarine which is yet to be started. The PHWRs are technologically very different from the VVER-1000 reactors, and the Russians have designed and built more than 20 of them. The experience gained over the years by Indian contractors who have steadily worked with NPCIL is also limited to PHWRs. Therefore, it is certainly foolhardy for India to insist that KKNPP Units 1 & 2 shall be built under the above division of responsibilities. Thereasons for doing so have been the minimisation of cost and an overconfident estimation of NPCILs capabilities, combined with a lack of appreciation of the technological finesse required to build a large and complicated PWR for the first time. The problems described in this article can be primarily attributed to this fatal error in project formulation. Besides the probable installation of substandard parts in KKNPP reactors due to laxity of quality control, it is now evident that another major safety issue related to the I&C systems is worrying the KKNPP management and the AERB, because of which the Unit 1 start-up is now postponed to July 2013. This inference is reached by piecing together information now available in the public domain. The problem, to put it simply, appears to be the inability to eliminate spurious signals of untraced origin appearing in many of the instrumentation cables of paramount importance to safety, like the reactor neutron chamber output lines, wiring of the safety and shut-off rod control systems, etc. Such phenomena belong to a broad class of problems known as Electro-Magnetic Interference (EMI). A very rudimentary example of EMI, for instance, is that of a powercarrying, unshielded cable that would generate a surrounding electro-magnetic field, that in turn could induce a voltage/current in a nearby instrumentation or control cable. This spurious input can add to or subtract from the real signals, therebysending erroneous control inputs to a variety of crucial safety systems, possibly leading to unpredictable and serious malfunctions or accidents. EMI in nuclear plants can be totally avoided by following modern I&C system design and installation norms. (See, for example, Modern I&C for Nuclear Power Plants, IAEA, 1999). In particular, obtaining a sound, interference -free transmission of electrical signals between various parts of a nuclear system demands careful attention to cable laying and routing as well as earthing, and requires that specific rules in this regard are strictly followed. The Russian advisers on site seem to have earlier indicated to the Indians that most of the VVERs which they have commissioned have used strict Russian standards like GOST 50746-2000, called the National Standard of the Russian Federation for Electro-magnetic Compatibility (EMC) of equipment for nuclear power plants (Requirements and Test Methods), which is available at: http://files.stroyinf.ru/Data1/41/41348/. However, the sequential history of KNPP events do not show that such care was taken in implementation of I&C systems by NPCIL and their contractors. The cable problems at Koodankulam have a long history. Glimpses of this can be seen from the past annual reports of the AERB. The 2009-2010 AERB report states the regulators were informed (by NPCIL) that new cable routes have been created to take care of additional cables required for normal operation of the plant, as these were not accounted for in the earlier design. AERBs 2010-2011 annual report states that NPCIL was asked to submit

detailed response to various observations made on cable layout along with justifications for deviations from established methods of laying of cables and alternative measures to meet any exigencies. Interestingly, the 2011-2012 annual report is totally silent about the followup actions taken in this matter. Around the same time, a telling PTI report on the KKNPP cable problem appeared on July 20, 2011, in Indian newspapers. In part it said(http://ibnlive.in.com/news/tn-kudankulam-nplant-to-achieve-criticality/168957-3.html), But the observation that several cables were missing, to be incorporated by designers in the reactor almost towards completion of the plant (2009-2010), could not be explained... The designers discovered that several kilometres of power and control cables in the reactor were missed after the completion of the double containment of the reactor... A year ago, a major operation had to be undertaken to incorporate the missing cables by making new opening in the containment domes (breaking open the concrete walls and its steel liner) and sealing it again after bringing the cables from the switch yard to inside. One wonders how such a serious error was committed by the NPCIL engineers and their contractors! This exposes a serious difference in the ethics of doing project site work between the Russians and Indians. Russians are very well-organised and systematic, and they rigidly follow the rules and expect others also to do so. While Indians, too, have rules and regulations on paper, to expedite work or to minimise cost, they would not hesitate to bend or break rules. In case of the I&C design and installation details, the Russians had prepared detailed documentation including hundreds of drawings, which they expected the Indian installers to follow diligently, in the interest of performance and safety. The World Nuclear Association has reported that KKNPP control system documentation was delivered late by the Russians and, when reviewed (http://www.world-nuclear.org/info/CountryProfiles/Countries-G-N/India/#.Ub7fWPkzjAs) by NPCIL, it showed up the need for significant refining and even reworking of some aspects. This was necessitated because, while waiting for details to arrive from Russia, the NPCIL team had proceeded on with the I&C work based on their PHWR experience, little realising that the PWR/VVER requirements contained in the Russian documents would be significantly different. In doing re-work and rectification of the PHWR-based work, the NPCIL team is unlikely to have come close to meeting the Russian design intent or conformed to the installation documents received from them. The origin of the present problem lies in this massive installation error of the NPCIL. In 2004, the then KKNPP station director told Frontline (http://www.frontline.in/navigation/?type=static&page=flonnet&rdurl=fl2108/fl210800.htm) that difficulty arose with working documentation, which was to arrive from the Russ ian designers. But I shall not blame the Russians, there was pressure on them to advance their drawings and documents. He went on to say, When you want to speed up...you have to take certain decisions even if the input data are not available. As a designer and an engineer, you have to assume those data and go ahead. It is this daredevil approach of the NPCIL site engineers and their contractors which has landed the KKNPP in the present mess. It is most likely that the KKNPP cable system, as completed today, has not conformed to the norms and standards of cable selection, EMI shielding, or layout as per Russian, Indian or any other standards. No wonder the EMI problem is persisting, because there is no other short-cut solution other than re-doing a sizeable part of the I&C cabling and its layout in accordance with a set of modern standards, agreeable also to the Russians. This may take several more months and extensive re-working, but this must be done in the interest of public safety. As directed by the SC, the group consisting of NPCIL, AERB, MoEF and TNPCB must certainly find an acceptable resolution of this problem and include it in their report to the apex court. 13. RBI can't substitute sloppy government

The Reserve Bank of Indias (RBI) decision not to cut any of its policy rates might be viewed as being somewhat contrarian by policy makers in the government who expected it to blink after wholesale inflation fell to a 43-month low. However, the central bank is right in factoring in the movements in the rupee over the past few weeks, which could trigger it again. While going for a modest rate cut during its last mid-quarter policy review, it had made it clear that the scope of monetary policy in reviving the economic slowdown is limited. Clearly, it does not believe that a small doze of interest cut can provide much stimulus for demand, particularly investment, when so many other constraints are at work. The responsibility of reviving growth now rests exclusively on the government. The RBI policy document said: Key to reinvigorating growth is accelerating investment by creating a conducive environment for private investment, improving project clearance and implementation and leveraging on the crowding-in role of public investment. Only the government and not the RBI can de-clog the investment pipeline and remove clearance hurdles. The decisions to ease caps on retail and civil aviation sectors last September had given some momentum to the reform process. Finance minister P Chidambaram has desperately tried to maintain that momentum by promising that caps in other sectors would also be eased soon. Yet, lip service to reforms will not prop up investor confidence. Despite policy announcements, proposals for FDI infusion in retail and civil aviation are yet to take off due to bureaucratic delays. It is imperative that the government machinery works in tandem by keeping the reform momentum going. This should include actual implementation of liberalisation measures and streamlining the process of clearances for projects. But Mondays cabinet reshuffle shows that the UPA government seems to have given up even the pretence of governing.
CURRENT AFFAIRS (20.06.2013)

1. Kabul suspends security talks with U.S. A furious Afghan government has signalled to Americans that they can no longer take for granted the positioning of U.S. forces in Afghanistan after the withdrawal of NATO forces from the country at the end of 2014. A statement released by Afghanistans National Security Council on Wednesday said the fourth round of talks on security agreement between Afghanistan and the U.S. which is currently underway in Kabul has been suspended as there is a contradiction between what the U.S. government says and what it does regarding peace talks. Analysts say that Afghans feel let down by the Americans on the opening of the Taliban office on Tuesday in Doha. Apparently, the Afghan government was under the impression that the Taliban office in the Qatari capital would be an unostentatious venue to advance peace talks, but after its opening, they were surprised that it has the trappings of a quasi-embassy. The Afghan governmentreinforced its protest by backing out of talks with the Taliban scheduled in Doha for Thursday. Without the participation of the Afghan government, a peace process on Afghanistan can hardly be expected to take off. 2. The art of managing differences The impression is now widespread that India-America relations are on a plateau, if not in the doldrums. This would not matter had they matured into a mutual understanding that allows two countries to be satisfied with nothing striking happening between them as welcome normalcy. Since the days when we hardly knew, and gravely suspected or even mistrusted each other, so much has developed between our two countries, and especially peoples, that we should not be at all bothered by the present situation, but for one reason: how well have we really learned to know each other, or shed earlier misgivings? Policymaking and specific measures of cooperation are still subject to deep doubts about just how good they are for either country. Convincing each other in these respects will continue to require

periodic boosts by leaders for some years to come. This is what makes the coming Strategic Dialogue important. Need for objectivity We in India need to approach international relations with hard-headed, dispassionateobjectivity, concentrating on national interest. Emotional attitudes and downright prejudices affect public opinion and state policies everywhere, but they affect us excessively. The view that we are too inclined towards abstract considerations, unrealistic world views and outdated thinking is not unjustified. Particularly damaging has been our illusion about friendship in international relations. States are often enemies but cannot be friends. Their peoples may have friendly feelings, but states can only develop greater or lesser closeness of views and cooperation. This is so obvious as to be almost banal, but we have ignored it to our cost often going overboard supporting others to show our friendship, beyond their expectations or our benefit. With America it has been the opposite: leave alone friendship, for decades, to speak favourably about America was considered virtually unpatriotic and, curiously, the legacy prevails. Respected pollsters may find that Indians as a whole have the best feelings toward America. There may hardly be a politician, bureaucrat or professional without a sibling or offspring settled there (or an innate longing to follow suit) but berating America remains more than an intellectual fashion, it spills over into a lack of cooperation. Not that America has not done wrong: mistakes, deliberate misdeeds, behaviour andpurposes that offend all are there to make a formidable case for criticism and distancing. But that can be done against every state, definitely including some we call friends. Nobody has criticised America more sharply than Americans, and nowhere are there more forces at work for self-correction. In any case, international interactions have to be determined regardless of the virtues and vices of individual countries: if you find a state innately harmful to you, you must of course treat it as such, but howsoever horrible a regime, it is what it can do for or against you, not its nature, that must determine your handling of it. India faces no such cruel choices today, nor any overnight external threat. There are only two foreseeable challenges to our territorial integrity, and two states to which a strong India is unwelcome, although one might take it in its stride. If either difference ever erupted in violent conflict, nobody would help us: we would be alone. But ourstrength is surely the best hope of preventing any eruptions, and some states see their interests served by a strong India, and are willing to help us become so. Nobody does such things for friendship, much less because we are so great or good that they ought to help as, unfortunately, too many of us fondly imagine. Mutual benefit, so entrenched in our Panchsheel, means mutual trade-offs. There are no lack of advocates for seeking closeness with other countries, including those with whom we could have conflict, but oddly enough such an approach towards America remains suspect. We also have vital interests beyond our immediate neighbourhood; the security of the Gulf, stability of Central Asia (especially after Americas cut-down in Afghanistan), the power balance to our East, tranquillity in the Indian Ocean. Our capabilities being limited, we surely need partners for all this. We must consider which powers have congruence with our objectives (assuming, perhaps too hopefully, that we know what our objectives are). Commonality of objectives never precludes disagreements, even bitter ones, on ways of getting there: Gulf security, for instance, would involve obvious differences on how to deal with Iran, like the role of Pakistan in Afghanistan apropos Central Asia; and looming over everything is the universal ambivalence about dealing with China. There are many other issues on which our interest and views will differ basically from Americas; but there are enough issues with manifest commonalities calling for anintensified dialogue.

Another important commonality is hardly noticed. Everyone talks about the need for a world order with little idea as to its meaning or content. Ideas for making sovereign states abandon the brute dominance of power which persist in the intrinsic anarchy of international relations, and accept common rules of behaviour, have long been proposed, to little effect. Two World Wars initiated idealistic efforts to make states settle differences and develop cooperation through multilateral institutions and international law, based on equity and the sovereign equality of nations. Nothing of the sort actually happened; the great powers continued trying to impose their will, using the new systems, accordingly. India was perhaps the leading sincere believer in the ideal, though we objected to all the unfair old dominating machinations which were so vitiating it, and we continue to fight hard against them. Other states, also opposed to western control of what currently passes for order, want another one, but really seek to replace the West, recasting the order with themselves in control. India remains the one genuine believer in making the existing system conform to the ideals that it professed to embody, with a truly fair deal for the underprivileged states, truly based on equity. America might seem the last country from which to expect cooperation to that end, as the leading unilateralist in the multilateral institutions (the Indian representatives who have had to endure its arm-twisting in the U.N., etc., are perhaps its strongest critics)) but it is also there that the ideas for betterment are most actively discussed. Power politics is not going to give way to the ideal world order soon, if ever; but the search for it finds more supporters in either country than in some one could name. It is a thought to bear in mind for the future. Interest in partnership While we should adopt a more purposeful approach, the other side should have a real interest in partnership. Much Indian dubiousness about better ties flows from resentment about being pressurised, and Americas so-called transactional attitudes: buy our planes, reform your investment rules, safeguard intellectual property our way, enact our climate change urgings; whereas much of what we want is perpetually blocked in Washington. Both sides could exchange complaints forever. The Strategic Dialogue will doubtless avoid that, but the problem remains: the working machinery on which delivery depends is obstructed by such faultfinding, fuelling doubts and hesitations on both sides. Top-down guidance has helped, but how much of that is to be expected today? Both countries are so heavily preoccupied with domestic and other concerns, developing this relationship is not exactly a priority for either leadership. Delhi is heading for national elections, and Washingtons focus is elsewhere. Many decisions badly needed by New Delhi in their own right are long overdue, but wont be risked for appearing as bowing while scepticism what has India ever done for us-or ever will never left the beltway. All this points to marking time a perfectly normal situation in most relationships but potentially retrogressive in this instance because of the persistent negativisms. There are major long-term interests to be served; they will be one day, if both sides focus on them, and manage interim differences instead of throwing them at each other. In the forthcoming Strategic Dialogue, India and the U.S. should focus on their long-term interests to take the bilateral relationship forward 3. Process without promise There is not much to celebrate in the Talibans announcement finally that it is prepared to hold talks with the Afghan government, and plenty to be wary about. The announcement came with the opening of a Taliban office in the Qatar capital Doha, which will, at least initially, host the talks. There is no clarity yet on the process, but it will most likely involve direct engagement between the Taliban and the United States before the group talks to the High Peace Council, the negotiating body set up by the Karzai government. What these talks will be about, however, is a question to which there are no clear or optimistic answers. The U.S. and President Hamid Karzai seem to be hoping that the Taliban will accept the countrys new Constitution, and a political role in accordance with it. But the Taliban are signalling

something entirely different. The Doha office, for instance, is audaciously named the Islamic Emirate of Afghanistan, recalling their rule over the country between 1996 and 2001. They were not reticent in declaring that their Qatari base would help them improve [] relations with countries around the world through understanding and talks. The name has already cast a shadow on the process, angering President Karzai, who has consequently suspended negotiations with the U.S. for a long-term security pact after coalition troops leave in 2014, accusing the Americans of playing a double game with him. Given his limited choices and the inevitability of talking to the Taliban, it is difficult to say how much of his outrage is real and how much smoke and mirrors. Certainly, nothing was unreal about the Taliban attack on a U.S. convoy outside Bagram that killed four soldiers, just hours after its public relations exercise in the Gulf city. Never has a peace process held so little promise. The only sliver of hope that the Taliban have offered the U.S is the declaration that they would not allow anyone to threaten the security of other countries from the soil of Afghanistan, which is being read as a sign of its readiness to jettison Al Qaeda. Even so, the road ahead for this reconciliation process is a minefield. In the immediate term, the process could turn on U.S. willingness to release Taliban prisoners from Guantanamo, a sticking point on which the process collapsed in 2011. Pakistans role especially with Nawaz Sharif, an old friend of the Taliban, now in power will also be crucial to how the process unfolds. New Delhi, which has no part in the process, has remained a silent observer. But if India wants its concerns to be taken into account by those who are driving this process, the time to speak up is now. 4. Appointments and some disappointments The law treats the rich and the poor, the man and the woman, the mountain and the valley, all on an equal footing. But the legal system can be operated only if lawyers are able to argue. The Bar is integral to the administration of justice, but it does make the process expensive and rather exclusive. India has adopted an adversarial legal system and it cannot function without the Bar. The members of the Bar compete in a commercial economy. Going to court involves hiring advocates, who naturally vie with one another in terms of their remuneration. The poor man is often rudely shut out of a money-driven market. In a world where the havenots have no clout, the law and the lawyer by and large tend to support the haves. The judiciary itself is largely chosen from among the members of the Bar, and, therefore, inevitably tends to have an inherent predisposition towards those with a good bank balance. The Secretary of State for the Home Department, W.S. Churchill on the second reading of the Trade Unions (No.2) Bill, 1911 (26 H.C. Deb. col.1022) put it powerfully thus: The courts hold justly a high, and I think, unequalled pre-eminence in the respect of the world in criminal cases, and in civil cases between man and man, no doubt, they deserve and command the respect and admiration of all classes of the community; but where class issues are involved, it is impossible to pretend that the courts command the same degree of general confidence. On the contrary, they do not, and a very large number of our population have been led to the opinion that they are, unconsciously, no doubt, biased. ( The Politics of the Judiciary , Page 173) Representatives of the poor Under the circumstances, socialism will remain a mirage unless the process of selection offers an opportunity for the representatives of the poor to sit on the Bench. The all-important issue where social and economic justice is a matter of state policy is the instrumentality of the selection of the members of the judiciary. Collegiums have ignored this perspective and the most relevant question today in a democracy with a socialistic pattern of society concerns the inclusion in the Constitution of a chapter on the judiciary that would seek to ensure the right orientation of the judicial structure. Justice has civil and criminal dimensions, and both require substantial mutations which ensure that the voice of the weaker sections is reflected in

judicial verdicts. The Supreme Court has interpreted the method of choosing the higher judiciary in a judgment that sets down that with a majority of one it could create the collegium. No plan, no commission, no parliamentary debate, no national symposium but a single vote that makes a majority in a single judgment. This ad hoc accident is what governs the choice of the members of the higher judiciary. The seniormost three or five judges of the High Court or the Supreme Court comprise the collegiums. Ideology, class character, antecedents, performance or position in the social milieu hardly considered. The whole process is arbitrary, and naturally the perfunctory selection has come up for criticism. Now, the government and a former Law Minister have claimed that the government has a draft alternative to the collegium. What it is, no one except the government knows. It is wrapped in a mystery of Secretariat files, and buried inside an enigmatic docket of the Law Ministry. We require a public discussion of a well-thought-out draft proposal where the Bar will get to express its views and the higher judiciary too will give its views. But it shall be the product of national debates, symposia, parliamentary discussions and expression of views by academics, intellectuals and other enlightened sections of humanity. The subject concerns Indias highest-level judiciary, whose verdict is final and binding on the nation. Such an authority needs considerable maturity. Neither Parliament nor the Union Cabinet has chosen to vocalise its views on the subject. I advocate publicity on the above lines. If necessary, the President of India may appoint a commission. It is better to hasten slowly than to rush into law a secretive proposal of the government. It is a pity that despite the Constitution, and the concept of infallibility of the Supreme Court, many of its appointments have been disappointments. The system of choosing judges should be preceded by a national debate and discussion 5. After defeating terror, winning the peace together On January 23, 2013, in The Hindu (Op-Ed, United against the terrorist threat), we had outlined the strategy of military intervention against the terrorists in Mali. We had underscored the coordination between the military aspect, aimed at wiping out terrorist groups, and a development policy for Mali and its political transition. At a time when the international community is mobilising its resources towards these ends, we found it important to present the efforts being undertaken to stabilise Mali durably. The international community united to ensure security and stability. At the request of the Malian authorities, France, the African forces of the neighbouring countries and the Economic Community Of West African States (ECOWAS) thwarted the attempt of terrorist groups to launch an attack on Bamako and transform Mali into a sanctuary for crime. We have paid the price for it, the highest price: the blood of Malian, Chadian and French soldiers who have fallen in combat. Today, Malis territorial integrity has been restored and the terrorists have been defeated. A great number of them have been neutralised and their outfits destroyed along with a significant part of their resources. This action will continue. The threat of terrorist groups in the Sahel and North Africa is a long-standing one. Although diminished, they retain a limited but real capacity for action and harm, as the May 23 attacks in Niger tragically show. Now that the terrorists have been held in check, pursued and defeated in Mali, it is time to ensure the maintenance of law and order and prevent the return of jihadists . This is the mandate that the Security Council unanimously approved for the United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA) on April 25, 2013. It will replace the African-led International Support Mission to Mali (AFISMA) forces in July, while the French forces will be scaled down to 1,000 men by the end of this year. The United Nations Force, with over 11,000 men and a solid mandate, will have the means to defend itself, with the support of French forces in the event of serious, impending threats. This operation will end once the Malian army is in a position to secure Malis sovereignty and territorial integrity. To attain

this goal, almost 600 European trainers have been deployed as part of the European Union Training Mission (EUTM Mali) to help rebuild the Malian Army. More generally, this endeavour concerns the entire region. Useful frameworks have already been put in place. The Global Counterterrorism Forum, co-chaired by Algeria and Canada, brings together all the countries of North Africa and the Sahel. The European Union has formulated a Strategy for Security and Development in the Sahel, which helps reinforce the security capabilities of the States of the region as part of a global approach. Presidential elections Development, political dialogue, democracy and governance are at the core of todays efforts. However, we must complete this fight by winning peace in Mali together. Parallel to the uncompromising fight against terrorist groups, it is crucial that the international community and Mali unite in their efforts to promote development, political dialogue, democracy and governance. To confront the terrorist threat, there must be an active democracy, which reins in the ideologies of hate and intolerance advocated by radical groups. The President of Mali and the Malian government have therefore decided, with the National Assembly, to hold the presidential elections on July 28, 2013. A Dialogue and Reconciliation Commission has also been set up and commenced its work to promote the reconciliation of all the political elements of Mali, which stood up against terrorist violence both in the South and the North. To win peace in Mali, it is also necessary to promote development and remedy the problems of the past: fragile institutions, insufficient governance and lack of coordination of international aid. We would like this to be an exemplary process. With the aid of the International Monetary Fund and the World Bank, the Malian authorities have themselves defined their reconstruction and development road map 2013-2014 for Malis sustainable economic recovery. All of Mali is concerned; not just the North, but the whole of Mali. Indias role At the joint invitation of the President of Mali, Dioncounda Traore, the President of France, Franois Hollande, and the President of the European Commission, Jos Manuel Barroso, more than 13 heads of State and 107 delegations including Indias spread over all the continents, participated in the donor conference, Together for a New Mali, which was held in Brussels on May 15, 2013. In all, pledges for a total of 3.2 billion in aid were confirmed, with Europeans alone contributing 1.35 billion. India pledged 100 million dollars. This is a good starting point for working in the long term. French and European aid will contribute towards consolidating the reinstatement of the State, public services and administration, especially in the North, so that polls may take place all across Mali. It will support the evolution of the political process that should help foster national reconciliation, build inclusive institutions and establish legitimate democratic authorities. The EU will extend its technical and financial assistance to this process in close coordination with the United Nations, which will be in charge. A global answer Development, democracy and efforts from all for Malis stability: we wish to mobilise all energies and show terrorist groups, no matter where they are, that the international community will not take matters lying down. We must all focus all the more to counter terrorism together as it is a scourge with increasing interactions: interactions between different regions of the world where terrorism manifests itself, as this is a phenomenon without borders; interactions with other threats, such as illegal trafficking or piracy, with the help of which terrorism subsists and is reinforced. India, a great democratic nation that has herself been the victim of heinous terrorist acts, is on our side and we thank her once again for her unflagging support. Counterterrorism is a goal of prime importance for the international community and one of the cornerstones of the strategic partnership between France and India. We are conducting this global fight against terrorism together, in Mali, in

the Sahel, in Africa, and everywhere where it is necessary. The international community and Mali must focus on the gains made at the Brussels meet to push for development, political dialogue and democracy 6. Right to life, liberty available even to foreign nationals, says Supreme Court Videocon case against three Ugandan citizens quashed The right to life and liberty, enshrined under Article 21 of the Constitution, is availableeven to foreign nationals, the Supreme Court observed on Wednesday and quashed an FIR registered by the Maharashtra government against three Ugandan citizens, including an Advisor to the President of Uganda. A vacation Bench of Justices A.K. Patnaik and Ranjan Gogoi slammed the State government for filing a criminal case of cheating based on a complaint given by Videocon. The Bench said the action of the Mumbai police in registering the FIR had brought bad name to India. It directed the police to release their passports immediately. Article 21 of the Constitution [right to life and liberty] applies to all citizens, whether Indian or foreign nationals. Their right to liberty could not be restrained by the police due to a business dispute. Our country gets a bad name because of acts of a few police officers and it is unfortunate that the Mumbai police, instead of protecting the rights of these foreign nationals, filed an FIR against them and the charges are baseless. The Bench said no offence had been made out against them. Extortion charge Isacc Isanga Musumba, lawyer and senior Advisor to the President of Uganda (equivalent to the post of a Minister); Mawanda Michael Maranga, Member of Parliament; and Magoola Mathias, a businessman, were charged with extortion by the police on a complaint by Videocon officials and their passports were impounded. Counsel for the petitioners told the court that they came to India in April to settle a business dispute with Videocon. Stopped from leaving In their petition, they submitted that from April 19 they were restrained by the police from leaving the country without a formal order of arrest. The lookout notice issued against them was a colourable exercise of police powers smeared with malice, ill will and was grossly spiteful, prejudicing thereby their fundamental rights. They said the high handed and illegal restraints put up by the police on them required to be looked into seriously in the context of friendly relations between two countries. 7. Mali set for polls as peace deal is signed Rebels in north Mali have signed a peace deal with the government to hold presidential elections on July 28 and pave the way for billions of dollars of western aid to rebuild the wartorn west African nation. The agreement was signed in Burkina Faso on Tuesday night after months of wrangling between the Malian government and the Tuareg-led National Movement for the Liberation of Azawad (MNLA). The deal envisages a two-stage process beginning with an immediate ceasefire to allow for the elections, followedby a peace agreement to be negotiated between the newly-elected government and the rebels. Prior to the elections, the rebels should withdraw to U.N. monitored garrisons, even as the Malian Army and civil administration, aided by French and U.N. troops, re-enter the town of Kidal. In January, France deployed troops in its former colony after a coalition of secessionist forces, including the MNLA, threatened to overrun Bamako, the Malian capital. While the intervention succeeded in driving the rebels from many strongholds including the historic city of Timbuktu, rebel fighters continue to hold Kidal, a Tuareg stronghold near the Algerian border. Since then, international donors have been pushing Mali to hold general elections as a pre-condition to channelling aid for reconstruction. Tuesdays agreement, a copy of which was seen by The Hindu , dismisses the possibility of a separate Tuareg nation by reaffirming the territorial integrity of Mali. I think we can say that the biggest task is finished. We have agreed on the essentials. There is an international

consensus as well as a Malian consensus on the fundamental questions, which include the integrity of our territory, national unity, and the secular and republican nature of our state, Malian politician and negotiator Tiebile Drame told the Associated Press. The two big sticking points in the earlier draft were concerning the timing of the arrival of the Malian army in Kidal and the rebel demand for general amnesty for all fighters, said an official briefed on the negotiation process. These demands have not been conceded. Under the agreement, the ceasefire will be enforced by a Joint Technical and Security Commission comprising four representatives each from the Malian defence forces and the rebels, one representative from the U.N. mission, one from the French forces, and a representative each from the regional body Ecowas and the African Union. The two sides have also agreed to set up an international commission of inquiry to examine accusations of war crimes levelled at both. 8. Crop yields will not meet 2050 global demand: study Yields of four major crops were not rising fast enough to meet projected global demand in 2050, warns a study published today (June 20) in the journal PLoS ONE. Several studies had shown that global crop production needed to double by the middle of this century to meet demands from an increasing human population, more meat and dairy consumption driven by growing affluence and more biofuels use as well to provide food security to millions who were chronically undernourished, observed Deepak K. Ray and his colleagues at the University of Minnesota's Institute on the Environment in the U.S.. Boosting crop yields, rather than clearing more land for agriculture, was the preferred solution to meet this goal, they pointed out. The researchers used a newly-developed crop yield and area harvested database to examine yield changes across the globe in maize, rice, wheat and soybean, focusing on trends in the recent two decades. These four crops together produce nearly two-thirds of the global agricultural calories. Yields of these crops needed to grow at about 2.4 per cent annually to double production by 2050. But the global average yield increase was only 1.6 per cent a year for maize, one per cent for rice, 0.9 per cent for wheat and 1.3 per cent for soybean. At these rates, global production of the four crops would be far below what is needed to meet projected demands in 2050, they noted in the paper. Moreover, the global trends masked significant variations in the rates of yield change among and within countries. Yields were growing slowly in the top three rice and wheat producing nations. Rice yields had improved in China by only 0.7 per cent a year, in India by one per cent and in Indonesia by 0.4 per cent. At these rates, we found that yield driven production growth in India and China could result in nearly unchanged percapita rice harvests, but decline steeply in Indonesia. The yearly wheat yield increases in China, India and the U.S. amounted to only 1.7 per cent, 1.1 per cent and 0.8 per cent. Clearly, the world faces a looming and growing agricultural crisis, said Dr. Ray and his colleagues in their paper. However, they also pointed out that opportunities did exist to increase production through more efficient use of arable land and boost yields by spreading best management practices. A portion of the production shortfall could be met by expanding croplands, but at a high environmental cost. Additional strategies, particularly changing to more plant-based diets and reducing food waste, could reduce the large expected demand growth in food, they remarked. 9. Climate change can hit India hard, says World Bank study South Asia, with India right in the centre, as well as South-East Asia and Sub-Saharan Africa are likely to face the worst heat from climate change, a study released by the World Bank predicts. Indians may very well have to get used to extreme summers, increased drought as well as increased flooding as precipitation patterns change dramatically. The World Bank study, Turn Down the Heat: Climate extremes, regional impacts and the case for resilience, says that shifting rainfall patterns in India would leave some areas under water, while others, deprived of adequate rain, would suffer severe water crisis, which could impact irrigation,

power generation and even drinking water availability in some cases. Since almost 60 per cent of Indias crop area is rain-fed, change in precipitation would impact food production. The study predicts by 2050s, a temperature increase of 2-2.5 degree Celsius is likely (compared to pre-industrialisation), which would reduce water availability for food production and 63 million people in India may not be able to meet their daily calorific requirement. This makes a compelling case for re-looking policies to ensure sustainable development as the economic implications of the scenario drawn by the study can be critical. Onno Ruhl, Country Director (India), World Bank, emphasised that Governments across the world, including India, tend to look at short-term gains in favour of long-term benefits while making policy decisions. For India the key is to grow in a way that can be sustained, he said. The report predicts that destructive natural disasters, such as floods, the kind seen in Uttarakhand recently, droughts, cyclones and others, could increasingly become frequent occurrences. In a grim finding, the report suggests that sea levels may rise by 50 cm as early as 2050 and by 100 cm by 2100. This could result is several heavily populated portions of land going under water. Two metros, Kolkata and Mumbai, are likely to be hit by extreme floods, more intense cyclones and rising sea levels. 10. Fixing fertility Keep focus on mother and child care The United Nations has revised upwards by 48 million its projection of India's population in 2050 - from its 2001 projection of 1.572 billion to the 2012 revised figure of 1.620 billion (both assuming a moderate change in fertility). It may not look like much, but it is not clear from related figures what the change can be attributed to. A rise in the total fertility rate (births per woman) can lead to a rise in numbers, but that's actually gone down from 2.1 projected in 2001 to 1.92 in the latest projection. Similarly, a higher life expectancy at birth (people living longer) can raise total numbers, but even here the projections are in the opposite direction - from 75.4 years (2001) to 72.9 years (2012). So the change can be attributed to two possible factors: a higher figure for net inward migration, or a change in methodology and data quality. In the case of certain African countries, a sharp rise in fertility has been attributed to under-reporting earlier. Similarly, the population in the 0-4 age group in India's 2001 census was under-reported. Regardless, is India going in the right direction? Has it adopted the right policies for that? India's aim is to reach the replacement rate in fertility of 2.1, at which level the population should level out. Progress on this front has been reasonable. In the 2005-10 period, the fertility rate went down from 2.9 to 2.5, that is by 14 per cent. But to answer the question as to why things could not have been better, it is necessary to look at the huge variation between states - from 1.7 for Kerala, equivalent to Canada's, to 3.4 for Bihar, equivalent to Pakistan's. The policy prescription is obvious. States like Bihar, Uttar Pradesh, Madhya Pradesh and Rajasthan have to get their act together and aspire to be like Tamil Nadu, Kerala, Punjab and Himachal Pradesh. Things can improve quickly, as shown by Rajasthan; or a state can punch above its weight, as Odisha does at 2.3 - which is better than 2.5 of Narendra Modi's Gujarat! But any notion that India is doing well has to be rejected by looking at the remarkable progress made by Bangladesh, which at 2.2 has a better fertility rate than India and, importantly, will not lose this lead even by 2050. Overall, it has to be remembered that an excessively sharp fall in the fertility rate to below the replacement level, as has happened in the case of China, can lead to a population ageing too fast with the attendant downside. So India must keep its primary focus on improving mother and child care and hope better educated and healthier young women will lead the country in the right direction. A poor country has much to gain by having its population grow slowly

but steadily, as that keeps the number of people in the working age high without the overall number going up too far or fast. 11. Stop messing with Himalayan ecology Flash floods and landslips triggered by the monsoon fury have left a stunning trail of death and devastation in the Himalayan hill states of Uttarakhand and Himachal Pradesh. Over 150 persons have died and the toll is mounting. Thousands of pilgrims and tourists from across the country are stranded. Patchy relief and rescue operations are impeded by roads and bridges that have been washed away by the swirling waters. Video clips telecast by new channels give only a glimpse of the scale of devastation that is ghastly to behold. While rescue and relief should be the first priority of the central and state governments, it is clear that the authorities have been caught totally unprepared. The National Disaster Management Authority had recommended a proactive prevention mechanism instead of the usual post-event ad hocism five years ago but these are yet to be implemented. There is no regulation of development activities in the Himlayan region to ensure that these do not damage its fragile eco-system. More than 220 power and mining projects are running in 14 river valleys in Uttarakhand alone. Several rivers are being diverted through tunnels for these projects. Flash floods and landslides are not natural calamities but manmade disasters caused by deforestation and environmental degradation. Their frequency has increased alarmingly of late, leaving a clear message that messing up with the Himalayas eco-sensitive zone is fraught with dangers. There must be a review of ongoing development works. A credible cumulative impact assessment, including carrying capacity study for each river basin, should be necessary for all existing and under-construction projects. Those that are likely to increase the disaster and damage potential should be scrapped and a well-defined disaster management plan should be in place so that it can kick in whenever disaster strikes. The Centre must draw up a long-term plan for sustainable development of the region in consultation with the states and get it off the ground. 12. New hope for Indo-Iran ties Hasan Rouhanis stunning victory in the recently held Iranian presidential elections, in which he secured close to 51 per cent of the votes cast and in which he led the nearestof his five rivals by a large margin, is a welcome development. A moderate cleric, the 64-year-old Rouhani is likely to bring to the presidency not only wisdom, maturity and pragmatism but also a matchless wealth of expertise derived from having served on one or another of Irans leading institutions. He has, for instance, been a member of the Iranian Parliament, the National Security Council, the Assembly of Experts, and the Expediency Council. In addition, he also was Irans chief nuclear negotiator. Rouhanismoderation, maturity and sense of balance were on full display at his recent press conference during which he made a number of important points. Describing his election as the opening of a new era he underlined that he would follow a path of moderation and justice and not extremism, and that this was the beginning of a move that will bring the change demanded by the people in the socioeconomic, cultural and political fields. The international sanctions regime which has imposed much suffering in Iran as evidenced by over 30 per cent inflation and massive unemployment also compelled him to underline that the economy would be his top priority. On the nuclear issue, while categorically asserting that Iran would not cease uranium enrichment and that the Iranian nation has done nothing to deserve sanctions, he did hold out the possibility of stepby-step measures to reassure the West over Irans nuclear ambitions. In this context, he indicated that Iran would be ready to show greater transparency and make clear that its actions are totally within international frameworks. But he also argued that to promote confidence as a first step no new sanctions should be imposed and subsequently, the existing sanctions should be reduced.

On Syria, he said: We are opposed to foreign intervention. We hope peace and tranquility will return to Syria through co-operation with countries of the region and world. While asserting that there would be no change in Irans longstanding alliance with Syrian president Bashar al-Assad, he indicated that he would seek improved ties with the Gulf states, which have been backing the Syrian rebels, as well as with the US and the West. Clearly Rouhanis assumption of the Iranian presidency provides a new opportunity to mend fences with Iran and the ball is now in the US court. The single most important issue in this regard is unquestionably the nuclear issue. Here the US and the West erred, when Rouhani had been Irans chief nuclear negotiator and had actually suspended Irans uranium enrichment programme, by failing to recognise Irans right to enrich. There was no logic in so d oing as the International Atomic Energy Agency(IAEA) had not found the smoking gun of Iran embarking on weaponisation, as indeed it has not be able to do till date. In case the US does not adopt a more accommodative stance the nuclear imbroglio is unlikely to be resolved. Another critical imperative is the need for the USA to drop its policy of seeking to contain Iran by working through Sunni Arab regimes like Saudi Arabia which is resulting in the spread of violence and extremism in the region. The classic example of this is the support of Syrian rebels for overthrowing Assad which has plunged the country into a bloody civil war that has dangerous possibilities of spillover. The initial US and Western reaction to Rouhanis election has been one of cautious welcome. They should, however, not expect too much of Rouhani as it is the supreme leader who ultimately calls the shots. Nevertheless, the former on account of his impressive victory, a rapport with the supreme leader and his own more moderate stance as compared to his predecessor coupled with Irans economic imperatives may be expected to work towards dtente with the West, provided the latter meets him halfway. Given Irans importance to India as a major regional player, as a gateway to Afghanistan and Central Asia, as a critical source of energy, and as a country with a huge potential for our project exports it is essential for us that its differences with the international community and particularly the West are resolved at the earliest. These differences have seriously affected our ties with Iran, in part because the US and international sanctions regime have inevitably impeded our economic and commercial ties with it as reflected in our declining oil imports which in May alone were down 12 per cent from the year ago levels and the closure of the Irano-Hind joint shipping company, and in part due to our voting quite unnecessarily under US pressure in support of the IAEA resolutions against Iran on the nuclear issue. It may also be mentioned that the West and Sunni Arab states ganging up against Iran is also not in our interest because it is a factor of instability in the Middle East which is the major source of Indias energy imports, employment of Indian nationals and Indian project exports. Such instability has also fostered the rise of a myriad of Al Qaeda-like outfits which breed terrorism and extremism. Accordingly, it would be in the fitness of things if India adopted a much more proactive, balanced and independent position in attempting to broker an accommodation between Iran and the international community. The warm message of goodwill sent by Manmohan Singh to Rouhani is a good first step. We need to follow this up with measures calibrated to bypass the sanctions regime and designed to bring about an intensification of our bilateral ties with Iran with the objective of demonstrating that India values this and will not be influenced by any other party in this regard. At the same time we need to press the West to meet Iran halfway, recognising its right to enrich uranium for peaceful purposes and getting the latter to provide the necessary transparency to satisfy the former that it will not go nuclear. Similarly, we need to impress on the Arab world that efforts to contain Iran by attempting regime change in countries allied to it through violence will ultimately backfire on them by breeding instability and terrorism. 13. Colombo must honour promises to Tamils

It is one thing to express dismay and quite another to do something about it. Prime minister Manmohan Singh could not have but expressed concern over moves to water down the 13th Amendment to the Sri Lankan Constitution, which promises devolution of powers to the provincial councils, when he met six Sri Lankan Tamil MPs on Tuesday. Some of the constituents of Sri Lankas ruling alliance had, in fact, demanded scrapping of the amendment, incorporated in the constitution following the India-Sri Lanka accord of 1987. Its defence secretary, who is the presidents brother, has also made such a demand. They want the law nullified before northern provincial council elections are held in September. Any tampering with the constitutional provision will be a setback to the peace process. If the elected council ends up as an ornamental body with all the real powers vested in Colombo, voters in the province will be thoroughly disappointed. In fact, there is a strong case for devolving more powers than are mandated by the amendment in the long-term interest of the island nation. The Lessons Learnt and Reconciliation Commission, set up by Colombo, had also recommended decentralisation of power to maintain the nations integrity. Any infringement of the law will be a dishonour of the commitment the Rajapaksa government had made to the Tamils, India and the world. The government has already proved that it is good atmaking promises, not implementing them. The progress in rehabilitating the Tamils, who had been displaced by the ethnic crisis that led to the war, decimation of the Liberation Tigers of Tamil Eelam and the killing of its chief, V Prabhakaran, has been far from satisfactory. If the Tamils fears of betrayal are allowed to fester, it will have dangerous consequences for Sri Lankas body politic. Apart from expressing concern, India should persuade president Rajapaksa to implement the 13th Amendment in letter and spirit.
CURRENT AFFAIRS (21.06.2013) Part 1

1. Indias surveillance project may be as lethal as PRISM Central Monitoring System covers all calls, SMSs, emails, web browsing, videoconferencing, multi-media streaming and even video games Project documents relating to the new Centralized Monitoring System (CMS) reveal the governments lethal and all-encompassing surveillance capabilities, which, without the assurance of a matching legal and procedural framework to protect privacy, threaten to be as intrusive as the U.S. governments controversial PRISM project. These capabilities are being built even as a debate rages on the extent to which the privacy of Indian Internet and social media users was compromised by the PRISM project. A PIL petition on the subject has already been admitted by the Supreme Court. The documents in the possession of The Hindu indicate that the CMS project now has abudgeted commitment nearly double that of the Rs. 400-crore estimate that senior officials mentioned in a recent briefing to the media. Once implemented, the CMS will enhance the governments surveillance and interception capabilities far beyond meta-data, data mining, and the original expectation of instant and secure interception of phone conversations. The interception flow diagram, hitherto under wraps, reveals that the CMS being set up by C-DoT an obscure government enterprise located on theoutskirts of New Delhi will have the capability to monitor and deliver Intercept Relating Information (IRI) across 900 million mobile (GSM and CDMA) and fixed (PSTN) lines as well as 160 million Internet users, on a real time basis through secure ethernet leased lines. The CMS will have unfettered access to the existing Lawful Interception Systems (LIS), currently installed in the network of every fixed and mobile operator, ISP, and International Long Distance service provider. Mobile and long distance operators, who were required to ensure interception only after they were in receipt of the authorisation, will no longer be in the picture. With CMS, all authorisations remain secret within government departments. This

means that government agencies can access in real time any mobile and fixed line phone conversation, SMS, fax, web-site visit, social media usage, Internet search and email, including partially written emails in draft folders, of targeted numbers. This is because, contrary to the impression that the CMS was replacing the existing surveillance equipment deployed by mobile operators and ISPs, it would actually combine the strength of two expanding the CMSs forensic capabilities multiple times. Even where data mining and meta-data access through call data records (CDRs) and session initiation protocol data records (SDRs) used for Internet protocol-related Even where data mining and meta-data access through call data records (CDRs) and session initiation protocol data records (SDRs) used for Internet protocol-related communications including video conferencing, streaming multi-media, instant messaging, presence information, file transfer, video games and voice & fax over IP is concerned the CMS will have unmatched capabilities of deep search surveillance and monitoring. The CMS is designed to have access to call content (CC) on multiple E1 leased lines through operators billing/ mediation servers. These servers will reveal user information to the accuracy of milliseconds, relating to call duration, identification and call history of those under surveillance. Additionally, it will disclose mobile numbers and email IDs, including pinpointing the targets physical location by revealing cellphone tower information. Nationwide surveillance The Hindus investigation has also unveiled the mystery relating to the CMSs national rollout. Contrary to reports about it being active nationwide, only Delhi and Haryana have tested proof of concept (POC) successfully. Kerala, Karnataka and Kolkata are the next three destinations for CMSs implementation. Till 2015, two surveillance and interception systems will run in parallel the existing State-wise, 200-odd Lawful Intercept and Monitoring (LIM) Systems, set up by 7 to 8 mobile operators in each of the 22 circles, plus the multiple ISP and international gateways alongside the national rollout of CMS. The aim is to cover approximately one dozen States by the end of 2013-14. On November 26, 2009, the government told Parliament that CMSs implementation would overcome the existing systems secrecy which can be easily compromised due to manual interventions at many stages. In January 2012, the government had admitted to intercepting over 1 lakh phones and communication devices over a year, at a rate of 7,5009,000 per month. Privacy vs. security Currently two government spy agencies the Intelligence Bureau (IB), and the Research and Analysis Wing (RAW) plus seven others, including the Central Bureau of Investigation (CBI), the Narcotics Control Bureau, DRI, National Intelligence Agency, CBDT (tax authority), Military Intelligence of Assam and JK and Home Ministry are authorised to intercept and monitor citizens calls and emails, under the guidelines laid down by the Supreme Court, The Indian Telegraph Act 1985, Rule 419(A) and other related legislation. Given the major technological advancements in monitoring and enhanced forensic capabilities in surveillance, coupled with the change in procedure which mandates the interception authorization to be kept secret between two government departments with no scope of a transparent public disclosure of who is being monitored, for what purpose and for how long, privacy and free speech activists are protesting and raising many questions. The government, meanwhile, is proceeding undeterred. 2. A Himalayan tragedy Excessive rainfall provides only a partial explanation for why the abode of the Gods the Himalayan hill States of Uttarakhand and Himachal Pradesh has been battered beyond measure in recent days. For mans excesses and follies have also been a factor in the destruction that nature has wrought. Whole villages, stretches of roads and communication links have been effaced. Thousands, including those from other parts of the country who were

undertaking pilgrimages to religiously significant temples in the region, remain stranded. It is evident that the problem of poor soil stability on the steep slopes in this fragile region has been compounded by man-made factors like indiscriminate deforestation and mindless construction. Hundreds of buildings along the banks of the Alaknanda and the Bhagirathi have been swept away in Rudraprayag district alone. Downstream, the Ganga, Yamuna and other rivers have reached levels not seen in years, posing difficulties even in Delhi. This tragedy truly has the makings of anational calamity. A mighty task of evacuation, relief and reconstruction lies ahead. The longer term lessons are many. Towns and villages in such terrain ought to be better planned. There should be a comprehensive renewal and relook at construction techniques and methodsemployed. Better systems of forecasting and dissemination of weather-relatedinformation are also essential. Over the past weekend, the India Meteorological Department did issue routine warnings about the possibility of heavy to very heavy rains, but these were not sufficiently stern, considering the uncharacteristically highprecipitation levels that were recorded since. It is also unclear if the warnings were acted upon with alacrity and disseminated promptly by the State authorities. Crucially, a 2011 notification to declare as eco-sensitive a zone extending to a distance of 130 km from Gomukh where the Alaknanda begins, up to Uttarkashi, remains unenforced to this day. The Uttarakhand governments misgivings on this move, based on the argument that it would impede development, need to be re-examined in an informed manner. Strategies to ensure better overall management of water resources in the region are needed. However, observations by the Comptroller and Auditor General in 2010 expressing concern over disturbance to the natural ecology and destabilisation of hill slopes causedby the construction of hydel projects along the Bhagirathi and the Alaknanda, and over the failure of the administration to plant enough trees to mitigate risks arising out of soildegradation, have a fresh resonance at this point. 3. Patent justice The U.S. Supreme Courts landmark ruling that DNA segments are a product of nature and hence not patent-eligible has worldwide significance because it settles the controversial issue of patenting human genes in the one jurisdiction where it has come to matter the most. Though the ruling said that the mere act of isolating genes is not an act of invention, it ruled, by the same yardstick, that complementary DNA (cDNA) does not occur in nature and is therefore patent-eligible. By walking a tightrope, the ruling has ensured that research on genetic testing is encouraged. The judgment strikes at the very foundation on which Myriad Genetics and the University of Utah Research Foundation have effectively monopolised BRCA1 and BRCA2 gene testing since 1994. By possessing the exclusive right to isolate the two genes for identifying the deleterious mutations that cause breast cancer, the company prevented the entry of cheaper and better techniques of identifying the mutations. That a patent was awarded even though the process of isolating genes was widely used at that time shows little application of mind. The ruling has spelled out in no uncertain terms that such an irrational grant of patents for laws and products of nature would end up inhibiting future innovation and is at odds with providing protection. The judgment effectively invalidates other patents granted for genes associated with diseases such as colon cancer, Alzheimer's disease, and muscular dystrophy. But it is not clear if this ruling would invalidate patents granted to genes removed from plants and animals. With the advent of whole genome sequencing, genetic testing has graduated to a different plane. Yet, patents granted to companies such as Myriad prevented new techniques from being used. Hence the unanimous decision by the nine judges to summarily reject patent protection to isolated genes has saved science and scientific research from the morass it had sunk into in recent times. While there can be no debate on whether scientific research should be rewarded, odious claims by Myriad and others should be roundly condemned.

