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Current Affairs: October 2009

CURRENT NATIONAL AFFAIRS

BANKING & FINANCE


RBI monetary policy
As part of its second quarterly review of the monetary policy for 2009-10, the RBI, on
October 27, 2009, hiked the Statutory Liquidity Ratio (SLR) for scheduled commercial
banks to 25 per cent from 24 per cent of their net demand and time liabilities (NDTL),
with effect from November 7, 2009, even as other key rates were left untouched.

RBI Governor D. Subbarao noted that the Indian economy was awash with liquidity and
there was possibility of considerable strain in the future from inflationary pressures.
However, to keep growth on track, the apex bank left the Bank Rate untouched at 6
per cent while the repo rate under the liquidity adjustment facility (LAF) stay at 4.75
per cent. The reverse repo rate under the LAF, too, remains the same at 3.25 per cent.
The cash reserve ratio (CRR) of scheduled banks also has been retained at 5 per cent of
their net demand and time liabilities (NDTL).

Mr Subbarao pointed out that the global economy has shown signs of major
improvement since the last review in July 2009. However, concerns remained of the
recovery being fragile. "Even as output is reviving, unemployment is expected to
increase to over 10 per cent. Investment is also expected to remain weak due to
ruptured balance sheets, excess capacity and financing constraints. Bank collapses are
continuing. World trade still remains below its level a year ago. On balance, while
global economic prospects have improved, uncertainties remain about the pace and
sustainability of economic recovery," Subbarao said.

The RBI chief also noted that there were concerns of large government market
borrowings. "During 2009-10 so far, the Central Government has already completed over
80 per cent (Rs 3,19,911 crore) of its net market borrowing and State governments have
mobilised Rs 58,683 crore (net) through the market borrowing programme," he stated.

Highlights

• Repo rate retained at 4.75 pc


• Reverse repo rate at 3.25 pc
• Cash Reserve Ratio kept at 5 pc
• Bank rates same at 6 pc
• Provisioning requirement for realty up at 1 pc from 0.40 pc
• Retains GDP growth projection for FY'10 at 6 pc
• Industrial production may revive further in coming months
• Ups inflation projection to 6.5 pc by March-end, from 5 pc
• Third quarterly review in January.

PLANNING & ECONOMY


RBI survey
The Reserve Bank of India has acknowledged the resurgence of the feel good factor in
the Indian economy but has said that growth and inflation continue to be a concern.
Maintaining a hawkish stance on inflation, the central bank has highlighted its concern
over slowdown in credit off-take and surplus liquidity in the system, giving no clear
indication on its rate stance. In its report on Macro and Monetary Developments in Q2
of 2009-10, the Reserve Bank has noted that "The combination of a weak recovery and
elevated CPI (consumer price index) inflation has already magnified the complexity of
policy challenges, notwithstanding the subdued nature of headline WPI inflation so far."

While premature reversal of the monetary policy stance entails the risk of stifling
recovery, persistence of accommodative stance could adversely impact inflation
expectations.

However, the results of its survey, based on “assessment for July- September 2009” and
“expectations for October-December 2009”, point to a strong momentum in industrial
recovery. Both the indices remained above 100 for the second consecutive quarter (100
is the threshold that separates contraction from expansion). According to the RBI
analysis, this suggests that the industrial recovery already seen up to August 2009 in
terms of trends in IIP growth could gain further momentum.

The outlook for employment is also improving and firms are expected to increase their
workforce on the back of expected increase in demand.

Among the positive pointers to the economic recovery include improved financial
conditions as reflected in return of capital flows, significant recovery in the stock
markets, and better transmission from low policy rates to declining lending rates. The
RBI has also said that there should not be any concerns about private credit getting
crowded out since over 80.4% of the government borrowing programme has been
completed so far as there is adequate liquidity in the system.

But RBI is concerned about the deceleration in private consumption and investment
demand that it says needs to be reversed from the low levels seen in the first quarter
of 2009-10 for ensuring a sustainable recovery.

Indian economy seen cruising at 6.5% in 2010


A key economic think-tank has made the most optimistic official projection yet for
growth in the fiscal to March 2010, flagged rising food prices as a major concern, and
suggested that tighter monetary and fiscal policies are unlikely in the coming months.

The Prime Minister’s Economic Advisory Council, headed by former RBI governor C.
Rangarajan, said it sees the gross domestic product (GDP) expanding by 6.5% in 2009-
10.

In its July 2009 forecast, the RBI had forecast that India’s economy in 2009-10 would
grow by 6%, with an upward bias, and the Planning Commission had said in early
September that it sees GDP growth at 6.3%. India’s economy expanded by 6.7% in 2008-
09 after growing at over 9% for three years.

The improving trend is unlikely to prompt any immediate withdrawal of stimulus


measures or a tightening of monetary policy, even though the panel made clear its
concern about inflation and fiscal deterioration. It expects the consolidated fiscal
deficit of the Centre and States at 10.09% for 2009-10 and sees inflation, imported and
local food inflation, as a significant risk for the Indian economy.

EDUCATION
IIMs can now set up campuses abroad
Directors of the prestigious Indian Institutes of Management (IIMs) and members of their
boards will eventually be appointed through an independent collegium of industrialists
and academics. Also, IIMs can set up campuses abroad, provided they come up with
“workable proposals and preferably function together instead of individually”.

"We want to globalise the IIM brand,” said HRD Minister Kapil Sibal. In another major
move, the government agreed that a collegium, as mooted for the appointment of vice-
chancellors of central universities, would also apply to IIMs, where majority
appointments so far are cleared by the HRD ministry, which advertises the positions
before short-listing and selecting candidates.

But that is set to change to advance the cause of transparency in appointments to top
institutes. IIM boards are also proposed to be restricted in size, with HRD ministry
describing them as “unwieldy and huge”. The membership will be limited to 13
(currently over 20 or so.

The boards are proposed to be reconstituted post January 2010, the deadline which the
government has given to IIM directors to present their views on the constitution of the
collegium, which will be empowered to recommend names of board members and
directors to the government for final selection.

For the institutes to beat competition, autonomy is the key, feel the directors. Sibal
agrees, but with a rider: “We are for IIM autonomy, for letting go, but let’s not forget
that the primary responsibility of all education systems is national.”

ELECTIONS
Congress wins in Haryana, Maharashtra and Arunachal
With a stunning result in the latest political super-bowl, the Congress has fortified its
"top dog" status, while pushing the main opposition party, BJP, into its gravest political
crisis in over two decades.