The prohibitive cost for a far inferior test had precluded many women from getting tested. With breast cancer being the leading cancer affecting women and about 10 per cent of breast cancer cases being hereditary in nature, the number of those who need to undergo genetic testing is high. Yet, the companys greed had effectively prevented many women from getting tested. Thanks to the courtsdecision, and greater awareness about genetic testing created recently by Angelina Jolie, who had a double mastectomy as she had a harmful mutation in BRCA1, more lives will be saved. And thats what medical science is all about. 4. Repeating Enron in Jaitapur More than a decade after Enrons collapse, its legacy continues to haunt Maharashtra. In 2006, the Dabhol power project was restructured into the Ratnagiri power project with public subsidies that, by some estimates, amounted to Rs. 10,000 crore. The project has led a troubled existence and in March this year it announced that it may have to stop servicing its outstanding debt of Rs. 9,000 crore because of a problem with its fuel supply. In spite of this reminder of the continuing long-term costs of sweetheart deals to attract foreign investment in the power sector, a team from the Indian atomic energy establishment left for France last week to repeat the same mistakes. Problem with design The French company Areva, just like Enron, has been promised a contract for six European Pressurized Reactors (EPRs) by executive fiat, bypassing a competitive bidding process. The reactors will be set up in Jaitapur, which is also in Ratnagiri. No one knows the exact extent of this give-way, because no EPR has been commissioned anywhere in the world. Areva started construction on its first EPR in Finland in 2005, with a promise to complete the reactor by 2009, at a price of just over 3 billion. After eight years, the reactor is still incomplete but cost estimates have ballooned to 8.5 billion almost thrice the original figure. Areva has various excuses, but similar delays and cost increases in the second EPR under construction in its own country point to a more fundamental problem with the EPR design. There is little public data about the EPRs being built in China, but these prices are consistent with those proposed for EPRs in Britain and indicate that each Indian reactor may cost as much as Rs. 60,000 crore. So, the price of the two reactors that the government hopes to commence in the Twelfth Plan period will equal the total plan outlay on science and technology including the departments of Space, Science and Technology, Biotechnology, and research labs throughout the country. What does this imply for consumers? In 2010, the then CEO of Areva, Anne Lauvergeon, told this newspaper that the tariff would be below the Rs. 4 figure. More recently, Areva suggested that this tariff holds true, except for small escalations because of the delay in operationalising the project. Both Areva and the Nuclear Power Corporation of India (NPCIL) have doggedly refused to explain the origins of this number. In the same 2010 interview, Lauvergeon said that I am not going to give you the details it is not for me to give the price if thecustomer does not want to give it. The government has also refused to divulge information in meetings with local activists or even in response to parliamentaryquestions, where it has fallen back on the story that the final price is still under negotiation. However, it is possible to independently estimate the cost of electricity using a study on the economics of imported reactors that the government produced inpreparation for the India-U.S. nuclear deal. This was later updated and published by NPCIL. When M.V. Ramana and I applied this framework to the Jaitapur reactors, in a paper for the Economic and Political Weekly , we concluded that the true cost of electricity is likely to be almost four times as high as what the government claims. The figure of Rs. 4 per unit comes from a combination of unrealistic assumptions and a revenue model that provides massive public subsidies to the project. The single most important factor in determining the tariff is the capital cost of the reactor. The government claims that the Indian

EPRs will be cheaper because construction forms about 40 per cent of the total cost. Estimates suggest that construction costs in India are about 60 per cent lower than Europe. So, under best case conditions, the government could hope for about a 25 per cent reduction in the total cost. However, the capital cost assumed in the governments study is not 25 per cent lower, but literally 25 per cent of the figure for European reactors! It is this assumption of an unrealistic capital cost that underpins the Rs. 4 figure. The study also reveals how the government plans to set out an exceedingly generous revenue model for the project. For example, it assumes that the project will have access to long-term debt at an interest rate of only 6 per cent. This is inconsistent with the serious concerns about the projects viability. Moreover, since the yield on 10-year Indian Government bonds has been consistently higher than 7 per cent, even the full backing of the government will not bring the rate down to this level in the open market. So, the government will have to arm-twist public sector banks or itself provide a long-term loan to the project at this throwaway rate. Another subsidy is built into the governments plan to inject equity during the first few years of construction. In the governments revenue model, this money will sit idle for more than a decade until the reactor becomes operational. Assuming, optimistically, that the EPRs are constructed as fast as the Kudankulam reactors, this delay will bring the governments return on equity down from the advertised rate of 14 per cent to an effective rate of only 7.7 per cent. Further delays, which are likely, will reduce this further. When these parameters are corrected, and combined with a realistic estimate of the cost of fuel, the governments own methodology leads to a first year tariff of Rs.15 per unit, even without including transmission and distribution costs. Obviously, this cannot be passed on to consumers, and so the state will have to subsidise the electricity. To bring the tariff down to Rs. 4 will require a subsidy of Rs. 22,000 crore each year for the first two reactors. This Areva-subsidy is a quarter of Indias entire food subsidy bill. There are other serious questions about the project. For example, Arevas reluctance to accept even a small amount of liability is in sharp contrast to its unscientific claims that it has precisely computed the probability of a serious accident in an EPR, and found it to be once in 1.6 million years. But the economics of this project are so appalling that it is possible to separate these issues and even the broader question of the role of nuclear energy in India. Even the nuclear establishment accepts, as WikiLeaks revealed, that the NPCIL [has] paid a high price. The justification for the project cannot be Maharashtras electricity shortage either since at this price it is possible to find several alternative solutions to that problem. Jairam Ramesh admitted that for the government, the venture is significant not just from an energy generation but also from a strategic point of view. Anil Kakodkar, former chairperson of the Indian Atomic Energy Commission, explained that India had to nurture French business interests because France helped India when it wanted access to international nuclear markets. Back-room deal This is an admission of an unsavoury back-room deal. However, a moments reflection also brings out the circularity of this argument. France supported Indias efforts because it wanted to sell reactors to India. Why should the country return this self-centred help by paying through its nose? There is a simple but significant political aspect to this entire issue. It is clear that this deal and the concomitant negotiations to purchase reactors from American companies are being driven by pressure from the Prime Ministers Office. The reason that negotiations with Areva have taken on an urgent note is because the governments prospects in the next elections are uncertain. If the next dispensation does not have the same ideological commitment to imported nuclear reactors, these deals may flounder. Our system concentrates enormous financial powers in the hands of the executive. However, just because the

government has the power does not mean that it has the right to rush into a deal that could bleed the country for years to come. The tariff of Rs. 4 per unit of electricity is unrealistic unless the government subsidises the cost of the first two Areva reactors by Rs. 22,000 crore 5. Nature avenges its exploitation A week is a long time in the Himalaya. In the late 1980s, I visited Arunachal Pradesh as a young researcher, with a keen interest in photography. I walked into the middle of the Dibang river, hop skipping over boulders, until my local tribal guide ordered me to return immediately. He smiled and said, Sir, these mountain rivers are like daughters, you never know how quickly they grow up. I was humbled by his knowledge and havent forgotten the lesson. Back to the present. During a just-concluded 10-day visit to the Bhagirathi valley, our research team witnessed telltale signs of a catastrophe ready to strike. At Uttarkashi, we viewed the destruction caused by the Assi Nadi (a tributary of the Bhagirathi) a couple of years ago. We noticed the rivers waters flow strongly against a number of houses and cheap hotel buildings, precariously perched on its weak banks. The next day we left for Gangotri, but couldnt go beyond Maneri village because a massive landslide had washed away the road about six to eight kilometres upstream. As a result, there was a long line of stranded buses, cars and trucks. Fortunately, the Garrison Reserve Engineer Force (GREF), an arm of the Border Roads Organisation (BRO) and the police worked overtime and made sure there was little chaos on the road as it opened. Harsil was biting cold and the rain incessant. We returned to Uttarkashi the same evening and to the safer Dun valley the next day. Deforestation On the television, news of the devastation in Uttarkashi had started pouring in. It was painful to see the buildings, photographed only the previous day, being washed away like toys by the Bhagirathi. There is little doubt that the present Himalayan disaster has been triggered by natural events, but the catastrophe is man-made. Let us address the various man-induced drivers. One, there is ample scientific evidence that the Himalayan watersheds have witnessed unprecedented deforestation over a long period. Deforestation as a commercial activity began during the British Raj and has continued unabated after independence. While official estimates say forest cover has increased in the Himalaya, a number of credible independent studies have found significant discrepancies in this claim. The fact is that forests have been diverted for a host of land use activities such as agriculture, human settlements and urbanisation. Massive infrastructure development such as hydropower construction and road building has taken place. Scientific studies indicate that at the current rates of deforestation, the total forest cover in the Indian Himalaya will be reduced from 84.9 per cent (of the value in 1970) in 2000 to no more than 52.8 per cent in 2100. Dense forest areas, on which many forest taxa (groups of species) critically depend, would decline from 75.4 per cent of the total forest area in 2000 to just 34 per cent in 2100, which is estimated to result in the extinction of 23.6 per cent of taxa restricted to the dense Himalayan forests. Global warming Vegetative cover slows the speed of falling rain and prevents soil erosion and gully formation the precursors to landslides and floods. Dense vegetation, by evapotranspiration, also stops nearly 30-40 per cent of rainwater from falling to theground, thereby significantly reducing run-off. Besides holding the soil together, forests and soil soak water from the rain, release it slowly and prevent water flowing as run-off. So, deforestation brings about slope destabilisation, landslides and floods. Given that the Himalayan range is geologically young and still rising, it makes the area vulnerable to erosion and instability. Therefore, it is all the more necessary to take land use change more seriously. Two, there is mounting evidence that global warming is fast catching up with the Himalaya. In a recent study, we reported that Himalayan ecosystems have experienced faster rates of warming in the last 100 years and

more than the European Alps or other mountain ranges of the world. In such a scenario, we expect faster melting of glaciers causing higher water discharges in the Himalayan rivers. Expanding settlements Three, expanding human settlements and urbanisation which, besides bringing about land use changes offer themselves as easy targets to the fury of natural forces. While it is important to appreciate the aspirations of the local people and their economic activities, there cannot be a lack of enforcement of land use control laws on the part of local governments and officials. Huge building construction, cheap hotels and individual dwellings at Uttarkashi, on the banks of the Assi and Bhagirathi rivers have been allowed. There is little buffer between the river and the human settlements. Four, large-scale dam building in recent years has caused massive land use changes with ensuing problems in the Himalayan watersheds. Hydropower and allied construction activities are potential sources of slope weakening and destabilisation. Massive intervention in the Himalayan ecosystems through manipulation of rivers and their hydrology, is linked to what we are witnessing today. Most downstream damage in otherwise flood-free areas is caused by dams and barrages, which release large volumes of water to safeguard engineering structures. Dam operators often release more water during rains than the carrying capacity of downstream areas, causing floods. Pilgrims Five, neo-religious movements, linked to changing socio-political developments in India, are responsible for significant human movement into the Himalaya beyond the regions carrying capacity, whether it is Amarnath in Jammu & Kashmir, Kedarnath, Badrinath, Gangotri and Hemkund in Uttarakhand. The heavy pilgrim population has also resulted in the mushrooming of shanty towns, cheap accommodation and numerous ramshackle buildings along river banks. What is the road ahead? There needs to be an integrated policy on the Himalayan environment and development. Enough information is available in the public domain, which only needs to be put together and looked at in a cohesive manner. Himalayan State governments need to consider imposing high environmental tax on visitors, particularly during summer and monsoon months. Heavily sizing down pilgrim numbers in fragile areas must begin. All vulnerable buildings need to be either secured or relocated away from rivers. Governments must impose penalties on building structures within 200 metres of river banks. Hydropower policy must consider building fewer dams and prioritise those that have the least environmental and social costs. Independent and serious monitoring of the catchment area treatment plans proposed by Forest Departments with funds from hydropower companies needs to be carried out and reported to the Green Tribunal. The catastrophe in the Himalaya is the result of deforestation, unchecked construction of dwellings and large-scale building of big dams 6. Cabinet may take up hike in natural gas price today Petroleum Ministry proposes $6.7 per mbtu for the April-June quarter The Cabinet Committee on Economic Affairs (CCEA) is understood to have recommended $6.775 per million British thermal unit (mbtu) for all domestically produced natural gas as against the present rate of $4.2 per mbtu, a hike of nearly 60 per cent, which is expected to impact the power and fertilizer sectors hard. The gas price hike issue has been listed in the additional agenda for the CCEA meeting scheduled for Friday. The latest recommendations contained in a CCEA note follow hectic inter-ministerial consultations and strong positions taken by the Power and Fertilizer Ministries. In fact, the Cabinet Secretariat had advised the Petroleum Ministry to move the CCEA note, as the Empowered Group of Ministers (EGoM) did not have the mandate to decide price hike. The earlier CCEA note was also returned back by the Prime Ministers Office (PMO), asking the Petroleum Ministry to hold wider

consultations on the issue and then come before the Cabinet with a revised note. The $6.775 mbtu is lower than the $8 to $.5 mbtu suggested by the Rangarajan panel, which had suggested pricing domestic gas at an average of rates at three key international hubs U.S. Henry Hub, National Balancing Point of the U.K. and well-head prices of supplies into Japan, and the actual cost at which India imports LNG. The CCEA note states that the price will be revised on the quarterly basis and for the April-June quarter, it comes to $6.775 per mbtu. The Finance Ministry had suggested changes in the pricing methodology by excluding international hub rates and pricing domestic gas at rate equivalent at the actual cost of LNG to India on a long-term contract. If thesuggestions are accepted by the Cabinet, then the price will come to $6.79 in theimmediate future and $8.93 by the end of current fiscal. It would rise to $10.29 in 2014-15 and $10.92 in the subsequent year. Price of gas as per the Petroleum Ministry formula in the CCEA note will be close to $12 in 2014-15 and $14 in the next year. The new rates will also apply to the public sector companies. However, Reliance Industries Limited will have to wait till April 1, 2014 for the new prices to take effect. Till the last minute, the Power Ministry has pitched for a gas price of not more than $5 and no change in rates of gas produced by State-owned firms like the Oil and Natural Gas Corporation Limited and Oil India Limited. However, this suggestion was rejected by the Petroleum Ministry. 7. Russia throws its weight behind Karzai Moscow says Taliban should accept the Constitution Afghanistans President Hamid Karzais refusal to participate in peace talks with Taliban on grounds of contested sovereignty has led to an indefinite postponement of the dialogue in Doha that the Americans were keen to steer. Itar-Tass news agency quoting sources close to the negotiating process reported the postponement of the talks. The U.S. State Department said on Wednesday that the visit to Qatar by the U.S. Special Representative for Afghanistan and Pakistan James Dobbins has been delayed. After following closely the open spat between the Americans and the Afghans, the Russians, already at odds with Washington over the situation in Syria and Iran, expressed their stance on the rapidly mutating situation in the heart of the Hindu Kush. On Wednesday, the Russian Foreign Ministry announced that it fully supported Mr. Karzais position that peace efforts in the war-torn country should be led by the government of Afghanistan, instead of the U.S. Talks halted Apprehending that the Americans and the Taliban had taken custody of the Doha peace talks, the Karzai administration had retaliated strongly by suspending security talks with Americans over stationing of U.S. troops in Afghanistan after the 2014 NATO withdrawal from the country. Upholding the principle of sovereignty, Mr. Karzai also asserted that members of the High Peace Council the body entrusted with peace talks with the Taliban would neither attend nor participate in the talks until the process was completely in the hands of Afghans. He also signalled the necessity of ceasefire, pointing out that talks will be possible when only Afghan parties will take part and the country will put an end to violence. The Russian Foreign Ministry stressed that a peace dialogue in Afghanistan could have a positive outcome only if the government in Kabul led the process, and on condition that the Taliban severed ties with al-Qaeda, ended the violence and accepted Afghanistans constitution, including its protections of women and minorities. By Thursday, it had become clear that the Karzai government was in no mood to be placated by the removal of the Taliban flag and the plaque which said the facility belonged to the Islamic Emirate of Afghanistan from its new office. These two signs of Talibans attempt at usurping Afghan sovereignty had been removed overnight following intervention by the Qatari government on the insistence of the Americans. The U.S. Secretary of State John Kerry had thrice called Mr. Karzai on Wednesday, but his exertions have not yielded any visible results so far. The

Afghan website TOLO news is reporting that Kabul has expressed serious reservations about the U.S. initiative. Crosses the redline The Taliban cannot get through political means what they have been fighting for in the last 12 years, the website quoted a senior government official as saying. They cannot kill people in Afghanistan every day and at the same time tour the world to represent the Islamic Emirate and establish relationships. It crosses the redline, the official observed. He added that Taliban, in their statement at the opening of their office, had said, without specifically mentioning the Afghan government by name, that they would generally engage with Afghans if necessary. The website said that the Afghan government has now refused to talk with the Taliban in Qatar and made it clear that it will not be participate unless it is allowed to lead the peace process without foreign meddling. The Taliban, meanwhile, seemed to be mounting a fresh charm offensive to engage with the Americans. The Associated Press quoting a senior spokesman reported that Afghan Taliban are ready to free a U.S. soldier, held captive since 2009, in exchange for five of their senior operatives, imprisoned at Guantanamo Bay, as a conciliatory gesture. 8. Domestic violence at epidemic proportions: WHO Domestic violence against women worldwide has assumed epidemic proportions with one in three suffering physical or sexual assault at the hands of a man they know a current or former partner, according to the World Health Organisation. Results of aseries of studies, released on Thursday, showed that being assaulted by a partner was the most common form of violence suffered by women. In many cases, such violence resulted in death. Nearly 40 per cent of women killed worldwide were victims of intimate partners, researchers said. Violence against women is a global health problem ofepidemic proportions, WHOs Director-General Dr. Margaret Chan warned as theorganisation called for health workers to be trained to recognize signs of domestic violence. It defined physical violence as being slapped, pushed, punched, choked or being attacked with a weapon while sexual violence was defined as being physically forced to have sex or having sex because a woman is afraid of what her partner might do if she refuses. Women in Africa, West Asia and Southeast Asia are at the greatest risk of suffering domestic violence. Some 37 per cent of women in these regions experienced physical or sexual violence from a partner at some point in their lifetime. Experts suggested that screening for domestic violence should be added to all levels of health care. Over time, if women are coming into a fracture clinic or a pre-natal clinic, they may tell you they are suffering abuse if you ask, said Sheila Sprague of McMaster University in Canada. 9. Domestic violence at epidemic proportions: WHO Domestic violence against women worldwide has assumed epidemic proportions with one in three suffering physical or sexual assault at the hands of a man they know a current or former partner, according to the World Health Organisation. Results of a series of studies, released on Thursday, showed that being assaulted by a partner was the most common form of violence suffered by women. In many cases, such violence resulted in death. Nearly 40 per cent of women killed worldwide were victims of intimate partners, researchers said. Violence against women is a global health problem of epidemic proportions, WHOs Director-General Dr. Margaret Chan warned as the organisation called for health workers to be trained to recognize signs of domestic violence. It defined physical violence as being slapped, pushed, punched, choked or being attacked with a weapon while sexual violence was defined as being physically forced to have sex or having sex because a woman is afraid of what her partner might do if she refuses. Women in Africa, West Asia and Southeast Asia are at the greatest risk of suffering domestic violence. Some 37 per cent of women in these regions experienced physical or sexual violence from a partner at some point in their lifetime.

Experts suggested that screening for domestic violence should be added to all levels of health care. Over time, if women are coming into a fracture clinic or a pre-natal clinic, they may tell you they are suffering abuse if you ask, said Sheila Sprague of McMaster University in Canada. 10. The hazards of reliance on hot money The rupee, which has been under relentless pressure over the past few weeks, came very close to breaching the 60-mark in inter-bank trading during the day on Thursday, but closed just a shade above at the end. A breach of the 60-mark would for lay people and some professionals alike be a major psychological blow, which no amount of explanations from government spokespersons will help mollify. Neither will the significant decline in the exchange rates of practically all emerging market currencies be taken as a mitigating factor. Indian stock markets, like their counterparts in many developing countries, already displaying a weak trend, slumped on Thursday. The Sensex and the Nifty ended the day sharply lower by 526 and 166 points, respectively,compared to the previous day closing rates. Stimulus programme Behind the extreme financial market volatility across the globe has been a much anticipated announcement on Wednesday by the U.S. Federal Reserve on the future course of the of the monetary policy. After a two-day review, Fed Chairman Ben Bernanke announced a gradual withdrawal of the extraordinary monetary stimulus programme, which ensured extremely low interest rates in America but simultaneously released very large sums of money, some of which found its way to India and other emerging markets in search of higher return than available at home. The fear in India and other emerging market countries has been that with the phasing out of the stimulus, much of the money, which has been invested in the equity and debt markets, will flow back to the U.S. Some of this has already been happening recently. In the past month, foreign investors sold debt worth Rs.18,345 crore, and equities of an estimated value of Rs.1374 crore. Global uncertainty, which in recent times has invariably been attributed to the likely posturing by the U.S authorities, has been cited as the principal reason. But even a quick glance at the U.S Fed announcement raises the question as whether the fears of the financial sector have become self-fulfilling. The Fed has been addressing domestic concerns the stimulus (quantitative easing as it is called) was meant to revive the U.S economy; its termination will again depend on domestic factors. Quitesignificantly, the Wednesday announcement was by no means pessimistic. In fact, the authorities appeared increasingly confident in the durability of economic growth. It is this confidence that is behind the decision to pull back the stimulus later this year, but in a gradual fashion. The withdrawal of the stimulus would be linked to the U.S economy reaching definite sign posts such as the unemployment rate coming down to 7 per cent (which is expected by the middle of next year). Altogether, the official view is that growth prospects of the U.S. economy have improved. The point is that a strengthening U.S economy ought to be a positive factor for India and its markets. But the exactly opposite reaction is most certainly due to the fear partly materialised of short-term flows fleeing the markets, dragging down the rupee and stock indices, which brings us to the serious weakness of Indias external sector and its abject dependence on short-term flows to fund the balance of payments. The Indian economy has been slowing down perceptibly. Short-term flows from the U.S. might have camouflaged the weaknesses. The possibility of these flows reversing might have been the trigger for the sharp declines in the markets. 11. Commodity transaction tax to be levied from July 1 It will be charged on the seller in futures trading Commodity Transaction Tax (CTT) will come into effect from July 1 with a levy of 0.01 per cent of the transactional value being applicable on the seller in futures trading of a host of items such as gold, sugar and edible oils. Apart from gold, other commodities such as silver,

crude oil and base metals and processed farm items such as sugar, soya oil, mentha oil and guar gum will also come under CTT. According to a Finance Ministry notification here on Thursday, 23 pure agricultural commodities such as wheat, barley, chana (gram), cotton and potatoes would be exempted from the levy. Also in the exempted category are some other farm produces such as coriander, cardamom and guar seeds. In effect, the CTT as proposed in the Budget for the current fiscal will primarily be applicable on nearly a dozen processed agricultural commodities at the rate of 0.01 per cent of the transaction value. In his 2013-14 Budget speech, Finance Minister P. Chidambaram had stated that CTT on the lines of theSecurities Transaction Tax (STT) in the capital market would be levied on nonfarm items to be paid by the seller only in futures trading. At 0.01 per cent of the transaction value, the levy would work out to Rs.10 on a deal worth Rs.1 lakh. The implementation of CTT, however, got delayed owing to detailed consultations between the Ministry and various stakeholders on the list of non-farm commodities to be brought under the levy.National level :Out of the 22 commodity bourses in the country, only six of them operate at the national level. In 2012-13, the combined turnover of these exchanges stood at Rs.170,46,840 crore, six per cent lower as compared to the previous fiscal. Also, of the total turnover, while over 80 per cent comes from non-agricultural commodities, the turnover from futures trade accounts for about 15 per cent of the total trade 12. Non-food bills overtake food spend: NSSO Families are spending more than half of their monthly spend on non-food items on an average, data from the National Sample Survey for 2011-12 show. This is true for rural as well as urban households; families bought over 51 per cent of non-food items in their monthly bills worth Rs.1,430 in rural areas and about 62 per cent out of an urban monthly spend of Rs.2,630. Back in 1993-94, Indian families non-food bill was almost 37 per cent in rural areas and about 45 per cent in urban areas. Officials of the National Sample Survey Organisation (NSSO) explained that although the percentage of food to non-food expense, as part of the overall household bill, had tilted over the decade, peoples absolute consumption of food had increased over the years; however, the consumption pattern of food sub-groups such as cereals had somewhat changed. The household consumer expenditure break-up is part of two sets of data (key indicators) that Chief Statistician of India and Secretary, Ministry of Statistics and Programme Implementation, T. C. A. Anant, released here on Thursday. He earlier addressed a two-day seminar for statisticians and policy-makers organised by the Bangalore outfit of the NSSO. Dr. Anant said the country had added almost 14 million to its workforce between 2009 and 2011-12. It increased from about 459 million in January 1, 2010 to 472.9 million by January 1, 2012. Unemployment rate was 2 per cent at the all-India level and rural areas; and 3 per cent in urban regions. As per the household spending data, only about 10 per cent of the urban population reported an MPCE (monthly per capita expenditure) above Rs.4,610. Non-food categories span tobacco/cigarettes and pan, fuel, light, clothing, bedding, footwear, education, medical bills, entertainment and durable goods. 13. Poorest of poor survive on Rs 17 a day in villages: NSSO Poorest of poor in the country survive on barely Rs 17 a day in villages and Rs 23 a day in cities, as per the latest data released by the National Sample Survey Office today. According to the data, which relates to 2011-12 (JulyJune), five per cent population on the bottom rung had an average monthly per capita expenditure (MCPE) of Rs 521.44 in rural areas and Rs 700.50 in urban areas. On the other end of the spectrum, top five per cent of the population had an MPCE of Rs 4,481 in rural areas and Rs 10,282 in urban areas. The National Sample Survey Offices (NSSO) 68th round of survey is based on samples consisting of 7,496 villages in rural India and 5,263 urban blocks except some remote areas,

during July 2011June 2012, the release said. On an average on the allIndia basis, MPCE was around Rs 1,430 for rural India and about Rs 2,630 for urban India. Thus average urban MPCE was about 84 per cent higher than average rural MPCE for the country as a whole, though there were wide variations in this differential across states, it said. For the average rural Indian, food accounted for 52.9 per cent of the value of consumption during 201112. This included 10.8 per cent for cereals and cereal substitutes, 8 per cent for milk and milk products, 7.9 per cent on beverages, refreshments and processed food, and 6.6 per cent on vegetables, the release said. Among non-food item categories, fuel and light for household purposes (excluding transportation) accounted for 8 per cent, clothing and footwear 7 per cent, medical expenses 6.7 per cent, education 3.5 per cent, conveyance 4.2 per cent, other consumer services (excluding conveyance) 4 per cent, and consumer durables 4.5 per cent. 14. Ministry seeks Rs 10,830 cr for power reforms scheme in 12th Plan To implement the programme, the Government will facilitate loans of Rs 50,000 crore to States. The Power Ministry is seeking an extension of Restructured Accelerated Power Development and Reforms Programme for the 12th and 13th Five-Year Plan period to strengthen the distribution sector. The Government launched this programme in the 11th Plan with an objective of reducing distribution losses. If extended, the scheme would cost Rs 10,830 crore in the 12th Plan and Rs 11,897 crore in the 13th Plan. The Cabinet Committee on Economic Affairs is likely to discuss the issue on Friday, a Power Ministry official told Business Line. In order to implement the programme, the Union Government would facilitate loans of Rs 50,000 crore to States. Of this, Rs 31,577 crore would be converted to grant. During the 11th Plan, projects worth Rs 5,242.64 crore covering 1,401 villages in 29 States and Union Territories have been sanctioned. The R-APDRP programme is divided into two parts. The first part includes projects for establishment of baseline data and implementing IT applications, billing and customer care services, among others. The second part includes projects that strengthen the distribution network. 15. Cabinet okays weeding, merging of Centrally sponsored schemes States given flexibility to use part of fund. The Centre has decided to reduce the number of Centrally Sponsored Schemes (CSS) in the country by more than half by merging similar schemes for better implementation and monitoring. The Union Cabinet, which approved merging of over 140 CSS into 66 schemes on Thursday, also agreed to give more operational flexibility to States. We have now reduced CSS to 66. There are many different schemes in one area (like horticulture). We have condensed them into one scheme, Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters after the Cabinet meeting. The Government has also decided to alter the scheme guidelines to suit the requirements of the States and give them greater flexibility to spend up to 10 per cent of the allocated funds. Ahluwalia explained that States would have flexibility to incur expenditure under any scheme (up to 10 per cent of the allocation) as long as the project is within the broad guideline of a scheme. He said innovation was very important while using the funds under CSS so that it can serve the broad purpose of the programme. The approved schemes include 17 flagship programmes with significant outlays for major interventions required in health, education, irrigation, urban development, and infrastructure sectors. To suit the requirements of the States, the Cabinet has also approved that a scheme may have State specific guidelines which may be recommended by an Inter-Ministerial Committee constituted for this purpose, it said. The financial assistance to the States in these schemes would be provided through the Consolidated Funds of the States. 16. Trade winds from the West

A sustainable level of current account deficit requires the full pass-through of global fuel and fertiliser prices into the domestic economy. In the globalised world of today, it is natural that actions of western central banks are watched no less keenly in emerging economies as they undoubtedly are, nearer home. This was never more apparent than in the reverberations felt in the Indian market following the Wednesday meeting of the US Federal Reserves open market committee. It is fair to say that the US decision attracted far more attention than the Reserve Bank of Indias monetary policy review announced earlier in the week. There was a good reason for that. During 2012-13, Indias current account deficit (CAD) in its external transactions crossed a record $90 billion. Yet, the rupee remained stable at 53-54 to the dollar for much of the year, even without any significant drain in the RBIs foreign currency reserves. This was made possible only because of the flood of global liquidity unleashed by loose monetary policies, especially of the US Fed. Its policy of quantitative easing simply put, printing of money through $85 billiona-month purchases of US treasuries and mortgage-backed securities and maintaining a near-zero interest rate regime created conditions for investors to channelise the resultant dollar deluge into emerging markets offering higher yields. It is the flow of these monies that helped finance Indias CAD and support the rupee in the past year or more. The prospect of any reversal of capital flows post the US Fed reining in its quantitative easing programme has, therefore, huge implications for the rupee. The rupee has, in fact, been under pressure ever since the Fed Chairman, Ben Bernanke, on May 22, hinted at cutting back on its current bond buying operations. Wednesdays announcement by Bernanke, that the Fed could start tapering its monthly purchases from later this year and end the programme by mid-2014, has seemingly only reconfirmed these fears. The end-result is that the rupee has fallen from under 55 to almost 60 to the dollar in the space of a month. The fact that the Feds proposed actions are subject to the unemployment rate in the US falling below seven per cent not easy if growth falters has not really been factored in by the markets, including in India. Whether or not loose monetary policies by western central banks are coming to an end, it is clear that India cannot depend on these to run an unsustainably high CAD. The CAD has to be brought down below $50 billion, which requires allowing full pass-through of global fuel and fertiliser prices. The existing policy of only gradually raising diesel prices, while freezing it in the case of urea, does little to align domestic demand for these products to their actual cost of imports. Simultaneously, the Government should stop sending conflicting signals on attracting foreign capital flows. It cannot announce grand reform measures to open up retail or aviation to foreign players one day, only to come out with complicated regulations and clarifications that make investors think twice about doing any business in the country. 17. The new 3D reality New India can be well understood through the lens of three Ds: Development, Democracy and Demography.What happens when an underdeveloped country with a young population and a vibrant democracy to boot grows at unprecedented rates for a sustained period of time? And what happens when that growth engine suddenly stalls? These are questions few economists, political scientists or sociologists have posed, but they capture the story of New India, which can well be understood when viewed through the lens of three Ds: Development, Democracy and Demography. During 2003-04 to 2010-11, the Indian economy grew by an average of 8.5 per cent a year. That, by itself, isnt extraordinary, for many countries have recorded such high growth rates over extended periods. But the difference is that most of them did so either underformal single-party rule (China, Taiwan), de facto single-party regimes (Japan, Singapore, Mexico) or outright military dictatorships (South Korea). India is an exceptional case, where Development (8 per cent-

plus growth for nearly a decade) and Democracy (every adult citizen, be it Dalit, Muslim or upper-caste Hindu, having the right to vote) have both gone together. The current century, if anything, has seen the forces of competitive electoral politics and free media (especially 24-hour television) gain strength, both at the national and regional levels. Voter turnouts, too, have been on the rise, despite all the organised efforts at belittling the countrys politicians and its electoral system. That brings us to the third D: Demography. The average (median) age of Indias population in 2010 was 25.5 years, as against 37.1 for the US, 42.3 for Western Europe, 44.9 for Japan or 34.6 for even China. Further, 42 per cent of Indians were aged between 15 to 40 years those whom we can call the young and aspirational population. This crowd cannot be compared with the youth of the previous generations, having far higher expectations in employment and consumption standards, and not as tolerant to harsh working conditions. The additional aspirational element has to do with the spread of education, increased access to information from multiple media sources (television, newspapers and internet), and greater exposure to the culture of towns and cities. When they converge The three Ds are mutually reinforcing. When people see Development and the incomes of others rising, it unleashes similar desires to raise their own living standards. The transmission of these expectations takes place faster in a Demographic structure with a significant young and aspirational component. The expression of aspirations and the pressures on governments to respond to them are, moreover, higher in a Democracy where parties have to face voters at least once in five years. Since the early 2000s, India has been witness to aconvergence of the three Ds. One of its effects has been on labour costs. Farm wages in India rose annually by 17.5 per cent over the last plan period from 2007-08 to 2011-12. Even after adjusting for inflation, the increase was 6.8 per cent in real terms, which clearly had to do with accelerated growth in the wider economy and urbanisation, creating new employment opportunities outside of agriculture. But rural wages wouldnt possibly have risen that much had India not been a democracy, with no restrictions on labour mobility (a la Chinas Hukou registration system) and politicians even obliged to seek the votes of agricultural workers. The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was, after all, only a response to such pressures. It is fair to say that the wage increases in recent years have been a product of both high growth and MGNREGA apart from the presence of a young rural labour force more willing to exercise migration options and not as keen to work on the farms as its predecessor generations. The land question The impact of the convergence of the three Ds has been felt not just in the labour market. In a brilliant recent work, The Price of Land: Acquisition, Conflict, Consequence(Oxford University Press), Sanjoy Chakravorty has shown how the Government in the 1950s could acquire some 130,000 acres of land for the Hirakud Dam project in Orissa by paying Rs 50200 an acre a paltry Rs 1,500-6,000 at current prices. Even till the early 2000s, one could buy a few thousand acres of land in many parts of India for Rs 50,000 per acre or less. But today, forget 100,000 acres, even 10,000 acres is beyond anyones capacity including the State with all its eminent domain powers just as no land is available for less than Rs 4-5 lakh an acre. The above transformation is again a result of growth (generating new demand for a resource whose supply is inherently limited), greater awareness among farmers (especially the younger generation) of the real value that their lands can command, and unfair acquisition becoming part of mainstream political discourse (Singur, Nandigram, POSCO, Yamuna Expressway). When things slow Since 2011-12, GDP growth has dipped sharply to 5-6 per cent.

Yet, the aspirations fuelled by the extended economic boom of the last decade havent faded away. Having seen, if not experienced, a rise in living standards during this period, there is an overwhelming sentiment of disappointment and frustration amongst the youth today. Ironically, it is directed at the Congress, under whose reign the India Growth Story happened. The man hoping to tap into this discontent, while hard-selling his own so-called Gujarat development model, is Narendra Modi. Whether or not he succeeds, the decade of the three Ds has left behind some enduring legacies. One of it is certainly the fact that the Indian polity is more democratic now than before. Governments no longer can take lands with impunity and pay whatever compensation they deem to be fair. In 2005, Bhupinder Singh Hoodas administration in Haryana could get away with the most violent police crackdown on striking workers at Honda Motorcycle & Scooter. But such strong-arm methods were simply ruled out when it came to dealing with the labour unrest at Maruti only six years later in the same Gurgaon-Manesar belt. Much of what India Inc terms as policy paralysis stems precisely from the States increasing inability to manage things for it whether in acquiring large swathes of land, imposing projects on unwilling locals or showing labour its place. While it is possible that many corporates expect Modi to restore order, what they perhaps dont realise is the new 3D reality of India. The interaction between Development, Democracy and Demography will mean Indias growth story is going to be different. We only saw a glimpse of that in the last decade. 18. Upbeat Fed spoils market mood Sensex falls the most in 21 months, Indian ADRs drop to lowest since Sept; Rupee nears the 60-a-$ mark, closes at record low Indian indices today saw their steepest fall in a day in 21 months, while the rupee tumbled to a new record low, tracking the weakness in global markets and currencies after the US Federal Reserve signalled a tapering of its monetary stimulus, stoking fears of portfolio outflows. Fed Chairman Ben S Bernanke yesterday said the central bank would cut back on its monthly bond-buying later this year if the economic outlook continued to improve. Fresh fears about Chinas manufacturing sector and liquidity squeeze also weighed on market sentiment, especially in Asia. Foreign institutional investors today net-sold stocks worth Rs 2,094 crore, according to provisional data. This is the highest selling by foreign investors in a single day since August 2011. In June so far, FIIs have sold to the tune of Rs 2,890 crore, while they have net-bought worth Rs 80,000 crore since January. Domestic institutions net-bought shares worth Rs 1,332 crore today. (BERNANKE SPOOKS MARKETS). The market was hopeful that the quantitative easing (QE) would continue but that didnt happen. This caught the market off guard, said India Infoline Chairman Nirmal Jain. The Bombay Stock Exchange benchmark Sensex fell 526.41 points, or 2.7 per cent, to close at 18,719.29, the highest single-day fall since September 2011. NSEs Nifty declined 166.35 points, or 2.86 per cent, to end the day at 5,655.90. The Indian market is highly vulnerable to foreign investor sentiment, Jain said. He expects the markets to decline by 5-10 per cent in the near term. The US stock markets, too, opened in the red. At the time of going to press, the Dow Jones Industrial Average had fallen 1.96 per cent from its previous close, while the Nasdaq was down 2.09 per cent. The Bank of New York Mellon India American Depository Receipts (ADR) Index dropped 3.4 per cent to the lowest since September in early New York trade. ADRs of Wipro fell 2.3 per cent to $7.09, the lowest since October, while the Infosys ADRs retreated 2.3 per cent to $39.99 and Tata Motors declined 2.6 per cent to $23.92. The rupee, Asias worst-performing currency, dropped to a record low of 59.96 a dollar in intra-day trade and would have easily slipped below the 60-a-dollar mark if the Reserve Bank of India (RBI) had not sold dollars to support the rupees slide. The Indian currency, at 59.58 a dollar, closed 1.46 per cent lower than its previous close.

The US Feds stance was more hawkish than the market expected. We have seen bond outflows on fears of QE tapering. Now, there is a possibility that even equity will be reallocated from the emerging markets to developed nations. This poses the risk of further depreciation, said Samiran Chakrabarty, managing director and head of research (India), Standard Chartered Bank. The spectre of the impact of the rupees weakening further against the dollar is weighing on the minds of FIIs and the government alike. Even as the government today put up a brave face, with Chief Economic Advisor Raghuram Rajan saying India was not short of options to tackle the rupees fall, investors remain worried that the dollars strengthening might not end anytime soon. Apart from the talks of withdrawal of QE3, the markets reaction is also on account of the dollar strengthening, said JPMorgan Managing Director (Equity Capital & Derivative Markets) Vinay Menon. In a poll conducted by Business Standard, currency market participants said they expected the rupee to fall below 60 a dollar soon and stabilise below that level in a month. Since the start of May, the currency has weakened 11 per cent against the dollar. Bond market participants said further weakness in the currency would reduce the chances of RBI cutting rates in its policy review in July (after it kept rates untouched earlier this week). 19. No easy answers How to minimise disasters in Garhwal The scale of the devastation in the Himalayas following the heavy onset of themonsoon, particularly due to flash floods and landslides in Uttarakhand, is staggering. An estimated 200 people have been declared dead so far, but that is purely on the basis of body count; given that between 60,000 and 70,000 are still unaccounted for, the number of fatalities will almost certainly increase considerably. The gravest damage is reportedly in the vicinity of the temple town of Kedarnath, the focus of much pilgrimage activity. Rescue activity has been fitful, and it is once again revealed how little capacity the Indian state has to deal with catastrophic events. Of course, even far more capable state machines, such as that of the United States, have struggled to deal with natural disasters of any magnitude; but it seems clear that, in India, disaster preparation is not a major consideration for an already overburdened state. However, surely natural disaster mitigation should be. Questions are legitimately being asked now whether successive governments in the Himalayan regions have allowed the area to become more susceptible to flooding and landslides. Not all the accusations being levelled at the moment are backed with empirical data; for example, there is no reason to suppose that low-intensity hydropower projects are in and of themselves more likely to cause floods or landslides. Indeed, if the mandated water management and reforestation are properly carried out, then quite the opposite will happen. This is a tragic reminder of the importance of regulation of new projects, not an argument against hydropower itself. Kedarnath Temple, which is situated in a stunningly beautiful mountain valley at the end of a 14-kilometre hike from Gaurikund in Garhwal, remains standing even as much of its surrounding construction has been washed away. In general, Garhwal seems much more prone to disasters and fatalities than neighbouring Kumaon - perhaps because the latter has fewer large rivers, but also perhaps because of substantial in-migration to Garhwal's towns. Some are people moving from work; but a large part is tourist traffic. Much of it is on a rapidly increasing road system. Some environmental activists estimate that vehicular traffic has increased a staggering 1,000 per cent in Uttarakhand over the past eight years. And those missing and killed were primarily those visiting the area in its brief tourist and pilgrimage season. Clearly, the infrastructure to support such a large number of visitors has not been built. But it is equally true that the required infrastructure would itself stress this

environmentally fragile region beyond bearing. Mountain roads themselves, for example, can destabilise young ranges and increase the frequency of landslides. India is, thus, faced with a difficult decision. Either the state can accept that such fatalities will happen as a region unable to cope with vast numbers of people is forced to deal with them, or it must choose to fairly regulate access. A laissez-faire market-based approach, even with strict environmental regulation, may lead to pilgrimages being priced out of reach of most people. Nor can things continue as they are. The government must seriously consider, therefore, what other equitable measures can be used to minimise the summer visitor pressure - the methods used, for example, for the Mansarovar pilgrimage. After all, it was always a crucial characteristic of the holy places of the hills for centuries that they were remote. For the pilgrim, the journey meant as much as the destination - not an idea aided by today's overbuilt temple towns and ecologically dangerous roads. 20. Demographic dividend gets postponed as agriculture workforce falls India's demographic dividend stands postponed, if we go by the employment figures garnered by the latest, 68th Round survey of the National Sample Survey Organisation. The proportion of the workforce living off agriculture has fallen below half, for the first time, which marks a milestone in the economy's structural diversification and moving people out of low-value agriculture and under-employment. A third major finding is thatwomen are withdrawing from the workforce. This is an extremely regressive tendency, unless they are withdrawing to spend more time in education, which has to be established independently. The demographic dividend is a shortcut for the phenomenon in which the working age population as a proportion of the population goes up, delivering faster growth through two routes: one, with more people working, even without any increase in productivity per worker, total output goes up; and two, with the share of nonworking, dependent population coming down, the economy has moresavings at its disposal to invest. If the proportion of the population entering the labour force comes down, these benefits would not accrue. And precisely that has been happening, with the ratio coming down from 43% in 2004-05 to 40% in 2009-10 to 39.5% in 2011-12. While this ratio has been more or less steady for men at over 55.5%, it has fallen, in the case of women, from 29.4% to 22.5%. It could be that more people are postponing their work life to stay back longer in education. While this would postpone the demographic dividend, a more skilled workforce would increase productivity and boost growth further. Reforms to encourage and facilitate women workers are called for, in any case. Right now, a lower labour force participation rate helps keep the unemployment rate down, 2.3%, 2% and 2.2% in the three reference years. Even in 2009-10, 63% of workers toiled in agriculture. This has fallen to 49% by 2011-12. Of course, this is still way too high. But progress is being achieved. If investment and growth pick up, the change would be dramatic. 21. Floods: Smart, small policy changes can contain the fallout The Uttarakhand-centred floods in north India and already-terrible devastation should provoke a vigorous national policy debate: what is the best way to control floods? The answer is: the humble way. Here's why. Let's first remind ourselves that floods have always happened and will happen, great engineering feats and large and small dams notwithstanding. The richness of the Gangetic basin is a result of periodic flooding occurring over eons, where rich soils were deposited year after year on a land now considered to be among the most fertile in the world. What happened in the past is happening again. Cramping the Rivers But there is one difference. Over time, population has increased, incomes have gone up, and our own confidence in better negotiating floods has gone up. The combined result is that people today live much closer to rivers, and in larger numbers, build more infrastructure closer to it, and overall greater incomes and wealth is generated closer tothe river floodplains

than before. As long as rains are moderately high and spread over a longer timespan, India can better contain the power of its mighty rivers today than in the past. Its dams, canals and bunds can hold and direct the excess water providing a modicum of safety to those who live around rivers. The success of these efforts has resulted in an overconfidence that has contributed to the large amount of construction that one sees around rivers and floodplains. And if it's the Ganga and Yamuna, it is not just residential areas and schools and colleges that one sees, but also temples and ashrams, sometimes venturing not just in the vicinity, but within the floodplains, as we see in Delhi, or sometimes in the river itself, as we saw in Rishikesh. We have taken away the Ganga's personal space, and will obviously suffer when once in a while she does decide to do what she has always done. Dam it All What should we do? There are two broad routes. The first is what some refer to as the Chinese way build a range of dams, large and small, over all tributaries and at various points on the rivers. Combine this with a range of bunds and strong protective walls. In a sense, totally control the course of the river. To that add a good and integrated water management system. If we do this, in all likelihood most extreme showers would be better handled. And flooding may be eliminated. For the record, this will be a big mistake. For one, this will be extremely expensive to put up, given that we have hundreds of rivers that are potentially prone to flooding. Two, such flood containment mechanisms are extremely destructive themselves in terms of their environmental impact. And three, while they reduce the possibility of extreme flooding, they themselves are prone to human errors. The Kosi floods in Bihar a few years ago are only one such example. Moreover, each dam and bund can only hold so much water. The ability of downstream dams to withstand the force if the upstream dams give way is limited. But when we build successive dams as the river flows downstream, the possibility of the domino effect increases. Prevent & Reconstruct The second route is a more humble one. And one that makes more sense for India. We will need to have a few check-dams and bunds to contain flooding due to moderately high rains which occur relatively frequently. But we must also recognise that there will be some extreme events when we will not be able control the rivers. And we must be prepared for such events even if they are infrequent. This preparation will not require much, certainly lesser than required to prevent flooding totally. First, flooding creates more harm if there is no place for the waters to drain into. A system of canals and drains exists in a few cities, and needs to be built where it doesn't. Second, the impact on morbidity and mortality is more after the flood waters recede disaster management is not rocket science and India has some experience in this. Third, both the government and public sector need to insure their assets against damage from flooding. The last will ensure that destruction is followed rapidly by new public construction. Our netas would love that. And what is more, the inflow of new funds for reconstruction will strengthen local economies harmed by flooding. Destruction and creation are a natural part of any economy as they are a part of nature. Fourth, perhaps the most important lesson for India is this: do not venture too close to the rivers. Give nature its due space. Postscript: For once, thankfully, we cannot blame the UPA and Manmohan Singh for a problem faced by India. But the government has a job to do: post-flood disaster management and reconstruction. 22. Open up for more foreign investment A committee headed by economic affairs secretary Arvind Mayaram has pitched for a dramatic opening up of foreign direct investment (FDI) in many sectors. So would, we hope, the group of ministers being set up on the subject. India needs foreign inflow of capital. And

overseas investors are more bullish than ever on India's prospects of long term growth. Evidence of this comes from a couple of recent transactions: Standard & Poors acquisition of CrisilBSE -0.37 % and Unilever's $5.5 billion takeover of its Indian subsidiary, HULBSE 0.27 %. The latter is the largest inbound chunk of FDI in India's history. So, the time is ripe for raising the caps that restrict FDI in certain sectors. Intelecom and private security agencies, the committee wants no caps on FDI. This could allow the entry of global giants like Verizon and AT&T into India. Others like Singtel, Vodafone and DoCoMo, who are already present with Indian partners, can buy absolute control. The 49% cap on security agencies is incomprehensible and raising it to 100% makes sense. It is also a good idea to allow FDI to go up in areas like supermarkets, defence and stateowned banks. More FDI in the latter will allow them to expand their capital base and grow their operations using new technologies like mobile banking. This will help push financial inclusion. However, it is not a good idea to allow more FDI in crucial sectors like the media, because this can skew the public discourse in unpredictable patterns and directions. With the exception of a few such critical sectors, the government should gradually move towards a regime that allows unlimited overseas capital in most sectors barring a few that are crucial to national interest. The committee's recommendations need to be adopted by the government. 23. Press for sanctions against Pakistan The actions of Pakistan prime minister Nawaz Sharif during the first month in office in his new stint should cause concern to India. He has hiked the countrys defence budget. The provincial government of Punjab, headed by his brother, has doled out 60 millionrupees to Jamaat-ud-Dawa, which is led by Mumbai terror attacks mastermind HafeezSaeed, and the Pakistan armys violation of ceasefire along the Line of Control has increased. Despite evidence of his dalliance with Islamists, New Delhi had believed that Nawaz Sharif will take some concrete steps to curb anti-India activities from and on Pakistani soil. Part of this was the result of Sharifs own pre-poll promises and part rooted in his previous efforts such as the Lahore initiative to improve bilateral ties. Sharifs recent actions belie this hope. Union home minister Sushil Kumar Shinde has confirmed that Inter-Services Intelligence (ISI) has stepped up efforts to revive militancy in Punjab and Kashmir. It will be foolhardy for India to adopt a business-as-usual approach with Pakistan without any tangible progress on Indias core concerns on terrorism. Pakistan must expedite the trial of the 26/11 Mumbai attacks accused and ensure that the terrorist training camps in Pakistan-occupied Kashmir are closed down. India should pause unilateral gestures or concessions, for this can be used by the Pakistan army and ISI to their advantage. In a recent disclosure, Peter King, US Congressman and chairman of the sub-committee on counter-terrorism and intelligence, has said that ISI provides Lashkar-e-Taiba with a safe haven and funding to train and prepare for terrorist attacks. In view of this irrefutable evidence, India should act tough and stop dialogue with Pakistan. The issue of combating money laundering and financing of terror is currently being discussed at aconference of the Financial Action Taken Force in Norway. India should push for economic sanctions against Pakistan for financing terror activities. 1. Decision to pass on coal import cost may hike power tariff Cabinet clears pass through system for coal import In an effort to boost power generation and unlock investments in idling plants, the Cabinet Committee on Economic Affairs (CCEA) approved on Friday a proposal to allow companies to pass on the higher cost of imported coal to buyers. Consequently, power tariff could rise. Preliminary estimates put the hike at 15 to 17 paise a unit, but according to the government and power producers, exact calculations are yet to be made and it would depend on case-to-case basis. The decision is likely to ignite nearly 38,000 MW of new capacity that

has either been put on hold or stalled due to uncertainty over the issue of bearing the additional cost of imported coal. A total of 78,000 MW of capacity, post 2009, will stand impacted by the decision. Power sector players hailed the decision. Associated Power Producers (APP) director-general AshokKhurana said their two years of hard work had finally paid off. We are very happy, he said. Talking to journalists, Finance Mi nister P. Chidambaram said, There will be a small increase in power tariff. It will be a very marginal increase on unit cost of power depending upon the cost of import of coal. Independent Power Producers (IPPs) could import coal themselves. Otherwise Coal India Limited (CIL) would do the job. This additional price which we pay for imported coal, obviously, has to be passed through in the power tariff. It is better to have power and pay a few paise more or not have power at all. It is better to have our power plants working and producing power or keep them shut down after investing thousands of crores. For every MW today, I think the capital cost is between Rs. 5-6 crore, he said. More coal mines Interestingly, Mr. important; text-decoration:underline !important;color:#0000FF !important">Chidambaram indicated that by July first week certain other decisions will be taken to open more coal mines. In the interim period, there is no option but to import some coal. Imported coal is costlier than domestic coal. We are guaranteeing 65 per cent this year to 75 per cent by the end of 12th Plan by CIL for the 78,000 MW capacity, he said. Significant power capacities stood stranded due to lack of coal and gas. We can't today estimate what will be the increase in cost of power and certainly it will not be uniform. It will depend upon power plant to power plant and where it is located, he said. Coal Minister Sriprakash Jaiswal said the Cabinet decision would not affect the signing of fuel supply agreements (FSAs) by CIL with producers. Earlier, the government buried a proposal to pool the prices of imported and domestic coal to make the fuel affordable to new plants, owing to sharp opposition to the scheme from some big States. The government also issued a Presidential Directive to CIL to sign FSAs with producers assuring them of at least 80 per cent of the committed coal delivery. So far, 62 FSAs had been executed. Of the 69 plants that are yet to enter into fuel supply pacts with CIL, 29 cases belong to NTPC Ltd., and its joint ventures. 2. Lethal surveillance versus privacy The tussle between government agencies need for a better, faster and real-timeinterception, surveillance and monitoring mechanism through the Central Monitoring System (CMS), on the one hand, and demands by privacy, civil rights and free speech activists, for ensuring higher privacy for citizens in view of CMS, on the other, is gaining ground. India today has nearly 900 million mobile subscribers, 160 million Internet users and close to 85 million citizens on social media. Internet and social media users are expected to double by 2015. The discussions have been coloured by the startling revelation relating to the PRISM project which, if true, may have meant that the privacy of millions of Indian Internet users could have been compromised, in varying degrees. Meanwhile, closer home, the CMS project, aimed at improving the capability of security agencies to protect national security and fight crime, including terrorism, has also raised serious privacy issues. Shrouded in secrecy First, very little real information is available about the CMS working procedure,technical capabilities and privacy safeguards in the public domain. While governments worldwide remain reluctant to share information about their surveillance and monitoring systems, successive governments in India have fared no better. Key unanswered issues include the uncontrolled use of technical capability and intrusive technologies, which are capable of instant, real time and deep search surveillance. There has been no debatein Parliament or outside about the level of surveillance citizens should be put through or

whether there should be red lines when using intrusive surveillance mechanisms, even when technology presents an option. Further, there is no information about whether there are additional safeguards against interception by political authorities, of potential targets carrying out sensitive assignments such as judges, opposition leaders, editors, regulators, advocates, vigilance officials, corporate CEOs, etc. Should there be? How far should the spy agencies take lethal technological capability against their own citizens? Can all technological prowesses be used against any category of citizen, regardless of the level of security clearance they are entitled to? Who decides the correctness and propriety of such authorisations, especially since these are approved by bureaucrats who, in turn, report to political authorities? The U.N. Special Rapporteur on Promotion and Protection of Right to Freedom, in his report of April 17, 2013, has concluded that apart from increasing public awareness of threats to privacy, States must regulate the commercialization of surveillance technology. Legal infirmities Secondly, while the existing law primarily relates to interception of calls, CMS expands surveillance across Meta-Data which includes CDRs and SDRs. Access, transfer and retention of CDRs is weakly defined under the existing laws. Provisions for authorisation of interception are contained in Section 5(2) of the Indian Telegraph Act 1885, Rule 419(A) of the Indian Telegraph Rules 1951, as well as Section 69 of the Information Technology Act 2000, read with Information Technology (Directions for Interception or Monitoring or Decryption of Information) Rules 2009. The Right to Privacy, on the other hand, is protected under Article 21 Right to Life and Article 19(1)(a) Right to Freedom of Speech and Expression under the Constitution of India, unless it is permitted under procedure established by law. While the Supreme Court has upheld the constitutional validity of interceptions, and monitoring under Section 5(2) of the Act through its order dated December 18, 1996, it subsequently laid down guidelines narrowing the scope of interception down to five instances national sovereignty and integrity, state security, friendly relations with foreign states, public order or for preventing incitement to the commission of an offence. With CMS, questions about the mismatch between the privacy legislation and the lethal forensic surveillance capabilities arise. These border on what is now recognised as a human rights issue. Are public order or preventing incitement to the commission of an offence sufficiently vague or broad for the security agencies to practically put through any authorisation request for interception, however weak, under these two heads? Can prevention of crime leave the door open to any agency, getting permission to monitor any citizen without adequate burden of proof? Since the authorities giving approval are not judges, will they have the judicial expertise to make legally valid decisions? Worse still if the surveillance is extra-judicial, how will it be uncovered? Further, interception under CMS can be done instantly and, since existing laws allow government agencies to intercept any phone conversation without the Home Secretarys mandatory permission, for seven days, should this procedure be reviewed under CMS? Should a lower level officers approval be sufficient to begin surveillance? The law also says the directions for interception shall remain in force, unless revoked earlier, for a period not exceeding 60 days, after issue, and may be renewed, but same shall not remain in force beyond a total period of 180 days. In effect, monitoring can continue for half the year. Is this period too long, without a periodic review? If there is a review, is it sufficiently independent and robust? Here again, the U.N. Rapporteur in the recent report on surveillance, recommended that surveillance must occur under, the most exceptional circumstances and exclusively under the supervision of an independent judicial authority. Further that surveillance techniques

and practices that are applied outside the rule of law must be brought under legislative control. Meanwhile, there is no consensus on the opposing views between DoPT, the Home Ministry and civil rights activists, two-and-a-half years after a privacy group was set up under Secretary, DoPT, and seven months after the Justice A.P. Shah Committee submitted its Report on Privacy, suggesting a privacy legislation which was technologically neutral, inter-operable with international standards, protected multi-dimensional privacy, ensured horizontal applicability and conformity with privacy principles in a co-regulatory enforcement regime. Ironically, the latest draft of the privacy legislation itself remains a mystery. Lastly, bureaucrats authorise interception without any need to pass judicial muster by securing a prior valid court order. The surveillance is not subject to any ongoing bipartisan Parliamentary oversight either. Before CMS, the mobile operator who gave access to the targets phone calls for interception was required to ensure that the interception order received had been duly authorised by the persons identified under the Act. This is no longer the case. The government has justified CMS in Parliament, by arguing that CMS, to avoid the recordings from being leaked, circumvents manual intervention by mobile operators, and is therefore more secure, allowing instant access. However, this means that the checks-and-balance system provided by the nodal officers in mobile networks which discovered the illegal request for BJP leader Arun Jaitleys CDRs, leading to the arrest of three persons including a Delhi police constable will no longer exist. Is there a new safeguard? Potential misuse Under CMS, one government official will authorise interception. This will be reviewed and executed by other fellow officers in different agencies but all within the government. What is the guarantee that such permission will be subject to the rigorous due diligence that it deserves? Will every government officer follow the laid down procedure, especially if he knows that all authorisations are covered under absolute secrecy with no chance of public disclosure or scrutiny? What happens if the procedure is violated? Will violations, when discovered, be acted upon since everything remains secret within the government? The identity of targets or duration of monitoring cannot be revealed publicly, even under the RTI, as it falls under specific exemptions granted in Section 8 of the RTI Act. How will mistakes be corrected and misuse prevented? There are other questions that remain unanswered in law. Who all within the government can have access to the Intercept Related Information (IRI), Call Content (CC) and CDRs? How long can intercept information be kept with the government and what is the procedure for its safe keeping especially given a track record of leaked tapes without a single official being found guilty in such instances? Are there any circumstances under which targets, especially when found innocent, will be informed that they were under surveillance? The privacy issues are sufficiently serious both outside India and within. Hopefully, the government can present the Privacy Bill early for Parliament to debate it. Equally it may be time for the Supreme Court to review its guidelines which were written at a time when there were less than a million mobile subscribers and no Internet users. There has been no public debate on the level of watch citizens can be put through, and on what the red lines should be while using intrusive mechanisms 3. Making use of the golden hour The case for instantaneous, and hence cashless, treatment to thousands of road accident victims is self-evident. For it has been established that 50 per cent of fatalities could be averted through intervention in the so-called golden hour immediately after a traffic collision. This is a cause the courts and quasi-judicial bodies have consistently championed. But it has taken the Ministry of Road Transport and Highways nearly 25, distressingly long years to announce that accident victims on the Delhi-Jaipur National Highway would be covered up to

a maximum of Rs. 30,000 for their treatment. The Supreme Courts 1989 ruling is categorical that there is no bar on doctors in private hospitals giving emergency care to a victim, irrespective of whether there is a legal-criminal dimension to the vehicular accident. A doctors professional obligation to protect life is absolute, and laws of procedure and regulations will have to give way so as to ensure the survival of an injured person. A 1996 SC judgment alluded to a law in the United States obliging hospitals to stabilise victims in an emergency regardless of insurance cover. Drawing on these pronouncements, the National Consumer Disputes Redressal Commission in 2005 declared that neither payment of fee, nor the absence of consent from the nearest of kin, could be adduced as grounds to deny treatment. A sequel to this ruling was the amendment of the Motor Vehicles Act. The Law Commissions draft bill of 2006 on the medical treatment of victims of different kinds of accidents, including natural disasters, deserves urgent consideration. In 2011, as per official figures, some 4.98 lakh road accidents caused 1.42 lakh deaths and injured more than 5 lakh persons, irreversibly disabling many. Investment in state of the art technology to regulate road traffic, strict law enforcement, accent on expandingpublic transport network and safe pedestrian passages would all go a long way to reduce the number of mishaps. The government should ensure that hospitals participating in the cashless treatment project comply with the recently adopted National Ambulance Code. AIS:125 (Automobile Industry Standard) stipulates minimumprovisions and guidelines for ambulances in keeping with global best practices. Standardisation of treatment procedures would ensure that arbitrary caps on cost do not jeopardise the full extent of intervention necessary, and prevent profiteering already rampant in other areas of insurance-based healthcare provision. Such an approach would be in keeping with the spirit of the recommendations of the High Level ExpertGroup on Universal Health Coverage. 4. One million on Brazils streets President calls crisis meeting over anti-government protests Brazil awoke on Friday to city centres still smouldering after a night that shocked the nation one million protesters took to the streets in scores of cities, with clusters clashing violently with police during anti-government demonstrations. President Dilma Rousseff called a meeting with top Cabinet members on Friday. She faced sharp criticism in Brazils media for what many called lack of leadership. There were growing calls on social media and in emails for a general strike next week. To be sure, the lack of any organisation or concrete demands behind the protests has made a unified government response nearly impossible. Several cities have cancelled the transit fare hikes that had originally sparked the demonstrations a week ago, but the outrage has only grown more intense. People in the protests have held up signs asking for everything from education reforms to free bus fares while denouncing the billions of public dollars spent on stadiums in advance of the World Cup and the Olympics. Peaceful protesters Despite the violence, the majority of protesters have been peaceful. In massive demonstrations through this week, as small groups began to vandalise, crowds would often turn and start to chant, No violence! No violence! But the pattern in has been that once night falls, the violence begins.In Rio de Janeiro, where an estimated 300,000demonstrators poured into the seaside citys central area, running clashes played out between riot police and clusters of mostly young men. At least 40 people were injured. In Brasilia, the national capital, police struggled to keep hundreds of protesters from invading the Foreign Ministry and the crowd set a small fire outside. Other government buildings were attacked around the citys central esplanade. The unrest is hitting the nation as it hosts the Confederations Cup soccer tournament. It also comes one month before Pope Francis is scheduled to visit Brazil, and ahead of the 2014 World Cup and 2016

Olympics, raising concerns about how Brazilian officials will provide security. Mass protests have been rare in this country of 190 million people in recent years, and the mushrooming demonstrations of the past week caught Brazilian government officials by surprise while delighting many citizens. 5. Cabinet nod for 5 % stake sale in NLC The Cabinet Committee on Economic Affairs (CCEA), on Friday, approved disinvestment of 5 per cent of the Centres equity stake in Neyveli Lignite Corporation (NLC) through the OFS (Offer For Sale) route in accordance with Securities andExchange Board of India (SEBI) regulations. SEBI norm The Department of Disinvestment (DoD) had moved the CCEA seeking to offload over 7.8 crore shares, or 5 per cent of the Centres holding in the Tamil Nadu-based integrated mining-cum-power generating company through OFS.At current market prices, the stake sale in NLC is expected to fetch about Rs.466 crore to the exchequerand also enable compliance of SEBIs norm stipulating 10 per cent minimum public holding in public sector undertakings (PSUs). Centres holding According to an official statement here, NLCs authorised capital stands at Rs.2,000 crore. Of this, the issued and subscribed equity capital as at the end of March 2012 is Rs.1,677.71 crore comprising 167.771 crore equity shares of the face value of Rs.10 each. After the disinvestment, the Centres holding in the company will down to 88.56 per cent. It may be recalled that, earlier this month, the CCEA had deferred a decision on the stake sale of NLC as the Tamil Nadu Chief Minister J. Jayalalithaa had conveyedto Prime Minister Manmohan Singh her governments opposition to the divestment in view of the likely labour unrest and consequent disruption in power supply from Neyveli. The DoD, however, informed the CCEA that there was no option to disinvestment as that was the only route open for making Neyveli Lignite compliant with SEBIs minimum public shareholding norm. The market regulator has set August this year as the deadline for all listed PSUs to adhere to the minimum public shareholding stipulation. 6. We are no lab rats for GM crops We are sitting on a mountain of food grain and wasting it. Where is the need for GM field trials? Its another kharif season. This is also the time biotech seed companies push and prod the Genetic Engineering Appraisal Committee (GEAC), the nodal agency for any environmental release of controversial Genetically Modified (GM) crops, to open up the country for their reckless experiments of GM crops. The GEAC has bowed to pressure from the biotech seed industry and approved 25 applications for field trials in a single meeting. These include GM versions of staple crops, rice and wheat, along with maize, cotton and castor. Contamination impact One might wonder what is wrong with experimenting with novel technologies. One should take a closer look at this technology and the concerns around it. Research on transgenic crop development has been taking place for three decades. But what has also happened over this time is growing scientific evidence of their potential impact to human health, the environment and farm livelihoods. A recent compilation of peer reviewed papers on the above themes published by the coalition for GM-Free India showed more than 400 of such studies. This is also why many countries are treading cautiously on GM crops. Even after all these years, the total GM cultivated area is just 3.4 per cent of the total global cultivated area. But still the promoters of GM crops either feign ignorance, or impudently say that GM crops can cause no harm. Given the proven cases of impact of GM crops, the next thing one should look for is what is wrong with experimental trials. Here again, evidence shows that open field

trials lead to contamination of regular food and seed supply. Classic cases are that of contamination from field trials of GM rice and GM wheat, both of which are mostly selfpollinated crops, in the US. Bayer Liberty link GM rice wreaked havoc among US rice cultivators when grains of this GM rice, which was unapproved, started appearing in the supply chains. No one could explain how this happened. Ultimately after five years of a legal battle, a jury ordered Bayer to pay $136.8 million to Riceland, one of the big farmer cooperatives which lost customers due to this contamination. A similar contaminationscandal rocked the US last month when Monsantos herbicide tolerant genetically modified RR wheat was found contaminating wheat supplies from Oregon in the US. While Monsanto and USDA are still trying to explain the possible reason for such contamination from field trials that happened almost eight years ago, American wheat supply has been badly hit, with Japan, South Korea, the Philippines and EU stopping wheat imports. Yet again, farmers were at the receiving end. Our own Bt cotton case has proved that contamination with transgenes is unavoidable if we let them into the open. We need to remember that these are novel organisms that have not been proven safe; contamination is irreversible. Besides health concerns, there is also the huge impact on biodiversity that this could have. Its this reality that led the Technical Expert Committee (TEC) comprising experts from the fields of toxicology, biodiversity, molecular biology etc, set up by the Supreme Court, to say that no genetic modification of crops for which India is a centre of origin should be allowed. Looking at the abysmal levels of regulation of field trials in the country and the irreversible nature of contamination, the committee also recommended a precautionary principle-based approach towards GM crops. The expert committee is expected to give its final report before the next hearing of the case in the Supreme Court in the first week of July. Two myths The GEAC seems to be in a hurry to approve these field trials before the report of the TEC is made available and the Supreme Court takes a considered view. One wonders why. Going by past experience one can only say its only for benefiting GM crop developers. But spin doctors in the media seem to be at work. They have started congratulating the Environment Ministry, under which comes the GEAC, on overriding concerns raised by various segments of society and the State governments to give these approvals. There is also the familiar refrain, if GM crops are not permitted how can we provide food security to a growing population. This promotes two myths that GM crops yield more and more output can solve problems of hunger. A 10-year review by the Central Institute for Cotton Research notes, Cotton Advisory Board data show cotton yield increased by about 60 per cent in three years between 2002 and 2004 when the area under Bt cotton was a meagre 5.6 per cent and non-Bt area was 94.4 per cent. So where is the big yield that spokespersons of GM seeds talk about? Malnutrition and hunger in our country are a failure of distribution and lack of purchasing power, and not one of production. The Indian Government is sitting on one of the worlds biggest hoards of food grains, about 66.7 million tonnes as of January 1, 2013, making the current stock 2.5 times more than the Governments benchmark for buffer stocks. The distressing fact is that 21 million tonnes of wheat go bad every year due to lack of storage and distribution facilities. How is it that the promoters of GM crops continue to insist on more production in the name of food security, when we are sitting on a mountain of foodgrain and wasting it? GM crops are risky and the country cannot be made a laboratory and all of us lab rats. GM field trials should stop. 7. Imported coal to now make power costlier Power firms can pass on burden to consumers, stocks rise up to 2%

Ending a year-long drama surrounding supply of coal to power plants, the UnionCabinet today allowed power companies to pass on to consumers the extra cost of importing coal to bridge the domestic fuel shortage. The decision will need regulatory goahead. If cleared, it will increase the electricity price in the country by an average 20-25 paise per unit. Reacting to the government move, the stocks of power companies rose by up to two per cent on BSE. The scrip of NTPC rose 2.11 per cent over its previous close to Rs 143.05, while those of PowerGrid and Tata Power climbed 1.18 per cent and 0.74 per cent, respectively. The Cabinet decision covers 78,000 Mw of power capacity commissioned in six years through March 2015. Over 36,000 Mw of this has already come on stream since March 2009. Costly power is better than no power. More than Rs 1 lakh crore has already been invested in setting up around the 25,000-Mw capacity stranded at present. The choice is between paying more for electricity or having no electricity at all, Finance Minister P Chidambaram said, announcing the decision. (STREAMLINING SUPPLY) The finance minister, who was accompanied by Coal Minister Shriprakash Jaiswal, said it was difficult to work out the exact quantum of increase in power rates, as it would vary from one power plant to another. He added implementing the decision would require modifications to the coal distribution policy and tariff guidelines. The government had last year asked state-run miner, Coal India Ltd (CIL), to meet power companies coal demand, corresponding to at least 80 per cent of their annual contracted quantity (ACQ). The Cabinet has now decided CIL would meet 65 per cent of ACQ through domestic linkages in the current financial year. To meet the balance supply obligation, CIL will supply imported coal and supply on a cost-plus basis. The power firms would have the choice of importing coal on their own. Actual supplies would begin only after power purchase agreements (PPAs) are signed. We have advised the electricity regulator (CERC) to allow the increased cost of imported coal as a pass-through on a case-to-case basis, to ensure power investments remain viable, Chidambaram said, calling the pass-through only an interim measure. He added power plants with more than 4,660 Mw of capacity would be left without assured coal supply even after todays decision. CIL will have to import six mt coal in the current financial year to meet the shortfall. This import quantity would vary every year, depending on how many FSAs (fuel supply agreements) materialise. However, there would not be any need for imports in the terminal year (2016-17) at 80 per cent commitment level, given the growth in our coal production, CIL Chairman S Narsing Rao told Business Standard. He also said power firms were likely to opt for sourcing imported coal through CIL, owing to assurance of supply and competitive prices. The approval for pass-through cheered the power industry. The Cabinet decision breaks the fuel impasse that was threatening the viability of the generation segment in the power sector and creating systemic risk for the banking sector, said Ashok Khurana, director-general, Association of Power Producers. The countrys largest private power generator, Tata Power, called for a similar mechanism for imported coal-based projects. Such projects have been impacted due to extraneous factors beyond the control of developers, the company said in a statement, referring to its 4,000-Mw Mudra project in Gujarat. The power regulator had recently allowed a compensatory tariff increase for the project after costly imported coal jacked up costs. The government had originally asked CIL to meet supply obligations for projects with 60,000 Mw capacity. It was later increased to 78,000 Mw after taking into account the 7,000-Mw projects with valid letters of assurance (LoAs) and likely to be commissioned by March 2015, and 11,000 Mw of capacity that has been granted tapering linkages. However, todays decision might lead to legal complications, as a sizeable chunk of this capacity has been set up through competitive bidding for tariffs. According to the

decision, CIL will continue supplies for the plants commissioned before 2009 at 90 per cent of ACQ. For those commissioned after 2009, its supply commitment would increase gradually from 65 per cent this year to 75 per cent in the terminal year of the current Plan period. CIL produces 452 mt coal annually, leaving a shortfall of 120 mt, which is met through imports. 8. Don't fret about the rupee It needs to fall some more before trade gets balanced When the rupee takes a tumble, people start thinking that things are going wrong with the economy. Conversely, if the rupee were to suddenly appreciate, people would take comfort as they did briefly last year. But the fact is that, at the end of March, when the rupee could be traded at 54 to the dollar, it was overvalued by about six per cent ininflation-adjusted terms. Since then the currency has fallen 10 per cent. That is not enough, because the calculations on the inflation-adjusted value of the rupee are deceptive - the Reserve Bank of India takes the wholesale price index for India and consumer price indices for other countries, when everyone knows that consumer prices have been rising faster. So a properly inflation-adjusted value for the rupee, using the consumer price index for India too, would take the currency to levels significantly lower than Rs 60. Only then will Indian producers be able to compete effectively in world markets - and also in the domestic market against imported competition, thus giving a powerful boost to domestic output, and economic growth. Remember that India has one of the largest trade deficits in the world, in relation to its GDP. Last month, for instance, the deficit in goods trade was twice Japan's - which has a three times bigger economy, and which nevertheless is pushing to weaken the yen. Instead of getting alarmed about where the rupee has fallen, we should be looking for it to fall some more. Because trade deficits that are at historically high levels and which stay at those levels carry a simple message: lost competitiveness. Till about 2004-05, the trade deficit was mostly explained by net oil imports and, therefore, was a resource endowment issue. Few remember that in 11 out of 14 years since reforms got kicked off in 1991-92, the country actually had a non-oil trade surplus. That picture has changed, and how. Last year, the trade deficit was a record $191 billion, of which oil accounted for $109 billion. Even without oil, therefore, trade in goods was in deficit by $82 billion - a very high 4.5 per cent of GDP. In the last couple of years, there has been the additional factor of gold imports - which totalled $54 billion last year ($48 billion, net of exports), or three times the level five years earlier. Import quantities surged too, reaching 950 tonnes each year in 2010 and 2011, compared to an average of barely 600 tonnes in the previous four years. But the bull run is over. Imports have fallen back, as gold prices have dropped from $1,900 per ounce in August 2011 to under $1,300. Some people may still rush to buy gold, expecting prices to revert to higher levels, but even the same level of imports will now cost less. Also, people would buy less gold if financial savings instruments were made more attractive. So offer a deaf ear to the clamour for lower interest rates. This should help turn attention to the underlying problem - the non-oil, non-gold deficit, which has been $34 billion in each of the last two years, and averaged $25 billion in the four years before that. What should the government do? It should shift focus, from financing the deficit to tackling the deficit. Increase the production of coal, whose imports have multiplied five-fold in the last decade. Raise the output of exportable iron ore. Get out more gas, which can fire up idle power stations. Even without getting into larger systemic issues about what hampers exports, these along with lower gold imports can bring the trade picture under control. We will head into a macroeconomic crisis only if there is continued managerial failure. 9. Rupee fall: Need to focus on the doable

The markets have come out of their panic reaction on Thursday to the US Federal Reserve's hint that it might ease off on unconventional stimulus as early as September, thanks to sustained recovery in the US. The rupee is holding out below 60 to the dollar. It is perverse that markets should tank at news of real strength in the economy, in the place of easy-moneyfuelled artificial growth. Sure, evaporation of surplus liquidity would drive up bond yields and call for reallocation of funds across financial instruments and geographies. These will moderate towards sense, but will remain an adverse influence on Indian markets and the value of the rupee for some time, till the markets price in what they expect the Fed's policy change to bring about. India has no control over that. It has to focus on what it can, indeed, influence. The government must keep its word on meeting its fiscal deficit target. If that calls for a sharper rise in diesel prices, it should allow that, sooner rather than later. Public investment in state-run infrastructure projects must be accelerated. Bumbling busybodies who do not deliver should be relieved from key projects and replaced with young, empowered executives. The Employees' Provident Fund Organisation keeps a vital chunk of India's longtermsavings away, in totality, from the stock market, leaving it wholly vulnerable to tiny ebbs and flows of foreign institutional investments, besides emaciating returns for workers. Engineer a diversion of these funds to the New Pension System, which does invest in stock markets. The EPF can be offered government-backed special deposits it will happily invest in, while the funds are then handed over for professional management to the NPS. The signalling would improve, quite a bit. Simultaneously, unblock clearances and land acquisition for large projects that await foreign investment. Indians must be allowed to use market instruments to hedge against currency volatility to the fullest extent possible. Open currency derivatives trading till midnight. Allow more contracts for longer time horizons. Bring the market for the rupee home to India. 10. Uttarakhand tragedy shows need for tighter regulation to preserve ecological balance The flash floods and landslides that destroyed parts of Uttarakhand and Himachal Pradesh are a national tragedy: many hundreds are feared dead and on Friday, military rescuers said that though they had evacuated over 30,000 people, another 60,000 remain stranded. Emergency operations continue. But why did the disaster occur? And can similar calamities be prevented in future? Experts say one of the reasons for the unusually high rainfall Dehradun got 380 mm of rain on Monday morning, when anything above 150 mm is classified as heavy rain is global warming. Warm air holds more moisture and contributes to extreme weather events and higher unpredictability of these events. Given that, the government must invest in new technologies to monitor and predict weather, especially in dangerous areas like mountains and coasts. Many local conditions were primed for disaster. The hills of both the states have been denuded by largescale cutting of trees, to make way for construction and timber. There is a price to pay for this: mountain soil is now loose and ripe for massive landslides. In the intense rain, there have been many such slides, blocking roads and sweeping vehicles off the hills. The volume of silt and boulders carried by mountain streams has gone up, boosting its wrecking power. The governments of both states must curb construction activity, stop logging, undertake afforestation programmes and enforce rules that declare the region as ecologically sensitive. So far, these governments have not implemented any such curbs, saying that would impede development. Now, they must act. Because when man modifies nature, he also takes on the risks that such modification brings. Governments must curb activity that increases these risks manifold. 11. Do four Delhi think tanks matter disproportionately in India?

Liberal democracy requires an interplay between ideas and action in shaping policy. In India, the failures of the universities have brought think tanks to prominence in public policy. The four key think tanks of Delhi have finished a generation change in leadership, and are now a lab where new processes for academic institutions will arise. Their process innovations will matter for the quality of economic policy reform, and will exert a positive influence upon the organisation of research in India more broadly. Four think tanks in Delhi matter disproportionately: National Council for Applied Economic Research (NCAER), Centre for Policy Research (CPR), Indian Council for Research on International Economic Relations (ICRIER) and National Institute for Public Financeand Policy (NIPFP). (Disclosure: The columnist is a professor at NIPFP, but the views are personal). With the problems of universities in India, and the low impact of think tanks outside Delhi, these four institutions loom large in shaping the climate of opinion, and the technical capabilities in Indian economic policy. In the days to come, the role of think tanks in the policy process will go up, for two reasons. As India veers into middle income, the complexity of economic policy has risen sharply. In previous decades, achieving progress was relatively straightforward, it was about finding the rule that was holding the economy back and repealing it. This was relatively simple work. Now, making progress requires a constructive agenda of designing laws and institutions, which requires much more knowledge. Alongside this, the capacity constraints of the Indian government have worsened. Both these factors have led to an increased role for think tanks, not just in envisioning the future but also in operationalising it. The think tanks are facing a surge of requests for work and are scrambling to strengthen their HR and other processes in order to achieve commensurate ability. In recent years, all four major Delhi think tanks have finished one major task: handing over to the next generation. NCAER is headed by Shekhar Shah;CPR is headed by Pratap Bhanu Mehta; ICRIER is headed by Rajat Kathuria andNIPFP is headed by Rathin Roy. In a country which ordinarily reveres the old, we have a striking change in scenery with an average age of the four directors of 50. It is reminiscent of CEO recruitment in the private sector, where the sweet spot is the age from 40 to 50. This handover represents an important generation chang in the intellectual life of economics and economic policy in India. While these four institutions are good by Indian standards, they are weak by global standards. As an example, RepEc has a ranking of the top institutions of Asia (http://goo.gl/fqT8Q) by academic output. In April 2013, NIPFP was at rank 41 and NCAER was at rank 87. One challenge for the four leaders will be to modify internal policies and procedures so as to improve this rank. The ultimate objective of a think tank is to exercise leadership in ideas on public policy, and to participate in policy reform. However, when a think tank renders policy advice, this should be grounded in high quality and state of the art knowledge, which is significantly measured by the RepEc rank. In the international discourse, there is an emerging consensus about the six principles which are required for achieving intellectual excellence. First, there should be no government approval required for budget; budget-making should happen at the institution only. Second, there should be a reduced government role in core funding. Third, there should be high inequality of wages: two staffpersons of the same seniority and rank should get different wages. Fourth, there should be complete flexibility in recruitment of students. Fifth, there should be a big role for competitive processes for gaining funding for research. Finally, it helps if the head of the institution has strong intellectual accomplishments. The disproportionate impact of the four think tanks of Delhi stems from their greater compliance with these rules. The impact of the four leaders will be primarily about the extent to which they are able to push further in these six directions. The modifications of process design in the four Delhi think tanks matters for other academic institutions in India. Institutions across

India that seek to improve themselves look at process design that is used at the four Delhi think tanks. In addition, improvements in the four will help kick off competitive dynamics. Universities in India have floundered under the burden of awful constraints and process deficiencies. In the long run, India needs a more normal arrangement of society where universities are the crucible of new thinking. But till then, the disproportionate impact of the four Delhi think tanks will continue. 12. India must overhaul its disaster preparedness The true dimensions of the death and devastation caused by flash floods, cloudbursts and landslides in the Himalayan state of Uttarakhand are yet to emerge as rescue workers are trying to reach cut-off areas and evacuate thousands stranded without much relief. While working out and implementing a plan for sustainable development of the eco-sensitive area is a long-term solution, the tragedy played out in the Himalayas has once again exposed a callous and criminal neglect of the Union and state governments to prepare for dealing with such calamities. This must change. With a bulging population of 1.2 billion, India is one of the most disaster-prone countries in the world. A large segment of its population lives in areas vulnerable to natural hazards. Around 76 per cent of Indias coastline is prone to cyclones and tsunamis, while 59 per cent of the country is vulnerable to earthquakes, 10 per cent to floods and river erosion and 68 per cent to droughts. Yet despite the passage of the Disaster Management Act in 2005, a national disaster management plan is yet to be in place. The National Disaster Management Authority, set up in 2006, has neither information nor control over response to disasters and has failed to execute most of its projects. Based on findings across nine states from 2007-08 to 2011-12, a recent CAG report found that National Disaster Response Force was yet to be established as a well-equipped, well-trained specialised force. What is worse, the CAG found that the government seemed unconcerned about these deficiencies. It observed: The reaction of the NDRF was an essential element of our tests. We noted that the deficiencies in this regard were not recognised and remedied, especially in terms of deployment or suitable manpower, equipment and training. The Himalayan tragedy underlines the urgency of immediate action. As head of the national disaster management mechanism, prime minister Manmohan Singh must himself take the lead. 13. New Delhi should help reconstruction in Iraq External affairs minister Salman Khurshids just-concluded two-day visit to Baghdad marks a thaw in India-Iraq relations. He and his Iraqi counterpart have expressed a desire to take the bilateral ties to a new level. The importance of the visit can be gauged by the fact that no Indian foreign minister had visited Iraq since the late I K Gujral in 1990. Consequently, theirs is a purely commercial relationship. Distressingly, even the full potential of their bilateral trade is not being exploited. For instance, India importscrude oil worth $20 billion from Iraq but exports only $1 billion worth of goods to Iraq, which is now engaged in a huge reconstruction activity. India, particularly its public and private sector firms, can play a major role in Iraqs reconstruction. China has already established a huge presence in Iraq, accounting for import of nearly 50 per cent of Iraqi oil. It has also invested heavily in Iraqs oil i ndustry, taking heavy risks, given the political instability that still prevails there. Iraq badly needs technology in various sectors, which many Western nations are scared of providing. What prompted South Block to think about Iraq may have been the need to reduce Indias dependence on Iran from where it imports the largest quantity of oil after Saudi Arabia but the thought has a lot to commend itself. However flawed Iraqi democracy may be, it is still a democracy with which the worlds largest democracy can engage in a long-term relationship based on many commonalities. The war, first with Iran and, then, with the US-led allied forces, has reduced parts of Iraq to a

rubble. Infrastructure has to be rebuilt and defence forces trained and equipped to meet Iraqs challenges. Many institutions of culture, including museums and libraries, have also to be rebuilt. Unlike many war-torn nations, Baghdad is in a position to finance its reconstruction, thanks to its oil resources. If India plays its cards well, it can contribute significantly to Iraqs reconstruction.
CURRENT AFFAIRS (23.06.2013)

1. Disaster management in disarray In this time of adversity, while there are food, water and biscuits, there is also politics Uttarakhand is abuzz with helicopters whirring in the skies, Ministers from all over the country are chipping in with aid, money is flooding the Uttarakhand Disaster Management and Mitigation Centre. All this has happened this past week after massive rains and floods ravaged the Himalayan State. Politics too reared its ugly head in the time of crisis. Gujarat Chief Minister Narendra Modi undertook an aerial survey of the affected areas on Saturday, even as Union Home Minister Sushilkumar Shinde asked VIPs not to visit the area lest relief operations be hampered. The BJP called for declaring the event a national calamity. Last Sunday (June 15) and the day after, a confluence of very heavy rainfall, cloudbursts, floods, and landslips devastated Rudraprayag, Uttarkashi, and Chamoli districts, where Char Dham pilgrims from all over the country, including some foreigners, had converged. The water swept [everything] away in front of my eyes, said Radhamohan Soni as he waited to catch a flight back to Rajasthan from Jolly Grant Airport here, recalling the horror of floods that hit Kedarnath. Around 7 a.m. on Monday, the women had gone to the river to freshen up when a humongous wave of water, carrying boulders and debris, approached our building, said Radhamohan. Everyone rushed to the top of the building we were staying in. I somehow survived as the river hit the lower part of the building, sweeping it away and filling it with debris. A woman was simply swept away; it looked as though she got dissolved in the water; she couldnt even cry [out] for help, he said. Radhamohan lost connection with the rest of his crew. Having no information from theauthorities, he was sitting forlorn in front of the airport gates. Similar was the case with many who stood in front of the airport, the Disaster Mitigation Centre and hospitals in the city, with enlarged printouts of photographs of missing friends and relatives. While different States announced aid, the authorities in Uttarakhand seemed clueless about how to handle the situation. Disaster management is a new concept, which is why it will take some time for the authorities to understand how to work in this field, said Pradeep Shukla, Section Officer, Disaster Mitigation Centre. In several places, food packets dropped by helicopters were swept away in the river. Many copters returned with the food packets, having found no safe place to drop them. L.N. Tapadia has moved between Guptkashi, Phata and other areas, in search of his wife Prabha Tapadia, who has been missing since June 17. My mother was on her way back from Kedarnath, Prabhas daughter Ankita Tapadia said as she waited in Dehradun with her brother for news. While officials have declared that the rescue operations in Kedarnath are over, Ankita is restless but hopes to find her mother. While the ineffectiveness of the Uttarakhand government has come to the fore, other States have lent a helping hand. Survivors, however, are burdened by anxiety. Every day, a throng gathers in front of the airport. These comprise people waiting for their family members to return, government

authorities and journalists and groups distributing water, biscuits, cold drinks, and fruits to the needy. The banner of one of the well-maintained pandal reads BJP Rahat Shivir [BJP relief camp]. In this time of adversity, while there is food, water and biscuits, there is also politics.
CURRENT AFFAIRS (24.06.2013) Part 1