Congress survived a scare in Haryana and retained power in the State with the help of
independents as well as five Haryana Janhit Congress MLAs, who decided to join the
Congress. Congress sailed back in style in Maharashtra and Arunachal Pradesh. All three
CMs—Ashok Chavan in Maharashtra, B.S. Hooda in Haryana and Dorjee Khandu in
Arunachal—have been renominated by the party leadership.

If the Lok Sabha polls settled the Number One slot for Congress party, the altest verdict
confirmed that the gap between Sonia Gandhi’s outfit and BJP is growing. In fact, some
political pundits feel Congress could well be on the way to regaining its pre-1996 status
when, as the key player in most States, it could be fought only by a united opposition.

Some riders are, however, in order. The win in Maharashtra has been facilitated by Raj
Thackeray playing spoiler again—on a bigger scale. In Haryana, the party failed to get a
majority despite a three-way split of anti-Congress votes. The resurrection of Chautala
shows the resilience of old-fashioned politics and should be sobering for those who feel
traditional political tools—caste/community—have lost salience.

Haryana: In Haryana, the Congress vote share fell by a huge 7.4%, from 42.5% to 35.1%.
Normally such a big swing away results in the decimation of a party. But Hooda has
managed to keep his head above the water, thanks largely to a fractured opposition.

Chautala, too, lost his vote share, but by just 0.7%, while BJP’s share fell by 1.4%. The
new political outfit, Kuldip Singh Bishnoi’s HJC, accounted for 7.4% votes.

Maharashtra: In the the lead-up to the Maharashtra polls, many had wondered whether
Raj Thackeray would help Congress-NCP in as big a way as he did in the LS polls by
eating into the Sena votebank yet again. Indeed, Congress-NCP cruised back to power
as Shiv Sena citadels in Mumbai and Thane crumbled under Raj’s assault. In a result,
the loser’s story is almost as important as the winner’s. If the ruling combine beat the
incumbency blues, the 144-90 scoreline was the clap of doom for the Sena-BJP camp.
To add to Sena’s woes, BJP crept ahead with 46 seats to its 44.

The revenge drama saw Raj Thackeray’s Maharashtra Navnirman Sena demolish Sena’s
prospects by not only splitting the “Marathi” vote but emerging as the second largest
party in Mumbai with six seats and a staggering 23.35% of the city vote.

MNS polled 5.7% of the State’s vote, eating into Sena and possibly NCP bases. While
Sena was the worst hit, losing 3.7% of its support since May 2009, the Raj effect may
have dented others, particularly NCP, which lost 2.4% of its vote.

Congress may have raised its tally of seats in the 288-member Maharashtra Assembly
from 69 in 2004 to 82 this time round, but the party’s vote share has never been lower
in any Vidhan Sabha election in the State, except in 1978. Yet with 21% of votes,
Congress has a distinct edge over the other big parties, NCP having won just 16.4%, Shiv
Sena 16.3% and BJP 14%. That also means that the combined vote shares of the big four
is down by 5.9% from five years ago. This almost exactly matches the 5.7% won by MNS
in these elections.

Independents have won 15.5% votes. In other words, despite the existence of two long-
standing coalitions in the fray, roughly one in every three Maharashtra voters did not
vote for either of them. That is perhaps the clearest indication that this verdict is not
so much a positive one for UPA as one it has got by default because of the absence of
credible alternatives.

Arunachal Pradesh: The electorate in Arunachal Pradesh returned Congress to power


with an overwhelming majority but rejected the man, Gegong Apang, who not only
nurtured the party but also ruled the State for over 22 years.

The Congress romped home with 42 of the 60 Assembly seats even as Apang (60) bit the
dust at the hands of Alo Libang, a political greenhorn from NCP.

Dorji Khandu had come to power in April 2007 after Congress dissidents revolted against
Apang. Like in the last two elections, Khandu has again won from Mukto in Tawang
unopposed.

With five seats each, NCP and Trinamool Congress emerged as the main Opposition,
followed by People’s Party of Arunachal (four) and BJP (three). In 2004, the BJP had
won nine seats against Congress’s 34.

EC announces five-phase polls in Jharkhand from Nov 27


Election Commission has announced five-phase Assembly polls in Jharkhand, spread
over November-December 2009. Faced with a serious threat of Maoist violence, five-
phase election for 81 assembly constituencies will take place on November 27,
December 2, 8, 12 and 18. Results will be announced on December 23.

Jharkhand has 1.8 crore voters and 23,944 polling stations. While photo electoral rolls
have been prepared in the case of 74.19% voters, 77.63% voters have electoral photo
identity cards.

Admitting that conducting election in Jharkhand could be a problem due to the Maoist
menace, Chief Election Commissioner Navin Chawla said home ministry has agreed to
provide sufficient central paramilitary forces.

Jharkhand, which has seen four Chief Ministers and six governments in the nine years of
its short existence, will be looking for political stability at the end of the Assembly
election.

The State was placed under President’s Rule in January 2009 but the then Governor,
Syed Sibte Razi, was shifted out following allegations of misuse and corruption. A hung
House following the last Assembly election—the State’s first—in 2005 had led to a string
of unholy alliances in which Independent MLAs and fringe political parties with one or
two members in the Assembly called the shots. The period had also seen an
Independent MLA, Madhu Koda, becoming the Chief Minister.

Since then, two former ministers of the State have been arrested and sent to jail in
disproportionate assets cases, while the Enforcement Directorate has instituted an
adverse preliminary report against Koda and two other former ministers in the State for
alleged violation of foreign exchange rules and hawala transactions.

As many as seven MLAs in the 81-member House were disqualified in August under the
Anti-Defection Act while three members chose to quit the House, which had been kept
under suspended animation.

The election will put the Bharatiya Janata Party to yet another severe test. BJP had
emerged as the single largest party in the House with 30 seats after the last Assembly
election, though the majority eluded it. It also bagged eight out of the 14 Lok Sabha
seats from the State in May 2009. But with most of the party stalwarts in the Lok Sabha
and the party riven by factionalism, it faces an uphill task to put its act together.

Congress is trying to revive its fortune in the State where it was virtually marginalised,
managing to secure just nine seats in the Assembly in 2005. Even in the general election
held in May 2009, the party had managed to win only one of the 14 Lok Sabha seats. A
weak organisation and absence of leaders with acceptability throughout the State are
handicaps which the party hopes to overcome through campaigning by Rahul Gandhi
and others.