1. U.S. rebuffed as Hong Kong lets Snowden leave NSA whistleblower to go to Ecuador via Moscow, U.S. wants him handed over The Hong Kong government on Sunday allowed American whistleblower EdwardSnowden to board a flight to Moscow, rejecting requests from the U.S. for his extradition. The former Central Intelligence Agency (CIA) employee, who arrived in Moscow on Sunday evening, was bound for Ecuador via a safe route for the purposes of asylum and was accompanied by diplomats from the country, according to a statement issued by the whistleblower website WikiLeaks. Sarah Harrison, a member of the WikiLeaks legal team and close aide of its chief Julian Assange, was alsoaccompanying Mr. Snowden and had helped arrange his safe exit from Hong Kong. Ecuadors Foreign Minister confirmed on Sunday evening that Mr. Snowden had put in a request for asylum. Explaining its decision to allow Mr. Snowden to leave, the Hong Kong government said there was no legal basis for it to prevent him from travelling. The government said in a statement on Sunday that documents provided by the U.S. seeking Mr. Snowdens arrest did not fully comply with the legal requirements under Hong Kong law although it did not specify what those requirements were. While the Hong Kong government said he had left through a lawful and normal channel, U.S. officials, however, were quoted as saying they were puzzled by how Mr. Snowden had been allowed to travel to Moscow as they had revoked his passport last week. Hong Kongs decision to allow Mr. Snowden to leave came after the U.S. had asked for a provisional warrant to be issued to arrest the 29-year-old, whose revelations have embarrassed Washington by detailing a vast domestic and overseas surveillance programme being run by the National Security Agency (NSA). In a fresh expos on Sunday published by the South China Morning Post, Mr. Snowden said the NSA had hacked into Chinese mobile phone companies and even targeted the elite Tsinghua University in Beijing. The Hong Kong government said in its statement it had formally written to the U.S. requesting clarification on Mr. Snowdens earlier revelations regarding hacking attacks targeting computers in Hong Kong. Reacting to the report, Xinhua, the official Chinese news agency, published acommentary on Sunday strongly attacking the U.S. They demonstrate that the United States, which has long been trying to play innocent as a victim of cyber attacks, has turned out to be the biggest villain in our age, the commentary said, adding that Washington needed to come clean about its record first with the drama around Snowden [supporting] Chinas stand on the issue of cyber security. Yet despite Mr. Snowdens apparent usefulness to China as an intelligence asset at the very least, to score a point over the U.S. amid recent tensions on cyber security the decision by the authorities in the Chinese Special Administrative Region (SAR) to let the whistleblower leave was seen by analysts as underscoring Beijings keenness to prevent the issue from derailing its overall ties with Washington. While extraditing Mr. Snowden to the U.S. may have led the Chinese leadership to have been seen as weak by a domestic audience that has closely followed the case, by allowing the whistleblower to leave for another country, Beijing will no longer have to grapple with the tricky challenge of deciding his fate. The Chinese Foreign Ministry in a statement backed the decision made by Hong Kong. The SAR, which is under Chinese sovereignty, enjoys autonomy on a number of issues, has its

own Constitution and an independent judiciary, but defers to Beijing on foreign policy and defence matters. Hong Kong SAR is a society ruled by law, spokesperson Hua Chunying said in Beijing. In line with the Basic Law of Hong Kong SAR and the principle of one country, two systems, the central government has always respected the Hong Kong SAR government in handling issues in accordance with the law. Mr. Assange, who is himself fighting extradition to Sweden over allegations of sexual assault, said that he was thankful to the countries that have been doing the right thing in these matters. WikiLeaks hopes that Ed Snowdens rights will be protected, including his right to free communication, he said. The WikiLeaks legal team and I are interested in preserving Mr. Snowdens rights and protecting him as a person, added Baltasar Garzon, a former Spanish judge, legal director of Wikileaks and lawyer for Mr Assange. What is being done to Mr. Snowden and to Mr. Julian Assange for making or facilitating disclosures in the public interest is an assault against the people, he said. 2. NSSO data analysis: High time for political parties to take the economy toward higher growth Whichever way one looks at the key indicators of employment and unemployment released by the National Sample Survey Office (NSSO) recently, there is nothing much to crow about in inferences that can be drawn from the data collected in the 68th round of survey conducted during the period July 2011 to June 2012. Coming as it does ahead of the Lok Sabha polls in 2014 and the detailed reports of the sample survey are likely to be available when the elections are round the corner the Congress-led United Progressive Alliance (UPA) may well go to town highlighting the marked increase in the number of jobs created in its second term. The fact that nearly 14 million jobs were created in two years till January 2012 may be interpreted as a remarkable achievement, more so when the sharp increase in additional jobs came about at a time when the Indian economy was experiencing a downturn with the GDP growth slipping from 9.3 per cent in 2010-11 to 6.2 per cent in 2011-12. But when juxtaposed with the fact that the UPA government, which has been swearing by its motto of inclusive growth and job creation, saw the creation of a mere one million additional jobs during its five-year tenure from 2004-05 to 2009-10, it exposes itself to the Opposition flak of jobless growth. Especially so when the BJP-led regime of the National Democratic Alliance (NDA) which sought to hail its five-year stint as India shining another matter that the slogan bombed at the hustings actually added over 60 million jobs. So, instead of starting a competitive debate to score brownie points on who did what as has been witnessed many times earlier on GDP growth rate comparisons it is high time that political parties indulge in the more constructive and serious business of taking the economy on a higher growth path and quality job creation to meet the aspirations of the educated youth while providing gainful employment opportunities to the rural folks. In fact, the NSSO indicators are aimed at doing just that. While releasing the survey pointers on June 20, the Ministry of Statistics and Programme Implementation said: The detailed results of surveys on employment and unemployment are usually brought out by the NSSO through a number of reports. In order to make available the salient results of the surveys, well in advance of the release of its reports, for use in planning, policy formulation, decision support, and as input for further statistical exercises, the NSSO has released the key indicators. Be that as it may, the survey indicators, based on the central sample of 1,01,724 households (59,700 in rural areas and 42,024 in urban areas) surveyed from 7,469 villages in rural areas and 5,268 urban blocks spread over all the States and Union Territories, has thrown up a slew of disconcerting facts. First, what was the type of 13.9 million jobs added in two years (that ended on June 30, 2012) especially at a time of growth deceleration? How is it that alongside, the overall rate of

unemployment during the period also rose and was more pronounced among women? If only primary work is taken into account, the unemployment rate went up from 2.5 per cent, or 9.2 million jobless persons in 2010, to 3.7 per cent, or 10.4 million in 2012. In the unemployed male category, the percentage rose from 2.2 to 3.4, while among women, the percentage was higher at 3.7 in 2012 as against 3.3 in 2010. In the second category, which includes other work apart from the primary area of employment, the jobless rate for men went up marginally from two per cent in 2010 to 2.1 per cent in 2012, while for women it was 2.3 per cent and 3.4 per cent, respectively. Ostensibly, this category includes work under the national rural employment guarantee programme, which also goes on to reflect the quality of casual work on offer. As if the fall in the labour force participation rate (LFPR) is not worrying enough, another disconcerting datum is the fall in this indicator among women. Perhaps owing to shrinking job opportunities at certain levels of education and consequent longer study periods for achieving higher qualification, or simply opting out of the job market, the LFPR fell from 40 per cent in 2009-10 to 39.5 per cent in 2011-12, with that for males at nearly 56 per cent and for females at 23 per cent . This is also corroborated by a survey by U.S.-based Gallup, which revealed that 54 per cent of the respondents were more pessimistic about landing jobs in India in 2012 as compared to the previous year. This perhaps explains why there is an overall increase in the number of self-employed with this category growing from 51 per cent to 52 per cent of the employed workforce, especially among urban males and females, as formal jobs are not available for the asking. Also for the first time, the overall employment in the farm sector, which accounts for about a quarter of GDP growth, fell from 50 per cent to 49 per cent, while manufacturing and services made up for 24 per cent and 27 per cent of the workforce, respectively. With agriculture providing only seasonal employment, the male workforce may be moving to urban areas for comparatively more stable wages and finding its way to the construction industry. Significantly, a steeper decline is witnessed among rural females as is evident from the workers population ratio (WPR) in that segment, declining from 26.1 per cent to 24.8 per cent, along with the number actually employed falling 2.4 per cent to 103 million from 106 million. According to National Statistical Commission Chairman Pronab Sen, rural women are shifting towards self-help groups and self-employment, which is clear from the percentage of women taking up self-employment rising to 59 per cent in 2011-12 from 56 per cent in 2009-10. Also, it could also be that a large segment of rural women are not being categorised in the employable workforce in the WPR, as their activity may be designated as family household chores. Clearly, the task before the government is laid out while its policy direction is on the right track. A shift from agriculture labour is welcome in terms of higher farm productivity. However, the labour moving out of the farm sector must be provided avenues of employment and this can be made possible by increasing manufacturing activity and raising t he sectors share in the GDP from about 15 per cent to 25 per cent, as per the programme under implementation. 3. In Afghanistan, back to the future Notwithstanding President Hamid Karzais anger and the deep resentment in Kabul at the Taliban conduct during the opening of their Doha office on June 18 and the statement issued by them on that occasion, there is little doubt that talks between the United States and the Taliban will take place sooner rather than later. When tempers cool, Mr. Karzai will also realise that he cannot defy the U.S. beyond a point for, where will he turn for funds, if nothing else, to keep the administration such as it is and the Afghan security forces going? In any event, the initiative is now with the Taliban and itsfriend and mentor Pakistan and they stand to gain even if the talks do not get off the ground for some unforeseen reason.

The U.S. has already gone to great lengths to accommodate the Taliban and Pakistan. Such is the measure of its strategic desperation that contrary to its earlier position, it has accepted the Talibans vague assurances regarding Afghan territory not being used tofoment violence outside the country. Also, for many months the U.S. and its European partners had almost given up on the reconciliation process and the focus was on a credible Afghan presidential election so that an effective and cohesive political leadership, post-2014 and post-Karzai , could take on the Taliban insurgency. No statement or comment since June 18 mentions the political process as mandated by the Afghan Constitution at all. U.S. approach In order to assess how far the U.S. will go in this direction and how much pressure it will bring to bear on Mr. Karzai, it would be instructive to turn to its approaches towards the Taliban in the 1990s. The Taliban effectively captured Kabul on September 26, 1996. That evening in Islamabad, at a dinner hosted by our High Commissioner, at which this writer was present, a senior U.S. diplomat was one of the guests. He wasobviously following the success of the Taliban in Kabul with a sense of satisfaction. He was completely unfazed by the nature of the Taliban, including its theological orientations. Two months later, the U.N. Secretary General called a meeting of countries with interest and influence in Afghanistan in New York. At that meeting the U.S. Assistant Secretary of State, Robin Raphel, called the Taliban a significant factor in the Afghan equation and one that will not disappear anytime soon. In a pointed message to those who considered the Taliban creatures of Pakistan, she said, ... they are Afghan; they are indigenous; they have demonstrated staying power. Notwithstanding the disquiet expressed by many influential U.S. women groups on Taliban attitudes on gender issues Ms Raphel sta ted the real source of their power has been the willingness of many Afghans, particularly Pashtuns, to tacitly trade the unending fighting and chaos for a measure of peace and security, even with severe social restrictions. It is especially noteworthy that the Taliban record on human rights was characterised thus. Why? U.S. officials at that time were particularly focussed on evacuating Central Asian hydrocarbons through pipelines across Afghanistan and Pakistan, and clearly felt that only the Taliban could create stable conditions in Afghanistan to make this possible. Human rights then as now have never come in the way of hard national interest. Ms Raphel also advised all countries to engage with the Taliban and put that suggestion in practice a month later when a Taliban team led by Mullah Muttawakil visited Washington ostensibly at the invitation of a U.S. oil company. The State Department strongly lobbied with many embassies, including our own, to receive the Taliban team. The Taliban team was received by a middle level diplomat. They said that they should be considered Afghans. They also said that they were not against India. This was at a time when they were hosting training camps where members of terrorist groups operating against India were also being trained. The U.S. attitude towards the Taliban changed in 1998. Why? Osama-bin-Laden reached Afghanistan from Sudan a few months before the Taliban captured Kabul. He developed a close nexus with the Taliban leadership, especially Mullah Omar. In 1998, the al Qaeda attacked U.S. embassies in Kenya and Tanzania and it became apparent that Osama was using Afghanistan as a base to plan his attackson western targets. It was only then that the U.S. began to be unhappy with the Taliban and, even then, its ire was not against the Taliban per se but against their connection with the al Qaeda. Prior to 9/11, the U.S. gave the Taliban every opportunity to give up the al Qaeda and make peace. Following 9/11, the U.S. allowed the Pakistanis to virtually nurture the Taliban provided they handed over members of the al Qaeda. The Pakistanis obliged and hundreds of low level al Qaeda operatives were given by them to the U.S. In return, Pakistan got strategic space and more than $11billion. By 2004 the Taliban, with Pakistani assistance, had gained sufficient strength to begin operations in Afghanistan and the Taliban insurgency had begun. It was allowed to

gain strength because deep down some influential sections in Washington subscribed to the Raphel Taliban Doctrine. An exhausted U.S., after the elimination of Osama, is essentially attempting to revert to that doctrine. Karzais challenge In the 1990s, the Taliban and Pakistan could not fully achieve their objectives largely because of Ahmed Shah Massoud. Mr. Karzai is no Massoud but he can meet the current challenge even now if he abandons the narrow politics he has pursued since 2001. More than ever, he needs the skills of the Panjsheri leaders, Abdullah and Qanooni, the analytical capacities of the former Intelligence Chief, Amrullah Saleh, the courage of the Hazara leader, Mohaqiq, and the tenacity of the Uzbek leader, Dostum. Along with them he needs to travel, with all its risks, especially to Pashtun areas to warn against the long-term dangers the Taliban represent to Afghanistans future. Perhaps this is too much to ask of Mr. Karzai. The Afghan situation will certainly figure prominently in Secretary of State Kerrys discussions in Delhi. The Indian leadership cannot confine itself to the pious principles contained in the governments statement of June 21. It must forthrightly inform Mr. Kerry of Indias misgivings about the Taliban and that India will act to protect its interests in Afghanistan, along with like-minded countries. We must especially underline that India will not allow itself to be excluded from international diplomacy over Afghanistan, as was the case in the 1990s. Following the Kerry visit, India must urgently hold consultations with Russia, Iran and the Central Asian states on developments in Afghanistan. The Taliban are part of the Afghan landscape but their vision of the countrys future is flawed for it is exclusionary, not inclusive of Afghanistans diversities. Our diplomacy while remaining realistic and flexible must not be oblivious of this basic aspect. As for the U.S.: Faustian bargains cost lives and much more. But that is mainly for the U.S. public to consider. On their part, U.S. policymakers will have to ponder over the reasons for the strategic reverses, if not defeat, of their country in Afghanistan. Is it because of a continuing ambivalence on Pakistan and the lack of a clear, specific and sustained Pakistan policy or are the reasons Afghanistan specific? The Af-Pak concept has clearly failed. Meanwhile the Taliban are out of the shadows and Pakistan is back at the centre of international diplomacy on Afghanistan. Such is the measure of Americas strategic desperation that it has accepted the Talibans vague assurances and gone to great lengths to accommodate the outfit 4. Remembering a perfect spy On March 12, 1993, Mumbai was hit by a series of bomb blasts. By that evening, one intelligence officer, working hard and fast, as was his wont, had drafted a detailed note for the Prime Minister. It included among other things, an assessment of likely motives, a list of groups that could have carried out the attack, and similar incidents that had occurred previously in various other countries. In the days that followed, the same officer meticulously followed up on every small clue that became available and the Research & Analysis Wing (R&AW) was ultimately able to acquire the names of those involved and the details of their activities prior to and immediately after the incident. The officer was B. Raman, who passed away on June 16 to cancer that he described as the last terrorist in his life. He wrote about this battle, so different from the others he had fought in his eventful career, with remarkable candour and occasional humour in his blog. Raman was an IPS officer of the 1961 batch who served for a time in the Madhya Pradesh cadre before deputation to the Intelligence Bureau in New Delhi. There, he was soon noticed by Indias legendary spymaster, R.N. Kao, who took him to the Research and Analysis Wing when it was formed in 1968. From very early on in his career, Raman displayed an unwavering commitment to his work. This, along with his vast knowledge and the ability to recall details of events even after the passage of decades (he could, in fact, tell you the

contents of notes recorded by him many years ago) made him a near ideal intelligence officer These rare qualities prompted Kao and many of his successors to entrust Raman with some of the very sensitive tasks that the R&AWundertook. His detailed study in the 1970s on the various ethnic groups of Burma is widely considered as one of the best of that time. During the 1980s and early 1990s, when Sikh militancy was a major security problem, he was given charge of the desk handling this issue. He quickly familiarised himself with all aspects of this problem and acquired extensive knowledge of militant groups operating abroad. As expected, he was made the pointperson to brief representatives of foreign intelligence agencies about the threat India faced from terrorism and more particularly about the help being provided to these groups from across the border. Some western intelligence agencies were initially sceptical about our claim that these groups were receiving assistance from Pakistan. Raman never backed down and insisted that the information we were sharing had been doublechecked and, hence, reliable. At the time of the Mumbai blasts, Raman was heading the counter-terrorism unit of R&AW. He started writing prolifically on strategic issues after his retirement in 1994 and was much in demand at conferences and workshops not only in India but also abroad. His standing in the international strategic community was evident when Stephen Cohen asked him to write a chapter for his book,The Future of Pakistan. In his passing, Indias strategic community has lost one of its finest minds, and the countrys intelligence world, a rare role model. 5. India, U.S. will seek to narrow down differences Both sides have a long wish list In their 46th but most awaited bilateral dialogue this year, India and the U.S. will seek to narrow down their divergences on a host of issues ranging from civil nuclear, immigration reform and trade to Afghanistan besides taking stock of progress made by their 30 Plus dialogue mechanisms, External Affairs Ministry sources said. In the first meeting between U.S. Secretary of State John Kerry and his counterpart Salman Khurshid, both sides would be sizing up each other especially with South Block feeling that Mr. Kerry has been soft on terrorism because of his close ties with Pakistans political and military leadership. His speech on Sunday did little to assuage that feeling as he did not mention terrorism and Pakistan in one breadth, a staple of Hillary Clintons observations at the previous three editions of India-U.S. Strategic Dialogue. Both sides have a long wish list, both at the bilateral and regional level, and Indian officials here caution against the visit producing a breakthrough in any of the major areas such as export of U.S. shale gas, setting up U.S. nuclear reactors in India, less punitive visa rules for Indian IT professionals, a bilateral investment protection agreement, preferential marketing arrangement and higher foreign direct investment limits in defence and insurance. Strategy in Afghanistan They are also at odds over the strategy for ending violence in Afghanistan and in an atypical gesture India officially staked out its position on integrating the Taliban which was different from the U.S. line. We are on a different trajectory though the broad strategy of b oth countries is similar. We dont agree on quick-fix solutions, said Indian diplomatic sources. Having done most of the heavy lifting for India at the Nuclear Suppliers Group, the U.S. keenly seeks a breakthrough in the nuclear energy field. But the reactor design of one company promised six reactors is yet to be cleared by the American regulatory authority. Another company, with the design cleared by the regulator (one could cost over Rs. 40,000 crore). However, it is still discussing two crucial aspects. That is why Indian diplomats discounted the possibility of an early works agreement with Westinghouse on the sidelines of the dialogue. Indias major concern is about tough immigration laws imposing stiff upfront visa fee payments for software professionals. New Delhi says this is non tariff barrier impeding

legitimate business activity than an attempt to streamline immigration laws. On the other side of the fence, the U.S. wants an early bilateral investment protection agreement but New Delhi says some of its crucial bits are still being formulated by the Finance Ministry. Lack of progress on all these issues does not mean a faltering relationship as compared to the Bush era, assure Government officials. The two are in step over improving political and trade ties among India and the U.S. allies in Southeast and East Asia, the U.S. and its friends in the Middle East have helped New Delhi make up for the cut back in oil imports from Iran and defence imports from the U.S. crossed Rs. 50,000 crore in three years. A stronger relationship in the field of education in the coming days would maintain people-to-people ties even if the flow of Indian professionals is likely to ebb. 6. Panel formed to study 13th Amendment Amid a raging debate on the 13th Amendment to Sri Lankas constitution, a Parliamentary Select Committee (PSC) has been formed to study and suggest possible changes to the landmark amendment that created a provincial council system within the unitary state based on a 1987 agreement with India. Parliament Speaker ChamalRajapaksa on Friday appointed Sri Lanka Freedom Party (SLFP) veteran and senior Minister Nimal Siripala De Silva as chairman of the committee, which has 19 members, all drawn from the SLFP-led United Peoples Freedom Alliance, for now. The main opposition United National Party (UNP), the Marxist Janatha Vimukti Peramuna, the Tamil National Alliance (TNA) and the Sri Lanka Muslim Congress are not part of it now for different reasons. The Speaker wants various parties in Parliament to name representatives. Key PSC members include Foreign Minister and legal expert G.L. Peiris, Basil Rajapaksa and Douglas Devananda, a political rival of the TNA. The UNP, headed by Ranil Wickremesinghe, has said it will not nominate a representative to the parliamentary panel until the government announces its stance regarding the understanding with the TNA. The TNA and the Janatha Vimukthi Peramuna (JVP), too, have boycotted the PSC for different reasons. The TNA says it has little faith in the PSC, as it is dominated by ruling party members, while the JVP has, for long, sought the repeal of the 13th Amendment that followed the July 1987 Indo-Sri Lanka signed between Rajiv Gandhi and J.R. Jayawardene. In an interview to The Hindu in July 2011, President Rajapaksa had said: I have asked my party and others topropose a Parliamentary Select Committee to look into a political solution, any amendments to the Constitution. Whatever the Parliamentary Committee recommends to me, I will accept and ultimately it has to go to Parliament. The appointment comes just two months ahead of the Northern Provincial Council elections scheduled for September. The UPFA is divided on the 13th Amendment. While parties such as the National Freedom Front (NFF) and the Jathika Hela Urumaya (JHU) demand its abrogation, some socialist allies have opposed proposals to dilute the 13th Amendment, which devolves certain powers for the provinces. A TNA delegation was in India recently to meet Prime Minister Manmohan Singh and seek his help in ensuring that the amendment was not diluted and Sri Lanka honoured its commitment on finding a political solution. Speaking to The Hindu on Friday, TNA sources said Prime Minister Manmohan Singh had told them that the Indian government had sent a message to the Sri Lankan government at the high-level, and that it would do all it can to ensure the 13th Amendment was implemented. There were also reports of Dr. Singh expressing concern over certain sections seeking dilution of the Constitutional Amendment. National Security Adviser Shivshankar Menon will visit Sri Lanka early next month to hold meetings with senior government leaders here. According to a report in Daily News here, President Rajapaksa said Mr. Menon was here only on a regular visit for discussions on regional defence arrangements. It also reliably learnt that External Affairs Minister Salman Khurshid is likely to visit Sri Lanka soon for high-level deliberations.

7. Paying the price Entrepreneurs should be made to pay the price for making wrong calls on parameters affecting project viability. The Governments decision to allow power producers to passthrough the higher cost of coal imported by them, in the tariff for electricity generated, is faulty. This is not because it may lead to an increase in prices for consumers. One cannot agree more with the Finance Minister P. Chidambaram that the choice today is between paying slightly more for electricity and not having it at all. But what makes the pass-through problematic is that it undermines the sanctity of public procurement contracts, specifically in cases where power purchase agreements (PPA) signed with state utilities do not permit producers to pass through their higher fuel costs to consumers. If power producers bagged projects by quoting aggressive levelised (flat) tariffs that did not factor in fuel price risks, there can be no justification for any renegotiation of the original PPAs. This is what the Government has now enabled. The Power Ministry will issue advisories to the Central/State electricity regulatory commissions, which can decide the extent of pass-through to be granted on a case-to-case basis. The above pass-though mechanism is bound to be challenged, especially by the state utilities which would argue that the tariffs fixed in the PPAs were discovered through a process of competitive bidding. The bidding documents clearly provided the option for quoting fuel charges that could be escalated based on some verifiable benchmark. If power producers including those whose plants were entirely fired by imported coal did not exercise that option, it is probably a result of their determination to bag projects at any cost. Giving the same producers the benefit of pass-through for the higher cost of imported coal implies a renegotiation of PPAs signed on the basis of competitive tendering, something that is most certainly going to open a legal can of worms. The Government will undoubtedly claim that in the absence of a pass-through mechanism, power producers will find it uneconomical to import coal. Given that the existing domestic production cannot meet the fuel requirements of many projects that have already been or will shortly be commissioned, these plants face the danger of operating at sub-optimal capacities. This is something neither they nor their banks and financial institutions leave alone powerstarved consumers can afford. But thisargument does not justify a violation of tendering norms, which is what renegotiation of PPAs to incorporate fuel pass-through amounts to. Such provisions can be permitted in projects that are freshly bid; as far as existing projects go, the only rational and legallytenable solution is for the promoters to exit. That would mean taking losses on their books, which is a risk any entrepreneur should be prepared for making wrong judgment calls on parameters affecting the viability of a project. If projects are rebid, the new competitively discovered tariffs are likely to reflect the real economics of running the plant on imported coal. 8. Govt may scrap SEZ policy Existing units stay operational; those approved may not be notified, land could be used for other purposes Plagued by a series of controversies and scams, it seems, the government is finallyplanning to do away with the Special Economic Zone (SEZ) programme it had launched in 2006 with much fanfare. While the existing SEZs will continue to remain operational, those approved might not be notified and developers be allowed to utilise the land for other purposes. The commerce ministry has asked the Export Promotion Council for EoUs and SEZs (EPCES) to commission a study to Icrier to find if SEZs have met the economic objectives for which the programme was rolled out. It has been given six months for the study. Ministry officials told Business Standard this had been done to end the turf war between the commerce and finance ministries, as the latter believed some numbers given out by the former on exports, investments and jobs in SEZs were exaggerated. "There has always been some tension between the two ministries over the success of SEZs. So, we are doing a

study by a neutral organisation on whether it has been able to measure up to its objectives. Else, we see no point in continuing with this scheme and giving them tax subsidies," said a senior commerce department official. The objective of the study was to find if the economic goals had been met, said P C Nambiar, director of the Pune-based Serum Biopharma Park (the country's first biotech SEZ), and the chairman of EPCES. "The finance ministry feels those have not been met," he said. It seemed the commerce ministry was also keen to do away with the policy so that it could promote the National Manufacturing and Investment Zones (NMIZ), under the National Manufacturing Policy, officials indicated. It was the Minimum Alternate Tax, imposed on both developers and units from 2011-12 onwards, that took away the interest of companies in SEZs. Additionally, a dividend distribution tax (DDT) was imposed on developers. However, existing SEZs were reported to be doing quite well. This raised the finance ministry's apprehensions. According to the latest data, exports from SEZs rose almost 30 per cent to $88 billion in 2012-13, from $68 billion the previous year. These were up 17 per cent in 2011-12, compared with $58 billion a year before. These are quite impressive numbers, given that the country's total exports fell 1.76 per cent to $300.6 billion in 2012-13. It means exports from SEZs accounted for 29 per cent of total exports in 2012-13. Total investments in SEZs rose to $44 billion in 2012-13, compared with $43 billion the previous year. As of March 31, SEZs had generated 1,074,904 jobs. The government has so far formally approved 577 SEZs, of which 389 are notified. At present, 170 operate across India. The Parliamentary standing committees on both commerce and finance have been opposing the policy. It has often been said that SEZs have led to large-scale realty scams, offering developers the opportunity to make quick money while enjoying tax exemption. 9. Demand for a Himalayan policy gathers pace In the wake of killer floods striking Uttarakhand, the demand for a separate Himalayan policy dealing with natural calamities, safeguarding the interests of local people and enhancing the quality of eco-systems, has come to the fore. For the past few years, social activists and environmentalists in Uttarakhand have been advocating such a policy. In 2011, the then Union minister of state for agriculture, Harish Rawat, had announced the Centre was preparing an action plan for Jammu & Kashmir, Himachal Pradesh and Uttarakhand, crisscrossed by the Himalayas that separate the Indiansubcontinent from the Tibetan plateau. But thereafter, nothing was heard on the issue. Now, the demand has come to the fore once again. "Neither the Centre nor the state government showed any enthusiasm for a separate Himalayan policy. Unless you have a concrete policy, we will remain directionless," said social activist Anil Prakash Joshi, the founder of Hesco, a Dehradun-based non-governmental organisation working in the Himalayan region. Uttarakhand Environment Protection and Pollution Control Board (UEPPCB), in 2004, prepared the "state of the environment report" that dealt with the most important environmental issues such as state planning, as well as a separate environment policy. The document said the state would shortly develop its environment policy, report for which is now gathering dust. The development planning processes need to integrate environmental considerations and concepts of sustainability, in order to become truly responsive to people's needs, while preserving the environment, said C V S Negi, former member-secretary of UEPPCB, during whose tenure, the "state of the environment report" was prepared. With nature playing truant with the hill state, the report proposed the separation of regulatory and policy making functions of the state and integrating environment considerations into the development policy process.

The report said UEPPCB should be solely vested with the regulatory role of environment management in the state. Other factors like haphazard growth, water shortage, rapid migration, unemployment should be taken into account into the future policy, said a top government official, while commenting on the separate Himalayan policy. Chipko leader Sunderlal Bahuguan, a recipient of the Padma Vibhushan, supported the idea of a separate policy, saying big dams were destroying the rich biodiversity of the region. "Our main concern is through the new Himalayan policy, we will be able to protect our forests and vast biodiversity of the region," said Bahuguna. 10. Growthless and jobless? There is indeed a link between growth and employment If all the criticisms of India's high economic growth being essentially jobless in nature are valid, then it would be logical to expect that slower growth would not result in anincrease in unemployment. Well, it turns out that the symmetry may not always hold. The results of the 68th round of sample surveys by the National Sample Survey Office (NSSO), which focused on household employment patterns, do suggest that unemployment rose between June 2010 and June 2012. Since 2011-12 was a year ofrelatively slow growth, it is tempting to infer that the two are correlated and that the even slower growth during 2012-13 will only exacerbate the problem. But is this argument valid? Looking at the unemployment numbers alone, perhaps it isn't. In January 2010, the unemployment rate by principal activity was 2.5 per cent; it rose to 2.7 per cent in January 2012. If subsidiary activities were to be taken into account, the unemployment rate was two per cent in 2010 and it increased to 2.2 per cent in 2012. Although in absolute terms this translates into about one million people more, it hardly suggests astrong relationship between slower growth and rising unemployment. Dividing up the workforce between rural and urban areas, the latter reveals a higher unemployment rate in both years, so the increase is not dramatic. Again, looking at the gender divide,female workers show higher unemployment rates than males but there isn't a significant difference in the increase in unemployment over this period. In short, the government could take some comfort from the fact that rapidly rising unemployment in response to slowing growth does not pose the same political threat that it does in many of the advanced economies. Going by these numbers, people appear to be finding employment even when growth is sluggish. In fact, if the growth in wages commanded by unskilled workers across the country is any indication - they have almost doubled over the past five years - the job market is robust, if not booming. So, why worry? Well, for at least two reasons. One, a relatively large proportion of the workforce is self-employed. About 57 per cent of rural workers and 42 per cent of urban workers fall into this category, with the proportion having risen slightly over the two years. It is obvious that the overwhelming majority of these "jobs" are of lowproductivity and high risk, offering far less prospects for socio-economic mobility than more traditional salaried jobs, which are apparently in such short supply. Two, the relatively comfortable picture on unemployment masks the somewhat more concerningsituation on workforce participation. A lot of people, particularly women, seem to have opted out of the workforce. Some of this may be for good reasons - more education, for example - but if it is otherwise, it is generally believed that the longer someone has been without a job, the less likely he or she is to get one. If members of low-income households stop looking for jobs, what does this do to their families' long-term livelihood prospects? Understanding why these two tendencies are manifesting and directly addressing them must be a priority for the government. Growth and job creation are, in reality, mutually reinforcing. 11. DNA of the future US gene judgment opens up biotech industry

A recent ruling by the US Supreme Court on gene patenting has huge implications for the biotechnology industry, healthcare and medicine. It will trigger a review of over 100,000 existing American patents. In a unanimous ruling, a nine-member bench has declared that a naturally occurring DNA (deoxyribonucleic acid) segment, or gene, cannot be patented. However, a patent can be granted for isolated forms of genes. The ruling was in a high-profile case filed against the biotechnology company Myriad Genetics by the Association for Molecular Pathology (AMP), a not-for-profit scientific association. The human genome contains over 20,000 genes. About 40 per cent of these have already been patented. Those patents are now "half-invalid". In the natural condition, genes are "mixed" together. They may be isolated and synthesised by various processes. The natural form is known as genetic DNA, or gDNA. The isolated, synthetic form is called complementary DNA, or cDNA. The court ruling held: "A naturally occurring DNA segment is a product of nature and not patenteligible merely because it has been isolated, but that cDNA is patent-eligible because it is not naturally occurring. Separating a gene from its surrounding genetic material is not an act of invention." A patent covering cDNA is thus, in effect, a process patent. A different process that isolates the same gene can work around the patent. Earlier US practice allowed patenting of both the cDNA and the gDNA, thus giving the patent holder a 20-year monopoly on all research into that gene. "Rollbacks" on existing gDNA patents may have several effects. The earlier practice offered greater incentive for research because the patent holder could recoup profits over a long period. That moat has been lowered. The AMP and the majority of the academic establishment argue that sweeping patents effectively halt further research into a specific gene and allow patent holders to make exorbitant profits. The AMP declared the ruling was "a great step forward for the field of molecular pathology, for genomic science, and most importantly, for patients". Myriad Genetics' charges were considered particularly egregious, which is why it was targeted. Myriad was awarded nine patents in 1996 on the related BRCA1 and BRCA2 genes. Mutations in these two genes trigger breast cancer. Myriad charges $4,300 for gene-screening tests for those two genes. (Actress Angelina Jolie took those tests before opting for her mastectomies.) By comparison, the entire human genome can now be sequenced for around $1,000. Limited DNA mapping kits are available off the shelf for $100. Researchers in John Hopkins and Yale claim they can provide free tests for mutations in BRCA1 and BRCA2 now that the patent is annulled. Apart from holding to the basic premise that patents should not cover natural substances or natural laws, the court's decision may have been influenced by academic opinion, as well as a declaration from the US Department of Justice that it does not support the patenting of naturally occurring genes. On balance, the ruling should provide for a more rational development of the biotechnology industry and lead to lower healthcare costs as well as faster medical breakthroughs. 12. Policy paralysis could numb 12th five year plan growth: Planning Commission study A study commissioned by the Planning Commission to validate the growth estimates of the Twelfth Five-Year Plan has thrown up a rather depressing outlook for the economy, sending alarm bells ringing in the government. An independent think tank, the National Council for Applied Economic Research (NCAER), has pegged average annual growth for the Twelfth Plan at a mere 4.8%, if the present logjam in policymaking continues. The NCAER had been entrusted by the Planning Commission to use econometric models to derive key macroeconomic indicators for this five-year plan. The NCAER analysis uses three different scenarios for growth based on the extent of reforms that can be pushed through. In all three scenarios, the NCAER has found that the Twelfth Plan would see slower growth than the

Eleventh Plan, which saw 7.9% expansion between 2007 and 2012. Though the NCAER presented its findings to the Plan panel in April, they have been kept under wraps. Reviewed by ET, the NCAER models are based on "more recent data till 2011-12 and 201213" while the plan document's growth simulations for each scenario were carried out last year using data up to 2011-12, when the Indian economy grew by 6.2%. Assuming a 'business as usual' approach - the worst-case scenario, in which the policy logjam would persist - the Plan panel had assumed growth of 5-5.5%. In contrast, the NCAER study says growth would slip to below 5%. Even under the 'insufficient action' scenario, growth won't meet the government's expectations. The government expects that under the 'insufficient action' scenario - which envisages a piecemeal approach to reforms - growth will be 6-6.5%. But the NCAER expects it to be just 5.9%. The Twelfth Plan document had pegged average growth at 8.2% assuming a best-case scenario of strong, inclusive growth delivered by all-round government action. But even in this scenario, the NCAER sees growth at 7.8% over the fiveyear plan that is already in its second year. In 2012-13, the first year of the plan, the economy expanded only 5%, the slowest pace in a decade. Since the first year of the plan saw slower-than-anticipated growth, overall expansion is likely to be lower, said Pronab Sen, the chairperson of the National Statistical Commission. "What is more critical is the trajectory of growth and the trends beyond the headline growth, in key economic indicators such as the investment rate. The real question is if the public policy approach outlined in the plan document is consistent with the high-growth scenario it envisions," Sen said, stressing that an average growth of 7.8% in the Twelfth Plan would mean growth could soar to 8-9% by 2016-17. The NCAER's assessment matches the sentiment among industry captains that the worst is yet to come. Last week, the Confederation of Indian Industry said the industrial slowdown has not bottomed out and sluggish private and government capital expenditure is hurting investment in industry and the economy. "Strong inclusive growth is the only way for the country to go and the policy agenda laid out in the plan is designed to achieve the objective," states the plan's macro-economic framework.Unless there's a dramatic shifting of gears by the economy's managers, the assessment carried out by the NCAER expects growth in 2016-17 to be just 5%. The first year of the plan period, 2012-13, also logged 5% growth - the slowest pace in a decade. This means the intervening three years, including this financial year, could see much more pain for the economy as the NCAER expects average annual growth over the five-year period at just 4.8% in the worst-case scenario. Back-of-the-envelope calculations based on this fresh projection indicate that average growth from this year till 2015-16 would, therefore, hover in the range of 4.6-4.7%. Such a slow pace of growth would have a deleterious effect on all key economic indicators, such as the current account and fiscal deficits, investment rate, poverty ratio and inflation. Without coherent and big-ticket policy action, average inflation is expected to be 7.9% through this plan period, fiscal deficit could be at an average 5.3% of GDP and the fixed investment rate may plummet to 28.7% from the 31.8% recorded over the Eleventh Plan period. A slower economy would also mean only a marginal improvement in poverty numbers from the 28% recorded in 2011-12, to 26.8% - of course, based on the Planning Commission's contentious poverty line. The current account deficit, NCAER has estimated, would soar to 3.8% of GDP compared to the 2.7% averaged between 2007 and 2012. 13. Stiff wage laws hold India from tackling high unemployment and low manufacturing base A recent visit to South Africa has provided me the opportunity to study its economy. With a population of just 51 million, South Africa is smaller than 10 Indian states. Its per capita income, at $8,000, is more than five times that of India. Despite these differences, there are

striking similarities between the two economies. While India has 90% or more of its labour force in the informal sector, South Africa suffers from 25%unemployment. Both outcomes can be traced to labour-market inflexibilities. In India, ultra-high restrictions on worker layoffs in the organised sector encourage firms to operate in the unorganised sector. Formal-sector manufacturing firms predominantly produce capital-intensive products such as automobiles in which labour costs per unit of output are tiny, making golden handshakes to layoff workers financially feasible. Alternatively, formal-sector firms are in skilled-labourintensive services in which laws against layoffs do not have the same bite as in industry. These sectors generate limited employment opportunities for the unskilled workers who then predominantly end up in the informal sector. Layoff costs are high in South Africa too, discouraging firms from hiring workers. Even greater impediment to employment is the ultrahigh wage. Ever-rising wages negotiated by strong labour unions have pushed South African firms toward capitalintensive technologies and sectors. Moreover, in many sectors, once the unions and large companies have negotiated the wage, the bargaining councils extend that wage to small and medium-size companies that are not even a part of the process. In sectors in which bargaining councils do not exist, expectations generate a similar wage effect. Given that small and medium firms do not enjoy the same economies of scale as large companies and must borrow capital at higher interest rates, their competitiveness crucially depends on the ability to hire workers at lower wages. So, the wage hikes discourage the entry of small and medium firms. Wages of Threshold Salary Minimum wages that labour ministry periodically announces for unskilled labour-intensive sectors such as apparel and agriculture complement the barriers to employment growth. With no unions and bargaining councils, these sectors could, in principle, hire unskilled workers at the market-clearing wage and substantially reduce unskilled-worker unemployment. But the existence of ultrahigh minimum wages kills the option. The minimum wage exceeds the wage at which sectors such as clothing could compete with imports and create employment opportunities. The labour-market rigidities in India and South Africa, though of different types, have led to similar structures of the economy. Services are the dominant sector in both countries, accounting for 65% or more of the GDP. Manufacturing has lagged in both countries, accounting for just 15% of the GDP. The flourishing sectors in both countries are either capital-or skilled-labour intensive. They include mining, automobile assembly, metalworking, machinery, textiles, iron and steel, chemicals, fertiliser, ship repair, finance and business services in South Africa and automobiles, two-wheelers, engineering goods, petroleum products, software and pharmaceuticals in India. The key difference between the two countries relates to the employment status of low-skilled workers. India has allowed the informal sector to operate under largely unregulated conditions. This has resulted in a vast unorganised sector that has absorbed unskilled workers even if in low-productivity jobs at relatively low wages preventing the low and stagnant levels of employment in the organised sector from translating into large, open unemployment. New Apartheid for Workers In South Africa, strict enforcement of the relatively high minimum wage in sectors that could potential provide employment to unskilled workers and the extension of the wages negotiated between unions and large companies to small and medium firms in many sectors have led to large-scale open unemployment. So, the rising political power of the unions and more vigorous enforcement of sector-specific minimum wages in the post-apartheid era have pushed up open unemployment from 17% of the workforce in 1995 to 25% today. The Book of Jobs: One for All

It is tempting to say that as an upper middle-income country, South Africa has no comparative advantage in unskilled labour-intensive sectors such as apparel and light consumer goods. But that would be wrong. Despite high average income, the apartheid-era policies have left a large adult population with limited education and skills. The new nation that has emerged post-revolution will take time to educate and skill the future generations. Meanwhile, those with low or no skills must be offered employment and a life with dignity. Unemployment and low-wage employment are at the heart of poverty that India and South Africa are combating. Despite different levels of per-capita income and country size, the solution to this key economic problem in the two countries is same: greater labour-market flexibility. 14. Align incentives in heath insurance Health covers offered by the four public sector non-life companies are set become more expensive, reportedly by 20-30%, depending on the age of the insured. This is bad news for underinsured India. Insurers say a revision is overdue as the pricing is below that justified by the claims experience, making the portfolio unviable. For one public sector insurer, the claims ratio is 110%, implying that for every Rs 100 of premium income, the company has to pay Rs 110 as claim. True, scientific pricing may help the business turn around. However, the problem is not inadequate premia, but the hefty cost of in-hospital treatment. Treatment costs are far higher when an insurancecompany foots the bill than when a patient pays out of her pocket. This is because a patient paying out of her pocket is pricesensitive, unlike one covered by insurance who may not be worried about the cost of treatment. Making insurance claimants pay a portion of the bill would make them more price-sensitive and vigilant about investigations and treatment procedures. This would help correct the basic misalignment of incentives for hospitals and insurers. The hospital seeks to maximise its take whereas the incentive of the insurance company is to minimise the outgo. Hospitals lack regulatory supervision. Whether doctors benefit from the investigations they ask for at the hospital must be monitored. Also, health insurance should not be just a cost-plus business, where prices are computed after providing for a markup over costs. Insurers must strike tougher bargains with hospitals. A model where premia are paid to the healthcare provider to keep the patient healthy is also worth experimenting here. Greater competition and an efficient public healthcare delivery system will also help bring down insurance premia. 15. Poverty levels decline significantly between 2009-12; less than 25% poor: NSSO Survey Poverty level in the country may have declined significantly between 2009-10 and 2011-12, the latest government survey on household consumer expenditure indicates, giving something to the beleaguered UPA government to hard sell ahead of elections next year. Back of the envelope calculations by ET suggest that poverty levels have fallen to less than 25% of population because of a sharp rise in rural incomes and decent performance by the agricultural sector. Adjusted for price rise, the poverty line for 2011-12, based on the Tendulkar committee calculations for 2009-10- comes to 803 per capita per month for rural areas and 1038.6 for urban areas. Applying these cut offs to the expenditure estimates released by the National Sample Survey Organization last week shows percentage of rural poor is likely to have fallen to 24.5% in 2011-12 from 29% estimated for 2009-10. The fall in the urban areas was flatter, from 16% in 2009-10 to 15.5% in 2011-12. "Yes, poverty has declined. But to say by how much I would wait for the Planning Commission figures for that. The purchasing power of people has gone up which shows in the consumption story," said TCA Anant, chief statistician and secretary of Ministry of Statistics and Programme Implementation. The decline is largely because agriculture sector performed well during

fiscal year 2011 and 2012 against a drought situation in 2009. Agriculture sector expanded by 7.9% in 2010 -11 and 3.6% in 2011-12. "During 2009-10, agriculture performed poorly as it was a drought year. Poverty in rural areas is closely linked to agriculture. Whereas 2011 was a normal year, we experienced high food inflation, which explains high purchasing power with the rural population and hence increase in consumption expenditure," said Pronab Sen, chairman, National Statistical Commission. Agriculture sector expanded only by 0.8% in 2009-10. Also, rural wages have risen faster than urban wages, due to NREGA, Sen added. More people moving out of agriculture may also be a factor in the depleting poverty in rural areas, Amitabh Kundu, economics professor, JNU suggested. Share of population engaged in agriculture came down to 49% in 2011-12. In rural areas, 59% of the men were engaged in agriculture as against 63% in 2009-10. The share in secondary activities like manufacturing went up to 22% instead of 19% among rural men. Similar was the case with rural women. The cumulative effect was that overall wages rose by 29% in rural areas between 2009-10 and 2011-12 against 23% in urban areas. The reduction in poverty also explains the reduction in share of expenditure on food and a similar rise in non-food expenditure. The share of expenditure on food declined substantially from 53.6% to 48.6% in rural areas and from 40.7% to 38.5% in the urban areas. "In 2011-12, rural demand was very robust, which saw many corporates draw up strategies for the rural areas to tap that growing demand," said Soumya Kanti Ghosh, chief economic adviser, State Bank of IndiaBSE -2.73 %. Despite the drastic fall in poverty in rural areas, still the average urban monthly per capital expenditure was 84% higher than average rural MPCE for 2011-12. And income disparities in rural areas have risen. The expenditure of the top 10% in rural areas was 6 times that of the bottom 10%, higher than 2009-10, when the expenditure of the top-most decile was only 5.5 times that of the bottom-most decile. In absolute numbers, according to the latest estimates, there were about 260 million poor in India in 2011-12, down from about 290 million in 2009-10. But the number of poor could rise as the Tendulkar Committeepoverty line has come under criticism for being too low at 28 a day for urban areas and 22 a day for rural areas. A panel chaired by C Rangarajan has been asked to review the poverty line. Even if the poverty line is set higher, in relative terms there will be a decline in these years because of the rise in incomes. 16. Boost exports, investment to arrest fall of rupee The Indian rupees slide to a record low against the dollar exposes the deteriorating fundamentals on the current account side of Indias external transactions, Regardless of whether loose monetary policies by western central banks are ending or not, India cannot depend on them to run an unsustainably high current account deficit. Since recent steps to curb gold imports have failed and there is little scope for easing subsidies on petroleum products in an election year, the only way out for the government is to boost exports and investments. The government should immediately implement the recent recommendation of the RBI technical committee to include exportcredit under the Priority Sector Lending and take steps to diversify trade towards emerging markets. It should also try to finance the current account deficit through capital inflows. As the experience in retail and civil aviation shows, mere easing of caps on foreign direct investment will not help. It should be accompanied by simplifying the procedures and regulation that complicate doing business with India for foreign investors. There is a dire need to expand Indias export pie, too. It has made progress in information technology and generic pharmaceutical exports, apart from its traditional gems and jewellery, natural fibres and garment sectors. But its share of merchandise export in global trade is still below 2 per cent. Export of auto and auto components is on the rise and with supportive policy initiatives, India could emerge as a regional hub for sourcing components for global automakers by utilising its vast engineering

talent pool. Government policy towards enhancing trade with partner countries and establishing new ties with developing nations in Asia, Africa and Latin America will also help promote exports. Clearly, there is much to do to bridge the current account deficit. The search for alternatives to oil must be speeded up and there should be no let-up inefforts to curb gold purchase.
CURRENT AFFAIRS (25.06.2013)

1. India assures U.S. share of nuclear pie India and the U.S. on Monday agreed to set a timeline for operationalising the civil nuclear agreement. The Fourth Strategic Dialogue co-chaired by U.S. Secretary of State John Kerry and External Affairs Minister Salman Khurshid here reviewed several issues ranging from the status of civil nuclear ties between the two countries through defence trade to education and cultural exchanges through some 30 bilateral panels. The two ministers felt further highlevel meetings should be held to achieve convergence and progress, especially in strategic issues. An example of such meetings will be the visit of U.S. Vice President Joe Biden scheduled for mid-July. At the press conference, Mr. Kerry almost let slip Americas chagrin at not having tasted the fruits of the India-U.S. civil nuclear agreement by drawing attention to the enormous domestic political capital invested by Democrats and Republicans to ensure New Delhi was given a special exemption by the Nuclear Suppliers Group (NSG). The Kerry-Khurshid meeting set September as a possible timeline for resolving two issues that have thwarted Westinghouse from setting up six reactors in Gujarat. Another company GE will set up an equal number in Andhra Pradesh but its reactor design has not yet been cleared by the U.S. nuclear regulator. India had promised these multi-billion bonanzas in exchange for supporting its case at the NSG and the International Atomic Energy Agency. While Washington was able to make India agree on a deadline for clearing Westinghouses mega civil energy project, India was handed an assurance for importing shale gas from the U.S., which is likely to accrue by 2016-17. The U.S. also continued to press India on adopting clean energy technologies. Of the large number of joint fact sheets released on every conceivable subject discussed by the two sides, the one on this was the most comprehensive. On Sunday, Mr. Kerry spent nearly half of his 45-minute lecture in convincing India to adopt clean technologies. Apart from Afghanistan, another sore issue was cyber-snooping by American intelligence agencies. Officials had earlier expressed concern over double standards followed by Internet companies denying India access to emails while happily opening their vaults to U.S. intelligence agencies. But Mr. Khurshid sought to play down the controversy, even telling a correspondent that concern was not the right word to use. Mr. Kerry told newspersons that notwithstanding vigorous American efforts to arrest the whistleblower, access by its intelligence agencies to emails and other electronic messaging was meant to track patterns and not to read the content. Differing viewpoints on Iran cropped up during the press meet. Mr. Kerry was strident on Irans refusal to fall in line with the Wests intentions and lauded India for being very cooperative in holding them [Iran] accountable for proliferation. He hoped New Delhi would step in to convince the new leadership in Tehran to fall in line with the West. Mr. Khurshid, recently back from Tehran, maintained that India greatly valued its relationship with Iran and would prefer to judge and test the intentions of the new leadership before considering such a plunge. Unhappy with compensation India did not raise the killing of one fisherman and the injuries caused to two others by a U.S. warship off the coast of Abu Dhabi in July last year. In the past, India had expressed dissatisfaction with the paltry compensation given to the injured as well as with a heavily crossed out U.S. Navy probe report which put the blame on the three Tamil fishermen.

2. TRAI harder on roaming While a step in the right direction, the Telecom Regulatory Authority of Indias move last week to reduce and reorganise national roaming charges fails to go the full distance. The telecom regulator has reduced the ceiling for outgoing voice charges for a roaming subscriber from Rs.1.40 to Re.1.00 per minute for local calls and from Rs.2.40 to Rs.1.50 per minute for STD calls. Similarly, ceiling tariffs for incoming calls for a roaming user have been cut from Rs.1.75 to 75 paise per minute. Since this is a cap, operators are free to charge less. In reality, though, they are unlikely to do so. While Telecom Minister Kapil Sibal and the National Telecom Policy 2012 had both spoken of removing the roaming charge, TRAI decided abolition was not feasible. For telecom operators, roaming costs have fallen from what they used to be but have not vanished. If roaming charges become free for subscribers, operators will not be able to recover costs from the roughly 13 per cent of the 860 million subscribers who roam nationally. To recover an approximately Rs.13,000 crore revenue loss on account of free roaming, they would be forced to hike call rates for the 600 million-odd, non-roamers. In nearly all cases, this would mean the poor subsidising the rich, which is hardly fair. Moreover, TRAI has retained the element of choice. Operators have been mandated to offer special plans where heavy roamers can avail of free national roaming for an additional fixed charge. The problem begins when TRAI approaches data specifically SMSs with a mindset trapped in voice telephony-related network costs. While keeping incoming SMSs free, the regulator has dispensed with its forbearance policy and placed a ceiling for outgoing local SMS at Re.1.00 and STD SMS at Rs.1.50/SMS. This will certainly slow down the roaming SMS gravy train, which had allowed service providers to take unsuspecting roaming users for a ride. What doesnt add up is the fact that the cost of sending an SMS, including the cost of storage and forwarding facility, is a fraction of a voice call. An SMS does not use voice channels, unlike speech, and costs just a few paise to send. The new SMS tariffs are also inconsistent with the recent reduction in 2G data tariffs by operators. TRAIs press release and accompanying documentation fail to explain this anomaly. Consumers ought to pay much less than what TRAI has recommended. Even where local SMSs are concerned, the termination charge regime being pursued by operators makes the price exorbitant. TRAI would be well advised to review its data-related techno-economic process to acknowledge the importance and convenience of SMSs in todays times. 3. The untold story from Uttarakhand It is one week since Uttarakhands worst disaster in living memory. Flash floods resulting from extremely intense rainfall swept away mountainsides, villages and towns, thousands of people, animals, agricultural fields, irrigation canals, domestic watersources, dams, roads, bridges, and buildings anything that stood in the way. A week later, media attention remains riveted on the efforts to rescue tens of thousands of pilgrims and tourists visiting the shrines in the uppermost reaches of Uttarakhands sacred rivers. But the deluge spread far beyond the Char Dhams Yamunotri, Gangotri, Kedarnath and Badrinath to cover the entire State. The catchments of many smaller rivers also witnessed flash floods but the media has yet to report on the destruction there. Eyewitness accounts being gathered by official agencies and voluntary organisations have reported devastation from more than 200 villages so far and more affected villages are being reported every day. Villagers whose homes, lands and animals have been swept away by the floods are in a state of shock trying to imagine dayto-day survival without their basic livelihood assets. Distorted coverage The national medias focus on the plight of tourists has grossly distorted the true nature of t he tragedy even in the Char Dham area. It has not reported on the fate of the thousands almost all male who come from the villages in these valleys (and elsewhere) to earn a

major part of their families annual income on the yatra routes during the tourist season. They help run the dhabas that line the entire 14 km trek route from GauriKund to Kedarnath; they sell raincoats, umbrellas, canes, walking sticks, soft drinks, water bottles, home-made snacks and other supplies. On their backs, they carry children, the old, the infirm and tourists who are simply unfit and out of shape to walk the entire route. They run along the path with their ponies or horses carrying yatris. Local residents tell of village after village in the Mandakini valley below Kedarnath resounding with wails from homes whose boys and men have not yet returned and are now feared dead. One village near Guptkashi alone counts 78 missing. The tragedy of the families dependent on religious tourism for much of their annual income is compounded by the fact that the yatra season is over for the year, and is unlikely to resume even next year given the destruction of the roads and bridges in the upper reaches. Several thousand Char Dham valley families will now fall below the poverty line. Till the revival of the yatras, what will be the alternative sources of employment for the newly unemployed? Most likely we will see increased male outmigration from the region. Last weeks disaster not only spelt doom for thousands of household economies but also dealt a grievous blow to Uttarakhands lucrative religious tourismindustry. With the media focus almost exclusively on the fate of pilgrims, the scenes of the deluge and its aftermath will linger on in public memory, making the revival of tourism doubtful in the foreseeable future. The abject failure of the State government, political leaders and the administration is therefore likely to impoverish the State cofferstoo. The scale of participation in the kaanwar festival that starts in July when about a million people throng to the banks of the Ganga at Hardwar over a couple of weeks and take back Gangajal to their homes will be revealing. The pressure on the State government will continue through September when the Nanda Devi Raj Jaat (yatra), a oncein-12-years event, is scheduled. A detailed discussion on the future of Uttarakhands tourism industry is not possible here but it is clear that it requires a radical overhaul. With the ineptness of the State government now fully exposed, new policies for the revival of tourism in Uttarakhand must follow an open debate. Not a freak incident The impact of the floods on Uttarakhands tourism leads to larger questions of what kind of development Himalayan States should pursue. Before delving into that, it is important to understand the nature of the rainfall that deluged the State. Already several voices are arguing that the deluge is a random, freak event. Odishas super cyclone in 1999, torrential rains in Mumbai in 2005, and now the Uttarakhand downpour constitute three clear weather related events in less than 15 years, each causing massive destruction or dislocation in India. These can hardly be called freak events. Several reports from the Intergovernmental Panel on Climate Change (IPCC) have repeatedly warned that extreme weather incidents will become more frequent with global warming. We are already riding the global warming curve. We will have to take into account the likelihood of more frequent extreme weather events when planning for development, especially in the fragile Himalayan region where crumbling mountains become murderous. In the 1990s, when the demand for a separate State gained momentum, at conferences, meetings, workshops and seminars, Uttarakhandi people repeatedly described the special character of the region. Consciousness created by the pioneering Chipko Andolan raised the hopes of village women that their new State would pursue a green development path, where denuded slopes would be reforested, where fuel wood and fodder would be plentiful in their own village forests, where community ownership of these forests would provide their men with forest products-based employment near their villages instead of forcing them to migrate to the plains, where afforestation and watershed development would revive their dry springs and dying rain-fed rivers, and where the scourge of drunken, violent men would

be overcome. Year after year in cities, towns and villages they led demonstrations demanding a mountain state of their own. Theirs was a vision of development that would first enhance the human, social and natural capital of the State. Recalling the tremendous worldwide impact of the Chipko movement, Uttarakhandi women dreamed of setting yet another example for the world of what people-centric development could look like. But in the 13 years after statehood, the leadership of the State has succumbed to the conventional model of development with its familiar and single-minded goal of creating monetary wealth. With utter disregard for the States mountain character and its delicate ecosystems, successive governments have blindly pushed roads, dams, tunnels, bridges and unsafe buildings even in the most fragile regions. In the process, denuded mountains have remained deforested, roads designed to minimise expenditure rather than enhance safety have endangered human lives, tunnels blasted into mountainsides have further weakened the fragile slopes and dried up springs, ill-conceived hydropower projects have destroyed rivers and their ecosystems, and hotels and land developers have encroached on river banks. Yes, wealth has been generated but the beneficiaries are very few mainly in the towns and cities of the southern terai plains and valleys where production investments have concentrated. In the mountain villages, agricultural production has shrivelled, women still trudge the mountain slopes in search of fodder, fuel wood and water, and entire families wait longingly for an opportunity to escape to the plains. Last weeks floods have sounded an alarm bell. To pursue development without concern for the fragile Himalayan environment is to invite disaster. Eco-sensitive development may mean a slower monetary growth rate but a more sustainable and equitable one. While the focus is on pilgrims, nobody is talking about the fate of boys and men who came from their villages in the Mandakini valley to earn during the yatri season 4. Not that Great being an Indian Bustard Have you seen the Big Five? Thats the question you will invariably be asked if you visit the East African states. The Big Five, Africas largest, and thus most prominent, mammals the lion, the rhino, the leopard, the buffalo and the elephant have dominated camp fire stories, tourist expectations and the growth of conservation. Across the world, big animals have a lure that is unmatched they inspire knee-knocking fear, awe and wonder. The Galapagos tortoise, weighing over 400 kilograms, is also called the Galapagos giant, the Indian Rhino is also called the Great Indian Rhino, and the elephant is often called the gentle giant. In India, much like in Africa, we share habitat with a range of veritable giants: the tiger, the largest of all big cats; the lion, also called the king of the jungle; and the brown and black bears, possibly the largest of all carnivores in this country. Yet, one giant has missed out, even though its very name gives away both its endemism as well as its size: the Great Indian Bustard. Rajasthans lead Found only in India and Pakistan, the sole viable range and population of the Great Indian Bustard is now in India. Here too, the bird, which weighs between 18-20 kilograms and the size of a terrier, has lost more than 90 per cent of its habitat, and is down to a miniscule population of 200 individuals. Thus, it is possibly one of the most critical of all critically endangered bird species in India. Last year, the Ministry of Environment and Forests issued guidelines to start a Centrally sponsored plan called Project Bustard in the bustard range States a much delayed clarion call for three neglected types of bustards, of which the Great Indian Bustard is numerically the closest to extinction. On the lines of Project Tiger and Project Elephant, other Great Indian Bustard States such as Rajasthan, Karnataka, Andhra Pradesh, Madhya Pradesh, Gujarat and Maharashtra have been invited to submit species recovery plans to the Centre to avail of funding and start long-term conservation programmes. Last month, the Supreme Court called for the operationalisation of the National Wildlife Action Plan and specifically directed the Government of India and the

Union Environment Ministry towards starting species recovery plans for the bird. This month, on World Environment Day, Rajasthan became the first State to declare Project Great Indian Bustard. This is the first time that the west Indian State has announced a landscape plan for its State bird. While we need more range States to actively pursue Project Bustard, we will have to move away from traditional approaches to Centrally sponsored conservation schemes and look at a truly unorthodox protection regime for this unorthodox bird. Ecological and social niche The Great Indian Bustard is one of the heaviest flying birds on earth. With its head turned up at a characteristic 45 angle, it gives out a deep hoom call, which can be a heard up to a kilometre away. Its local names, Godawan and hoom, are derived from this booming call, an indication of the way its presence has built up in local consciousness. In the 1960s, ornithologist Salim Ali proposed that to focus interest and solicitude on a bird that represented the country, the bird should be chosen as the national bird. Despite this consideration and its prominent size, it has since been relegated to complete neglect, perhaps because of the habitat it lives in: semi-arid grasslands, which to untrained government eyes, is an epithet for a wasteland. The only habitat protection law that India has is the Forest Conservation Act (1980). And therefore the question is: are grasslands forests? Biologists argue that grasslands should be legally considered as forests, for the purpose of conservation of both the habitat and the unique assemblages of species they hold. The only species that went extinct in independent India was the Cheetah, also a grassland species. In its report of the Task Force for Grasslands and Deserts, the Planning Commission notes that species closest to extermination are grassland species, found in dry, wet and high altitude grasslands, such as the lesser florican, the pygmy hog, the Bengal florican and the Nilgiri Tahr. Forest management has led zealous forest departments, trained to raise forests and nothing else, towards burning grasses, ploughing soil, and planting trees where grasslands once swayed. The Great Indian Bustard, with most of its habitat range lost, today poses one of the most pressing challenges to conservation design and management. Despite being such a huge bird, it is a cryptic giant. It converges before the monsoon at sites where it displays for breeding, enlarging its neck and moustaches. But where it goes in the non-breeding season is a mystery. With the display season now on, Gujarat, for the first time, has granted permission to the Wildlife Institute of India and others to satellite track the Great Indian Bustard (in the way tigers have been tracked before) to understand its foraging and dispersing ecology. Conserving this bird will mean both legal protection of breeding and display areas, and joining hands with communities over a large, legally unprotected landscape where the Bustard disappears to. Herein is the biggest challenge to help create ownership towards the last few individuals of this wandering, vagrant bird, the very last evolutionary dregs of a species whose habitat is now an anachronism. It will, in effect, mean creating a vibrant social niche among people, for a bird which is near forgotten. Community-driven Where semi-arid grasslands are not available, the Great Indian Bustard is found in pseudograsslands traditional cropping areas of traditional crops, such as millets and sorghum. Here, it has also been found to nest. If arid and semi-arid grasslands both natural as well as pseudo can escape land-use change, the other pressing concern is to allow some areas to retain their traditional Great Indian Bustard friendly crops. Instead of a strictly protectionist or legally-enforced approach, we will need a management approach, most of which will have to be self-enforced by communities. Conservation planning will have to involve new players, like district commissioners, the revenue department, agricultural officers and gram sabhas . All of them have to be roped in to identify and protect revenue and private lands that bustards forage on, and to encourage natural agro-biodiversity. If we can save the Great Indian Bustard from extinction, it will mean a triumph against the fatal end, but also a template for

facing the typical problems of contemporary conservation today: working with whatever habitat we have left, using principles of restoration ecology to safeguard ecological baselines, and creating reconciliation with dense human communities who hold rights to these areas and are a reality in wildlife conservation today. Unorthodox models of conservation are needed to save this elusive and magnificent big bird 5. India likely to offer power to Bangladesh from ONGC Tripura Bangladesh has long been demanding a share of the electricity from OTPCs gas-based facility at Palatana, and in return it is willing to allow India transport heavy power gears through its territories to the land-locked State of Tripura. Bangladeshs demand has strong support of Tripura Chief Minister Manik Sarkar. OTPC promoted by ONGC, IL&FS and Tripura Government is also in favour of the proposal. It has been proposed that electricity can be traded through Monarchak, which is approximately 20 km from Palatana and only 4 km from Comilla in Bangladesh. Though this issue figured in the initial talks between the two countries, the proposal was later put on the back burner as India preferred to supply up to 500 MW electricity, through the West Bengal border. Of this, 250 MW will be sourced from NTPC Ltd at a regulated tariff. Bangladesh can procure an additional 250 MW from the open market. Both the countries are scheduled to implement a common grid through Bherama in Murshidabaddistrict in West Bengal by July. A sore point Though NTPCs coal-based generation should be cheaper for Bangladesh, Dhaka wasunhappy about the non-availability of power from OTPC. The reasons are not difficult to fathom. The North Eastern part of Bangladesh, bordering Tripura, suffers from an acute power crisis. Cross-border power sales through West Bengal cannot meet this demand due to inadequate grid network in Bangladesh. Moreover, the transhipment of power gears (from Ashugunj port in Bangladesh to Palatana in Tripura) required changein road alignment leading to land acquisition and displacement of people in Bangladesh. The political leadership in Dhaka obtained public cooperation by promising them electricity from OTPC. Tripura demand Given the failure on the Teesta water accord, any volte-face by the Indian Government on OTPC is bound cost the Sheikh Hasina Government dearly in an election year. Tripura Chief Minister Manik Sarkar agrees with Dhakas stand. We dont understand why its not happening. Bangladesh extended unstinted support in making OTPC a reality. Now they want to buy a part of the power from the project. Since we already have a power sales agreement with Dhaka, there shouldnt be any hindrance in allowing this, he said. Tripura made a strong representation to President Pranab Mukherjee in this regard during his two-day visit to Agartala recently. I am going to write to the Prime Minister soon, Sarkar tol d Business Line. The exemplary support of Bangladesh in implementing OTPC and the need to strengthen the Indo-Bangladesh cooperation received appreciation from the President during the inauguration of the project on June 21. The announcement to sell electricity through Tripura may be round the corner, said a source. According to him, the opposition from West Bengal Chief Minister Mamata Banerjee on Teesta water had embarrassed the Union Government. It was high time India did something to lift the spirit of bilateral relationship, he said. 6. Changing pattern of food inflation Food inflation has been a continuing theme in India for the past decade, and its persistence almost without any remission over the entire period of the two UPA Governments suggests that it has proved to be relatively intractable at least for Indian policy makers to address. Chart 1, which shows the monthly movements of theWholesale Price Index (WPI) for all commodities as well as for food, indicates that particularly for UPA-2 food inflation has significantly outstripped the increases in the general price level. It is also evident that the

gap has actually grown in the recent past, in particular in the past four years of UPA-2. The other feature of significance that is apparent from Chart 1 is the divergent behaviour of the aggregate food price index compared with the price index for only foodgrains. Before the middle of 2010,foodgrain prices were moving upwards faster than other food items. Thereafter, while grain prices have been rising, the composite food price index has gone up even more, suggesting that non-grain food items have become the significant drivers of food price rise. Policy failure It has been commonplace for Indian policy makers to blame global trends for thedomestic food price increases. This is problematic for several reasons. First, despite the more open trade in agricultural products forced upon India by the WTO regime, it is still possible to insulate domestic consumers from the full impact of global price increases and market volatility. A number of other countries (including China but also other smaller economies) have done so more effectively than India. Second, it is bizarre to talk of global prices for essential commodities such as food and fuel in India when per capita income is still so much lower than the global average and when the majority of Indian residents operate at levels of monetary income that would be considered extreme destitution in most other countries. To that extent, the increasingly close correspondence between Indian and global food prices is not just a reflection of globalisation: it is a sign of domestic policy failure, even in the increasingly integrated economy. Chart 2 shows that the recent trajectory of Indian food prices has been unremittingly upwards, even beyond the movement of global prices. The index (with May 2005=100) shows that while Indian food prices avoided the extreme spike exhibited by global prices in 2007-08, they did increase quite significantly even then. What is more, they did not fall as global prices fell rather their levels exceeded the global index by a substantial margin until the next global price spike of early 2011. Thereafter, while global prices fell from their peak, the Indian food price index has continued to rise. However, this has not been mostly because of cereal prices, which was much more the case earlier. Indeed, Chart 3 suggests that the Indian economy has avoided the worst effects of the global price spikes in cereals, largely because of the domination of domestic production in consumption and the role played by the public procurement and distribution system for major foodgrains such as rice and wheat. At a time when this system is being sought to be undermined (including through proposals to substitute it with a system of cash transfers) it is important to recognise this crucial role. There are clearly major weaknesses in the system, as will be noted below, but without this in place it is likely that Indian consumers would have suffered even more by being exposed to the massive volatility in global prices. demand-supply imbalance The relative significance of foodgrain and non-foodgrain elements of the food price index in driving food inflation and general inflation becomes more evident from Chart 4, which describes movements in the price indices during UPA-1 (May 2004 to April 2009) and UPA2 (May 2009 to May 2013). During UPA-1, the increase in foodgrain prices (by around 53 per cent) was more than double the increase in the general price level, and also much higher than the general food index. But during UPA-2 thus far, food grain prices have moved along with the general price index, while the composite food index has moved much faster, rising by nearly 60 per cent in just four years. The major elements of this are fruits and vegetables, sugar, milk, eggs, meat and fish, and edible oils, as indicated in Chart 5. In the four years of UPA-2, prices of fruits and vegetables and milk have gone up by close to 60 per cent, while prices of eggs, meat and fish have more than doubled. This indicates that the nature of food price inflation has changed to some extent. While foodgrain prices continue to increase, that increase has tapered to some extent such that it is now the same as the general inflation (which does not mean that it is less of a problem for the poor, as will be evident below).

However, the other elements of a balanced diet have soared in price, becoming unaffordable for many poor consumers. Obviously, the factors behind this rapid price increase in non-grain food items need to be studied in more detail. The growing demand-supply imbalance in such items as well as the continuing problems of Indias livestock economy as well as rising prices of fodder that must be purchased in the market may be among the factors. Little done to revive PDS Meanwhile, however, the increase in foodgrain prices is also not something that can be ignored by policy makers, especially in a country with such terrible overall nutrition indicators. In the past four years of the UPA-2 Government, prices of both cereals and pulses have increased by nearly 40 per cent still very high rates for a dominantly poor country. (It is worth noting that lower increases of food inflation have been associated with increased public disaffection and widespread protests in countries at much higher levels of per capita incomes, such as Brazil.) Further, in the first few months of 2013, cereal prices have started rising faster than other food prices once again, suggesting that this may become an important concern very quickly. While the Central government has been anxious to score political points by belatedly trying to pass a flawed Food Security Bill that has been pending for years, it has done very little to revive the Public Distribution System and ensure that it is more effective in its functioning. This is in stark contrast to some State governments that have already shown that it is possible to have an effective system of public procurement and distribution of foodgrain and even other food items (such as Tamil Nadu and Kerala) and others that have recently expanded and reformed their systems (such as Chhattisgarh and Orissa). Instead, the Central governments handling of exports and imports as well as of food stocks in the central pool has been such that it may well have contributed to the domestic price rise in foodgrains. This is certainly suggested from Table 1 which shows that net exports of foodgrain were large and even growing during periods of particularly rapid foodgrain price increase. Further, the increase in central stockholding in a period of rising prices, and with inadequate storage facilities that allow the grains to rot and become unfit for human consumption, has prevented their being transferred even to those State governments that are clearly interested in making this system more effective. In the case of pulses, production has remained low relative to Indias requirements, making India the largest importer of pulses in the world, whose imports clearly drive up global prices, and still leave net domestic availability low relative to the real needs of the population. This is doubly important as pulses remain the most important source of protein for most households in the country. These processes may be why per capita net availability of both cereals and pulses remains low relative to that achieved several decades ago (Chart 6). Indeed, recent trends have not been sufficient to bring this back to levels that were experienced in the early 1990s in the case of cereals. The UPA Governments management of the food economy may yet prove to be its political Achilles heel. But a more serious consideration of the strategies to ensure food and nutrition security to the entire population is not just about politics: it is an essential plank of any viable development strategy. 7. Had we Chipkoed to his warnings Watching with horror the devastation in Garhwal Himalayas and the fury of the swollenMandakini destroying almost everything in the Rudraprayag region, except the ancient Kedarnath temple said to have been built by the Pandavas, some extremely powerful images flooded the memory. The first one brought with it the magical sound of temple bells summoning us for the morning and evening aarti at the Kedarnath shrine dedicated to Lord Shiva. It was 1987 and this was my first introduction to the magic of Garhwal Himalayas. We were two couples and my six-year-old son also accompanied us, leading to surprised exclamations from western trekkers we encountered on the way to Kedarnath. Our

accommodation was in a modest lodge near the temple, and manyyatris we spoke to were amazed that this Muslim group was visiting one of Hinduisms holiest of temples. But their biggest surprise came when the Muslim child joined the pujari in reciting the sloka Sakthi saiva Ganapatam, Sankara vishevitham. A student of the Krishnamurthy Foundation of India school in Chennai, this sloka was part of his school Assembly every morning. Ill never ever forget that brilliant starlit night in Gaurikund, before beginning the trek to Kedarnath... Id love to claim I had trekked, but I didnt. The men did; t he women and the child took mules. Landslides galore The intoxication of the Garhwal Himalayas, then a part of Uttar Pradesh, was such that the very next year, the same group, with our friends 12-year-old daughter, made a trip to Gangotri. From there, we made our way to Bhojbasa where we had booked two rooms at the Garhwal Mandal Vikas Nigam, the UP Tourism facility. The next morning was scheduled the 4 km trek to Gaumukh, the source of the Ganga. But that night it rained heavily; there were landslides at several points and, as the boulders kept falling, Gaumukh was declared danger zone. With landslides affecting and closing crucial parts of the 14-km trekking route from Gangotri to Bhojbasa, tourists like us and thousands of yatris were stranded at Bhojbasa. ts been 25 years, but I vividly remember the bearded, tall and lanky manager of the rest house, who went beyond the call of duty to help the stranded yatris. He vacated his room to accommodate about 20 people, and requested us to vacate one room so that he could offer shelter to another 20. We willingly complied, even six in a room was a luxury under the circumstances. Perhaps those were different times. Today, Twitter debates if Rs 200-500 for roti-dhal is the just price or not in a region where thousands of desperate people are trapped. Isnt the price decided by the market, asked one worthy. But in 1988, the manager threw open his kitchen and aloo parathas were served to all the stranded people at the usual price or even free. We were stranded for four nights; power went on the first night, but every morning the manager brought hot water buckets to our room every morning. Bahugunas warnings Our trips to the Himalayas continued the Valley of Flowers after a few years, Badrinath in 2004 and Gangotri revisited in 2007. The pristine region has given millions of Indians like us such great joy. But through these visit and over a quarter of a century, the voice and warnings of Sunderlal Bahuguna, environment warrior and the Chipko movement leader, who I had met as a cub reporter in the late 1970s, kept reverberating. I regularly reported the deep concern he expressed over the systematic destruction of the fragile Garhwal region that was being allowed by the Government. His Chipko movement the villagers would cling to the trees earmarked for axing by the timer merchants hand in glove with the government fought against the destruction of green cover on our mountains. He later battled for long against the construction of the Tehri dam. His constant warning was that such dams impede the flow of rivers and can cause huge catastrophes in the fragile Uttarakhand mountains. On his rare visits to Madras, Id get educated on the havoc deforestation and damning of rivers would cause to the region. In 1981, he politely refused a Padmashri, saying: I do not deserve it till the flesh and blood (top soil) of India was flowing down to the sea. Later, as he went on repeated hunger strikes to stop the Tehri dam construction, he was even called an environmental terrorist. On our first trip to Garhwal (Kedarnath), I was delighted when at Tehri he boarded our bus. In the early 90s when I was invited for a panel discussion at an environment conference in Delhi and saw Bahuguna listed as a keynote speaker, I called him all excited, to say we would be meet soon. His chilling reply: I declined that invitation; the meeting is in a five star hotel and such hotels are the shamshan ghat (crematorium) of green trees. They are built after destroying hundreds of trees. Today at 86, Bahuguna is a frail man, and was

hospitalised this April for a breathing problem. But his words and warnings ring true; of course they werent heeded as the nexus between the timber and mining lobbies continued through different governments. Even last week, if the alert official machinery had acted in time by closing the route once torrential rains started, or beginning rescue operations much earlier, hundreds of lives could have been saved. As the Kedarnath temple looms tall and isolatory amidst the massive ruin and destruction, mere mortals can only wonder at its survival. Either the engineering and building technology were far superior over a thousand years ago, or the huge boulder that fell bang behind the temple bore the brunt of the gushing torrent and protected the shrine, or there was something in that stone structure that no disaster could destroy. Pick the explanation that suits you. But the rest of the temple complex has been destroyed and will have to be rebuilt. Gujarat Chief Minister Narendra Modi has said Gujarat has the experience of the 2001 massive earthquake and has volunteered to rebuild it. The Congress Chief Minister of Uttarakhand says even before Modi, the Maharashtra Chief Minister and industrialists in Mumbai had offered to do so. Politics will surely be played on this issue too. But the best way to do so will be by allowing millions, like this writer, who have been soothed by the Kedar deity over long years, to participate in that rebuilding. Keeping in mind, of course, the warnings of environmentalists like Bahuguna its time to end the looting and plundering in a vulnerable, fragile and priceless region like the Himalayas. The sowbhagyavati pooja done on my bangles in a tiny shrine near Gaurikund remains a sanctimonious moment in my life. 8. Pooling tariffs Govt must review the proposal to bail out power plants Last week, the Cabinet Committee on Economic Affairs (CCEA) stepped in to address the question of coal pricing for power plants. Finance Minister P Chidambaram, announcing the CCEA's decision, said that "we have advised the electricity regulator[Central Electricity Regulatory Commission] to allow the increased cost of imported coal as a pass-through on a case-to-case basis, to ensure power investments remain viable". Essentially, this was a bailout for power producers, who found that the cost of running their plants had gone up because of a spike in the price of imported coal. The decision would also help such producers to earn a tidy profit - at the cost of the consumers of electricity. By some estimates, Rs 10,500 crore would have to be passed on to end-users of power, raising prices by perhaps 25 paise a unit. The CCEA, according to Mr Chidambaram, was forced into the decision because "costly power is better than no power". About 78,000 megawatts of capacity that was due to go on stream by mid-2015 will benefit from this decision. The government is right that this was a problem that needed to be addressed; the capacity built up in the power sector should not be allowed to lie idle because the concessionaires would make a loss if they ran their plants. The loss in generation if these projects do not start producing power is too much in a powerstarved country. But it is far from certain that this is the right step to take. After all, in essence this allows those who bid for power plants less responsibly, by not taking into account the possible fluctuation in coal price and supply, to evade the consequences of that decision. In other words, it once again makes a mockery of the original bidding process. Consider the possibility that onecompany bid for a plant with a fixed tariff, whereas another bid with a variable one. If the former won over the latter, it should not now expect a variable tariff. The decision is all the more puzzling because the government has correctly rejected the demand to "pool" prices of domestic and imported coal, which would have penalised those with fuel-supply agreements for domestic coal, making them pay extra to cover the costs of those dependent on imported coal. The government may have avoided pooling of costs - but is allowing tariffs to go up as a solution any better? For that is, essentially, what the government is proposing the electricity regulator should permit. While more expensive power

is better than no power, the companies that bid for the projects should not be permitted a free ride in this manner. Instead of a complete pass-through, they should be forced to bear some of the burden, and given a much lower return on their investment - a less-than-full pass-through. There is also no explanation as to what happens if and when coal gets cheaper. Does the decision cover that reverse eventuality? The government has too often run into trouble for favouring private sector partners at the cost of those the projects are intended to serve. This decision seems to fit in with that mentality, and should be reconsidered. 9. Create more jobs in manufacturing sector The findings of the 68th Round Survey by the National Sample Survey Office released last week reveal a disquieting aspect of the Indian economy. Despite creation of 14 million jobs in two years, the unemployment rate per 1,000 people has gone up by 2 per cent in rural areas and 3 per cent in urban areas. Also for the first time, the overall employment in the farm sector, which accounts for about a quarter of GDP growth, fell from 50 to 49 per cent, while manufacturing and services made up 24 and 27 per cent of the workforce, respectively. This calls for a radical shift in Indias development paradigm. The government must prioritise employment as a key driver of its growth strategy as higher economic growth by itself does not create more jobs. An honest recognition of a need for course correction is a must. That the proportion of the workforce living off agriculture has fallen below half, for the first time, may be welcome as a pointer of the economys structural diversification. But the government must ensure that the people moving out of low-value agriculture and under-employment are employed in the manufacturing sector. For this, it has to adopt a policy that increases manufacturing activity and raises the sectors share in GDP and, simultaneouslyupgrades the skills of the workforce released from agriculture to perform high value jobs. The revelation in the report that an estimated 10.8 million youth are unemployed in India as of January 2012 and that unemployment has risen by 10 per cent in the last two years shows an acute failure of our model of development. There is little point in tom-tomming about a high growth rate when the benefits of development are not reaching a sizeable section of the populace. It would be wrong for the government to cover up its failings and to project an artificially rosy picture to the gullible masses. There is indeed no escape from a conscious effort to boost manufacturing activity. 10. India talks tough at strategic meet Shedding its soft approach, India on Monday sent out a tough message to the US at the fourth round of the Indo-US strategic dialogue here, flagging its major concerns overAmerican onthe-sly online snooping, the unilateral offer of talks with the Taliban in Afghanistan and the protectionist immigration measures that curtail the work permits to Indian IT professionals. With the bilateral ties seemingly on auto-pilot mode, US Secretary of State John F Kerry met Union External Affairs Minister Salman Khurshid on Monday morning and held four hourlong discussions hoping to put some momentum in the ties. On a day when former CIA technical worker and whistle-blower Edward Snowden -- who revealed a massive internet snooping programme devised by the US National Security Agency -- remained in Russia, Khurshid said there was a meaningful discussion on the subject. But giving the benefit of doubt to the Americans, he said it was important to note to get access to the contents of communication is one thing and being able to study by way of computer software patterns of communications by e-mails and telephone calls is another thing. He echoed US President Barack Obama by saying that due to this programme, terrorist strikes were foiled because of some of the work they have been able to do. Now, the issue of privacy and issues of reciprocity are all that we will keep in mind and these are matters that engage our attention on both sides and we are constantly in touch and if there is any need for things to be brought to notice on either side, it will be done, said Khurshid. Expectedly, Kerry strongly defended the programme asserting that there was an

enormous amount of misinformation about the programme after it came into the public domain through the information leaked out by Snowden to The Guardian and The Washington Post. The Secretary of State claimed that only after adequate linkages were found between different numbers, then the case went to a special court where the judge allowed the content to be examined only after scrutiny. He asserted that all evidence has shown from our FBI, from our intelligence community that we have avoided terrorist attacks and saved lives. Meanwhile, the other thorny subject on which India and the US do not see eye-to-eye, the new Afghan reconciliation process which began with opening of the Taliban political office in the Qatari capital Doha, was also discussed with Kerry. With the observers here deeply worried about role of the Taliban and Haqqani network (HQN), which had targeted the Indian embassy in Kabul, Kerry pre-empted the fears by asserting that the Indian concerns will not be overlooked. Meanwhile, US Vice-President Joe Biden will be arriving on a state visit to India by July-end. And this was announced by Kerry after the latest round of the strategic dialogue drew to a close. I am very pleased to announce that in furtherance of this dialogue and in an effort to keep the high-level that we think this relationship deserves that Biden will be visiting India in late July, he said. 11. Act tough to combat revival of militancy A day ahead of prime minister Manmohan Singhs visit to Jammu and Kashmir, Pakistanbased terrorist group Hizb-ul-Mujahideen (HM) on Monday launched a daredevil attack on an Indian Army convoy, killing at least five soldiers and injuring over a dozen. That the outlaws could infiltrate into the capital city of Jammu and Kashmir and open fire at the convoy from both sides despite tight security arrangements should be cause of serious concern. The HM had given a clear warning of their intentions when they shot dead two J & K policemen from point blank range in Srinagar on Saturday. The escalation of operations by terrorist groups operating with support from across the border with full backing of Pakistans ISI puts a question mark over UPA governments smug assumption that the threat of militants had ebbed in the troubled state. It is clear that these groups have stepped up their activities as part of a concerted plan to vitiate the atmosphere in J& K, after failing to win popular support for their cause. In his address to the chief ministers at their recent conference, Union home minister Sushil Kumar Shinde had said that the Centre was aware of increased efforts by the ISI to revive militancy in J & K and Punjab. He had also referred to the increased terror threats to the two-month-long Amarnath Yatra which begins on June 28. In the backdrop of these intelligence reports, this is not the time to lower guard. Unfortunately, responsibleCongress leaders have been betraying a lack of clarity. While J & K chief minister Omar Abdullah has raised the pitch for revocation of Armed Forces Special Powers Act (IFSPA), state Congress leaders are supporting him. Shindes comment that all stakeholders would be taken on-board before a final decision has added to the confusion. It is time the Centre made it clear that AFSPA will stay and forced Omar Abdullah to fall in line. India should also stop any dialogue with Pakistan till it dismantles the terror structure on its soil.
CURRENT AFFAIRS (26.06.2013) - PART I

1. Will CBIs long overdue autonomy finally come true? GoM likely to suggest panel of retired Supreme Court judges to examine complaints against investigating agency Helped by the Supreme Court, the CBI may finally get its long overdue autonomy. A Group of Ministers (GoM), looking at a new framework of autonomy for the CBI, is likely to suggest that a three-member committee of retired Supreme Court judges act as an independent ombudsman to examine complaints against the premier investigating agency.

The panel is aimed at insulating the CBIs probe from external influence and may also oversee its investigation in certain circumstances. The GoM, headed by Union Finance Minister P. Chidambaram, is also said to have agreed to a CBI suggestion that sanction to question officials above the rank of Joint Secretary be examined only by a committee of secretaries, which will have the Central Vigilance Commissioner as its member. It will give a decision within 90 days. The committee will include the Secretary (Personnel) and the Secretary of the ministry concerned, highly places sources told The Hindu. Earlier, the matter was first examined by the minister concerned and, after his refusal, came to the committee of secretaries. This long-winded process delayed matters inordinately. Now ministers will be kept out of it, and the committee of secretaries will directly deal with it and decide within 90 days. These and some other suggestions will form part of a package to be cleared by the Cabinet this week. It will then be presented to the Supreme Court on July 3 as part of an affidavit from the Union government. The court will further hear the matter on July 10. The package will reiterate the governments commitment to put in place a broad-based and bipartisan mechanism for appointing CBI Director through a collegium, which is likely to consist of the Prime Minister, the Leader of the Opposition in the Lok Sabha and the Chief Justice of India. The GoM, constituted by the Prime Minister to consider an appropriate law to provide for the CBIs independence and functional autonomy, has also agreed to increase the financial powers of the CBI Director on a par with those of the heads of the Central police organisations, one of the key demands of the CBI, the sources said. We have decided and that is fundamental principle of the Constitution that there should be no interference of government or any other agency in the probe carried out the CBI or any other agency. We are committed to that. We feel that there should be accountability along with autonomy, Law Minister Kapil Sibal said here on Monday after the GoMs last meeting. The GoM includes External Affairs Minister Salman Khurshid, Home Minister Sushilkumar Shinde and Minister of State for Personnel V. Narayanasamy. It is not inclined to make drastic recommendations, which may alter the functioning of the CBI, the sources indicated. SCATHING INDICTMENT The GoM was set up following the Supreme Courts scathing indictment in May of the CBI for being a caged parrot of its political masters. It made the remarks while hearing a case of alleged irregularities in coal blocks allocation at throwaway prices. The court asked the government to try to come out with a law to insulate the CBI from external influence. Clearly, the court was not satisfied with the way the government had gone about implementing its directives given way back in 1997 in the Vineet Na 2. Beneficent and baleful This year, the monsoon has been in rumbustious form. It swept in to Kerala on June 1 and then headed off north with surprising rapidity. So much so that the rain-bearing cloud systems covered the whole country by June 16, a process that is typically completed only by around the middle of next month. Moreover, it has rained copiously. Consequently, about three-quarters of the country have received much more rain than usual. After last years poor monsoon, the plentiful rains have aided the planting of this years kharif crops, improved water storage in reservoirs and helped recharge badly depleted, underground aquifers. But for Uttarakhand, which in the course of a week was hammered with eightfold more rain than it typically gets, the deluge was too much. Human environmental depredations worsened the resultant flooding and landslides, and poorly managed disaster relief efforts added to the calamity. With this months heavy rains, flooding has been reported from other parts of the country too. North-western India has received over twice its usual rain. Although the eastern and north-eastern States are showing deficits, the country as a whole has thus far got 32 per

cent more rain than average. It is a far cry from last year, when the countrywide rainfall deficit soared to 50 per cent by mid-June and the month ended with a considerable shortfall. Good rains this month do not necessarily mean that the rest of the rainy season will be just as bountiful. However, if June ends with surplus rainfall of 20 per cent or more, then, going by the record of past years, there is a good chance that this monsoon could see above average nationwide rainfall for the season as a whole. The updated forecast that the India Meteorological Department released recently was remarkably similar to the one it issued in April: a normal monsoon, with countrywide seasonal rainfall between 96 per cent and 104 per cent of the long-period average, had the highest probability of 47 per cent. That was followed by the odds for a below normal monsoon, with seasonal rainfall between 90 per cent and 96 per cent of the long-period average. The met agency has also indicated that July, which provides close to one-third of the seasonal rainfall, could see normal or above normal rain; rains in August might be below par. But the monsoon can be capricious and difficult to predict. How sea surface temperatures and atmospheric conditions evolve in the central Pacific Ocean and the equatorial Indian Ocean can strongly influence the rains over India. Hopefully, despite such uncertainties, this monsoon will turn out well. 3. Doctors by merit, not privilege Cleaning the mess in Indias medical education first needs a strengthening of the Medical Council of India through the appointment of members by an independent and rigorous selection process. India is the only country that authorises, as official policy, the sale of medical seats by private medical colleges, implicitly accepting the principle that the ability to pay, and not merit, is what counts. Further, in the absence of any system of third party certification by way of an entry or, more importantly, an exit exam which could guarantee the qualities and competencies a doctor must possess before starting to practice many medical colleges are producing quacks. The tragedy is that we all know about it. The issue is not just about illegal capitation fees that range from Rs.50 lakh to Rs.1 crore for a MBBS seat. The process of admission is itself flawed with a walk-in system for those with money but for the others, it is a harrowing tale of expensive tuitions and writing 15 to 20 examinations across the country a process that once again excludes and deters several. Entrance test In order to reduce the stress of multiple examinations, make it more equitable and ensure minimum levels of competence, having the National Eligibility-cum-Entrance Test (NEET) as a qualifying requirement for admission has been a long-standing recommendation of experts. It was reiterated in 2010 by the Medical Council of India (MCI), inspired by rapidly deteriorating standards of school education. The delay in implementing NEET was because of a lack of political will and the growing clout of private medical colleges in a neo-liberal environment that has encouraged a deadly cocktail of money power and political muscle. It is creditable that despite pressures, the MCI conducted NEET in 2012, for 90,000 aspirants. Defying the MCI mandate on regulating entry into medical colleges, about 90 private colleges held their own examination and, on specious grounds, successfully obtained a stay from the Supreme Court. On May 13, the Supreme Court issued an interim order, making NEET voluntary and permitting the private colleges to go ahead with admissions based on their own examinations. For the harried students, it was Black Monday. As business Archaic and outmoded rules, regulations and eligibility conditions requiring a capital base of more than Rs.150 crore have made the establishment of medical colleges a business proposition. Combined with no incentives for quality education, there has been a twofold impact: 1. commercialising the medical profession, where recouping the investment is the prime concern for the investor and graduating doctor alike; and 2. an aggravated shortage of doctors in three ways: 15 per cent of those in the Non-Resident Indian quota within the 50 per

cent management quota do not practice in India; of the remaining 35 per cent, many do not practice, migrate abroad or establish themselves in cities for better incomes; and, poor training makes many unemployable as amplified in a provider survey by Jishnu Das in Madhya Pradesh which found a marginal difference in the practices of qualified doctors and quacks. Clearly, the commercialisation of medical education is one of independent Indias biggest mistakes. Therefore, the solution of flooding the market with doctors by opening more medical colleges to contain the menace of capitation fees without in the first instance, overhauling the regulatory framework related to quality of instruction, faculty development, better salary structures and banning private practice, etc has little merit. Issue of quality There are no short cuts or easy solutions to what has become a highly political issue. If peoples health really matters for this government and if India is to stay competitive globally, it can no longer look the other way. It has to exercise its constitutional authority to bring in much needed institutional reform to clean up the mess, just as it did in 2010 by replacing a corruption-ridden MCI with a board of governors by way of an ordinance. In the same year, the ministry also drafted a bill to establish a National Commission for Human Resources for Health (NCHRH) to address the issue of quality by balancing the three critical functions of the profession: a) curriculum what is to be taught and for how long; b) accreditation who is to teach and in what manner; and c) ethical practice adhering to the best interests of patients. While the first two aspects were placed within the domain of a nominated body of experts, ethical medical practice was to be ensured by an elected body of the MCI. A distinction between nomination and election was made keeping in view the professional expertise needed to address complex issues related to content, standards, quality, competencies and skills as required by the country. Such expertise has to be sought and is not thrown up through electoral processes. It is for this reason that in most countries such as the United Kingdom, regulators are selected by the Public Service Commission based on merit and suitability. In addition, the U.K. Medical Council also has patient groups, student representatives and civil society activists as members of the Medical Council. Such openness and transparency is the only effective antidote to an indiscriminate abuse of power. Focus on the regulator In October 2012, the Parliamentary Standing Committee returned the NCHRH Bill to the government to re-examine three major concerns: 1. States autonomy and potential violation of federal principles;2. excessive bureaucratisation and centralisation, and 3. faulty selection procedure of regulators, providing scope for abuse. Rather than seizing the opportunity to come up with a better draft, the ministry has, for the third time, reconstituted the board of governors with a retired Directorate General of Health Services as chair. It is believed that the main purpose of the reconstituted body is to oversee the elections to the Board of the MCI. If true, this is disheartening. The MCI is the regulator for medical education and practice just as the Reserve Bank of India is for financial institutions or the Election Commission of India for elections. Regulators cannot be elected on popular mandate they have to be invited by the government for their professional eminence and moral authority. The MCI has to discipline and police the profession, more so on account of the extensive market failures that characterise it. Elected persons are compromised individuals and cannot do the task effectively. We have seen how disastrous our experience has been with an elected body; within the decade 2000-2010, it was set aside twice, once by the Supreme Court and the second time by the government by way of an ordnance. No other regulatory body has suffered such humiliation. Since medical education is in the concurrent list of the Constitution, the Central government needs to leverage that power to bring in some discipline before permitting any more colleges to be established. The time has come to strengthen the