The election is also crucial for the Jharkhand Mukti Morcha, which campaigned for
separate Statehood but which never managed to get anywhere close to securing the
majority in the State Assembly. The virtually one-man party is still a force to reckon
with in Santhal Pargana region and the party chief, Shibu Soren, is still a big draw
among Santhals. But the JMM, which has declared its intention to contest the election
alone, may find the going tough in other parts of the State without the support of its
old ally, the Congress.

ENVIRONMENT
Ganga clean-up
Twenty two years and Rs 960 crore later, the government plans to spend another Rs
15,000 crore over the next 10 years to make the Ganga river pollution free. This
decision was taken at the meeting of the first National Ganga River Basin Authority,
chaired by Prime Minister Manmohan Singh, on October 5, 2009.
It has been decided to take up the cleaning of the Ganga river on a mission mode.
Mission Clean Ganga will ensure that by 2020 no untreated municipal sewage and
industrial effluents flows into Ganga. At present, the sewage treatment capacity is
about 1,000 mld, against 3,000 mld sewage being generated in the towns along Ganga.
Nearly 75% of the pollution in the Ganga is on account of municipal waste.

The costs will be borne by both the Centre and the States. There were disagreements
over the sharing, with States asking for 100% central funding. An alternate funding
pattern of 70% by the Centre and 30% by the States has been suggested. A final decision
on the sharing ratio will be worked out by the Planning Commission, in consultation
with the States and Central government.

In the meantime, the World Bank has offered a loan of $1 billion for the mission.

JUDICIARY
Vision Statement to cut delays
The Union government has suggested a drastic dilution of the judiciary's role in the
appointment of Judges in the "Vision Statement" for cutting down delays and banishing
cases pending for more than three years.

"The Executive and the Legislature must take initiative in recommending the best
possible talent for selection to the judiciary," Law Minister V. Moily said in the 32-page
document presented to Chief Justice K.G. Balakrishnan. The "government should also
be given the power to suggest outstanding lawyers and jurists as Judges," the Minister
said in the statement, which was discussed threadbare at a conference aimed at
"strengthening the judiciary towards reducing pendency and delays."

Moily's proposals have come in the wake of the crisis-like situation that has arisen
following allegations of judicial misconduct against a number of Judges—Karnataka High
Court Chief Justice P.D. Dinakaran and Judges Soumitra Sen of Calcutta High Court and
Nirmal Yadav of Punjab and Haryana High Court. The custodial death of Ashutosh
Asthana, the prime accused in the Uttar Pradesh PF scam, which reportedly involves
several Judges, has cast a further shadow on the judiciary.

Styled as "National Consultation," the conference was attended by Supreme Court


Judges and Chief Justices of High Courts, including Justice Dinakaran, and top judicial
luminaries from across the country.

Both the Law Commission, headed by Justice A.R. Lakshmanan, and the Parliamentary
Standing Committee report have recommended reverting to the pre-1993 system which
involved appointment of High Court and Supreme Court Judges through consultation
between the Chief Justice of India and the government-primarily the Prime Minister and
the Law Minister.

In all, Moily has suggested five "improvements" in the present system of appointment.
The other three are: There should be lucid and comprehensive guidelines which the
Collegium should follow in the matter of selection of judges. The Collegium should be
given a timeline to clear the backlog in vacancies. The government and the Collegium
should work "hand in hand while appointing Judges."

NUCLEAR ENERGY
India notifies N-separation plan
India has notified its separation plan in the IAEA, which formally separates India’s
civilian and military nuclear establishments. The plan, which was announced in March
2006, has passed muster at IAEA and India’s safeguards agreement is now officially
operational.

This is likely to help in the negotiations for the reprocessing agreement that is currently
under way between India and US. But more than that, this will silence many non-
proliferation critics in the new Obama-led US administration who had been looking at
the delay in notifying the safeguards agreement as an example of Indian dithering.

FOREIGN RELATIONS
India slams OIC over J&K envoy
Pakistan has succeeded in its efforts to compel the Organisation of Islamic Conference
(OIC) to appoint a special envoy for Jammu and Kashmir. At its meeting in New York
earlier in first week of October 2009, the OIC also stated that it supported people of
Jammu and Kashmir in realisation of their legitimate right to self-determination in
accordance with relevant UN resolutions and aspirations of the Kashmiri people.

A fuming India reacted sharply to the OIC action, dubbing it as interference in the
internal affairs of this country. “Jammu and Kashmir is an integral part of India and it is
our firm position that the OIC has no locus standi in matters concerning India’s internal
affairs,” the External Affairs Ministry said in a statement.

Condemning the OIC move, New Delhi said inherent in its statements and actions on the
issue of Jammu and Kashmir was a complete inability to understand India’s position.

The appointment of a Saudi national, Abdullah Bin Adbul Rahman Al Bakr, by the OIC as
its envoy on Kashmir is being seen as a move initiated by Pakistan as part of its
attempts to internationalise the Kashmir issue.

India has time and again told the international community, including major world
powers, that Jammu and Kashmir is a bilateral issue between India and Pakistan and
there is no room for third party intervention.

Under pressure from Pakistan, the OIC has at all its meetings adopted resolutions on
Jammu and Kashmir, prompting New Delhi to condemn 57-member body’s action every
time. Privately, however, many of the Islamic nations have repeatedly assured India
that they are not in agreement with OIC resolutions on Kashmir but had to support
them for the sake of unanimity and to keep Pakistan in good humour.

Well aware that its action would draw a strong response from India, the OIC is now
trying to play down the appointment of the special envoy.
OIC Secretary General Ekmeleddin Ihsanoglu was quoted as saying that the appointment
would help bridge the gap between India and Pakistan and address the issue of
minorities in India.

India, Argentina sign N-accord


On October 14, 2009, India signed an agreement for civil nuclear cooperation with
Argentina, making it the seventh nation to ink such an accord with this country after
New Delhi secured a waiver from the nuclear suppliers’ group (NSG) to undertake
nuclear commerce.

The agreement for cooperation in the peaceful uses of nuclear energy was among the
10 accords signed by the two countries following wide-ranging talks between Prime
Minister Manmohan Singh and visiting Argentine President Cristina Fernandez de
Kichner, during which they desired to establish strategic partnership between their two
nations. The two leaders discussed a wide range of bilateral, regional and global issues
of mutual interest.

A joint statement issued by India and Argentina after the visiting dignitary concluded
her talks with Indian leaders said the two sides shared the view that civil nuclear
energy could play an important role as a safe, sustainable and non-polluting source of
energy in meeting rising global demands for energy.

The other nine accords signed between the two sides include: exchange of letters for
business visa providing for five years multiple entry gratis visa for a single stay of 90
days; programme of cooperation in science and technology for 2009-11; MOU between
ONGC Videsh Limited and ENARSA; MOU on sports cooperation; MoU on cooperation in
the field of trade promotion and technology transfer in international trade; and
agreement on outer space.

The two sides also agreed on the need to give a new impulse to multilateral
negotiations in the area of disarmament, especially weapons of mass destruction.

India-China talks
Without getting into the recent spat over Arunachal Pradesh, Prime Minister Manmohan
Singh and Chinese Premier Wen Jiabao talked peace and harmony on October 24, 2009,
in a meeting on the sidelines of the India-ASEAN summit in Thailand.

The visit of the Dalai Lama to Arunachal also did not figure in the discussions between
the two leaders who instead focused on the positives in the relationship and agreed
that "differences" should not impede cooperation between the two countries.

In an effort to ameliorate the recent strain on the bilateral relationship, Prime Minister
Manmohan Singh even proposed that the two countries observe the 60th anniversary of
the establishment of diplomatic ties in a "fitting manner". He also put stress on the
trade and economic relations, calling it a "vital pillar" in the bilateral relationship.

This exchange at the highest political level came after an escalation in the rhetoric
between the two sides over the border issue. China had objected to Mr Singh’s trip to
Arunachal Pradesh for the Assembly elections. This had elicited a strong reaction from
New Delhi which had reminded Beijing that Arunachal remained an integral part of the
country. New Delhi had further pointed out that in the democratic system leaders
visited States where elections are taking place. This was further followed by India
protesting against China’s involvement in projects in Pakistan Occupied Kashmir, which
New Delhi pointed out was also disputed territory. New Delhi had earlier also objected
to Beijing’s practice of issuing visas to people from Jammu and Kashmir on loose
sheets.

Chinese Prime Minister Wen recalled Mr Singh’s remark about both sides having enough
space to develop and cooperate and added that there are sufficient areas in the world
for India and China to enhance such cooperation. The Chinese premier further
suggested that the Joint Economic Group should hold early consultations and that China
would work with India to handle the matter of the growing trade deficit.

India also rejected China’s objections to Dalai Lama’s Arunachal visit in November
while making it clear that the Tibetan spiritual leader was not allowed to indulge in
political activities on the Indian soil. The issue figured when Prime Minister Manmohan
Singh and his Chinese counterpart Wen Jiabao were seated next to each other at a gala
dinner hosted by the Thailand Prime Minister for leaders attending the ASEAN and East
Asia summits.

India, China ink pact on climate change


Amidst tension over political issues, India and China have signed an agreement to
cooperate on ways to fight climate change. Moving closer, at least on an issue
concerning the entire world, the two neighbours announced setting up of a Joint
Working Group (JWG) to exchange views concerning international negotiations on global
warming. The memorandum of agreement (MoA) assumes significance in the run-up to
the Copenhagen climate summit. Developed and developing countries are at
loggerheads over who should reduce emissions of greenhouse gases that are causing
climate change.

India and China are in the same bloc as the Group of 77 countries in climate
negotiations.

The MOA acknowledges that climate change and its adverse effects are a common
concern of mankind and need to be addressed through international co-operation. It
emphasises that the UNFCC and its Kyoto Protocol were the most appropriate
framework for addressing climate change.

The agreement also reaffirms the principle of common but differentiated


responsibilities, in particular that developed countries should take the lead in reducing
their greenhouse gases and providing financial resources, technology transfer and
capacity building support to developing countries.

Egypt offers special industrial zone to India


Egypt has invited India to build a ‘India industrial zone’ in the Suez development area
for setting up joint ventures with Egyptian companies. Egypt’s Prime Minister Ahmed
Nazif, in his meeting with commerce and industry minister Anand Sharma in Cairo,
offered to designate an area for setting up of the zone exclusively for Indian
companies.

India could gain significantly from the offer as it would give it easier entry to the
European and African markets, since Egypt has preferential access to both.

The Suez development area, located on the north-west coast of the Gulf of Suez, has
lower bureaucratic barriers to business formation and provides tax incentives. The law
gives more incentives for priority areas, such as infrastructure, auto parts, software, oil
field services, tourism and manufacturing. The terms and conditions of investing in the
proposed India zones and the tax benefits to industry are to be worked out.

Indian companies have, till now, invested about $750 million in 40 projects in Egypt.
India has a significant presence in the IT and automobile sector with companies like
Wipro, Satyam, Mahindra and Tatas having invested in the country.

Olive branch to Pak with rider


In a speech delivered at the inauguration of the Anantnag-Qazigund rail link in
Anantnag, Prime Minister Manmohan Singh focused largely on ties with Pakistan and the
earlier success of cross-LoC initiatives. Targeting domestic audience and also sending
out a message to Pakistan, Mr Singh prefixed his offer of peace with the rider that
Islamabad must bring perpetrators of terror attacks to justice and destroy terror
camps. "For a productive dialogue it is essential that terrorism must be brought under
control," he said.
Mr Singh said India would put pressure on Pakistan to curb the activities of the
elements engaged in terrorism against India. "If they are non-State actors, it is the
solemn duty of the government of Pakistan to bring them to book, to destroy their
camps and to eliminate their infrastructure. The perpetrators of the acts of terror must
pay the heaviest penalty for their barbaric crimes against humanity," he said.

With Pakistan now being targeted by terrorism, Mr Singh said there could be no
compromise with the ideology of terror. "It is a misplaced idea that one can reach a
compromise with the ideology of the terrorists or that they can be used for one’s own
political purpose. Eventually, they turn against you and bring only death and
destruction. The real face of the terrorists is clear for the people of Pakistan to see
with their own eyes," he said.

He maintained that India was ready to discuss humanitarian issues whose “resolution
requires the cooperation of Pakistan”. "We are ready to discuss these and other issues
with Pakistan. I hope that, as a result, things will be made easier for our traders,
divided families, prisoners and travelers," he said.

President Pratibha Patil’s visit to UK and Cyprus


President Pratibha Patil visited UK and Cyprus from October 27 to 31, 2009. During her
visit to UK she received the Baton of the Commonwealth Games from the Queen of
England at a ceremony in the Buckingham Palace in London on October 29.

This was the third State visit by an Indian President to the UK. The first was by
President S. Radhakrishnan in 1963 and the second by President R. Venkataraman in
1990. This was also the first State visit after the commencement of the strategic
partnership between India and the UK in 2009.

During her visit, President Patil interacted with Queen Elizabeth of England as also met
Prime Minister Gordon Brown, leader of the opposition David Cameron and leader of the
Liberal Democratic Party Nick Clegg.