regulator first by having the MCI Board freed from the clutches of doctors to include all stakeholders and have the members appointed through a rigorous selection process by an autonomous body like the Union Public Service Commission. This will end the nomination process of the ministry and the consequent conflict of interest. Once appointed, the regulator can be allowed to enforce its own rules and regulations. The government needs to attend to a range of reforms from: appointing a tariff committee, indicating the right quantum of fees to be charged and legally enforcing the same; providing autonomy to medical colleges to stimulate excellence and innovation; constituting a committee of experts under the chairpersonship of a senior politician to examine some of the contentious issues, including the frequently made suggestion to nationalise private colleges, and appointing an advisory committee to undertake some of the critical functions of curriculum change and accreditation pending the establishment of a body like the NCHRH, which in todays circumstances may take not less than three years. What is required is a non-negotiable, high priority concern for patient welfare and safety by focusing on the quality of doctors being produced, in sufficient quantity of the skill mix. In conclusion, sorting out the mess in medical education requires a consensus across the political spectrum. Any shifts in the status quo will be bitterly opposed, so deeply entrenched are the vested interests. But the time has come for the government to act as the acute shortage in human resources is the main barrier to achieving universal health coverage. The more the delay in addressing the critical challenges facing human resources for health on grounds of political expediency, the greater the social, political and financial costs this country will have to bear in the years ahead. Prudence lies in stemming the rot by decisive action and before it is too late. 4. Tensions between two natural allies The doctrine of prior restraint and the more potent contempt of court provisions have the potential to disturb the relationship between the judiciary and media. Today is the anniversary of the imposition of the Emergency in India in 1975. The day also marks the anniversary of the first introduction of press censorship since Independence, as the two emergencies of 1962 and 1971, declared prior to 1975, were devoid of censorship. On June 26, 1975, the Indira Gandhi government used the Defence of India Rules, 1971 to impose the Censorship Order, requiring every newspaper, periodical, or other document to submit any news, comment, rumour or other report relating to a list of specified subjects to an authorised officer for scrutiny before publication. The government kept expanding this list till the Censorship Order was withdrawn on March 21, 1977 coinciding with revocation of the Emergency. If the history of censorship in modern India is a brief one, this is due at least in part to the judiciary, which has built a natural alliance with the media against any onslaught on the freedom of the press by the executive and legislature. Press freedom has been interpreted by the Supreme Court as an integral part of the freedom of expression, guaranteed by the Constitution under Article 19(1)(a) and subject to only certain reasonable restrictions specified under Article 19(2). In return, the judiciarys expectation is that the press will mould public opinion in favour of its independence from executive-legislative interference and ensure the latters compliance with its activist orders. Seminal cases The test of this alliance was evident during the Emergency itself, when, as the famous saying goes, institutions crawled when asked to bend. Two High Court judgments stand out, when even the Supreme Court had delivered a pro-Emergency verdict in the infamous A.D.M. Jabalpur case. One was the Bombay High Courts judgment in Binod Rao v. Minocher Rustom Masani, delivered by Justice Dinshah Pirosha Madon and Justice Madhukar Hiralal Kania on February 10, 1976. Masani was the Editor of the monthly journal, Freedom First, which was subjected to censorship. A single judge of the High Court, Justice R.P. Bhatt had

already granted relief, by setting aside the censorship orders against the magazine, which was under appeal before the Division Bench. The High Court held that except in two out of 11 items censored, it did not find any intention or likelihood of the censored articles creating disorder or disturbance of law and order or incitement to violence. It held that most of the consequences contemplated by the censor were fanciful and far-fetched, and that the view taken by it was such as no person acting rationally could ever possibly take. The other was the Gujarat High Courts judgment in Chunibhai Vaidya v. H.J.DPenha (Special Civil Application No.141 of 1976), delivered on March 22, 1976 by a Bench comprising Justice J.B. Mehta and S.H. Sheth. In this case, copies of Bhumiputra, a journal dedicated to Sarvodaya, were forfeited after it had published a report of a civil liberties conference held at Ahmedabad. The court held that it is wrong to think that once the legislature has made the law which places restrictions on or curtails the inherent and natural right of a citizen to speak and express himself, it is open to the executive to do anything which it likes irrespective of what the law empowers it to do and how much forbidden area it craves out. The Court also refused to concede that there is any nexus between the forfeiture order and public safety and order, as claimed by the Chief Censor to the Government. Last year, the Supreme Courts five-judge Constitution Bench relied on these two cases in its judgment in Sahara India Real Estate Corp. Ltd. & Ors vs. Securities and Exchange Board of India, (known as the legal reporting-media guidelines case), to buttress its holding that prior restraint per se (on the publication) has not been rejected as constitutionally impermissible, and to draw a distinction between prior restraint per se and cases of misuse of powers of pre-censorship which were corrected by the courts. The Supreme Court, in this case, was looking for legal justifications for prior restraint in order to defend its doctrine of postponement of publication or publicity of courtroom proceedings. The doctrine allows a writ court to grant preventive relief, if a litigant seeks an order of postponement of publication or broadcast or reporting of certain phases of the trial in cases of real and substantial risk of prejudice to the proper administration of justice or to the fairness of trial. Ironically, the Constitution Bench relied on cases which ought to be celebrated for their contribution to freedom of the press in order to place further restrictions on that freedom. Since no litigant has so far sought to temporarily injunct the media, the precise implications of the Supreme Courts ruling have not yet become apparent. Prior restraint is just one aspect of the tension between judiciary and media. The other is contempt of court. The Supreme Court evolved the doctrine of postponement, ostensibly to prevent cases of contempt that may arise if the media were free to report, even if there is real and substantial risk of prejudice to the proper administration of justice or to the fairness of trial. But prior restraint in the age of social media makes little sense and is likely to be ineffective. It is reasonable to suggest that were the two High Court judgments, delivered during the Emergency, to be written today, the judges might have probably concluded that prior restraint per se is impractical, if not impermissible, because of the growing presence of social media. Rather than prior restraint, it is the chilling effect of certain provisions of the Contempt of Court Act, 1971 and its likely interpretation by the judiciary which has the potential to disturb the relationship between the two natural allies. WEAK PROTECTION The 2006 amendment to the Act providing for truth as a valid defence in contempt proceedings has not really led to any appreciable increase in reports critical of the judiciary. The reason, perhaps, is that this defence is available to the alleged contemner only at the sentencing stage, and the courts are free to find one guilty, irrespective of the amendment. Besides, Section 13(b) of the Act inserted by the amendment gives wide discretion to the courts to admit truth as a defence to contempt proceedings if such a defence is in the public interest, and the request for invoking this defence is bona fide. The Parliamentary

Standing committee which considered the Amendment Bill in 2005 was told by experts that there cannot be truth without bona fides, and when truth is there, public interest is also there. It was felt that imposing these twin limitations would virtually defeat the objective of justification by truth. Despite this, these vague limitations were included. Internal criticism If the 2006 amendment of the Act is controversial, the Act itself has come in for criticism from judges themselves. The Chairman of the Press Council, Justice Markandey Katju, had endorsed the eminent lawyer, Fali S. Nariman, in a lecture in 2007, saying: Contempt jurisdiction is mercurial, unpredictable capable of being exercised (and therefore in fact, exercised) differently in different cases and by different Judges in the same court. He added that there are no rules, no constraints and no precise circumstances when the administration of justice is brought into contempt, and this part of the law of contempt is a standing threat to free expression. The Supreme Court is seized of certain pending matters in which journalists have been arraigned as alleged contemners, and certain recent reports in the media which have raised issues of contempt. In keeping with its sense of magnanimity, the court has refrained from showing any sense of urgency in settling these matters. Hopefully, the tensions between two natural allies will get resolved in the spirit with which the two high courts had come to the rescue of beleagured journalists during the Emergency. 5. India, China to hold border talks on Friday India and China will hold the 16th round of talks between the Special Representatives (SRs) on the boundary question here on Friday and Saturday, with the discussions seen as taking on added significance in the wake of the leadership change in China and the recent incursion by Chinese troops in Depsang in eastern Ladakh. The Chinese Foreign Ministry said on Tuesday the two sides would use the meetings to follow through on the requirements of the leaders of the two countries, who had called on the two SRs to inject momentum into the negotiations process, as well as ensure that incidents such as the three-week stand-off in Ladakh do not occur. The talks will see a new SR from the Chinese side engage with National Security Adviser Shivshankar Menon. Yang Jiechi, the former Foreign Minister, took over as State Councillor and top diplomat in March following the once-in-10-year leadership transition. His predecessor, Dai Bingguo, had served as the SR since the mechanism was introduced in 2003. Mr. Menons two-day trip is expected to be followed by a visit by Defence Minister A.K. Antony between July 4 and 7. Indian and Chinese officials hope the two high-level visits will help draw a line over the recent strains in the relationship following the April 15 incursion, which cast a shadow over last months visit to New Delhi by Chinese Premier Li Keqiang. To signal the importance Beijing is attaching to the two visits, President and Communist Party of China General Secretary Xi Jinping has expressed his desire to meet either Mr. Menon or Mr. Antony, depending on his schedule, according to Chinese officials. Mr. Xi had his first meeting with Indian officials when he met with Prime Minister Manmohan Singh along the sidelines of the BRICS summit in South Africa in March. Hua Chunying, Chinese Foreign Ministry spokesperson, said both sides would use this weeks talks to maintain the negotiation momentum, safeguard peace and tranquillity in border areas, exchange views on bilateral relations as well as major international and regional issues, and push for comprehensive and in-depth development of relations. The SRs were, last month, tasked by Dr. Singh and Mr. Li to take stock of the lessons learnt from the Depsang incident and examine the existing mechanisms in place to resolve border issues. Both sides have also been in communication on a border defence cooperation agreement to enhance and give structure to confidence building measures, although it is as yet uncertain if the agreement may be concluded before the arrival of Mr. Antony in Beijing. Asked how China viewed the progress made on the long-running boundary negotiations over the past 15 rounds, Ms. Hua said both countries had made long-term efforts for the early settlement of the

boundary issue. Positive progress has already been made in previous rounds of the SR meetings, she said. For example, we have signed an agreement on political guiding principles to resolve the boundary issue [in 2005], and we have also reached some preliminary consensus on the settlement of the issue. We are trying to work together with India to find an equitable, reasonable and mutually acceptable solution to the issue, she added. Pending the final settlement of the issue, we should safeguard peace and tranquillity of border areas, and ensure that the boundary issue will not affect the overall development of bilateral relations. 6. A joint campaign against GM crops, Biotechnology Bill We will oppose the Bill in Parliament, says Yechury. Cutting across party lines, several political leaders participated on Tuesday in a joint campaign with civil society groups and farmers organisations against Genetically Modified crops and the Biotechnology Regulatory Authority of India (BRAI) Bill at Jantar Mantar here. Participating in the campaign CPI(M) leader Sitaram Yechury declared that he would support the organisers Coalition for GMfree India on the streets and oppose the Bill in Parliament. We do not need a bioregulatory bill. We need a bio-safety law. Aam Aadmi Party convener Arvind Kejriwal said his party was opposed to genetically modified crops and his colleague Prashant Bhushan had filed a PIL in the Supreme Court against it. The Aam aadmi is unaware of GM crops and the BRAI. He/she does not understand it. If they did, then this demonstration site [at Jantar Mantar] would have been milling with people as it concerns their health and safety. Regulation spells corruption and our party is striving to change the political system that breeds corruption. The former BJP ideologue, Govindacharya, was quick to come out with a suggestion that the coalition form small groups of people who could fan out in the country to spread awareness about genetically modified organisms and BRAI. CPIs National Council member Dinesh Vasnik said his party would fight on these issues inside and outside Parliament. He warned against foreign aids and grants for agriculture research, seminars and such programmes that were meant to promote the agenda of multi-national companies. Gurnam Singh of the Bhartiya Kisan Union in Haryana wondered why the government was in a hurry to promote GM seeds when farmers and consumers were opposing it. When the Parliamentary Standing Committee and the Supreme Court have said there is not need for GM crops, then why is the government allowing surreptitious field trails? Why is the government shying from an open debate on this issue. SUCCESS OF GREEN REVOLUTION Recalling the green revolution, Mr. Singh said that farmers have enhanced grains production since Independence to such an extent that today the godowns were overflowing with grains. There is no storage capacity. Still half the land in the country is waiting to be exploited. There is was no irrigation facility. If the government provides water for irrigation, then farmers can raise production even higher. If the government persists with the GM/BRAI path, then farmers and consumers will unite to oppose it on the streets, he warned. While Nikhil De of Mazdoor Kisan Shakti Sangathan bemoaned the lack of Right to Information on GM crops, Devendra Sharma said BRAI and GM crops were being opposed as prevention is better than cure. SINGLE-WINDOW CLEARANCE TO GM SEEDS He said BRAI provided for single-window, fast clearance to GM seeds. It is meant to suppress the voice of farmers and consumers and does not even allow the States the right to decide if they want field trials. Scientists do not speak up for the fear of losing their jobs. Companies like Monsanto decide the fate of farmers and farming in countries like the U.S. and governments tweak their regulations to ensure profits for them, he said. Among others who participated in the campaign were Bharat Krishak Sanghs Krishnabir Choudhary,

farmer leaders Laxman Singh, Naresh Sirohi, former journalist Ved Pratap Vaidik and Greenpeace activist Rachna. 7. Navigation satellite launch work picks up steam Slated for July 1 launch, IRNSS-1A will provide accurate info on position of cars, ships and aircraft Hectic activity is on at Sriharikota for the lift-off of the Polar Satellite Launch Vehicle (PSLV-C22) at 11.41 p.m. on July 1, which will put the Indian Regional Navigation Satellite System, IRNSS-1A into orbit. A PSLV-XL version, which uses six powerful strap-on booster motors, will put the 1,425-kg IRNSS-1A into orbit. Everything is going well for the launch and the satellite has been integrated with the PSLV, ISRO Chairman K. Radhakrishnan told The Hindu on Monday from New Delhi. Today, the phase 3, level 2 of the checks have started with the launch vehicle and the satellite together. There will be a final Mission Readiness Review [MRR] meeting on June 27 and clearance will be given for the countdown, which will begin on June 29 morning, he said. It would be a 69-hour countdown. The IRNSS will have a constellation of seven satellites and the IRNSS-1A is the first of the seven regional, satellite-aided navigation systems built by ISRO. The PSLV-C22 would put the IRNSS-1A into an elliptical orbit with an apogee of 20,600 km and a perigee of 280 km. From there, it will be taken to a geosynchronous circular orbit of 36,000 km with an inclination of 29 degrees to the equator, Dr. Radhakrishnan said. Longer countdown Asked why this launch had a longer countdown time of 69 hours, he said, Since the launch is to take place at night, we would like to keep some cushion so that people can take some rest. The IRNSS-1A will provide accurate information on the position of cars/trucks, ships and aircraft vis--vis their destination, with the help of a receiver. It could be an independent receiver, or built into a mobile phone, a car or a ship. The satellite can provide precise information when the aircraft is about to land on the runway. The pilot will know how far he is from the runway or at what height he is above the runway, with an accuracy of 20 metres. Unlike the Global Positioning System (GPS) which can be used anywhere, this is called a regional navigation system because it is available to users in India and the surrounding region. A highly accurate atomic clock is part of the navigation payload of the satellite. Thus, the IRNSS applications include terrestrial, aerial and marine navigation, disaster management, tracking of vehicles, guiding hikers and travellers, and visual and voice navigation for drivers. The PSLV-C22 launch was to have taken place on June 12, with its four stages fully integrated and undergoing electrical checks. Regarding the postponement, Dr. Radhakrishnan said: When we were doing electrical checks of the vehicle, we found an anomaly in its second stage. The problem was identified to be with the electrohydraulic actuator. We have done the necessary replacement of the actuator. Small disturbance M.Y.S. Prasad, Director, Satish Dhawan Space Centre, Sriharikota, said the control system in the PSLVs second stage required the nozzle to be moved to control the vehicles flight. An actuator pushed or pulled the nozzle to give a correcting force to the rocket if there was any deviation in the flight path. But ISRO engineers detected a small disturbance in the correcting force. When they removed the actuator and investigated the issue, they found a problem with a valve in the actuator. So the entire actuator was removed and replaced with a new one. This necessitated the dismantling of the second, third and fourth stages after they had been

assembled. After the new actuator was put in the second stage, we had to restack the vehicle, Dr. Prasad said. Hectic schedule Dr. Radhakrishnan said ISRO was gearing up for a tough schedule in 2013 with the launch of INSAT-3D slated for July 26 by Ariane-5 vehicle of the Arianespace from Kourou, French Guiana; the lift-off of the Geosynchronous Satellite Launch Vehicle (GSLV-D5) with an indigenous cryogenic engine in August to put a communication satellite, GSAT-14, in orbit; the launch of GSAT-7 from Kourou in August; and the orbiter mission to Mars in October/November. INSAT-3D had already reached French Guiana. 8. No country for children Child labour mainly teenage tribals and dalits is rampant in rural India, and escapes legal scrutiny. In a position paper on Child Labour, the NGO, Save the Children, points to its nature as invisible labour. Unlike children slogging away in the sweat shops of nineteenth century London immortalised by Charles Dickens, child labour in India remains below the radar and estimates therefore tend to vary wildly. The governments calculations

are modest: 12 million, the ILO pitches it at 44 million and civil society puts the number of children not at school or play at 70 -80 million. Are all forms of labour engaged in by children to be condemned? Children below the age of eighteen or even fifteen work in factories in both hazardous and non-hazardous jobs; the distinction is both arbitrary and false because one would think all forms of work in assembly lines or in bidi shops or cutting sugarcane to be hazardous to the child insofar as they prevent his/her education and spell the end of innocence. But one would think helping parents with housework or even, as was the case with artisanal families, sons inheriting the skills of the father by first watching, then emulating (a process that psychoanalyst Sudhir Kakar found indispensable for the bonds between fathers and sons in traditional families) to be an essential socialisation of the boy-child. In a society with pretensions to modernity, even that form of child labour would be condemned if it impinged on education and what the NGO calls holistic development. The NGO also draws a distinction based on age so that all children below the age of 15 years should be excluded by legislation from labour of any kind, while those in the 15-18 range should have legal protection. By now the image of children working at carpet weaving in Bhadohi or in bidi factories is the stuff of legend and legislation to prevent such practices has been enacted. The Child Labour Prohibition and Regulation Act 1986 was meant to protect children from exploitation in various arenas, but has been found wanting.
THE CANE CUTTERS

One such lacuna is the use of children on sugarcane farms; sugarcane cutting is both hazardous and tedious. It is almost shocking at first glance to learn of the practice of employing children of migrants for sugarcane cutting in Western Maharashtra, the area of rich agriculture, the hub of irrigation and modern practices, the crucible of political leadership, the site of the dominant Maratha kulaks who have held sway in the State for well over five decades. In a study titled, Child Rights: Situation Analysis undertaken by the Gokhale Institute of Politics and Economics for Save the Children, Debasish Nandy paints a dismal picture of child exploitation on sugarcane farms, in a part of the State one would have expected to have switched to mechanisation long ago. There are several aspects of the study that are revealing as there are the obvious. One hardly needs a survey to be told that children of migrant families forsake education, have no rights whatsoever and are subject to the caprices of powerful landowners. Nandy points to the absence of health

protection: In Maharashtra, unlike Gujarat, migrant labourers are not provided with health cards, a gross institutional reluctance (sic) in providing basic health facilities. Needless to say, adolescent girls suffer most from the gross lapses, especially from a poor supply of medicines to counter nutritional anaemia. Abuses of various sorts are also rampant.
SIGNPOSTS OF DISTRESS There are a few pointers that underline Indias lopsided development and the States s spatial inequalities. First, migration is not just a rural-to-urban phenomenon. The

skewed growth divides the rural economy, too. Most migrants, small landowners or landless labourers gravitate towards the rich sugarcane farms of western Maharashtra from the poorer and depressed districts to its east. Migration is seasonal or circular, with the same families returning in season to cut the harvest. Most migrant families are forced to migrate because of indebtedness; most are socially marginal, tribals and dalits. Of the 638 households surveyed, 384 (60 per cent) moved to repay the debts incurred from their native village mukadam, loans for both farm and consumption needs. Given the flawed pattern of farm growth in the State and water resources concentrated in the sugar belt in the western parts, the high rate of suicides in the eastern region such as Vidarbha (which is also the site of Naxal violence), and now, as the study shows, indebtedness --what is patent is the fragility of more than 60 per cent of the population that still lives off agriculture.
WHO PAYS? WHO CARES? Children then pay the collateral damage of this warped growth. The intensity of the deprivation borne by them can be measured by the severity of the work, with teenage boys in the main cutting the cane, a dangerous job for anyone, and the fact that most of the surveyed migrant families are scheduled castes or various categories of tribes. In short, they are

the lowest in the rural pecking order and there is a paucity of laws

to ensure some measure of protection for the under-aged. Over the years, India has created what on paper at least is a robust institutional capacity to protect and perhaps eliminate child labour. Constitutional provisions are considerable and yet they suffer from some drawbacks. One is the lack of clarity on the definition of a child and the universe of child labour. Most of the Acts, including the RTE, consider 6-14 years as the defining age for child rights. But Nandys study shows the majority of children employed in cutting cane to be teenagers, between 15 and 18 years. These children fall outside the purview of almost all child protection laws and the RTE. Read this with the more pernicious shortcoming that afflicts the Child Labour Prohibition and Regulation Act (CLPRA) of 1986: Its ambit does not count farm labour or agro-based activities as prohibited sites for child labour. In the event, teenagers on the sugarcane farms of western Maharashtra have to suffer triple forfeits: first the penalty for being born into the lowest social strata, then the exclusions from the benison of the RTE and the CLPRA on account of a discriminatory yardstick. India may be shining but its no country for children.
9. New special cell in cabinet secretariat takes up 122 stalled projects he new special cell in the cabinet secretariat, set up to get long-stalled investments off the ground, has already taken up 122 of the 200-odd projects worth Rs7 lakh crore. Intensive discussions to resolve issues with individual ministries on these projects, which include 50 large power plants, are expected to kick off in early July even as the cabinet secretariat launched a new portal on Monday for corporates to flag their big-ticket projects held up on account of myriad clearances. "Once a project is uploaded on the portal which is now active, investors will get a unique identification number to track its progress and will be updated of any outcomes regarding the pending clearances,"said a senior government official. The official told ET that 122 projects have already been taken up by the special cell and the new portal will help expand the number of projects under its purview. "Though we are

primarily looking at projects worth over Rs 1,000 crore, private firms can seek our intervention even for critical projects below that investment size," he said. Projects put up by firms on the new portal will be automatically get added to the agenda of the special cell after being reviewed and accepted by ministries that may 'sponsor' it. The cell will then take up the specific issues holding up the project with the 'recipient ministry' that is responsible for issuing the relevant clearances. FICCI president and HSBC's India head Naina Lal Kidwai told ET that a system of proper monitoring and follow-up of projects considered by the Cabinet Committee on Investments (CCI) is very important. "We are hopeful that the new cell created in the

Cabinet Secretariat will ensure that a coordinated process is followed for taking up these projects with CCI and subsequently followed also to ensure that the process reaches its logical conclusion," she said. Once investors upload a project on the new portal, they could keep tabs on its progress through the maze of red tape holding it up. Modalities are being worked out for the different stages at which information can be shared with developers, though of course, the final outcomes or decisions would be conveyed. "The on-line mechanism for the industry will be really useful as it would help the industry to directly submit its delayed project for consideration at the highest level and know its status on real time basis," said Kidwai.
10. The FDI debate Foreign capital is important, but security safeguards are a must. The government's efforts to refine and liberalise norms for foreign direct investment (FDI) in India are useful and welcome steps in many ways. The central purpose of FDI, to introduce greater discipline to Indian sectors and permit consumers greater choice, is a valid and important goal. In addition, regulations continually need to be tweaked to ensure that the private sector, which is always more dynamic than regulators, does not get too far ahead in terms of exploiting any loopholes that may exist. This is why, for example, there was a need to revisit the definition of "control" of a company. What does it mean to say that a foreign entity has "control" of an India-based company? The current definition, that foreign entities should be able to appoint the majority of a company's directors on its board, could easily be worked around in practice. Justifiably, therefore, the government wants to tweak the definition of control, which is now proposed to be determined by shareholder agreements or lien over voting rights. An expanded definition will allow for better principles-based regulation. The question, of course, always

needs to be asked: why should there be regulations on foreign ownership, anyway - especially between one sector and another? If FDI can galvanise one sector, say retail, why should it be restricted in another? The most coherent answer is to ensure that there are safeguards for reasons of national security. Whatever steps the government takes to liberalise FDI, it should always allow itself the option to intervene on questions of security. Legitimate questions could be asked, for example, as to whether India's entire telecommunications backbone should be built by providers from a single foreign country. This would lead to an unacceptable degree of vulnerability in a crucial component of India's economy, and one that is susceptible to remote attacks, too. These sectoral interventions, however, should be chosen judiciously, and not at random; the default

should always be to attract investment that benefits consumers and broadens the market.
For that is the point of FDI: to help consumers of final and intermediate goods as well as services to access a wider variety of options, and to deepen and strengthen the market economy. The point of FDI is not to allow India to finance a current account deficit or to help the owners of Indian companies bury their mistakes in an avalanche of foreign money. Nor is it to allow existing Indian businessmen to leverage their permissions and contacts to make windfall gains. Sadly, it is far from clear that the government has worked out this difference. This is a larger problem with government attitudes to reform in India: reforms should be promarkets, and not merely pro-business. If business is helped in the process, then all to the good; but designing or introducing reform measures specifically to help business gives rise to cronyism and corruption of the sort that has bedevilled the Indian state in the recent past. More, the distortions that such policy making causes are precisely those that empower poor business models and overambitious market participants, leading to demands for bailouts. Whether the bailout comes from taxpayers' money or from foreign investment that would otherwise flow to some other productive activity in the Indian economy is irrelevant. The government needs to change its entire mindset about reform; and its thinking about FDI would be a good place to start. 11. Thank you, Mr Bernanke? Tightening of US monetary policy might actually force India's govt to be responsible The rupee rout was triggered when Helicopter-drop Ben (Bernanke) intimated that he might turn into Hoover Ben. The prospect that the chairman of the US Federal Reserve would suck back the liquidity he had been so generously providing to the United States and the rest of the world created uncertainty and panic. Indianeconomic policy makers have watched with frustration and helplessness. Two aspects of this crisis have received less attention: first, that one of the major costs of the rupee decline is entirely self-inflicted; and second, that there may well be a silver lining for India. Consider each in turn. The 10 per cent decline

in the nominal value of the rupee over a short period of time entails three costs (rupee depreciation will have benefits too, but that is not the focus here): higher inflation as prices of imported goods and of domestic goods that are close substitutes rise; a larger fiscal deficit because the rupee cost of fuels rises without the increase being passed on to consumers; and a decline in the profitability of all those enterprises that have borrowed heavily in foreign currency and have not insured themselves against a rupee decline ("unhedged borrowing"). This third cost will manifest itself in reduced investment by these companies and hence lower aggregate growth; it will also manifest itself (eventually) in a worsened fiscal situation because the government will have to support these companies directly or the banks that have lent to them. The important point, though, is that this

latter cost is entirely self-inflicted. In the last three years, the government has allowed greater foreign currency-denominated borrowings by the private sector by progressively relaxing the socalled external commercial borrowing (ECB) limits. Actual borrowings have increased from about $70 billion in 2010 to $115 billion today. Every episode of rupee pressure provokes a relaxation of these limits, which renders the economy vulnerable to the next rupee shock - which, in turn, provokes the next liberalisation and so on. And sure enough, in the wake of the recent crisis, too, the government has further relaxed ECB limits - which will come back to haunt the economy down the road. This is folly. Until hedging becomes common practice, the Indian government cannot afford to allow risky foreign borrowing. That means reductions - even drastic ones - in the ECB limits, which is exactly the opposite of current policy. One consequence might be a more depreciated exchange rate because of less foreign financing; but that will be less costly because there will be fewer dollar obligations to repay and roll over in the first place (in the long run, a policy of restricted ECBs could even improve the current account and reduce dependence on foreign financing). Turn next to the silver lining in this latest episode. It is easy to forget that Indian macroeconomic policies have improved considerably with the return of P Chidambaram as finance minister last summer. There has been liberalisation of foreign direct investment, a concerted effort at tax reform, restraints on spending, and a steady - if stealthy - reduction of the diesel subsidy. It is also easy to forget that the finance minister's reforms last autumn were facilitated, even galvanised, by external events: the sharp deceleration of economic growth and, most important, the then-looming investment downgrade by credit rating agencies. But if impending crisis was a necessary condition for helping the government pursue good policies then, it may prove absolutely essential to prevent the government from pursuing imprudent policies now. In the run-up to the general election, the temptation to open the fiscal spigots will be irresistible. The next elections will be closely contested and will involve more horse trading and more political manoeuvring than ever - which will add to the populist pressures to spend and spend. As internal restraints on these pressures weaken, external ones will have

to come to the rescue in strengthening the hands of the reformers within government. And that is where the rupee crisis can play an important role. The fate of the food security Bill is a possible illustration of this dynamic at work. Even if its incremental fiscal costs were small (estimates by Prachi Mishra of the ministry of finance suggest they could be substantial), its passage could provoke a further outflow of capital that in these testy times is just looking for an excuse to head for the exit doors. That logic might have enabled the government to convince the Congress party to postpone submitting the Bill to Parliament. (Of course, there is an alternative interpretation in which the postponement is aimed at bringing the Bill closer to the elections to maximise its vote-getting, populist potential.) The rupee crisis will also facilitate more prudent policy making by the Reserve Bank of India (RBI). The monetary easing since April last year was always questionable, with the RBI appearing overly responsive to the populist demands to boost growth despite the elevated level of inflation and the large current account deficit. Skittish capital and a vulnerable currency will now help the RBI to focus on the more important objective of maintaining macro stability. In the months ahead, with elections looming on the horizon, the government's ability to pursue an ambitious and proactive reform agenda is limited. Faster clearance of projects and improvements in coal supply remain within reach. But reforms - relating to land acquisition and the financial sector - that require parliamentary approval seem increasingly elusive. The most tragic casualty - despite the best efforts of this government - is the passage of the constitutional amendment Bill, which would have initiated the implementation of the goods and services tax. But a respectable outcome in these politically uncertain times would, in the spirit of the Hippocratic oath, involve doing no harm. Specifically, resisting what are likely to be mounting pressures to spend would be a significant achievement. The sword of Damocles of a run on the rupee hanging over the Indian economy would be no bad thing. Instead of being annoyed with Ben Bernanke for the mayhem inflicted on the Indian economy, the responsible elements within this government should perhaps send a thank-you note to him for helping them stave off the fiscal profligates. Hoover Ben, as opposed to Helicopter-drop Ben,

may be just the right person to save this government from its political, populist self.
12. Live-in relations and alimony The ongoing debate on the Madras High Court judgment ordering alimony to a victim of desertion in live-in relation is more like the legendary six-blind-men-and-elephant analysis. The discourse has got reduced to asking whether it was not just to order alimony to an unjustly deserted woman. The critical point missed is that when a court renders a judgment, it sets legal precedent for all cases of desertion in live-in relations. This is what distinguishes court of law from panchayat which does case-to-case justice for a homogenous village or community. India is neither a homogenous village nor one community. It has separate marriage, divorce and alimony laws for Hindus, Muslims, Christians and Parsis, besides a special law mainly for cross-religious and community marriages. A court judgment on alimony in live-in cases should factor in all religious laws and the special law while ordering alimony for non-marriages. A court of law is mandated to do justice by strictly observing the law. Law is unjust at times. If the law does permit alimony only when legal marriage breaks, the court impelled to do justice to the victim of live-in relations should exercise high judicial wisdom and do justice without harming the matrimonial law which sustains stable families. It does not need a great legal scientist to explain why live-in

relation does not equal legal marriage. A lawful marriage can be enforced by asserting conjugal rights. It cannot be terminated unilaterally by either party (except in Islamic Shariat law by the husband). But live-in relation is voluntary sexual union founded on mutual attraction, not on mutual agreement. Neither partner can enforce the live-in relation, but either of them can unilaterally walk out of it with ease. Imagine, instead of the man, the woman had left the live-in relation and joined some other man, could her live-in male partner have had any remedy like restoration of conjugal rights as in a legal marriage? Is there any doubt now that marriage is a mutually enforceable bond but live-in relation is unilaterally terminable affair? How then could indulging in sex and begetting children alone make live-in affairs equal to marriage? Yet, obviously moved by the distress of the
deserted lady, Justice Karnan fell into a series of legal errors to justify the noble objective of giving alimony to her. First, to ensure alimony to her, he wrongly equated her non-binding live-in relation to binding legal marriage. Next, to recognise long live-in mating as equal marriage, he declared the rituals which validate marriages under diverse religious laws as irrelevant. And in upgrading live-in relation to the status of legal marriage, the judge has actually downgraded legal marriages to live-in mating by erasing the legal difference between the two. In the process he has outlawed all laws of marriage for doing apparent justice. While the legal premises of the judgment are complex enough, to complicate matters even more, in the case before the judge, the deserted live-in woman partner is a Hindu and the deserter is a Muslim. It is cross live-in relation. Had they married legally either the man would have

become a Hindu to be governed by Hindu law or she would have become a Muslim to be governed by Shariat law or their marriage would have been registered under the special marriage law to be governed by it. Some ask why not regard live-in relations

as Gandharva Vivaha. First Gandharva Vivaha, a Hindu concept, will not work between a Muslim man and Hindu woman. Also the Hindu law describes not prescribes eight types of marriages including Gandharva Vivaha. Of these, only four types, namely, Brahmana (giving the girl with dowry to an educated bridegroom), Daiva (giving the girl to a priest during the performance of religious ceremony), Arsha (giving the girl after receiving dowry from the bridegroom) and Prajapathya (giving the girl with respect and blessing to a bridegroom) were considered proper for all. The other four, namely Asurika (marrying a girl against her will by giving wealth to her family and kinsmen), Gandharva (voluntary union of man and woman out of sexual urge), Rakshasa (abducting a girl and marrying her forcibly) and Pisacha (stealthily seducing a sleeping, intoxicated or mentally ill girl) were regarded as improper for all. So if courts can recognise marriage in the Gandharva form, then why not its Asurika, Rakshasa and Pisacha forms also? Anyway, the Hindu Marriage Act does not recognise the last four forms. Such suggestions may open a Pandoras box. Islamic Sharia applicable to Shia Muslims permits Muta marriage, a temporary marriage valid for 30 days at the end of which automatically the 30-day husband and wife become strangers. Imagine Shia Muslims beginning to resort to Muta marriages. Is it not better then to avoid recalling such forgotten traditions to answer modern problems? It needs dispassionate analysis. Alimony, as the law knows, arises when a legal marriage ends in separation. But the judgment orders marital alimony where there was, in law, neither marriage nor separation. The judge also ignores the obvious fact that marriage laws in India are not common, but separate for different religious communities. The Hindu Marriage Act (1954) applies, besides to Hindus, to Sikhs, Buddhists, Jains and to all, other than Muslims, Christians and Parsis. The Parsi Marriage Act (1936) applies to only Parsis. Christian Marriage Act (1872) applies only to Christians. For Muslims, the exclusive Islamic Sharia law applies as if it is the legislated law. These laws apply for couples belonging to the same religion, not to others. Hindu marriage law validates marriages performed according to Hindu customs. So do the Islamic, Christian

and Parsi marriage laws for Muslims, Christians and Parsis. But, registration under the Special Marriage Act makes non-ritualistic and cross-religious marriages valid. It means that except marriages under the Special Marriages Act, marriages are valid only if respective religious rituals are observed. Yet Justice Karnans judgment virtually dismisses the mandatory rituals and customs stipulated for marriages as irrelevant. He does not ask why the couple did not register their live-in relation under the special marriages law which needs only two witnesses and notice to the society, not its consent. Like on marriage, so on divorce and alimony also there are divergences among different marriage laws. Traditional Hindu law did not provide for divorce. But the legislated Hindu Marriage Act altered the traditional law and provided for divorce on specific grounds or by mutual consent. And in every case alimony payment is determined by court. The Parsi law allows divorce including by mutual consent and court-determined alimony. Till 2001, the divorce law applicable to Christians (Indian Divorce Act 1869) had heavily discriminated against female spouses. This was corrected, though only partially, only as late as in 2001. Till then, Christian marriages were not terminable by mutual consent and alimony to a Christian wife was capped at one-fifth of the husbands income, which was removed only in 2001. Under the Islamic Shariat law, a Muslim husband can divorce his wife by pro nouncing talaq thrice, without giving any reason. But his wife cannot ask for divorce unless he had granted her that right. The Dissolution of Muslim Marriages Act 1939 extended the grounds on which Muslim women could seek divorce. But in Islamic divorces, including through triple talaq, alimony for the divorced Muslim wife is limited to only three months (three menstrual cycles). When in the case of one Shah Bano (a 62-year-old Muslim divorcee) the Supreme Court directed that she was entitled to alimony like any non-Muslim, the Muslim community protested against it as an invasion of the Islamic Shariat. It became a high-voltage political issue in the 1980s and the government had to pass a law to overrule the Supreme Court judgment and legislate Shariat principles of alimony. So, if the couple before Justice Karnan were legally husband and wife under Islamic law, the lady would have got only three months maintenance. Could a woman partner in a live-in relation with a Muslim male get better benefits than a legally

wedded wife? Will the alimony continue in case she enters another live-in relation or marries? A court decision, which is a legal precedent, should hold good all such situations. Otherwise it is only a panchayat verdict.
With the marriage, divorce and alimony laws of India lacking commonality, how then could the court have done justice to the deserted lady? Could it not have ordered relief to the victim, construing live-in relations as a quasi-contract or on common law principle of justice, equity and good conscience, thus keeping it outside the matrimonial domain? In equating sex with marriage and vice versa the more desirable options disappeared from the court radar. After doing justice specific to the case, the judge could also have suggested a separate law to protect the victims of live-in relations in future. And he could have reinforced the need for a common civil code for all religious groups in the country which is the ultimate answer for the contemporary problems. In the interest of the sanctity of legal marriages, which is not just the equivalent of sex and includes other legal and moral obligations, this exotic judgment deserves to be overruled. 13. Laws alone cannot fight caste bias The move to strengthen the Scheduled Castes and Scheduled Tribes (Prevention of Atrocities) Act, 1989, has to be seen in the context of the next Lok Sabha elections due in less than a year. The Congress-led United Progressive Alliance government seems to think that by addressing the sense of insecurity of Dalits and tribals, it will be able to build a sizeable vote bank. The idea is to define atrocities a little more comprehensively so that if a Dalit or a tribal is prevented from contesting elections or such an elected person is prevented from discharging his duties or if any of them is socially or economically boycotted, the law can be used against the guilty. One crucial change proposed is that the accused should have the foreknowledge that the victim is a Dalit or a tribal if the Act is to be invoked against him. Be that as it may, during the two decades the Act has been in force, it has not curbed the number of cases of atrocities against the Scheduled Castes and the Scheduled Tribes. Far from that, the figures available with the National Crime Records Bureau suggest that atrocities against Dalits have more than doubled during this period. Even when the Bahujan Samaj Party was in power in Uttar Pradesh when the maximum number of cases were registered under the Act, there was no let-up in the atrocities against Dalits. Police continue to show reluctance to register cases under the Act and even when cases are registered, they fail on the investigation front. Small wonder that the conviction rate in such cases has been abnormally low. It also needs to be pointed out that there have been instances when the law, which has stricter provisions for bail, was misused to punish innocent persons. The anti-rape law was strengthened recently but it has not reduced incidents of rape. Similarly, to expect the amended Act to reduce caste-based atrocities is not to know the social roots of caste discrimination, which needs to be fought socially, politically, economically and legally.
CURRENT AFFAIRS (27.06.2013)

1. $1 = Rs. 60.72 The rupee continued its streak of hitting undesirable milestones and touched an all-timelow of 60.76 a dollar on Wednesday. But it closed lower than its previous record low of 59.98. The rupee ended at 60.71/72, compared with its Tuesdays close of 59.66/67 in the foreign

exchange market. The major catalyst for todays swift fall was stop losses of banks being triggered the moment it crossed the 60-mark.The rupee plunged to a new low against the dollar in the spot market on back of strong dollar demand from oil importers, said Sugandha Sachdeva, AVP & Incharge-Metals, Energy & Currency Research, Religare Securities Limited. In the past 10 days, the rupee has mostly opened with a gap of 30-40 paise, indicating the impact of non-delivery forward markets on the rupee rate. 2. The right to sanitation Astaggering 2.4 billion, or one-third of the worlds population will continue to remain without improved sanitation in 2015, says a recent World Health Organization and United Nations Childrens Fund report. This is a terrible violation of basic human dignity, because clean drinking water and basic sanitation are human rights that impinge on the exercise of other rights. To be sure, the proportion of the population without adequate provision decreased from 51 per cent in 1990 to around 33 per cent in 2011. East Asia has registered a 40 per cent increase in sanitation coverage. But recent global progress still falls short of the 2015 Millennium Development Goal target to halve the proportion from the 1990 baseline. The shortfall is in the region of eight per cent, which translates into half a billion people. This relative failure must also be viewed against the significance of the sanitation goal for other targets to reduce child mortality, improve maternal health, combat HIV/AIDS, malaria and other diseases. A major cause of concern for public health still remains, with 15 per cent of the worlds population practising open defecation. Despite a declining trend from 24 per cent in 1990, the practice is rampant in over a quarter of the population in 27 countries. Water contamination is of particular concern for two reasons. First, while the MDG target relating to drinking water was achieved in 2012, some three-quarters of a billion people continue to rely on unprotected sources. Second, the MDG target on clean water is based on evaluations of the nature of construction of the source, in terms of contamination from the outside, rather than the actual quality of water people consume. Thus the treatment and disposal of faecal matter are major challenges. Instructive for India is a study undertaken for the Water and Sanitation Program and the World Bank. It estimates the cost of inadequate sanitation for the countrys economy at $53.8 billion a year, a figure equivalent to 6.4 per cent of GDP. Among the so-called BRICS countries, India fares by far the worst, with some 627 million resorting to open defecation. The statistics elsewhere are strikingly small; 14 million in China and half that number in Brazil. The importance of proper sanitation to disaster preparedness can hardly be overstated, given the susceptibility of affected populations to waterborne diseases. Clearly, universal coverage must remain the core objective, at least at the level of basic offering of sanitation services and market-based alternatives as a supplement. This may prove a sustainable combination to rid the globe of the ruinous consequences of insanitary conditions. 3. Assams disappeared, Indias shame Several people have asked me why I chose to write a novel set against the backdrop of the Assamese insurgency. The truth is that I had to deal with the subject because my generation has grown up under the shadow of this violent conflict. It is impossible not to tell stories set amid the conflict because almost all my memories of childhood andadolescence have been shaped by it. In fact, when I was in my teens one of the most shameful episodes of human rights violation under Indian democracy was unfolding. Throughout high school, I read reports in Assamese papers about the discovery of mutilated bodies or the massacre of entire families (such as poet and former insurgent Megan Kacharis family) and heard stories from people in our ancestral village. My generation grew up amid this normalised sense of fear. Since it seemed so regular, and hence normal, a lot of us didnt pay much attention to it until it touched us in some way. That happened to me in 2001, when a person called Jyotish Sarma was killed not very far from my house. The next

morning, I was waiting for my school bus on Zoo Road Tiniali, Guwahati, when a few young men riding a Bajaj scooter stopped to tell me that I should return home, because soon there will be trouble. I had a test in school that day. I couldnt have skipped it. That afternoon, when I walked down from the bus stop to my house about an hour later than usual, my mother hugged me and cried because she was so worried. I told her about the demonstrations that had blocked the streets of Guwahati, delaying my school bus. Later, I learnt, the people had taken to the streets to protest against the government, tired of the mysterious murders. Blood-stained stories From that day onwards, I started asking my parents questions and reading the local papers keenly. All the stories I read were stained with blood. I understood that our government was systematically and extra-judicially killing innocent civilians, people who were considered sympathisers of the separatist movement led by the United Liberation Front of Asom (ULFA) who wanted a sovereign and free country of Assam. People say many who were killed and disappeared had nothing to do with the insurgency. They were either close friends or relatives of the rebels. By then, a large number of rebels had surrendered. But a lot of them hadnt. The government couldnt lure them with its lucrative surrender schemes. Frustrated, it wanted to poke on raw wounds; touch where it hurt the most. If you dont surrender, we will kill your dearest sister, mother, father, brother, best friend, brother-in-law and we dont care if they support the separatist movement or not that was the message behind the killings. Masked gunmen visited the homes of these people at night to pick them up. Their bullet-ridden bodies were found in random places. Sometimes, they were never found. In the small rivers of Assam, in streams, in forests, mutilated body parts were discovered that were probably those of the victims. The Secret Killings of Assam remain one of the most shameful, underreported chapters of Indian democracy. Despite such widespread human rights violations, very little of it was covered by the Indian media and almost none by the international press. It is reminiscent of the Dirty War in Argentina: a period of state terrorism during the 1970s when approximately 22,000 people who opposed the military dictatorship were killed or disappeared. Even now, the Secret Killings of Assam resurface only during the elections when contesting parties sling mud at each other. The media tell us that the K.N. Saikia Enquiry Commissions report clearly indicates the complicity of the Indian government and the army in orchestrating these killings. We still dont know what the exact truth is. We would probably never have a clear picture and perpetrators would be never brought to book. All that remain are relatives of those victims. For the people who found bullet-ridden bodies, or heads or legs or fingers, of their family members, at least there is closure. But for the ones whose sons and sisters never returned home, it is a flame thriving on their blood, tears and sweat. In 2012, a family conducted the last rites of their son seeking such a closure they constructed an effigy, dressed and cremated him. A local TV channel covered the news. I saw the mother howling and wailing over the effigy, hugging it, refusing to let it be cremated as if it was her sons real body. Has closure really come for that mother? Writing on fear My generation grew up surrounded by this violence, just like the protagonist of my novel, Pablo, an adolescent boy growing up in this period I heard his voice clearly in my mind. I also wrote this book because I was interested in the different ways in which fear percolates into the minds of people living under terror and what kind of choices they make due to this fear; because I wanted to celebrate the lives of people in rural Assam who have borne the brunt of Assams insurgency; because I wanted to suggest that life goes on despite everything; because I wanted to think deeply about the generation in Assam born around and

after 1979 a crucial year for Assam because it was the year ULFA was formed, the year the Assam Movement started; events that changed things forever for the worse. Anger and the book Anger was an almost insurmountable obstacle while writing the book. Anger at how human rights are recklessly violated in my home State by the security forces and the insurgents. Often, while writing, I would end up crying without being aware of it. But the novels I have loved and admired are about gross social injustice and at the same time, deeply political, subversive, tender and hopeful; the conflicts of the human heart are their central preoccupation. I was very worried that I would end up writing a book that I wouldnt like reading and that is why I had to tone down the bitterness and anger while rewriting it. I wanted it to be an optimistic book that would look beyond the ugliness of violence. I didnt want to write a bitter, angry story that would thrive on embracing victimhood because I do not believe that the perennially resilient people of Assam are victims; we are, rather winners, survivors. Also, too much anger directed at the government would have placed Delhi (the seat of Indian government) centrally in my novel. I wanted to avoid that because Assamese life has more meaning than the violence, than its relationship with Delhi. Assam may not be sovereign politically, or economically, but the Assamese imagination has to remain sovereign. Extra-judicial killings by security forces during the separatist insurgency continue to be a traumatic chapter for the people of the State 4. Banihal-Qazigund rail link opened It will end isolation of Kashmir Valley in winter and usher in growth in the region: Manmohan. Waving a green flag, Prime Minister Manmohan Singh and Congress president Sonia Gandhi scripted a red letter day on Wednesday, launching a rail project to connect Kashmir with Jammu and the rest of the country. First, they inaugurated the newly constructed station at Banihal, the last one in Jammu, and then the 11.215-km Pir Panjal tunnel, before boarding the train they themselves flagged off. They travelled through the countrys longest transport tunnel, which links the valley with Jammu and opens up a new horizon of development in the State, ending its isolation from the rest of the country in winter. They enjoyed the 12-minute ride to Qazigund with 100 students, mostly girls, of the Banihal Higher Secondary School, and made the 17.8-km ride back to Banihal, passing through the tunnel, the second longest in Asia. Those who accompanied them were Governor N.N. Vohra, Chief Minister Omar Abdullah, Railway Minister Mallikarjun Kharge and Union Health Minister Ghulam Nabi Azad. Dr. Singh and Ms. Gandhi interacted with the students and assured them of aprosperous future. Hailing the Banihal-Qazigund section, which IRCON International executed at a cost of Rs.1,672 crore, as an engineering marvel, Dr. Singh said itsimportance was far greater as it would end the isolation of the valley at winter and speed up people-to-people contact across the country, besides boosting tourism. The rail link would make Jammu and Kashmir an integral part of the countrys development, he said, highlighting the scope for more growth in trade in commodities among various regions. Dr. Singh asked the Railways to complete the Katra-Banihal section at the earliest so that the people and the region could be better linked to the rail network nationwide. The KatraBanihal section, comprising the highest bridge across the Chenab river, is considered the toughest portion of the Jammu-Srinagar-Baramulla link. It is expected to be completed by December 2017. The Chief Minister exuded confidence that the return of UPA III would ensure the completion of the remaining section of Banihal to Katra and the whole rail link project. Describing the rail project as part of the United Progressive Alliances efforts at developing

the State, Dr. Singh said 34 of the 67 projects announced in 2004 had so far been executed. He said Rs.7,215 crore had been sanctioned for completing the rest. A sum of Rs.1,000 crore had been allocated for skills development and employment generation for the States youth. Ms. Gandhi said the linking of the Jammu region to the Kashmir Valley was the fulfilment of a dream that seemed impossible. The project was a matter of pride because the Railways had to overcome several challenges. It would usher in a new era of development and boost handicraft and tourism and create jobs for youth and an opportunity for the people living on the edge, especially women, to change their lifestyle. Roads and highways were also being developed, with priority for rural roads, she said. Mr. Abdullah said the project would change the lives of the people by boosting trade and tourism. It would not only connect the two regions of the State but also the hearts of the people. 5. Rupee breaches 60 barrier versus dollar Declining euro precipitated the fall of rupee in the last couple of hours of trading The rupee touched an all-time low of 60.76 a dollar on Wednesday, breaching its previous historic low of 59.98 (intra-day). It closed at 60.71/72 as compared to its Tuesdays close of 59.66/67 in the foreign exchange market. It was a sharp reaction and it was not expected, said N. S. Venkatesh, Chief General Manager, Treasury, IDBI Bank. Stop-loss The moment the rupee touched 60, there were lots of stop-losses which got triggered and short positions were covered resulting in rupee depreciating further. The dollar hasstrengthened against all major currencies and the dollar index also strengthened.The weakness is expected to continue for a couple of days and the rupee is expected to pull back after that on expectation of dollar inflows for the HUL share buyback as also remittances from NRIs, said Mr. Venkatesh. According to him, it would strengthen to 59.50 levels in the current juncture. The European Central Bank also was not supportiveof euro and the euro also started falling against the dollar, which precipitated the fall of rupee against the dollar in the last couple of hours of trading. Speculative movements Total speculative movements were happening after the 58 levels, said K. N. Dey, a Mumbai-based foreign exchange analyst. At present, non-delivery forward markets are guiding the rupee rate. Over 11 per cent fall in two months is extremely alarming, which, in turn, pushes the prices of commodities, especially oil and coal, Mr. Dey added. The rupee fell 1.8 per cent on Wednesday, the worst performer of the day among the emerging Asian currencies. In the last ten days, the rupee mostly opened with a gap of 30-40 paise, clearly indicating the impact of non-delivery forward markets on rupee rate. Indian rupee plunged to a new record low against the U.S. currency in spot market on the back of strong dollar demand from oil importers, towards month-end needs, said Sugandha Sachdeva, Assistant Vice-President & Incharge-Metals, Energy & Currency Research, Religare Securities Limited. The rupee has seen a precipitous fall of more than 7 per cent in the last one month, as recovery seen in U.S. economy and an expected scaling down of monetary stimulus by the U.S. Fed by year-end is resulting in FIIs (foreign institutional investors) withdrawing money from emerging markets andinvesting in U.S. assets. Further, adding to the rupees woes is the renewed strength witnessed in dollar index, now trading at its three-week high and 10- year bond yield that has surged considerably by around one per cent on Wednesday. As rupee has breached the invincible 60-mark, it is likely to depreciate further in continuation of its strong bearish momentum, though a short bounce-back cannot be ruled out, said Ms. Sachdeva, adding, the level of 62 looks imminent in the coming days. Sensex drops 77 points

As chances of a rate cut was eroding and the fall of rupee had accelerated, FII outflows also intensified, resulting in stock indices closing at lower levels. The benchmark Bombay Stock Exchange 30-share sensitive index, Sensex, fell by 77.03 points to 18552.12. The broader National Stock Exchanges 50-share Nifty fell 20.40 points to close at 5588.70. However, technology, FMCG, power and information technology (IT) stocks ended in the positive territory, with IT gaining the most with 1.69 per cent on the back of falling rupee which is expected to increase the profit of IT companies, which are export-oriented. The biggest loser was automobile companies as BSEs auto stocks dipped by 1.79 per cent followed by metals 1.31 per cent, consumer durables and healthcare 1.12 per cent each and banks 1.03 per cent. 6. Politics of divestment State Governments picking up stake in Central PSUs is no worse than public financial institution doing so on cues from North Block. Disinvestment in central public sector undertakings (PSU) has rarely if ever been enmeshed in local politics. That has changed with the Tamil Nadu Government initially voicing its opposition to the Centres decision to offload 5 per cent in Neyveli Lignite Corporation (NLC) and later expressing a desire to acquire this stake. From a public policy framework, the State Government is well within its rights to acquire the stake that the Centre plans to divest. Nothing prevents it from bidding for the promoters (Centres) shares offloaded through the stock exchange route, which the Securities and Exchange Board of India (SEBI) had devised specifically for meeting the prescribed minimum public float requirement (10 per cent in listed PSUs). That said, there is no case for according any preferential status to the State Government either in terms of price or the quantity of shares to be offloaded in its favour. The latter must outbid other investors in a competitive auction if it is to acquire the entire quantity on offer, so that the Centre gets a fair return on its original investment. True, the above transfer from the Centre to a State Government may not comply in spirit with the objective of SEBIs minimum public shareholding norm which is meant to ensure a certain degree of liquidity for a companys shares in the secondary market. But the Centre certainly cannot complain on this count, considering its own record of having got institutions such as the Life Insurance Corporation to pick up the bulk of shares offloaded in divestment auctions of ONGC or Hindustan Copper. In the present case, the Tamil Nadu Government, far from being reluctant as the state-owned financial institutions were, is more than willing to buy the 5 per cent that the Centre wants to sell in NLC. The Centre, therefore, has no moral or financial case to deny the Tamil Nadu Government the opportunity to bid for the proposed offer-for-sale of NLC shares. Therefore, the fact that it will not lead to the desired level of public float or a genuinely dispersed shareholding structure cannot be used to disallow the State Government from acquiring the stake the Centre intends to shed in NLC. Having said this, one can question the wisdom of the Tamil Nadu Government spending close to Rs 500 crore for this stake. Surely, this amount is better spent in building schools and improving public hospitals in the State. 7. No more concessions till US reciprocates US secretary of state John Kerrys recent visit did little to revive the euphoria generated by the UPA leadership after inking the India-US Civil Nuclear Agreement during prime minister Manmohan Singhs first tenure. Kerry valiantly sought to allay Indian fears bypromising the US will not enter into talks with the Taliban as long as they cant be trusted. But his vague assertions have failed to dispel the impression that Pakistan is driving the US Afghanistan policy. The US has already gone to great lengths to accommodate the Taliban and Pakistan. Such is its strategic desperation that contrary to its earlier position, it has accepted the Talibans vague assurances about Afghan territory not being used to foment violence outside the country.

On terrorism, India would have preferred some public pressure on Pakistan, considering Pakistan-backed Hijb-ul-Mujahideen attacked an Indian army convoy on the outskirts of Srinagar, killing eight soldiers even as Kerry was holding talks with Indias external affairs minister, Salman Khurshid. The fact that Pakistan was diverting US aid to fund terrorist outfits operating from its soil was corroborated by recent dole by the ruling Pakistan Muslim League (Nawaz) to Jamaat-ud-Dawa, headed by 26/11 Mumbai attack mastermind, Hafeez Saeed. Instead of promising to rein in Pakistan, Kerry lectured on the new silk route, connectivity via Pakistan from South Asia to Central Asia, finally recommending India and Pakistan to invest in each other. Barring smiles and photo-ops and inane joint statements, the latest round of India-US strategic dialogue produced nothing substantive. Kerry insisted on a bilateral investment treaty and pushed for the nuclear reactor pact between US companies and the Nuclear Power Corporation of India. Clearly, the US wants a bigger cake of Indian market and seeks dilution of Indias nuclear liability law. New Delhi should not be too eager to oblige but insist on reciprocal commitments from Washington to protect its strategic interests. 8. India needs innovative banking to displace moneylenders A clutch of companies and NBFCs will apply for new bank licences by July 1, the deadline set by the RBI. This is welcome. India needs more banks and innovativebanking to displace moneylenders who occupy the unbanked vacuum. Prospective applicants may include the AV Birla and Anil Dhirubhai Ambani groups and NBFCs likeIDFCBSE 0.58 %, Shriram Capital and L&T Finance. Promoter groups cannot set up a bank directly. They will have to set up a wholly-owned non-operating financial holding company - which will hold the bank and other regulated financial services companies - within 18 months of a licence. However, no deadline has been set for grant of licences. The RBI is right not to compromise on integrity, but to keep the process open-ended is not a good idea. A decision should be taken either way within a clear time frame. Those who qualify should be given regular banking licences on par with existing ones. More banks will mean more competition, driving banks to rural areas. The new index of financial inclusion, released by Crisil, shows that Bimaru states and even industrialised ones like Gujarat and Maharashtra fare poorly in financial inclusion. Against a national average of 40.1, Gujarat's score was 38.6, and Maharashtra's 37.5, with even Andaman & Nicobar Islands, Orissa, Sikkim and Tripura faring better. Southern states topped the chart. More people in more states need access to the banking system. However, the RBI reckons that financial inclusion can be achieved only through expansion of branch networks to rural areas. It says that a new bank must have at least 25% of its branches in rural areas. This is absurd. Established banks have not found it worth their while to open rural branches. Making new banks waste capital is a bad idea. Instead, the RBI must allow innovative forms of banking, especially mobile banking that is well-placed to leverage on the electronic infrastructure being put in place by the unique identity project. This can be achieved by a joint venture between a public sector bank and a telecom operator. Use technology, not coercion. 9. Beyond Snowden: US surveillance system a useful model for democratic, terror-hit India Edward Snowden, who leaked details of the US National Security Agency's PRISM electronic surveillance programme, is now in Moscow, where he has become embroiled in a sometimes farcical cat-and-mouse game involving several countries. But the high drama surrounding Snowden obscures the important debate on government surveillance. The only response to the US intelligence agency accessing users' information from internet companies

has been outrage, in the US and around the world, including in India. But the issue is about a lot more than Snowden's fate and anger at Big Brother. FINE BALANCING ACT At its core, the issue of digital privacy is about reconciling three somewhat contradictory objectives. The first is the government's responsibility to ensure the security of the state and its citizenry. The second is individuals' right to privacy and opportunity. And the third is the preservation of a conducive business climate, in this case, for internet firms that often provide services to users for free. Thus, gathering vital intelligence might impinge on individuals' privacy, ensuring citizens' rights may mean sacrificing business interests, promoting internet access could necessitate concessions on security, and so forth. Each state has to find its own balance between security, privacy and a favourable business climate based on the nature and severity of the security threats it faces, its legal regime and system of governance, and its economic landscape. A perfect solution is impossible. But a state can nonetheless strive for an optimal balance between its competing priorities. Unfortunately, on each measure security, privacy and business climate - India's efforts can be said to have fallen short. SHORT ON SECURITY Take security. All states, especially those facing major security threats, must at times conduct surveillance on individuals to gather critical intelligence, including electronic surveillance, in a world where information is increasingly becoming digital. In fact, a state that does not have adequate electronic surveillance capabilities is failing in its security duties. While details about India's surveillance capabilities are not all public, it appears to be lagging in this respect. Its shortcomings were deeply exposed during the 26/11 attacks in Mumbai, when the perpetrators used voice over internet protocol (VoIP). That led to the fast-tracking of the Central Monitoring System (CMS), theoretically capable of monitoring a wide variety of communications, including various online activities, wireless phone conversations and text messages, and satellitecommunications. CMS has been repeatedly delayed due to inadequate infrastructure, and is not expected to be activated until December, almost a year later than previously envisioned. India also falls short on the matter of data privacy. Whereas the US makes strict legal divisions between spying on individuals in the US and those abroad, the distinction in India is less clear, meaning there is greater leeway for the state invading - and possibly abusing - the privacy of individuals it is supposed to protect.The Information Technology Act - specifically Section 69 and its attendant clauses - is extraordinarily wideranging, empowering both central and state governments to "exercise powers of interception". 10. Reform coal policies to fix power cuts There is welcome action on the power front. The Cabinet decision last week to revisepower tariffs due to higher imported cost of coal - subject to regulatory approval - is sensible, although the broader policy objective must be to dismantle the stodgy public sector monopoly in coal and boost domestic supplies. There are huge and growing shortages of coal, our main source of energy. So, it makes sense to provide for a transparent pass-through mechanism to take into account higher incremental costs of sourcing coal from overseas. Also, what is required is proactive policy - given our large proven reserves - to step up mining and evacuation of domestic coal to stamp out shortages in the medium term or earlier (coal projects tend to be of long gestation). The reported plan of the Centre to use surplus coal from captive producers to meet overall demand also makes sense, although the move underscores the fact that the policy of captive mining is suboptimal and worse. The anomaly clearly restricts the economies of scale in what are lumpy, capital-intensive projects, and thus needlessly rev up costs, when the policy environment ought instead to encourage multiple coal producers to competitively seek custom, and provide timely deliveries in the bargain. What's envisaged is that to meet a part of the growing annual requirement, Coal IndiaBSE -

0.38 % would be able to import coal on a costplus basis for willing thermal power producers (the latter may also import the fuel themselves). But any deviation from competitively-bid tariffs would need to be vetted and justified by the central and state power regulators, and power producers anyway would need to keep tariffs competitive to meet the merit order dispatch criteria. Besides, rigidities like inflexible tariffs would plain short-circuit power.
CURRENT AFFAIRS (28.06.2013) Part 1

1. Despite opposition, Cabinet approves gas price increase Prices could double by 2014 leading to hike in power tariff and fertilizer cost Despite opposition from within the Cabinet and outside, the Manmohan Singh government on Thursday approved a doubling of natural gas prices from the present $4.2 mbtu to $8.4 mbtu from April 1, 2014. Many experts feel the increase would likely lead to a hike in power tariffs, increase fertilizer cost and make CNG transportation more expensive. In the Cabinet meeting, some Ministers objected to the hike when gas production from the KG D6 block had been consistently falling and asked why no action was being taken to check it. As a result of the hike, power tariffs are likely to go up by Rs. 4.70 a unit for gas-based plants and by almost 16 to 20 paise in other cases. Earlier last week, the government allowed the power sector to pass on to the consumer any increase in the the cost of importing coal. That means a hike in tariff. The CCEA has approved $8.4 mbtu as the new gas price to be effective from April 1, 2014, Petroleum and Natural Gas Minister Veerappa Moily told journalists after the conclusion of the CCEA meeting. The Cabinet Committee on Economic Affairs, headed by Prime Minister Manmohan Singh, went along with the Rangarajan Committee formula and the demand made by Mukesh Ambani-owned Reliance Industries Limited (RIL) for doubling, thus bringing them on a par with the international price of LNG. The CCEA has decided to overlook the $6.775 mbtu proposed by the petroleum ministry and has instead opted for the Rangarajan formula advocated by the Finance Ministry and the Planning Commission. The Rangarajan formula would be applicable for five years. The new $8.4 mbtu price, which will be reviewed every three months, will apply to all the gas producers uniformly including the state-owned firms like Oil India Limited (OIL) and Oil and Natural Gas Corporation (ONGC) and private companies like RIL. The Rangarajan Committee had used a formula of long-term and spot liquid gas (LNG) import contracts as well as international trading benchmarks to arrive at a competitive price for India. While the Rangarajan panel had recommended revising domestic gas prices every month, the CCEA has opted for a quarterly revision. The price of gas in April next year when these guidelines will come into effect would be around $8.42 and over $10 in the following year. This is because Petronets deal with Qatars RasGas has a pricecap which lifts in January 2014, linking gas prices fully with crude. RIL gas rates were fixed in 2008 at $4.2 for the first five years. Later, APM rates were revised in June 2010 when prices were raised to $4.2 from $1.79. The revision of gas price beyond the $5 mbtu mark was strongly opposed by the power and fertilizer ministries as well as the Left parties. The two ministries were of the view that any price hike beyond this figure would badly impact the power and fertilizer sectors and lead to massive hikes in power tariffs and prices of fertilizers. Left parties termed it as a move by the petroleum ministry to help RIL. However, the Petroleum Ministry argued that this price hike was needed in order to attract investments in the oil and gas sector and give a big fillip to domestic production and exploration activity. An increase of one dollar in gas price would result in $128.5 million (Rs. 707 crore) in additional royalty and profit petroleum. The variable cost of generating electricity would be around Rs. 5.40 a unit at the new gas price, taking the total cost of generation to Rs. 6.40 a unit. The outgo for every $1 increase in gas

price will be up to $1.138 billion (Rs. 6,260 crore). The outgo for the fertilizer sector due to a $1 hike in gas price will be $406 million (Rs. 2,233 crore). 2. Reimagining the Silk Route The samosa and seviyan were my first introduction to India being a part of something bigger. Stuffed ravioli and slippery spaghetti from Italy to the ubiquitous dumpling and noodles of a staple Chinese take away, opened up a wider but familiar world. In my school in the sixtie s, based on intuitive visual response and little else, my first exhibit compared the rhythmically paced pirouettes of Kathak to flamenco. The ease with which we managed to collage fabulous Indian, Chinese and Persian flora and fauna into exotic trees of life helped us question the complex origins of iconographies. Twenty years we shared in the new dialogues between parent civilisations (note: not countries) evoking shared cultural memories and religious moorings through Unesco, which had launched a brilliant but sadly unnoticed Silk Roads initiative. In 1877, German explorer Baron Ferdinand von Richtofen used the name of a treasured cloth as a seductive metaphor to coin the term Silk Route for a conjunction of ancient, though not smooth, caravan routes scattered over Eurasia along the Far East, Central Asia, South Asia, reaching up to Africa. Probably inspired by wily tales of secrecy linked to the making and trade of silk an invention romantically ascribed to a Chinese princess fishing out a fibrous cocoon found floating in her tea cup the route was active, offering a lot more. The tangible and the intangible The first millennium BC through the middle of the second millennium AD witnessed seminal give and take in the areas traversed by the Silk Route. Buddhism and Islam became world religions. Sufis and poets provided enlightenment, spices pickled foods. Pottery, glass, gold, tea, indigo, jade and textiles made merchants rich and crafts people prospered. The vocabularies of music, architecture, dance, drama and design morphed. Values became more universal as world views expanded. The flux was intense, effecting a profound movement, deeply impacting our thought, actions and deeds. The impact on both tangible and intangible heritage was profound. The Silk Route in fact became humanitys first global exchange a precursor to the Internet not just opening multiple ways but offering a web of choices, instrumental to great innovations that have directly impacted culture, science and commerce of today. As a conduit of transmission of knowledge and wisdom and as a perennial source of adventure, discovery and power, its deep resonance still evokes fresh perspectives which are perhaps just as vital now for the future of our world: a world fast shrinkingHollywood celebrities working with Asian teams and themes, IT with its cyber web of interdependencies, culinary arts tickling changing palates, material goods and games catering to emerging life styles, medicines and wellness industries integrating the ancient with the modern. New Routes? How does South Asia reach out to ride the waves? The peripheries of our subcontinent can once again become vital links as dynamic and lucrative gateways to the rest of Asia. With strategic interventions to ease political tensions, fragile Kashmir, once a vital junction on a great crossroads and the troubled seven sisters along the volatile North Eastern Himalayas, could well have an indispensible stake in such a plan. Connectivity of areas that have become conflict-affected would symbolise relative prosperity for the whole region, stimulate migrations and exchange, stabilise fast disappearing skills and livelihoods, re-define securities and modernity with a purpose. The efforts to re-establish ancient routes are tied up with the pragmatic needs of new nation states along the routes, such as in the former Soviet Union, for modern infrastructure and this millenniums goals for development. Today, Unesco is perhaps less persuasive than the realpolitik of Uncad, UNDP, Unescap and ADB pooling their might to develop Trans Asian Highways and Trans continental Railways. Talking about revival of Silk and spice Routes for intellectual or ideological cross fertilization of ancient culture will continue but if

commercial, social and geopolitical justifications are found, a lot else follows without much ado. In 2004 India became signatory with 30 countries for joint projects on Trans Asian transportation networks. Chinas role was to promote a single axis linking Europe-Central Asia with its mainland. Bypassing most of South Asia with exception of a small opening into north-east Pakistan, China carries on with much else for purposes other than trade. India, though, has done little, neglecting great economic and geopolitical dividends for northwest or north-east India. More than four decades ago, I crossed the picturesque Mughal route running through Rajouri, Poonch and Thanamandi on mule back. Lately revived for tourism, other areas such as Ladakh and north-east, remain barely accessible. The governments new road building programmes are somewhat limited, focusing on mainland connectivity, giving negligible attention to border States. Indias unpreparedness to reach out to Central and East Asia has resulted in it confining itself to a South-South Asia box. Reviving Kashmir Independent cross cultural exchange within an emerging region, particularly for Kashmir will revive the States historic role as a veritable and dynamic crucible of major transformations witnessed over centuries. This rare alchemy between Jammu, Kashmir and Ladakh has for too long remained static and uninspired. Hinged as the region is to the problematic borders of Pakistan and China, it is losing its critical role in a unique network of cross cutting identities. What passed through this region went through a transformative rite of passage. Not even an institution like religion emerged untouched. As an important transit emporium in the trade between India and Central Asia, Jammu, Kashmir and Ladakh represent an unusual coexistence of three great faiths tempered by living traditions of Hinduism, Buddhism and Islam. The Trika of the three continues to influence peoples lives, giving the call to human conscience in an increasingly polarised region. Kashmir embodies Kashmiriyat a quality the young holding guns can barely understand. While in Kashmir recently to launch the unprecedented art programme conceived for the new Air terminal in Mumbai it took place in an Intach-restored building on the River Jhelum the much acclaimed Baroda based artists, Nilima Sheikh and B.V. Suresh collaborated with an interdisciplinary team of Kashmiri craftspeople on a huge mural entitled conjoining lands. Fayaz Ahmed Jan, the most reflective papiermache artist amongst them, has created evocative and unprecedented panels depicting life in Seher or Srinagar. When asked by the press Why Srinagar? my reply may have resonated with the subconscious of young Fayaz, who I have known over three decades growing up in troubled times, Stand anywhere in the old city or simply float on its lakes of paradiseone feels the fragrance of Bokhara, the streetscapes of Isfahan, the recurring motifs of Xian and the immeasurable presence of Sadashiva. Srinagar permeates the senses, expanding ones notion of land or being. I appeal to all right thinking politicians, adventurous entrepreneurs, hard nosed academics and imaginative stakeholders of creative and cultural industries to help bolster trans-national connectivity, by reinventing the idea of the Silk Route for the South Asian sub-continent. To begin with, a sublime riverine festival energising the decaying ghats and waterways of Srinagar will help. An international biennale positioning the best that Jammu, Kashmir and Ladakh have to offer needs to follow not as a mere mela of arts and crafts but as a veritable stocktaking of the finest thinking and creativity the sub-continent has on offer.The spirit of give-and-take that this ancient route inspired among civilisations can transform todays geopolitics 3. When the Ganga descends Had the elemental fury of flash floods not rained down on Uttarakhand last week, June 18 (June 19, according to some almanacs), would have been a day of festivity and ritual for Hindu devotes across north India. They would have relived the mythology of the Gangas descent from heaven to earth with a dip in its waters at various pilgrimage centres. Ganga

Dussehra celebrated on the tenth day of the waxing moon in the third month of the Hindu almanac usually coincides with the opening up of ice-bound holy sites such as Kedarnath, Badrinath, and Gangotri. This time, however, the sweeping devastation along the banks of the Ganga in Uttarakhand, with Kedarnath feeling its full force, swiftly transformed the mood from celebration to mourning. In the midst of so much grief, how do we reflect on the mythology of Gangas descent in a way that it enables us to comprehend a tragedy of this magnitude, and perhaps relearn a relationship between human and nature that is lifeaffirming. For that to happen, it is necessary to look beyond the veil of ritual surrounding this myth. At its core, this mythology is made up of aspects which have been integral to peoples ways of life in mountains, lived in full awareness of the towering presence of nature. Two narratives The myth of Gangas descent contains two very different narratives. The first part is a narrative of power. At its simplest, the story of Gangas descent starts on a note of hubris, with a proud king called Sagara whose ambition is to conquer the world. As it becomes clear that there are few to rival Sagara, the gods above intervene. Sagaras 60,000 arrogant sons (all born of one of his wives) are reduced to ash by the wrath of sage Kapila for having disrupted his meditation. King Sagara dies of grief. For his sons, now mere heaps of impure ash, there is no salvation for generations on end. Then, Bhagiratha (descended from the son of Sagaras second wife) ascends the throne, and from here the narrative of the myth changes track. Deeply stirred by the fate of his ancestors, he leaves his throne to undergo two long and increasingly severe penances in the Himalayas. The gods are pleased. Thus Ganga descends from heaven to be caught in the locks of Shiva, who alone can withstand her tempestuous force. Bhagiratha performs his third penance, whereupon Shiva releases Ganga in several streams. Ganga follows Bhagiratha across mountains, forests and plains to the end of the world where his ancestors remains lie. Midway, the wilful Ganga scatters sage Jahnus sacrificial offerings and he swallows her up in rage. Bhagiratha performs one more penance to have her released yet again, showing enormous reserves of persistence. Finally, Bhagiratha leads her to his ancestors ashes at Ganga Sagar. Having purified their ashes and paved their way to heaven, Ganga disappears into the ocean. Origins of a name Thats how the originating head stream of the Ganga gets its name Bhagirathi, say people, the other major headstream of the Ganga being the Alaknanda. These two headstreams, nourished by several others (such as the Mandakini, flowing alongside Kedarnath) come together as the Ganga, which flows across the plains until it reaches the Bay of Bengal. The myth of Gangas descent resonates at different levels in the lives of the people of Uttarakhand. At one level, the story of Ganga getting tangled in Shivas locks or inexplicably disappearing seems entirely believable in a geological landscape that has seen rivers changing course, or getting blocked swallowed by tectonic disturbances. In a wonderfully layered article written in 1994, well-known writer, poet and cultural theorist Pria Devi pointed out an interesting ecological aspect of Ganga Dussehra: It falls at the leanest moment in the annual cycle of the river, at the precise moment when, before the rains, she begins to swell with snowmelt at her source. It is as if the Ganga comes down from the heavens every year. At another level, this story provides the alluvium of cultural resources for a society to shape its ecology of existence. That is, if one stays connected to its core. Thus, in a land where nature resists all attempts at domination or subjugation, it is Bhagiratha, not Sagara with his goal of world conquest, who emerges as a heroic figure, articulating a different narrative of power. The qualities emblematic of this valorous figure: his powers of persistence, humility, and selflessness. Pria Devi puts it succinctly: What distinguishes Bhagiratha and explains his great popularity as a culture hero, is his non-violence, and his remarkable patience. He is quite clear about means and ends. His ends are selfless. It is not his own

moksha that he seeks. Equally, he will not seek his ends by applying his will outwardly as a force. He turns inwards....By the integrity of his self-government he compels outward sanction to his inner motives. This strand of cultural memory can be a potent resource for resistance, for it implies that notions of conquest of humans or nature be replaced by the idea of conquest of the self and its excess appetites, whether it is an individual, or society. Cultural memory Like a river this cultural memory flows through space and time now a subterranean existence, now a rapid current over ground. And when it does surface, it lays bare civilisational faultlines such as an exclusionary narrative of power impervious to the political ecology of inclusive instincts. In post-independence India, this cultural memory surfaced in the 1970s to herald a new phase of protest environmental resistance that one might term a Bhagiratha prayas (the Hindi equivalent for Herculean effort). This phase was accompanied by the articulation of a whole new discourse of Constitutional guarantees such as equality and citizenship emerging from the margins of the Republic, from the Narmada valley to present-day Niyamgiri hills. In Uttarakhand, too, the past four decades have seen noteworthy movements of environmental resistance built on this principle, such as the 1970s Chipko movement spearheaded by village women like Gaura Devi, which is considered Indias first green movement. From the 1970s to the 1990s, Gandhian activist and environmentalist Sunderlal Bahuguna through long fasts, and many others such as Professor Vinod K. Gaur and other experts of Himalayan geology, questioned the long term impact of big dams such as Tehri (built on the Bhagirathi), on the fragile ecological balance of the Uttarakhand region. As for the Ganga, listed among the 10 most endangered rivers of the world by the Worldwide Fund for Nature, it still awaits the collective conscience of a Bhagiratha to come back to life. Role of greed The qualities symbolised by Bhagiratha also exist as part of larger contemporary discourses, when we speak of sustainable development, disparities within nations and between hemispheres, or limiting consumption by putting a leash on gluttony. The story of Bhagiratha and Ganga is as relevant today, if not more. As news filters in of the near totality of natures devastation in Uttarakhand, it is becoming clear that humans have played their part in exacerbating the sheer scale of the disaster in terms of lives lost and property destroyed. Unchecked construction and increasing encroachment on the flood plains of the Ganga to accommodate more and more residential buildings, hotels and tourist rest houses in the name of development, have extracted a huge human cost for a Sagara-like conquest of the environment. Similarly, in the aftermath of the 1991 Uttarkashi earthquake, experts had pointed to the man-made factors responsible for large-scale destruction: the explosion of inappropriate building techniques and materials in the march to modern progress frequently accompanied with a disdainful neglect of local wisdom. Over the years the nature of protest may have changed, but the issues of entrenched interests vis-a-vis forest, mineral and water resources still remain; on the contrary, they have become more acute. Due to a range of factors, the catastrophe which brought forth a terrifying side to the Ganga not witnessed in recent times, occurred around the time of Ganga Dussehra. Yet seen in conjunction, the disaster and the mythology seem to be pointing to the same truth: ritual observance on an appointed day may be important, but is certainly not enough. It is equally significant to internalise the essential spirit and reality of the story of Bhagiratha and Ganga, and, for that, the pact between the self-reflexive human and nature needs to be revived. Myths have meanings that we ignore at our own peril 4. NAC to address UPA's unfinished social welfare agenda The flagship programmes are plagued by poor delivery systems

The chasm between the promise and performance of the Centres high profile flagship programmes, and the still ridiculously low government allocation on healthcare in the country will top the list of business at Fridays meeting of the Sonia Gandhi-led National Advisory Council (NAC). As the countdown to the next general elections, less than 11 months away, begins, the NAC remains focussed on the UPAs unfinished aam aadmi agenda. Nine years after the UPA came to power, the flagship programmes are plagued by poor delivery systems even as the UPA Ones commitment in the National Common Minimum Programme in 2005 to increase public spending on health from 1.04 per cent of GDP to 2.5-3 per cent remains unfulfilled. The NACs Mihir Shah who is also a Planning Commission member will present the draft recommendations on Reforms in Governance, Strengthening Institutional Capacity and Effective Implementation of Flagship Programmes, while council members A.K. Shiva Kumar and Mirai Chatterjee will jointly make a presentation on Universal Health Coverage. Devolution of powers The recommendations on governance reforms, NAC sources told The Hindu , is to realise Rajiv Gandhis dream of devolution of powers that lie at the core of panchayati raj. The objective of the presentations four key elements how to improve fund flows, introduce transparency into the working of the flagship programmes, maximise human resource capacity and build a new architecture of knowledge management right down to the subdistrict level is to bridge the gap between what Prime Minister Manmohan Singh describes as the gap between outlays and outcomes. Similarly, the ultimate objective of the suggestions proffered in the paper on universal health coverage (UHC) is that every citizen should be guaranteed a national health package (covering both in-patient and out-patient care) that is provided cashless at the point of delivery, either by the government, and where there are critical gaps, or by contracted-in private providers. The entire public health system will have to be re-structured, the paper says, with reforms in both the public and private sectors. The paper also recognises that it might take the next 10 to 15 years to establish UHC in India. If the period since 2004 has seen an unprecedented increase in spending in programmes of social inclusion, and a slew of legislation to secure the rights of the most disadvantaged, an analysis by the NAC Working Group on the flagship programmes shows that inefficient fund flows through the system resulting in delayed releases, are a major bottleneck hampering performance. The suggestions made include reforming the existing fund flow mechanism at various levels of government by enabling real-time transfer of government funds, replacing the file-based system of programme management by an Internet-based system that captures and propels the entire work-flow at all levels Central, State and local and providing all citizens.. real-time visibility of the movement of all government funds meant for them. It will thus lead to greater accountability and transparency of fund flows leading to empowerment of citizens, resulting in a powerful check on corruption. The paper points out that Andhra Pradeshs electronic fund management system has achieved efficient and optimised fund flows for various Rural Development programmes by operationalising the electronic movement of funds from a State-level fund to the destination accounts as and when expenditure is incurred. This system allowed movement of funds from a State fund right through to the beneficiary, cutting down multiple levels of releases. The Union Rural Development Ministrys approval is currently being sought for programme management by Internet-based platforms. The paper also argues that while the Union and the State governments must nurture local talent as community resource persons, it should augment its human resource pool by seeking out professionals from the open market. It suggests substantive financial incentives to attract professional talent to backward districts. Addressing another component knowledge management the presentation will recommend actions required to mobilise and manage knowledge resources. The challenge is

to build an adaptive system .. that learns from communities, from academics, and from its own experiences in implementation, and constantly uses this learning to improve programme outcomes on a continuous basis, says the paper, adding, It is vital to recognise all three sources of knowledge as important and complementary: peoples knowledge; academic or professional domain knowledge; and implementers knowledge. Most often, it is peoples knowledge that is ignored in programmes. The NAC Working Groups paper on UHC, meanwhile, draws both on the High Level Expert Group (HLEG)s suggestions as well as the extensive discussions it had with government and NGO experts. It suggests putting in place an overarching national health regulatory and development framework for ensuring provision of quality health care by both public and private providers. The paper also suggests that State governments be given greater flexibility in spending even as they are encouraged to develop more effective mechanisms to monitor performance and ensure compliance with essential requirements of the UHC. 5. CAD moderates to 3.6% For the whole of 2012-13, the Reserve Bank pegs it at 4.8 % After continued sessions of mayhem on the bourses and the free fall of the rupee to an unprecedented low of 60.72 against a perceptibly strengthening U.S. dollar a day ago, the Reserve Bank of India (RBI) on Thursday pegging the current account deficit (CAD) at 4.8 per cent of the GDP in 2012-13 came as a big respite. It offered a soothing balm to the authorities who have been at their wits end to stem the currency volatility and also provided time to small investors to nurse their networth wounds after the heavy battering of stocks. Even as the CAD at a record high of 4.8 per cent of the GDP last fiscal as against 4.2 per cent in 2011-12 continues to be a matter of concern, the positive cue was that the whole years figure surprised the market which had expected more. What came as a further silver lining was that the net deficit in foreign currency inflow in the fourth quarter (January-March) of 2012-13 signalled a sharp moderation to 3.6 per cent from a historic high of 6.7 per cent of the GDP in the third quarter (October-December) quarter of the fiscal. Thus, with the CAD in the fourth quarter of 2012-13 markedly lower than the 4.4 per cent in the same quarter of 2011-12 , both the rupee as well as the stock market recovered a part of the lost ground during the days close. However, despite the days euphoria which saw the rupee recover partly to 60.23 against the greenback, the high CAD continues to be a worrying factor, especially as it is still way above the RBIs comfort level of 2.5 per cent of the GDP. According to the RBI data, while theCAD in 2011-12 was at $78.2 billion (4.2 per cent), a surge in oil and gold imports widened the gap further to 4.8 per cent at $87.8 billion last fiscal. The challenges In the event, presenting a non-committal view, the Finance Ministry noted that the short-term increase or decrease in CAD should not be a cause for either optimism or pessimism. We must look at the figure at the end of the year where the CAD standsMarkets have been over reacting as we have seen in the case of prediction for CAD last year which were much higher than 5 per cent and we have seen that it is much lower than five per cent, it said. The RBI data revealed that oil and gold made up about 45 per cent of the total merchandise imports during 2012-13 with petroleum import going up by 9.3 per cent and that of gold declining by 4.8 per cent to $53.8 billion, marginally down from $56.5 billion in the previous fiscal. Accordingly, the trade deficit during the fiscal year remained elevated at $195.7 billion in the wake of a decline in merchandise exports by 1.1 per cent coupled with a rise in imports by 0.5 per cent on a yearly basis. Widening trade deficit The apex bank pointed out that in 2012-13, the CAD widened on account of a burgeoning trade deficit, decline in net invisible earnings due to sharp increase in investment income

payments and only a modest rise in net services receipts. Significantly, the ways of bridging the CAD were also queered during 2012-13 owing to the type and quality of foreign inflows. While the longer term FDI (foreign direct investment) inflows moderated during the fiscal , portfolio investment witnessed a surge. Net FDI inflows eased to $19.8 billion from $ 22.1 billion in 2011-12 while net portfolio investment rose to $26.7 billion in 2012-13 from $16.6 billion a year ago. On the whole, during 2012-13, there was an accretion of $3.8 billion in the countrys foreign exchange reserves as compared to a draw-down of reserves to the extent of $2.8 billion in 2011-12, it said. Short-term increase or decrease in CAD should not be a cause for either optimism or pessimism 6. Financing deficit is a major concern: RBI The Reserve Bank of India (RBI) has said that non-disruptive financing of the high current account deficit (CAD) and containing its size within sustainable levels have become key challenges in managing the external sector and especially in mitigating its vulnerability to global shocks. In addition to the magnitude of flows needed to finance the CAD, the composition of flows, particularly dependence on portfolio and short-term debt flows, represent an added source of concern. While lower commodity prices and moderation in gold imports could have a positive effect on the current account balance, high CAD in a sluggish economy poses difficult macro-economic policy challenges, the RBI said in its Financial Stability Report. External debt Rise in Indias overall external debt is an added source of concern. Short-term liabilities have also been increasing. The ratio of short-term debt to total debt (both residual and original maturity) increased in the second quarter and third quarter of 2012-13 from its level in the first quarter. Reflecting the widening CAD, net IIP-GDP ratio increased to 15.4 per cent at end-December 2012 from 15.1 per cent at end- September 2012. In general, the external sector vulnerability indicators have shown a worsening trend. Rising gold imports have been a continuing concern. The share of gold in total imports has been increasing since 2007-08, and was close to 3 per cent of GDP in 2012-13. The RBI said that the rupee, which was largely range bound during January-April 2013, started weakening in May 2013. Among other factors, strengthening U.S. dollar and relatively high trade deficit during April-May 2013 exerted pressure on the Indian rupee, it added. Viewed from a different perspective, against the backdrop of tepid global growth, the RBI said that other emerging economies were also experiencing similar external sector challenges in terms of size of the CAD and pressure on the exchange rate. Asset quality of banks The RBI said that the asset quality of banks, which was deteriorating continuously, recorded an improvement in March 2013 quarter. The gross non-performing assets (GNPA) ratio of banks improved to 3.4 per cent as at end-March 2013 from 3.6 per cent as at end-September 2012. The net NPA ratio declined to 1.4 per cent from 1.6 per cent. This decline in NPA was attributed to the lower slippage, improved recovery and higher write-off during the quarter. Change in classification for restructured advances with effect from April 1, 2015, may have some adverse impact on the NPAs, unless banks take preventive measures in this regard. NPAs At the bank-group level, the gross NPAs of public sector banks were highest and stood at 3.8 per cent as at end-March 2013, followed by foreign banks. The quarterly slippage ratio of public sector banks declined to 0.5 per cent for the quarter ended March 2013 from 0.8 per cent recorded during September 2012. Quarterly slippage of foreign banks increased to 0.3 per cent and 0.1 per cent for the corresponding periods. Old private banks registered highest quarterly recovery at 21.2 per cent during the quarter ended March 2013 followed by the public sector banks at 9.1 per cent. All the bank groups, except new private banks, recorded

higher write-off during the quarter ended March 2013 as compared to quarter ended September 2012. 7. Gas some solid facts Its time to take stock of Indias growing gas needs, and its possible sources. Indias

growing gas needs are being heard loud and clear in the tiny, gasrich nation of Qatar. Indias falling domestic gas production has meant that the country now has to rely on increasing its imports of natural gas. Natural gas through possible pipeline routes such as the Iran-Pakistan-India Pipeline, Turkmenistan- Afghanistan-PakistanIndia Pipeline and Myanmar pipeline has fallen by the wayside over the years, due to contentious border issues. The reliable way to import gas seems to be through shipping it, as liquefied natural gas (LNG). Indias first natural gas imports came from Qatar; today, the Gulf country is hoping to continue its tryst with the worlds largest democracy. Natural gas production from the eastern offshore KG D6 block in India, which is operated by Reliance Industries, is projected to fall to 24 million cu m/day in 2013-14, compared with 28 million cu m/d in the current financial year. It is forecast to fall further to 20 million cu m/d in 2014-15. This is worrying, considering natural gas has become the hydrocarbon of choice for power generation and transportation across the world, and India is keen to catch hold of that trend.
PRICING PROBLEMS Before delving further into Indias natural gas needs and who is going to supply them, it is interesting to understand the current-day dynamics of natural gas trade. The Paris-based International Energy Agency (IEA)says among the headwinds facing gas are continuing weak demand in Europe, resilience of coal in North America as well as persistent bottlenecks and disruptions in the LNG value chain that in 2012 caused an exceptional global decline of LNG supply. At the same time, Asian demand for gas remains red-hot and gas is beginning to gain traction as a transport fuel. So, it becomes quite clear that Asia will become a driver for natural gas markets in the years to come. However, the trading of natural gas in the AsiaPacific region is dominated by long-term contracts in which the price of gas is indexed to that of oil. As the price of gas between Asia and other parts of the world has widened in recent years, observers have raised serious doubts about the sustainability of this pricing model. Asias growing reliance on imports and long -term contracts

means that the region needs to be able to move from its traditional model to a more competitive and sustainable market. It is this pricing that the exporters are keeping a close watch on these days, before signing a long-term, 20-year contract for LNG supply. Qatars Energy Minister Mohammed bin Saleh Al Sada has said the Gulf country is keen to meet Indias growing demand and that the dialogue is still on.