She also addressed in London a business meeting organised by the UK India Business
Council.

Gandhi letters handed By UK to President Patil: Mahatma Gandhi won’t receive


letters not bearing stamps as a matter of principle. But he chose to write back and
inform sender Hamdiullah Afsar, a contemporary poet of those times, of his decision.
These and many such aspects of Gandhi’s personality come out in a set of letters
presented by Curry King Ghulam Noon and NRI from London Nat Purie, who bought some
of the memorabilia associated with Mahatma Gandhi in an auction in London and
presented them to President Pratibha Patil at the India House.

The memorabilia, consisting of a piece of khadi cloth, ostensibly spun by Gandhi


bearing his signatures along with those of Sarojini Naidu, Gandhi’s disciple Meerabai,
secretary Pyare Lal and some other blurred signs are part of the package bought by the
NRI duo that was handed over to the President.

Gandhi’s letters written in Urdu to his disciple Maulana Abdul Bari and a lesser known
Urdu poet of those times, Hamidullah Afsar, are a study in contrast. These letters bring
out the difference between those who were close Gandhi’s freedom movement and
those who tried to intrude upon his privacy.
The President visited Cyprus on an invitation of the then President of Cyprus
Papadopoulus who visited India in April 2006. The last time an Indian President visited
Cyprus was 21 years ago, again R. Venkataraman, whereas all former Cyprian Presidents
have visited India during their term of office.

Cyprus has always supported India on all crucial issues and expressed its understanding
on our nuclear tests in 1998 and supported Indian position during Kargil war, too.

India is planning a major headway in generating energy through solar sources. It has
approached Cyprus which has made considerable headway in that direction to develop
solar power plants ranging between one MW and 50 MW. An MoU was signed in the
presence of visiting Indian President Pratibha Patil for providing solar power to India.

The MoU states that NORASCO, UPTURN of DALCO company and CASE NEUBERG of the
CASE group of companies will supply solar photovoltaic systems, kits and technology for
solar energy projects in India. It also states that CASE will be Indian technology and
engineering partners for setting up turnkey solar energy plants in India and NORASCO
will provide project finance and investments of EURO 50 million in solar energy sector
in India between 2010 and 2015. The Photovoltaic Technology Group of University of
Cyprus (PVT Group) also signed an MoU with NORASCO whereby PVT Group will act as a
technology consulting partner for developing solar energy projects and solar energy
education in India.

RESERVATIONS
Cabinet OKs 50% quota for women in civic bodies
Women will soon occupy half the seats in urban local bodies with the Union cabinet on
Thursday clearing a proposal for raising reservation for them in municipalities from 33%
at present. This provision will apply to the total number of seats to be filled by direct
election, offices of chairpersons and seats and offices of chairpersons reserved for SCs
and STs.

The increased representation of women is likely to have significant benefits in terms of


higher priority to women’s issues in critical areas of urban governance and service
delivery such as water supply, sanitation, education and health.

SCANDALS
Former Jharkhand CM Koda booked for graft
Jharkhand presents an example where lack of political stability was allegedly exploited
by a group of legislators led by former Chief Minister Madhu Koda to fatten themselves.
The Enforcement Directorate, on October 9, 2009, slapped charges under Prevention of
Money Laundering Act (PMLA) on the former Jharkhand CM and three of his former
Cabinet colleagues for allegedly amassing assets running into several hundred crores—
between Rs 700 and 800 crore according to the preliminary estimate.

Koda, the first Independent to become Chief Minister and now a member of Lok Sabha
supporting UPA government, has been charged with having business interests of diverse
kinds—cement, steel, auto, power, agro and tourism. His alleged investments,
estimated at Rs 300-400 crore, are just as widely spread—from Singapore to Thailand to
Dubai to Liberia.

His former colleagues who have also been booked under PMLA include Bhanu Pratap
Shahi, Bandhu Tirkey and Kamlesh Singh. Though they did not prosper as much as Koda,
the trio, according to ED, made personal fortunes ranging from Rs 20 crore to Rs 50
crore.
Koda and his associates milked their success in 2005 Jharkhand polls. The election
threw up a hung House, enabling them to play kingmaker with remorseless agility.
Shibu Soren, who was sworn in as Chief Minister of Jharkhand when he lacked majority
support, had to resign when the group refused to rescue his aspirations. They helped
Arjun Munda of BJP become the Chief Minister and were rewarded with 'plum' portfolios
as part of deal. The arrangement, however, did not last long. The group ditched BJP
after UPA agreed to propel Koda to Chief Ministership. Others in the group, naturally,
held on to their portfolios.

The tenure was marked by allegations of corruption, particularly allegedly dubious


decisions on mining leases to big industrial houses. Later on, with the stink rising to
embarrassing levels, Congress wanted to dissociate itself from the arrangement, but
allies RJD and Jharkhand Mukti Morcha prevailed. The import of allegations of the ED
begin to sink in deeper when two other factors are considered. First, the last five years
have seen Maoists rapidly expanding their influence in Jharkhand, turning huge swathes
into "liberated Red zones". Also, the office of the Governor also came under a cloud,
with CBI raiding two close aides of Governor Syed Sibte Razi.

TERRORISM; LAW & ORDER


New anti-Naxal policy
The Centre’s plans to take the battle to Naxalites hinge on a strategy that will see
Central and State forces acting in concert to first wrest control of areas long considered
“Red” zones and then facilitate expeditious restoration of civil administration. The
Cabinet Committee on Security (CCS) has okayed a comprehensive approach to Maoist
extremism with a "clear and hold" doctrine at the centre of the anti-Naxal "action plan".
Moving from the current largely reactive stance which saw occasional jabs into Maoist
hinterland, forces will pro-actively engage the ultras.

Recognising that draining Maoist swamps would also require restoration of rule of law
and demonstrable development, the government has decided that the forces used in
anti-naxal operations will not pull out after an operation. Rather, reinforcements will
beef up security and set the stage for the civil bureaucracy to get to work. The
developmental aspect of the plan is crucial to denying Maoist ranks of fresh recruits and
addressing the argument that exploitation and abysmal conditions in tribal areas in far-
flung areas has led to "popular" support for the Red insurgency. Fixing things and
making them work was important in showing the state could deliver.

The view in government is that the offensive cannot be delayed much further. With
alarming signs of an emboldened Maoist leadership targetting urban areas beyond their
known forest hideouts—arrested politburo member Kobad Gandhy was incharge of
operations in cities like Delhi, Mumbai and Pune—the government is gearing for action
and bracing for casualties.

The strategy for acting on intelligence tip-offs and hitting at naxal bases deep in Red
"liberated" zones was put to trial in September 2009 in Chhattisgarh’s Dantewada. The
Maoists were routed but the hazardous forests and complete lack of infrastructure
underlined how difficult it would be for a force to operate "behind the lines". It is felt
that the surge in Central and State forces after the Assembly elections in Haryana,
Arunachal Pradesh and Maharashtra can be sustained if the local population is
convinced that Maoists can be defeated and that the forces will not leave in a hurry.
This would strengthen intelligence collection and provide the administration with
valuable allies as even fence sitters opt for the winning side.
The Centre plans to deploy 70,000 paramilitary personnel—drawn from CRPF, ITBP, BSF,
SSB, CoBRA and Nagaland Armed Police—in States like Jharkhand, Chhattisgarh, Orissa,
Bengal, Bihar, Maharashtra and Andhra.

Maoists step up the gore, behead police officer


On October 5, 2009, in a barbaric, Taliban-style execution, Maoists beheaded special
branch inspector Francis Indwar and threw his body on a slip road leading to National
Highway 33 that connects Patna to Jamshedpur. The officer was abducted and held
hostage by Naxalites demanding a swap for arrested Maoist ideologues Kobad Ghandy in
New Delhi, Chhatradhar Mahato in Kolkata and another captured leader
Chandrabhushan Yadav.

CURRENT INTERNATIONAL AFFAIRS

EUROPEAN UNION
Ireland endorses Lisbon treaty
On October 3, 2009, Irish voters strongly endorsed the European Union's Lisbon Treaty-
16 months after their first vote rejecting it plunged EU reforms into deadlock.

About 67% voted "Yes". Irish Prime Minister Brian Cowen hailed a "clear and resounding"
endorsement. Political leaders across the EU have also welcomed the result. The
President of the European Commission, Jose Manuel Barroso, said it was a great day for
Europe. He urged the leaders of Poland and the Czech Republic-the only other countries
yet to ratify Lisbon Treaty-to sign the treaty as soon as possible.

The treaty-which is aimed at streamlining decision-making in the 27-nation bloc-cannot


take effect until all 27 member States ratify it.

Ireland was the only EU member State to hold a referendum on Lisbon Treaty, though
there have been calls for referendums in several countries.

Irish opinion is thought to have swung behind the "Yes" vote this time because of the
severity of the economic downturn, as well as the legal "guarantees" on Irish
sovereignty that the EU pledged after the first referendum.

The legally binding "guarantees" state that Lisbon Treaty will not affect key areas of
Irish sovereignty, such as taxation, military neutrality and family matters such as
abortion-significant issues in 2008's campaign in Ireland. But they have not yet been
attached to the treaty.

The treaty is intended to make EU institutions better suited to the enlarged bloc of 27.
But opponents see it as part of a federalist agenda that threatens national sovereignty.

PAKISTAN
Multi-terror attacks on cops, 40 dead
Teams of terrorists unleashed attacks on three law enforcement facilities in Lahore on
October 15, 2009, even as car bombs exploded in two cities near the Afghan border,
killing 39 persons in an escalating wave of anti-government violence in Pakistan.

No group claimed responsibility, though suspicion fell on Pakistan’s umbrella Tehreek-


e-Taliban movement, Al Qaeda and home-grown Islamist groups Lashkar-e-Jhangvi and
Jaish-e-Muhammad.

The co-ordinated assaults underscored the power of armed radicals to strike in the
heart of Pakistan, and the weakness of poorly equipped security forces, despite
promises of a new offensive against the Taliban. Nuclear-armed Pakistan, a key ally in
the US-led fight against terrorism, is reeling from two years of Taliban-linked attacks
that have escalated such that over 160 people have been killed since October 5.
Pakistan's weak civilian government said the country faced a new war after the slew of
militant attacks away from the insurgent hotbed of the north-west tribal region.

WORLD ECONOMY
Human Development Index
While China figures among the only five countries across the world that improved their
Human Development Index (HDI) rankings, 2009, by three or more points, India
continues to cut a sorry figure, slipping six points (from the last compilation) in the
latest UNDP Human Development Index. Overall, however, India made progress on HDI,
improving its value from 0.556 in 2000 to 0.612 in 2007.

As against a standing of 128 in the 2008 UN Human Development Report, India has been
ranked 134th among the 182 nations surveyed. The slip represents poor progress on
some indicators of people’s well-being, including life expectancy, literacy, school
enrolment and GDP per capita.

In China (ranked 92), along with Colombia, France, Peru and Venezuela, which
improved their rankings by at least three points, the fillip has been attributed to
increase in incomes and life expectancy. China, Colombia and Venezuela’s progress has
also been driven by improvement in education. The report concludes that disparities in
life expectancy in the world can range up to 30 years. Despite progress in the last 25
years, disparities in people’s well-being in rich and poor countries continue to be
unacceptably wide.

2009 report represents the most extensive coverage ever of 182 countries. As for
rankings, the top three ranked countries in the HDI are: Norway, Australia and Iceland.
France rejoined the top 10 countries after dropping down for one year, while
Luxembourg fell from the top 10.

US exits recession
The world's largest economy, USA, has climbed out of recession as it grew by 3.5 per
cent in the third quarter ending September 30, 2009, the first quarterly expansion in a
year, thanks to higher consumer and government spending among others.

The economy, which was battered by the worst financial turmoil since the 1930s Great
Depression, expanded last in the second quarter of 2008, when GDP rose 1.5 per cent.

The advanced estimates from the US Bureau of Economic Analysis (BEA) showed that
American GDP expanded 3.5 per cent in the third quarter.
Consumer spending, which accounts for two-thirds of the GDP, grew 3.4 per cent in the
quarter under review, compared to 0.9 per cent fall in the previous quarter.

USA is the latest advanced economy to shrug off recession and joins the likes of
Germany, France, Japan and Singapore. However, the country would be officially out of
recession only after the National Bureau of Economic Research (NBER) declares so. A
country is said to be in recession if its economy contracts for two straight quarters.

The third quarter growth was primarily due to rising personal consumption expenditures
(PCE), higher federal government spending and exports.
One of the main factors for the upturn in economic activities in the third quarter is the
government's 'Cash for Clunkers' programme for the auto industry, which resulted in
increased car sales. The initiative which ended in August had offered rebate of about
$4,500 for consumers to purchase new cars and sell their old models.