But what prevents immediate shipping arrangement could well be the pricing problems. It seems from trader reports that Qatar is asking for a price which is 15 to 16 per cent of the Japanese Crude Cocktail (JCC), the average price of customs- cleared crude oil imports to Japan, while India is willing to pay only 14.5 per cent of JCC. According to Barclays latest market research, the share of Qatars LNG exports to Asia has reached 73.5 per cent in January 2013 witnessing a sharp jump of over 30 per cent as compared with 56.4 per cent in 2012. So, why Qatar is so keen on negotiating with Asia and India in particular, and retaining its customers can be understood by the growing shale gas commercialisation in the US. Even, as recently as the companys 2011 Annual Report, Qatar Petroleum (owner of all the gas that comes out of Qatar, either as Qatargas or RasGas) lists North America as the target market for its LNG Production from its Ras Laffan complex. Whilst the company also listed trusted Asia and West Asia as destinations, these mega-trains (gas chilling units) have a total capacity of 15.2 mtpa, and the potential income from exporting this amount of gas to the US had to be replaced. LNG import terminals in the US could well become relics of the bygone era when the US was a huge importer of energy.
OTHER GAS PARTNERS So while it is evident Qatar is keen on wooing India, it is worthwhile to explore who the other gas partners to India are. India imports LNG from its two operational terminals Dahej and Hazira. Indias major importer, Petronet LNG, has deals in place with the US and Australia for gas imports and is revamping its Dahej terminal in Gujarat to double its existing capacity to 20 mtpa by 2020. It has signed initial pact with Houston-based United LNG to buy four million tonnes of liquefied natural gas per annum for 20 years, beginning 2018. Contracts are in place for Australian LNG import as well. Again, India is competing with China for its gas needs, but the shale gas finds in the US and possible imports means that the consumers in the gas market have better clout than ten years ago; when the Asian countries were in fact competing with America for gas from Russia, Qatar and Iran. The gas market trade and pricing is in dire need of better regulation and now with more players, it may just happen. So, will Indias projected need for gas push the country to forge long-term contracts with gas exporting nations? It is interesting to note that Indias power and fertiliser plants are not quite ready for long-term commitments for the relatively expensive imported gas. So, on the one hand, companies will continue negotiating with the exporters on price and invest in gas importing terminal, but on the other, they may have the conundrum of what to do with all that gas. 8. CAD cheers, but external debt plays spoilsport Current account deficit narrows in Q4, external debt up 12.9% The countrys current account deficit (CAD) for the fourth quarter of 2012-13 narrowed sharply to 3.6 per cent of gross domestic product (GDP), helping a battered rupee gain some ground against the dollar and pushing the sentiment in equity markets. The numbers came as

a surprise, also because these were released a day ahead of schedule and a day after the rupee touched a record low of 60.76 a dollar. The data helped lift the rupee to as high as 60.19 a dollar on Thursday. But the good news seems to have ended there. If lower CAD came as comfort to policymakers, rising external debt was a source of major concern. As of the end of March, external debt rose 12.9 per cent to $390 billion, compared with the year-ago period. The increase was primarily on account of short-term trade credit, external commercial borrowings (ECBs) and non-resident Indian deposits.

Also, for the full financial year, though lower than the expected five per cent of GDP, CAD hit a record high 4.8 per cent, mainly because of rising imports of oil and gold. (INDIAS CURRENT ACCOUNT BALANCE). For the March quarter, CAD narrowed to $18.1 billion, or 3.6 per cent of GDP, from an all-time high of $32.6 billion, or 6.7 per cent of GDP, the previous quarter. We expect the commodity import bill to moderate in the near term, reflecting a relatively benign commodity price outlook, subdued domestic growth and a likely softer rate of inflation. Our baseline scenario is for CAD to fall to 3.9 per cent of GDP in 2013-14, said Barclays Siddhartha Sanyal. Rating agency CRISIL Research was not so hopeful. The dip in CAD in the fourth quarter is temporary. It will rise to settle at 4.5 per cent of GDP for FY14. Financing CAD is a bigger challenge this year. For one, global liquidity will be stretched if the US recovery continues and as Federal Reserve starts winding up its bond-purchase programme by the end of 2013. Also, with much weaker growth prospects vis--vis other emerging markets, Indias attractiveness as an investment destination is waning, it said. Industry body Ficci said though discernible moderation had been noted in the Q4 numbers, such a high level of deficit was unsustainable and the recent plunge in the value of the rupee, in all possibility, would further aggravate the issue of ballooning imports. Also, given the extent of the rupees fall since the beginning of this financial year, Ficci believes relying on FIIs for helping curtail the deficit is certainly not a good strategy for the long run. Merchandise exports increased 5.9 per cent in Q4 of 2012-13, compared with 2.6 per cent in the same quarter the previous year. Merchandise imports recorded a marginal decline of one per cent in the quarter, against an increase of 22.6 per cent in the same period of 2011-12. The non-oil non-gold component of imports showed a decline, reflecting a slowdown in domestic economic activity. As a result, trade deficit narrowed to $ 45.6 billion in Q4 of 2012-13 from $ 51.6 billion in the same quarter of 2011-12.

During 2012-13, CAD stood at $87.8 billion (4.8 per cent of GDP), against $78.2 billion (4.2 per cent of GDP) during the previous financial year. A burgeoning trade deficit, along with a significant decline in invisible earnings, caused widening of CAD during the year.The lowerthan-expected CAD numbers also helped the markets gain, with the Sensex rising nearly two per cent. The gain was also because companies like Reliance Industries gained on expectations the government might increase domestic gas prices. In its financial stability report published on Thursday, RBI voiced concern over an increase in external debt. According to it, the increase in total external debt during 2012-13 was primarily on account of a rise in short-term trade credit. RBI observed there had been a sizeable rise in external commercial borrowings (ECBs) and rupee-denominated non-resident Indian deposits. For the financial year ended March, the country had a balance of payments surplus of $3.83 billion, compared with a deficit of $12.8 billion a year earlier. The swing to surplus was due to robust capital inflows. Experts said the country was in a far better shape than during a balance of payments crisis of 1991. 9. Next time you go to the Post Office, it may well turn out to be a bank Dept of Post has moved a Cabinet note with the govt providing Rs 500 cr as seed capital to India Post, the minimum requirement A long-pending dream of India Post to have banking operations is now taking a final shape. The Department of Post has moved a Cabinet note with the government providing Rs 500 crore as seed capital to India Post for this purpose. This is the minimum paid up capital required under the final norms for banking licenses put up by the Reserve Bank of India. Financial help from the government is needed since India Post ran a deficit of Rs 5,805.9 crore in 2011-12, though 8.5% lower than Rs 7,899.3 crore in the previous year. India Post plans to start banking operations in 50 branches, a key official said.

The official said all the initial work on applying for a banking license to RBI has been completed and the only task left now is to formally submit its application. The deadline for submitting applications is July one and in between only two working days are left. "Our officer is in Mumbai and we will file the application before the deadline," the official said. When asked that it would be too costly an affair to convert a post office into a bank, the official explained that both post office work of India Post and banking operations will simultaneously exist. She said India Post can always squeeze a little space in its existing post offices. "We can give the bank a completely different branding and so the bank and post office can coexist ," she said. "That little space for bank branches will be built from the scratch. But, the existing infrastructure across 1,50,000 post offices will be leveraged. We are naturally the most fit candidate to open a bank as no one can match the department's reach," the official said. She said India Post has around 1,50,000 post offices, while all the other bank branches combined would come to around 50,000 only. "So, other aspirants have a reason to worry, but we qualify RBI's eligibility criteria in all respects," the official said. When other private banks can have a lean

and mean approach in terms of bank branches and can still be successful, so can India Post, the official asserted. But, the idea is to not to open branches across all the 1,50,000 post offices, but have a selective play. "If we cover the entire network, it will be too extensive, therefore we will open in places where there are not other banks etc. And our post man could act as a banking correspondent enabled with micro-ATMs," she said. To become a bank, India post will have to restructure its shareholding. There is a stipulation in the RBI's norms that promoter companies of entities wishing to set up banks should be 51% held by the public. At present, India post is 100% government of India holding. India Post has long nursed an ambition to start a bank, called Post Bank of India. Earlier, the finance ministry is understood to have opposed India Posts plan as the postal service doesnt have the expertise needed in relevant areas, such as handling credit. The Department of Post has a few savings instruments like post office savings scheme, besides acting as a distributor for mutual fund companies. It also has a life insurance scheme Postal Life Insurance. India Post's plans will also help the UPAs ambitious Direct Benefits Transfer (DBT) Scheme as the programme falters because of poor last mile connectivity of banks. The official said the banking correspondent model as enshrined in DBT will be performed by postman. He will get an additional commission of 0.07% over and above his regular salary for every new deposit. The official said that moves are also afoot to link all post office branches with core banking solutions (CBS), which would further enable them to function as a full-fledged bank.
10. Falling deficit, rising debt Vulnerability on both current and capital accounts

The Reserve Bank of India published the balance of payments data for the fourth quarter of 2012-13 (and, consequently, for the full year) a day earlier than scheduled. What clearly motivated this uncharacteristic enthusiasm was unquestionably the hope that a rather positive reading on the current account deficit would have on a rapidly declining rupee. Whether the desired impact was had or not will be difficult to gauge immediately. There clearly was no dramatic reversal in movement. But going by the principle that there's never a

bad time for good news, the early announcement could not have hurt unless, of course, it is read as a signal that the government has completely run out of options. On the face of it, the sharp decline in the current account deficit to 3.6 per cent of GDP, from 6.7 per cent in the previous quarter, clearly comes as a significant relief in the battle against a rapidly declining currency. Most observers see the large current account deficit as a major factor behind both the magnitude and the pace of the rupee's decline. Consequently, its narrowing must have positive implications for the currency. However, it must also be remembered that this is an accounting of what happened three months ago. Compared to what has happened in the first quarter (April-June) of 2013-14, that period was one of relative calm. While exports grew by almost six per cent during January-March, the early indications from April-June are that even this rate is not sustaining. Further, with the extent of rupee depreciation during this quarter, the rupee value of imports will undoubtedly increase for some time at least. Overall, then, while the 6.7 per cent recorded in the third quarter of last year was something of an aberration, the 3.6 per cent seen in the fourth quarter may also be well below the sustainable level. The government simply cannot afford to lose sight of the structural adjustments necessary to reduce this vulnerability.
Going beyond the good news on the deficit, however, the external debt report, also published yesterday, highlights the dangers of financing a large deficit by increasing recourse to debt flows. By March 2013, outstanding external debt grew by almost 13 per cent over March 2012 to reach $390 billion. Of greater concern is the fact that effective short-term debt - or debt with residual maturity of less than one year - comprises 44 per cent of the total. As a proportion of foreign exchange reserves, it is close to 60 per cent. These are clearly pointers to rising vulnerability. Any shock - global or domestic - could trigger a rapid outflow or refusal to roll over, thereby exacerbating the pressure on an already stressed currency. Although it's tempting for the government to encourage further debt inflows by easing remaining restrictions, it must also remember that this comes at the price of increasing overall vulnerability. This may ultimately be self-defeating from the viewpoint of stabilising the rupee. Here again, while admitting that there are short-term compulsions, the only solution is to shift the balance of capital inflows to direct investment. That, of course, means improving the investment climate, which is really the core problem.
CURRENT AFFAIRS (29.06.2013) Part 1

1. India has to repay $172 billion debt by March 2014 Burden triples in six years; outflow will deplete 60 % of forex reserves The U.S. Federal Reserves hint that it could roll back its cumulative easy money policy seems to have suddenly increased Indias vulnerability to slowing capital flows in the near future. In this context, Indias short-term debt maturing within a year would seem to be a matter of concern against the current backdrop of the declining rupee and the U.S. Feds possible change of stance on easy liquidity in future. Short-term debt maturing within a year is considered by experts as a real index of a countrys vulnerability on the debt -servicing front. It is the sum of actual short-term debt with one-year maturity and longer-term debt maturing within the same year. Indias short-term debt maturing within a year stood at $172 billion end-March 2013. This means the country will have to pay back $172 billion by March 31, 2014. The corresponding figure in March 2008 before the global financial meltdown that year was just $54.7 billion. India has accumulated a huge short-term debt with residual maturity of one year after 2008. The figure has gone up over three times largely because this period also coincided with the unprecedented widening of the current account deficit from roughly 2.5 percent in 2008-09 to nearly 5 per cent in 2012-13. Much of this expanded CAD has been funded by debt flows. This may turn into a vicious cycle. More pertinently, short-term debt maturing within a year is now nearly 60 per cent of Indias total foreign exchange reserves. In March 2008, it was only 17 per cent of total forex reserves. This shows the actual increase in the countrys repayment vulnerability since 2008. Theoretically, if capital flows were to dry up due to some unforeseen events and NRIs stopped renewing their deposits with India, then 60 per cent of the countrys forex reserves may have to be deployed to pay back foreign borrowings due within a year. A lot of the surge in external debt maturing within the next year is on account of big borrowings by Indian corporates during the boom years after 2004. Corporates became quite heady from their initial growth success and stocked up on huge external debts of 5- to 7-years maturity. The repayment clock is ticking for many of them now. External commercial borrowings are now 31 per cent of the countrys total external debt of $390 billion as of 31 March 2013. Short term debt with one year maturity is 25 per cent of total external debt. However, total short term debt to be paid back by the end of this fiscal, which includes a lot of corporate borrowings payable by end March 2014, is 44 per cent of the countrys external debt or $172 billion. Corporates have managed to roll over their foreign borrowings over the past year because of the easy liquidity conditions kept by the U.S. Federal Reserve. But if the Feds easy liquidity stance were to reverse, there is no knowing how Indian corporates will pay back their foreign debt at a depreciated exchange rate of the rupee. In any case, besides meeting its debt repayment obligation of $172 billion by 31 March 2014, India needs another $90 billion of net capital flows to meet its current account deficit projected at 4.7 per cent of GDP by the Prime Ministers Economic Advisory Council (PMEAC) for the coming fiscal. The chairman of the PMEAC, C. Rangarajan, told The Hindu that an otherwise manageable CAD may create a perception of vulnerability in the backdrop of the Feds latest stance. The $172 billion that has to be paid back by March 31, 2014, will no doubt add to this growing sense of unease. 2. Power, fertilizer sectors may get subsidised gas rates While producers will get a price determined by the Rangarajan formula, user industries of power and fertilizer may get gas at lower price with government subsidising the difference. While defending the hike in natural gas prices from $4.2 mbtu to $8.4 mbtu, Finance Minister P. Chidambaram on Friday hinted at subsidised gas rates for the power and fertilizer sectors

to protect consumers from a huge financial burden from April next year. Briefing journalists here about the decision of the Cabinet Committee on Economic Affairs (CCEA) to hike gas prices based on the Rangarajan Committee formula from April 1, 2014, Mr. Chidambaram said the move to almost double the gas prices was taken in view of the dramatic decline in investments in the oil and gas sector. This had to be made up by importing expensive Liquefied Natural Gas. Time till April The recent gas price hike may not necessarily lead to a corresponding increase in power and fertilizer prices, said Union Finance Minister P. Chidambaram. At the moment we are fixing only output prices, the price payable to gas producers, Mr. Chidambaram said. This will indeed have an impact on the consumer, but those prices are not being fixed today. The price that power and fertiliser companies will pay for is not being fixed now. What is the price at which it should be supplied to a power plant, to a fertilizer plant in order to make power affordable, fertilizer affordable... that can still be decided between now and April 1. He said the government was conscious of the need to keep power and fertilizer prices low. It could be tweaking prices or it could be bearing an additional subsidy. There are various methods but at the moment we are not addressing those issues. The CCEA meeting that approved the new pricing took an unusually long time and saw Ministers raising objections. According to the Rangarajan formula, valid for five years, gas rates will change every quarter based on cost of imports and international hub rates. The Power and Fertilizer Ministers had vehemently opposed the hike stating that it would lead to the cost of generating electricity spiking to Rs. 6.40 per unit from Rs. 2.93. Mr. Chidambaram said, in the absence of remunerative prices, no investment had been made in domestic exploration and production, resulting in a fall in natural gas production from 143 million standard cubic metres per day in 2010-11 to 111.44 mmscmd in 2012-13. This in turn meant a sharp rise in imports of LNG which was expensive. Imported gas price was three times the domestic gas rate and importing gas was unsustainable for the Indian economy. The choice is to live without gas or to produce gas because the third alternative to import is simply not sustainable, he said. The new price will apply uniformly to all producers, be it state-owned companies like Oil and Natural Gas Corporation (ONGC) or Reliance Industries Limited, he added. While it was previously said the new rates would apply to regulated or APM gas produced by firms like ONGC immediately, the pricing as per Rangarajan formula will come into effect from April 1, 2014, just when RILs KG-D6 formula of $4.2/mmBtu runs out. 3. Farm suicide trends in 2012 remain dismal Farm suicides rose sharply by almost 450 in Maharashtra in 2012 to touch 3,786, the latest National Crime Records Bureau data show. (The State saw 3,337 suicides in 2011). That is the worst annual increase in seven years. It also brings Maharashtras total tally since the NCRB began recording farm data in 1995 to a staggering 57,604 farmers suicides. Andhra Pradesh also saw an upward surge. It logged 2,572 farm suicides in 2012. That is 366 higher than the previous years figure of 2,206. Karnataka and Madhya Pradesh reported declines of 225 and 154 respectively. The last of the Big 5 States that account for over two-thirds of all farm suicides, Chhattisgarh, continued to declare a near zero figure. In 2012, it claimed it had just four. Chhattisgarhs three-year average prior to its zero-declaration approach was 1,567. Indeed, the States own data, prior to that tactic, show it suffered 18,375 farm suicides between 2001-10. Other States seem inspired by Chhattisgarhs methods. West Bengal sent in no data at all on farm suicides (or some other categories, too) in 2012. But its three-year average for 20092011 was 951. Chhattisgarhs figure of 4 and Bengals non-filing of data stand out in the all-India total of 13,754 farm suicides in 2012. If three-year averages for both States are

included, then the national total would be 16,272. That would be the highest farm suicides figure in three years. Even accepting the truncated numbers, the Big 5 accounted for over 68.4 per cent of all farm suicides in the country in 2012. That is the highest ever since the recording of such data began. Among other major States, Kerala saw 1,081 such farm deaths, a steep increase of 251 over its 2011 number of 1,830. Uttar Pradesh saw 745 farm suicides up by 100 over its 2011 figure. Tamil Nadu reported a decline of 123 to log 499. Thats down from 623 the previous year. The NCRB figures across 18 years for which data exist show that at least 2,84,694 Indian farmers have taken their lives since 1995. (That is, accepting the non-figures of Chhattisgarh and West Bengal). Divide that 18 years into two halves and the trend is dismal. India saw 1,38,321 farm suicides between 1995 and 2003 at an annual average of 15,369. For 2004-12, the number is 1,46,373, at a much higher annual average of 16,264. The figures in the second half occurred against a steep decline in the numbers of farmers in India and are hence even worse than they appear. (See The Hindu : Farmers suicide rates soar above the rest, May 18, 2013. http://thne.ws/13u9It1) In short, there is no serious decline or reversal of the major trends in farm suicides in the country. Zero declarations, though, are likely to grow by the year as more States feel the need to massage their dismal data or simply not file it. 4. A very reliable formula In going with the formula recommended by the Rangarajan Committee for pricing natural gas produced in the country even if it means considerably higher prices the government has chosen the practical way out of a sticky situation. Gas producers were lobbying hard for remunerative prices while users from the power and fertilizer sectors were agreeable only to a nominal increase. With production from the KG basin fields of Reliance Industries, the lead gas producer in the country, falling drastically in the last couple of years due to what the company claims are technical problems, power and fertilizer companies were forced to either use expensive imported gas or operate their plants at sub-optimal capacities. There was thus pressure on the government to incentivise investment in the oil and gas sector by revising prices upwards to meet the expectations of gas producers. The Rangarajan formula links the price of gas in India to world prices. Though it will be lower than the price of imported gas, the new price will nevertheless lead to a sharp rise in input costs for power and fertilizer companies. Mindful of this, the government has already hinted that it will have to subsidise these two sectors for a while. Even as it examines ways of keeping the burden off consumers, the government needs to rethink two elements. First, if there has to be an international reference point for the Indian gas price, the well-developed Henry Hub market is enough. Gratuitously including Japan and the U.K. in the pricing formula only serves to push the Indian price higher than it ought to be. Second, there must be a ceiling price under the formula. It cannot be that gas producers will reap unlimited gains in the case of an upswing in global prices; any upside has to be capped at a level that takes into account a reasonable return on investment for the gas producer. The government must also subject gas producers to closer regulation, especially on aspects of cost recovery and technical parameters related to production. The ongoing issues with Reliance which will benefit the most from the higher prices now over cost recovery and penalties for not meeting contracted output levels need to be taken to their logical conclusion. Once Reliance overcomes the technical difficulty of producing gas at the KG-D6 field, the government must ensure the company delivers the shortfall it still owes at the old price of $4.2 rather than getting the benefit of the new price. The government should also consider the other important recommendation of the Rangarajan Committee of moving to a revenuesharing arrangement with gas producers. That will eliminate future disputes over cost recovery, even as it discourages gold-plating of project costs. 5. What was left unsaid

It was always unrealistic to expect that Round 4 of the India-United States Strategic Dialogue would push the bilateral relationship up from its so-called plateau into the heights. So its not surprising that the much sought after big idea to take ties to the next level remains elusive. What it has done, though, is confirm that there is no magic wand that can be waved to make differences disappear. Certainly, it takes more than high-sounding rhetoric about the IndiaU.S. relationship as one of the defining partnerships of the 21st century or the common DNA that Secretary of State John Kerry said the two countries share. External Affairs Minister Salman Khurshid publicly played down New Delhis concerns on the Afghan reconciliation process, but the silence of the joint statement on what is happening in Doha is one indication that India is not as optimistic about talks with the Taliban as the U.S. On a day that the Taliban attacked the presidential palace in Kabul, Secretary Kerrys assertion that the Doha process is predicated on certain red lines was no consolation. The differences between the two sides on Iran were also apparent by the conspicuous omission of that country from the joint statement. It is passing odd that on two of the most pressing global and regional issues, the two sides preferred to remain silent or sparing with their comments in public. Another major difference, over visas for IT professionals, has been bumped back to industry leaders on both sides. Where there is convergence is on working together in the East Asian region, where Indias apprehensions vis--vis China have increased in recent months, with the joint statement stressing the importance of the India-U.S.-Japan dialogue. Despite the low-key reception accorded to him by New Delhi and the lukewarm tone of the dialogue, Mr. Kerry could not have been unhappy with the commitment from New Delhi that it would clear the way by September this year for Westinghouse to set up a power plant in Gujarat. The companys negotiations with the Nuclear Power Corporation of India Limited have gone slowly, partly over the issue of confidentiality, but mainly because of Indias nuclear liability law. It is significant that the stated timeline coincides with Prime Minister Manmohan Singhs likely visit to the U.S. for the U.N. General Assembly. While the proposed visit next month of Vice-President Joe Biden is a strong signal of the Obama administrations desire for political engagement, ensuring that New Delhi keeps its promise on the nuclear deal will be top of his agenda too. Speeding it up is desirable for both sides, but not at the cost of Indian interests. 6. One barefoot step, a giant administrative leap As the world observed U.N. Public Service Day on June 23, it was hard to miss the perfect storm brewing across the globe. Disenchantment with public service delivery has engulfed Brazil, Greece, Turkey and South Africa. Closer home, the disaster in Uttarakhand has highlighted the potential of public service to make or mar thousands of lives. Critically, public management is seen as failing the disadvantaged, especially those who have no choice but to resign to its inadequacies. In response to trenchant criticism, the global development discourse has focused on devising numerous policies, structures and strategies. But, inevitably, the front line, institutional mechanism has not received the kind of analytical attention it warrants. Across the world, public organisations are typically characterised by rigid weberian structures with minimal space for individual innovation or creativity. Governance frameworks exhibit command and control characterised by top-down leadership and delegation upwards. Employees are adept at both overly respecting and exercising power, suppressing values of self in deference to those of the system. Building relationships Not surprisingly, World Bank studies show that public service reform programmes are the most intractable. The recurrent challenge is to bring about changes in people and system performance. Harvards Frauke de Weijer associates these failures with treating such sociohuman resource challenges as mere technical ones to be tamed by procedures and

bureaucratic structures. Essentially, preoccupations with form need to be replaced by an understanding that development is predicated on an uninhibited rejection of the status quo that is, understanding development as a change endeavour focused on facilitating those at the bottom of the pyramid towards higher satisfaction levels. What this means is that change should necessarily begin at the bottom, the site of frequent interaction between citizens and the monolithic state. It is the experience of this interface that determines the quality of the service and how citizens subsequently view the state. This front line actuality epitomises the concept of Barefoot Bureaucracy a construct that is bureaucratic in its regulatory behaviour yet barefoot in its proximity with the citizen and their shared socio-cultural and economic milieu. Barefoot bureaucracies reflect this personality paradox in the wide gamut of their choice, ranging from the whimsical bureaucratic gatekeeping in routine implementation, to yeoman barefoot service during disasters. In a world of scarce resources, who is granted access to free medicines, the water tap or the destitute pension? These are the many moral judgements they make everyday. Yet, there is potential in this paradox. Research has shown that successful public organisations are characterised by unusual dedication of ground-level employees to their jobs, with a strong sense of mission, purpose and the capacity to build relationships based on trust and ownership with communities. Foot soldiers Herein lies the opportunity. A performing barefoot bureaucracy can transform both the organisation and the people it serves as it is only in the interactions with the disadvantaged, that public organisations create maximum, incremental, economic and human developmental value. Public management needs to recognise the cutting edge as the value zone and the foot soldiers as the catalytic change agents. Clearly, the organisational structure should be geared towards creating an enabling environment for the change agent to perform its value functions to the best of individual and collective capabilities the performance of an extension worker, a health worker or a teacher has a disproportionately large influence on the final outcomes of state programmes. If we are to solve common action problems we need approaches that are consistent with public management, that encourage developmental value creation at multiple levels. Therefore, any attempt at change in public service performance would need to be barefoot bureaucracy-centric for creating maximum impact and ensuring its distortion free implementation. Such an inversion suggests a dilution, if not destruction, of the bureaucratic command structure to be replaced by a polycentric organisation encouraging a network of multiple-change leaders dispersed across the hierarchy. Each would be empowered with the freedom to create unique service pathways in response to their differing contexts, to honour their collective commitment to the common purpose. Nodes in this polycentric network would thrive on diversity with the understanding that each community requires a fresh exploration of social capital and forging of new relationships between the citizen, node and thus the state. Noble laureate Elinor Ostrom posited this as a changed understanding of the role and relationship of public professionals and citizens. We can visualise them as utilising local knowledge, skills and experience towards co-creation of the service experience. There is enough reason to hope that such change is not impossible. Large studies with U.S. social survey data found a strong correlation between public service motivation and preference for government jobs. A Dutch study found that government workers had higher levels of public service motivation than private sector workers. In the post-market collapse across the globe, front line pro-social activities have gained ground over the I perspective popularised by rational choice economics. Evidence apart, conceptually the desired transformation is predicated on the values and behaviour of barefoot bureaucracy. Values are

the priorities we live by and are expressed in our choices. Human values are important to both achieving desired organisational goals and the care and management of common-pool resources. The challenge is to encourage, align and establish the desired values in the organisation. Along with values, behaviour changes determine the individual and societal transformations that we seek. Public behaviour is essentially shaped by attitudes and perspectives. Any attempt at behaviour change requires addressing the cognitive, emotional and intentional segments of attitudes. And also redefining perspectives about the organisational purpose (development with dignity), the process (co-creating service) and people (reaching the unreached) at individual and group levels. Complex though it seems, such a transformation can be achieved. A multilayered randomised evaluation undertaken by Unicef of an extensive change programme carried out in South India found a threefold improvement in front line, barefoot bureaucrat behaviours, as experienced by socially disadvantaged groups. About change Globally, public services are under intense pressure to improve performance. While many structural reforms have been tried, barefoot bureaucracy has been consistently bypassed. Undeniably, sustained development can only be achieved by triggering the value creating potential at the bottom of the public service environment. Global policymakers should repose faith in these subalterns and reap the benefit of silent evolutionary change. With just mundane means they can generate spectacular ends. The tiger will change its stripes. In order to create maximum development value, the bureaucracy needs to bring changes at the bottom of the public service pyramid, the citizens first point of contact with the state 7. Government goes into PPP mode to award massive infra projects In an attempt to boost the sagging economy and turn around the negative investor sentiment, the Manmohan Singh government on Friday set a target to unlock and put on offer infrastructure projects worth Rs.1.14 lakh crore in the next six months in the rail, power, ports and aviation sectors. The proposals that will be given a firm shape in the next six months under the public-private partnership (PPP) mode include the Mumbai elevated rail corridor (Rs.30,000 crore), two international airports in Bhubaneswar and Imphal (Rs.20,000 crore) and power and transmission projects (Rs.40,000 crore). The Prime Minister was of the view that there was an urgent need to ramp up investment in infrastructure to revive investor sentiment. A steering group is being formed to monitor the award and implementation of projects on a priority basis, a PMO release said. It was also decided during the meeting chaired by Dr. Singh and attended by Finance Minister P. Chidambaram and Planning Commission Deputy Chairman Montek Singh Ahluwalia that the Railway Ministry would soon bring before the Cabinet a proposal for creating a Rail Tariff Authority. Ministers of Power, Coal, Railways, Roads, Shipping and Civil Aviation also took part in the meeting. Two new international airports Bhubaneswar and Imphal would be awarded and 50 new low-cost small airports would be set up by the Airports Authority of India for implementation. Similarly, eight greenfield airports are to be awarded this year in PPP mode Navi Mumbai, Juhu (Mumbai), Goa, Kannur, Pune (Rajguru Nagar Chakan), Sriperumbudur (Tamil Nadu), Bellary and Raigarh. Airport operations and maintenance through PPP contracts will be introduced in Chennai, Kolkata, Lucknow, Guwahati, Jaipur and Ahmedabad. The low-cost airports that are likely to be set up include Vijayawada, Nellore, Kurnool, Kadapa, Nizamabad, Tirupati, Anantapur and Karimnagar in Andhra Pradesh; Dhanbad, Bokaro and Hazaribagh in Jharkhand; Muzaffarpur, Chapra and Sasaram in Bihar; Ludhiana, Jalandhar and Firozepur in Punjab; Agra, Allahabad, Moradabad, Saharanpur, Meerut, Aligarh, Muzaffarnagar, Bijnor and Azamgarh in Uttar Pradesh; Tezu, Momdila and Along in Arunachal Pradesh; Silchar, Jorhat and Tezpur in Assam; Gwalior, Singrauli, Burhanpur,Khandwa, Jabalpur, Sidhi and Shahdol in Madhya Pradesh; Berhampur,

Rourkela and Kendujhar in Odisha; Ajmer, Kota, Bhilwada and Alwar in Rajasthan and Kolhapur, Nasik, Jalgaon, Solapur and Amarawati in Maharashtra. In the case of the Railways, an Inter-Ministerial Group of Railways, Finance and Planning will be formed with the task of coming up with a creative financing-cum-implementation mechanism in two months for clearing the huge backlog of sanctioned projects of over Rs. 2,00,000 crores in a prioritised and time-bound manner. The flagship projects of the Railways such as the two loco manufacturing projects, elevated rail corridor, the dedicated freight corridor and station re-development will be closely monitored for award in the next six months, the release said. 8. Now multidrug-resistant TB stock crisis looms The uproar over the stock-out situation for anti-tuberculosis drugs has driven the government into action. It is learnt that following media reports, the Prime Minister's Office wrote a letter asking the Union Ministry of Health and Family Welfare (MoHFW) for clarification on the availability of drugs. An emergency meeting was also called by the Central TB Division (CTD) to discuss the way forward to mitigate the crisis. Manufacturers of paediatric drugs, prolongation pouches and streptomycin have been identified and the ministry is hopeful of getting supplies to states by the end of July. States with a lower disease burden have been asked to transfer drugs to those with a higher burden facing extreme shortage of drugs. Even though the current crisis is being addressed aggressively, a new one is raising its head. Stocks of second-line medicines like Kanamycin, an injectible drug used for treating multi-drug resistant (MDR) TB have dipped alarmingly. Currently, according to CTD officials, there is stock only for two and a half months. India is among the few countries with a high burden of MDR TB. For patients, it is a race against time, especially paediatric and multidrug-resistant (MDR) TB cases. In Bihar, in almost every district, there are no drugs. A CTD official said that in two days Kanamycin, along with Pyridoxine (used to mitigate the side effects of Isoniazid), will run out. Against the requirement of 35,000 doses of Kanamycin, currently just 2500 doses remain. Likewise, there are only 4000 doses of Pyridoxine instead of the required 14,000. The official said that patients who come for testing every day for MDR TB at the drug resistant TB testing facilities are not being informed of their status since there are no medicines for new patients to be treated. Day by day, the numbers are rising since many have not been able to take the correct course of treatment, he said. For the moment, the CTD has asked Rajasthan to transfer 10,000 doses of Kanamycin to Bihar but that is inadequate to deal with the current crisis. Though the World Health Organisation (WHO) had maintained that there is no stock-out situation in India, in an internal briefing within the WHO on June 27 Dr. Nata Menabde, WHO representative, India, was apprised of the true status. Delay in procurement The briefing note stated that the shortage of drugs was due to procurement failures and delays at the level of the government of India. It also confirmed stock-out of paediatric doses, Rifampicin (the key drug to treat TB), streptomycin injection as well as diminishing stockpiles of Kanamycin injections and other first line drugs. The note also said that emergency procurement of paediatric drugs was delayed by six months and the orders had just been placed. As for Kanamycin, emergency procurement of over 400,000 vials, done with the support of the Geneva-based Global Drug Facility (GDF) through WHOs intervention had not reached the country because of delays in processing orders, payments and the ministry not issuing the necessary customs duty clearance on time. Pressure building up As a result, the consignment of Kanamycin was parked at a warehouse in China. It is learnt that the consignment was moved only this Monday. The pressure is now building up on the government. In a letter to Anshu Prakash, Joint Secretary, Health, the Independent Commission on Development and Health in India, states that the ground situation belies the ministrys stand. Its team has reported drug shortage in the field, especially paediatric drugs

and that there is a risk of developing drug resistant TB in India. It has also asked the government to look into the factors that led to the crisis and take measures to correct the procurement process so that such a situation does not occur in the future. 9. China ready to break new ground in boundary settlement Menon holds talks with Special Representative Yang Jiechi in Beijing Chinas new Special Representative on the boundary dispute said here on Friday that he was ready to break new ground with India in the long-running border negotiations, as the two sides met here for the 16th round of talks. Yang Jiechi, who took over as the Special Representative (SR) earlier this year following his promotion as State Councillor or the top diplomat, met with National Security Adviser Shivshankar Menon, his counterpart on the boundary negotiations, at the Diaoyutai State Guesthouse in central Beijing. The talks have assumed particular significance following this years once-in-10-year leadership transition in China and the recent strains along the disputed border following the April 15 incursion by Chinese troops in Depsang, in Ladakh. In introductory remarks before the talks began, Mr. Yang said the visit in May by new Premier Li Keqiang to New Delhi had injected fresh and strong momentum into the relationship. The two Special Representatives have a lofty mission and heavy responsibilities, said the new Chinese State Councillor. I stand ready to work with you to build on the work of our predecessors and break new ground, to strive for the settlement of the China-India boundary question and to make greater progress in the China-India strategic and cooperative partnership in the new period, he added. Mr. Menon described Mr. Yang as an old friend. He said both countries were meeting at a moment when India-China relations have achieved a momentum and are moving in the right direction. It is our conviction that we are at a moment of strategic opportunity for this relationship, Mr. Menon said. The visit of the National Security Adviser is likely to be followed by that of Defence Minister A.K. Antony on July 4, at a time when both countries have been grappling with strains in the wake of the Depsang incident. On Thursday, Peoples Liberation Army Major General Luo Yuan, a prominent Chinese military strategist known for his hawkish views, told The Hindu that China did not want to see unexpected incidents along the border with India. The outspoken Major General had a surprisingly positive take on the state of relations, saying he did not even see the boundary dispute with India as figuring among Chinas top five current military threats. He identified those threats as the East China Sea, where China is engaged in a dispute with Japan over the Diaoyu or Senkaku islands; the South China Sea, whose waters and islands are disputed by several countries; and recently newly emerging financial, cyberspace and outer space threats. 10. India remains committed to expanding the role of nuclear energy Following the Fukushima nuclear accident, India has enhanced safety of nuclear power plants: R.K. Sinha In the post-Fukushima world, India remains committed to expanding the role of nuclear energy in economic growth while enhancing the safety of its reactors, R.K. Sinha, Chairman of the Atomic Energy Commission, said addressing the 2013 International Ministerial Conference on Nuclear Power in the 21st Century on Friday. The constraint of depleting reserves of fossil fuels, leave alone the sheer enormity of the quantities of coal required, taken along with the need to shift to low carbon energy sources for addressing the global warming related concerns, would drive the options that could meet the Indian energy needs in future, said Dr. Sinha. It is here that nuclear energy becomes a very important option. Following the Fukushima nuclear accident in Japan, India has taken necessary measures to further augment safety of our operating nuclear power plants under extreme external events, Dr. Sinha said. India, as one of the leaders in nuclear technology, remains committed to the

highest levels of safety in its NPPs and in the associated fuel cycle facilities, he assured the conference. At the same time, the Atomic Energy Commission chief drew attention to the practically insignificant impact of the Fukushima accident on the health of the population in the affected regions, as testified by the World Health Organisation. In this context, he reiterated, it is absolutely essential to adequately explain to the public and decision-makers the extremely large margins of safety inherent in the prescribed permissible radiation dose limits. This would help work out more rational, science-based criteria for post-accident evaluation, and restrictions on land use in contaminated areas. Dr. Sinha said that there was no shift in Indias policy on nuclear power. This policy is based on the utilisation of Indias nuclear resources of modest uranium and abundant thorium [reserves], through the closed fuel cycle option, and the three-stage programme, aimed at large-scale deployment of thorium in the long term. 11. Costlier gas: Chidambaram hints at cushion for power, urea users Defends hike, saying norms aimed at preventing cartelization Briefing reporters here on Friday, the Minister said there was still time to decide on the endprice of gas for fertiliser and power consumers. He, however, did not indicate whether this would be in the form of a subsidy or price-tweaking. On Thursday, the Cabinet Committee on Economic Affairs (CCEA) decided to almost double the price of domestically produced natural gas from $4.2/mmBtu at present, if all external factors such as taxes and the rupeedollar exchange rate, remain at current levels. Chidambaram said: What we have decided is the output cost... we are aware of the concerns raised by the Power and Fertiliser Ministries, and those concerns will be duly addressed. The CCEA approved the fixing of gas prices based on recommendations of the C. Rangarajan Committee on the production sharing contract mechanism in the petroleum industry. The present gas pricing policy under the New Exploration Licensing Policy (NELP), approved by the Government for five years beginning April 2009, is due for revision from April 2014. The recommendations approved on Thursday, known as the Natural Gas Pricing Guidelines, 2013, will be valid for five years. The guidelines are aimed at incentivising investment in the upstream sector to take production to optimum levels, especially in exploitable reserves. The guidelines are also aimed at ensuring that producers do not form a cartel because of the huge unmet demand. This will protect consumer interests, said Petroleum and Natural Gas Minister, Veerappa Moily. The new guidelines will be applicable for all domestically produced gas, but will not cover gas for which prices have been fixed contractually for a certain duration, till the end of such period. The guidelines will also not be applicable where the contract provides a specific formula for natural gas price indexation/fixation. The formula is based on the weighted average of wellhead netback price (or price at the wellhead) of Indian LNG imports, excluding spot purchases at the wellhead point of exporting countries and weighted average of the prevailing price at the global trading points of transactions Henry Hub (traded prices in the US), National Balancing Point of the UK, and netback price at the sources of supply for Japan. At present, Henry Hub averages around $4/mmBtu and National Balancing Point at $9-10/mmBtu. The netback price at the sources of supply for Japan at current rates would be around $10/mmBtu, and for Indian LNG imports, the netback price would be $7/mmBtu. At these rates, Indian natural gas prices would be around $7/mmBtu. The price for domestic gas producers in 2014 if all these factors remain the same would be around $8.4/mmBtu. The Secretary, Petroleum and Natural Gas Ministry, Vivek Rae, said a quarterly review of gas pricing would be notified in advance using data for four quarters, with a lag of one quarter. 12. 51 low-cost small airports to come up

Airports in Kolkata, Chennai will see public-private partnership. In addition, there are plans to introduce pubic-private partnerships (PPPs) in the modernised Chennai and Kolkata airports among six others. These were among the decisions taken in a meeting chaired by Prime Minister Manmohan Singh here on Friday. The meeting was called to fix targets for infrastructure projects. The Prime Minister reiterated that a lot of work still needed to be done and its pace should not slacken. It was decided that 51 low-cost small airports would be taken up by the Airports Authority of India during 2013-14. According to officials, there is no cap on investment in a low-cost airport, which is likely to be a basic airport, unlike airports in metro cities with vast spaces for shopping, eating places and hotels. The locations identified in Andhra Pradesh are Vijayawada, Nellore, Kurnool, Kadapa, Nizamabad, Tirupati, Anantapur and Karimnagar, while for Uttar Pradesh, the locations are Agra, Allahabad, Moradabad, Saharanpur, Meerut, Aligarh, Muzaffarnagar, Bijnor and Azamgarh. Apart from these two States, Madhya Pradesh has got seven, Maharashtra five and Rajasthan four, while, Bihar, Jharkhand, Punjab, Odisha, Assam, and Arunchal Pradesh have got three each. It was also decided to award eight greenfield projects during the current fiscal which include Navi Mumbai, Juhu (Mumbai), Goa, Kannur, Pune (Rajguru Nagar Chakan), Sriperumbudur, Bellary and Raigarh. Railway backlog According to Montek Singh Ahluwalia, Deputy Chairman of Planning Commission, the Railways has a huge task in hand. But, internal resources cannot help in meeting projects needs. He said an inter-ministerial group of Railways, Finance and Planning will be formed to formulate a creative financing-cum-implementation mechanism in two months for clearing the large backlog of sanctioned projects of over Rs 2,00,000 crore in a time-bound manner. It was also decided that a proposal to create a Rail Tariff Authority would be accelerated and brought to the Cabinet soon. Power projects The meeting directed the Power Ministry to work with the Planning Commission and Finance Ministry to resolve remaining issues in the power sector and improve generation and transmission capacity. The Power Ministry is working on a separate provision to operationalise open access. 13. Rural banking can trigger economic revolution, says K. C. Chakrabarty The launch of a rural bank branch often marks the start of an economic revolution in a village and its surroundings, RBI Deputy Governor K. C. Chakrabarty said. Speaking after inaugurating the 3,742nd branch of Canara Bank at Gungralchatra, a hamlet on the outskirts of Mysore, he said new technology initiatives such as Aadhaar (UID), RuPay and Kisan cards will help bring about an economic revolution. Urging customers to use these facilities, he pointed out that banking is a business where money has to rotate and, thereby, provide a multiplier effect. Speaking to Business Line on the sidelines, Canara Bank Chairman and Managing Director R. K. Dubey, said the bank would consciously be increasing its rural and semi-urban presence. BRANCHES, RECRUITMENT The bank, he said, hopes to open about 1,300 branches over the next two years. This would enable the bank to increase its CASA ratio from 25 per cent to 30 per cent of deposits in the next two years, he added. On recruitment, Dubey said the bank had hired about 7,500 persons last year and would recruit about 7,000 more this year. He added that with this, the bank would practically be replacing a third of its existing workforce in just two years. 14. Contain fallout of US immigration bill The US Senate has approved the controversial immigration bill that would provide millions of undocumented immigrants a chance to become citizens. President Barrack Obama described the passage of the bill as a critical step closer to fixing our broken immi gration

system once and for all and hoped that the House of Representatives would follow suit. Despite lobbying by business and industry groups, the Senate Bill contains several provisions which can impact India adversely. While its provisions related to the H-1B visas will hit the Indian IT industry, its provisions fast-tracking permanent residency are likely to spur exit of talent from India. There is still hope on the horizon that the Republican dominated House of Representatives may not endorse the Senate Bill, as it is working on its own version of Immigration Bill. House Speaker John Boehner has said he will not advance legislation that lacks support of most of his fellow Republicans, who remain resistant. The House version of the Bill does not have the stringent provisions of Senate Bill on H-1B visa and has been supported by industry bodies like the US Chamber of Commerce and US-India Business Council (USIBC). Nevertheless, Indian companies and government will do well to prepare for worse. To overcome such a situation, Indian IT companies in the US have increased local hiring and establishing local development centres. According to the National Association of Software and Services Companies, around 2,00,000 jobs for locals have been supported by Indian IT companies in the US with investments of over $5 billion through 128 acquisitions. It is now for the government to prepare for the contingency. Over a lakh Indian students are in the US and even if half of them choose to stay back, India will be deprived of their services and skills. Considering the Indian education scene and growth prospects in industry, the cream may not like to return. The government must take immediate steps to stop this brain drain. 15. Gas price revision a step forward The Union Cabinet's decision to double the domestic natural gas price to $8.40 per unit from next April, based on the Rangarajan committee's pricing formula, seems bold, but what it really does is to better reflect scarcity value and is in keeping with the ground reality of dearer gas prices (which have a marked regional bias). The price revision would proactively align supply with demand by stepping upinvestment in the upstream hydrocarbon sector. Estimates suggest that the sedimentary basins in India have in situ up to 10 billion tonnes of crude oil and one trillion cubic meters of gas, or enough to meet our requirements for decades. The upward gas price revision would raise the government take and attendant realisations, but also add to the subsidy outgo on fertiliser and increase costs of gasfired power plants. Fertiliser and power account for the bulk of gas demand, so we need policy solutions to better manage the higher subsidy burden and costs. It calls for an attractive investment policy for fertiliser plants in areas where gas prices are now much lower, like the US, and time-of-day power tariffs as gas-fuelled power plants basically meet peaking load. In tandem, we need much more transparency in the very process of price discovery, by opting for regular price bids and increased trading. The Rangarajan panel has indeed set the ball rolling by calling for disaggregated prices in gas. The plan is to work out prices of liquefied natural gas (LNG) term imports nationally (excluding spot imports) on a netback basis (actual market prices less cost of liquefaction, shipping and regasification, etc). The going prices in the main gas hubs in the US and UK and netback LNG prices in Japan would also be taken into account and averaged out to arrive at the domestic price. But going forward, we surely need to have in place a mechanism to determine prices in the main domestic gas hubs, with requisite infrastructure in place, by a process of regular bids for supply and demand. We also need effective regulation to boost gas storage, transportation and supply for a more complete market.