ENVIRONMENT
UN climate talks end without any consensus
As the Bangkok round of talks on climate change in October 2009 came to an end, the
rift between the developed and developing countries appeared to have deepened and
widened. The developed countries would like to abandon the Kyoto Protocol, in favour
of a new agreement, while the developing countries would like an extension of the
Protocol. There has been virtually no progress on the issue of finance and mid-term
emission reduction targets for industrialised countries.

Developing countries have opposed scrapping the Kyoto Protocol as it clearly places an
obligation on developed world to deepen emission cuts and to provide finance to help
developing countries to adapt to and mitigate climate change. The United States and
Australia were among the 42 countries that sought to junk the Protocol. They argued
that the world had changed since the 1990s, and keeping in mind the ground realities a
new agreement needs to be crafted. This agreement would require all countries to take
on emission cuts. This move was resisted at Bangkok, with the developing countries
under the G-77 umbrella argued that such a proposal would violate the Kyoto Protocol
and the Bali Action Plan.

The bright spot in Bangkok was the unveiling of an aggressive emission reduction plan
by Norway. The Scandinavian country had previously committed unconditionally to
slashing emissions 30 per cent below 1990 levels by 2020. Its new pledge is to cut
greenhouse gas output by 40 per cent if an international agreement is reached in
Copenhagen in December 2009.

Lawmakers join hands to fast-track carbon cut


The time to act is now, whether or not there is an international consensus on climate
change at the UN Copenhagen talks in December, say the 100-odd legislators from
major economies representing major political parties—including US, UK, France, China,
Brazil, Mexico and India.

The lawmakers converged at the Danish capital at a GLOBE International and COM+
meeting held over two days from October 24-25, 2009 at the Folketing, the Danish
Parliament, in preparation to the UNFCCC meeting in December that is expected to find
an alternative to the Kyoto Protocol that is to conclude in 2012.

The legislators have signed key guiding principles set out by Chinese Congressman Wang
Guangtao, chairman of the steering committee on environment and resources
protection, National People’s Conference, China and US Congressman Edward Markey to
enable enacting of climate change laws in their respective countries.

The Wang-Markey principles outline energy standards, forestry preservation, and


renewable energy that could see 70% of the emissions cuts needed by 2020 if the global
average temperature rise is to be limited to 2°C.

They include standardized action on building and appliance standards; renewable


energy; vehicle fuel and efficiency standards; and forestry. Such coordinated action—
especially in areas like domestic, transportation and industrial energy efficiency—will
result in cost savings and more competitiveness.
The overriding theme has been to stress the need to accelerate domestic legislation
that bind national governments to short, medium and long-term targets for emissions; a
commitment to "climate compatibility assessments" for major government policies; a
duty on governments to report to parliament regularly on their progress in meeting
targets; and a commitment to a regular review to ensure that policies are consistent
with the latest science.

India joins rich nations to protect forests


India, along with five other developing countries, has joined a group of five rich nations
to work on a $350-million project to fight climate change through forest management.

The six developing nations, which also include Brazil, Congo, Morocco, Nepal and
Romania, have joined the group of five contributing countries-the US, Australia, Britain,
Denmark and Norway-under the governing body of the Forest Investment Programme
(FIP).

The FIP Trust Fund Sub-Committee met in Washington for the first time on October 29,
2009, to begin implementation of the Program, including consideration of criteria for
how to select pilot countries and regions.

The FIP governance structure is among the first in a new generation of partnerships
among developing and developed countries and other stakeholders which takes account
of the need for a level playing field in addressing climate action.

INTERNATIONAL RELATIONS
RIC meeting in New Delhi
Global terrorism with special focus on Afghanistan dominated the ninth trilateral
meeting of the foreign ministers of Russia, India and China (RIC) that concluded in
Bangalore on October 27, 2009.

The ministers emphasised the need for the three countries to assist Afghanistan in
fighting terrorism, ensuring security, restoring peace and stability and building a
democratic and pluralistic Afghanistan.

The meeting was held in the backdrop of two significant bilateral issues—meeting
between Prime Minister Manmohan Singh and China’s Premier Wen Jiabao at Hua Hin,
Thailand and trade, economy, scientific and climate meeting with Russia in Moscow on
October 21—and resolved to jointly fight terrorism and narcotic trafficking with
mention also being made on diplomatic settlement of Iran nuclear issue and
denuclearization of the Korean peninsula.

The demand for a greater role for India in the United Nation affairs has gained
momentum once again. Russia and China made a strong bid for India’s status in
international affairs be accorded importance. "There is a need for a comprehensive
reform of the United Nations with a view to make it more efficient so that it can deal
with the current global challenges more effectively. Russia and China attach
importance to the status of India in international affairs. We urge the world
communities to understand and support India’s aspirations to play a greater role in the
United Nations," Russian and China’s foreign ministers Sergei Lavrov and Yang Jie Chie,
jointly stated.

Obama signs into law Pak Aid Bill


US President Barack Obama has signed into law legislation that will provide $7.5 billion
in US aid to Pakistan over the next five years.
"This law is the tangible manifestation of broad support for Pakistan in the US, as
evidenced by its bipartisan, bicameral, unanimous passage in Congress," the White
House said in a statement.

Obama signed the legislation after hectic jockeying by Pakistan's Foreign Minister Shah
Mahmood Qureshi to secure assurances from Congress that the Bill does not trample on
Pakistan's sovereignty.

The United States Congress sought to allay Pakistani concerns. Lawmakers released an
explanatory statement assuring critics of the legislation that the Bill in no way impinges
on Pakistani sovereignty.

"This Act formalises that partnership, based on a shared commitment to improving the
living conditions of the people of Pakistan through sustainable economic development,
strengthening democracy and the rule of law, and combating the extremism that
threatens Pakistan and the United States," the White House statement said.

Sen John Kerry, a co-author of the legislation, said the statement was issued "to set the
record straight". He emphasised that the legislation in no way sought to “compromise
Pakistan's sovereignty, impinge on Pakistan's national security interests, or
micromanage any aspect of Pakistani military or civilian operations". House Foreign
Affairs Committee chairman Howard Berman, an author of the legislation, said the
statement was "a reflection of our desire to be long-term partners with the Pakistani
people".

Visit of Chinese PM to N-Korea


North Korea’s leader Kim Jong-il made a rare appearance to personally greet visiting
Chinese premier Wen Jiabao at the start of a trip to North Korea in the month of
October 2009.

Kim Jong-il’s unusual outing followed by Wen’s talks with the premier was a show of
how serious North Korea is about shoring up ties with Beijing, which gives its poor
neighbour crucial economic help and diplomatic backing.

Kim Jong-il is widely believed to have suffered a serious illness in 2008, and it is rare
for him to personally greet an arriving visitor. Even audiences are uncommon.

North Korea told Jiabao that it was open to bilateral and multilateral talks on its
nuclear programmes. The comments appeared to be the latest indication of
Pyongyang’s apparent willingness to return to six-nation disarmament talks that it
broke off in early 2009.

China termed Wen’s visit a "goodwill" trip to mark the 60th anniversary of diplomatic
relations, but nuclear issues figured to be high on the agenda.

Hillary Clinton's visit to Pakistan


Stating that Pakistan was at a "critical point" of history, the US has offered to stand
soldier-to-soldier with the country in its fight against "tenacious and brutal terror
groups". "This is not Pakistan's fight alone," US Secretary of State Hillary Clinton said
during her visit to the country in October 2009.

During her maiden visit to Pakistan after assuming office, Clinton met President Asif Ali
Zardari, Prime Minister Yousuf Raza Gilani and Army Chief Gen Ashfaq Parvez Kayani.
She refused to be drawn into the debate on whether there are "good Taliban" and made
no reference to contentious issues like differences between the US and Pakistan on
conditions attached to economic aid.

SUMMITS
ASEAN Summit
The 15th ASEAN Summit and the related summits, including the 12th ASEAN-China
Summit, the 12th ASEAN-Japan Summit, the 12th ASEAN-Republic of Korea Summit, the
Seventh ASEAN-India Summit, the 12th ASEAN Plus Three Summit and the Fourth East
Asia Summit, were held on October 23-25, 2009 in Cha-am Hua Hin, Thailand. ASEAN
Leaders discussed among themselves and with relevant Dialogue Partners on how to
realise an ASEAN Community by 2015.

Highlights for the Summits include the inauguration of the ASEAN Intergovernmental
Commission on Human Rights, the adoption of a declaration on climate change to
reaffirm ASEAN position in the negotiation under the UN Frameworks Convention on
Climate Change (UNFCCC), as well as the adoption of a declaration on education
cooperation to achieve an ASEAN Community. Other issues affecting the well-being of
the peoples, including food and energy security, financial stability, pandemics as well
as disaster management, were also discussed.

During the Summits, ASEAN Leaders also met with representatives from the ASEAN
Inter-Parliamentary Assembly (AIPA), ASEAN Youth and ASEAN Civil Society
Organisations which reflected Thailand’s will to promote people’s participation in
ASEAN Community-building process.

The 15th ASEAN (Association of Southeast Asian Nations) Summit and the related
summits were concluded Sunday afternoon, with a series of documents being adopted
by the participating national leaders.

Key documents, such as the Cha-am Hua Hin Declaration on the Inauguration of the
ASEAN Intergovernmental Commission on Human Rights (AICHR), Cha-am Hua Hin
Declaration on Strengthening Cooperation on Education to Achieve an ASEAN Caring and
Sharing Community, Draft ASEAN Joint Statement on Climate Change, and ASEAN
Leaders' Statement on ASEAN Connectivity were adopted by ASEAN leaders and other
participating national leaders.

The next ASEAN summit and related summits will be held in Vietnam.

East Asia Summit


The Fourth East Asia Summit was rescheduled several times, had its venue changed and
one attempt to hold it was cancelled due to the 2008–2009 Thai political crisis. It was
ultimately held on October 25, 2009 in Cha-am and Hua Hin, Thailand. ASEAN
(Association of Southeast Asian Nations) countries, China, Japan, South Korea, India,
Australia, and New Zealand attended the Summit.

The Summit adopted two documents. The first was a statement on disaster
management. The second related to the re-establishment of Nalanda University by
India.

The Chairman's Statement noted: We acknowledged the importance of regional


discussions to examine ways to advance the stability and prosperity of the Asia Pacific
region. In this connection, we noted with appreciation the following:
(a) the Philippines’s proposal to invite the heads of other regional fora and
organizations in Asia-Pacific to future EAS meetings to discuss measures that will
protect the region from future economic and financial crisis and strengthen Asia
economic cooperation, including through the possible establishment of an economic
community of Asia.
(b) Japan’s new proposal to reinvigorate the discussion towards building, in the long
run, an East Asian community based on the principle of openness, transparency and
inclusiveness and functional cooperation.
(c) Australia’s proposal on the Asia Pacific community in which ASEAN will be at its
core, will be further discussed at a 1.5 track conference to be organized by Australia in
December 2009.

The East Asia Summit is a forum for dialogue on broad strategic, political and economic
issues of common interest and concern with the aim of promoting peace, stability and
economic prosperity in East Asia. It is an open, inclusive, transparent and outward-
looking forum, which strives to strengthen global norms and universally recognised
values with ASEAN as the driving force working in partnership with the other
participants of the East Asia Summit.

INTERNATIONAL TERRORISM
Pak’s Saeed farce continues
Hafiz Saeed, who has shown to be the mastermind behind the 26/11 terror assault on
Mumbai, has been allowed to go scot-free yet again. In a development which lays bare
Pakistan’s game of deceit in acting against perpetrators of the attack, the Lahore High
Court, in October 2009, dismissed two cases registered against him on the ground that
the Jamaat-ud-Dawa, the organisation headed by him, was not 'proscribed' in Pakistan.
JuD is the new avatar of the banned Lashkar-e-Taiba.

Describing the case against Saeed as arising out of a 'mala fide intention' by the Punjab
provincial government, the court quashed the cases, which were registered at police
stations in Faisalabad for allegedly inciting people to wage 'jihad' (holy war) against
'infidels'.

The first FIR was based on his preaching session at Royalton Hotel in Faisalabad’s Canal
Road on August 27, 2009, in which Saeed urged people to retaliate against those who’ve
suppressed their rights. He explained away the problems of the American economy as
God’s way of retaliation.

The second FIR was lodged over his speech at an Iftar dinner at Peoples Colony,
Jaranwala Road Faisalabad on August 26. In this tirade, Saeed accused India of stage-
managing the 26/11 attacks and conspiring against Pakistan—a clear attempt to invoke
anti-India sentiments.

Car Bomb Targets India’s Kabul Mission


In yet another reminder of the desperation of terror groups and their sponsors to get
India out of Afghanistan, Taliban terrorists executed a suicide car bomb attack on the
Indian embassy in Kabul on October 8, 2009, killing 12 people and injuring more than 80
others. The attack came 15 months after the deadly strike near the embassy in 2008,
which left more than 60 dead, including an IFS officer and the Indian defence attache.

The damage could have been much more but for the security arrangements put in place
after 2008’s attack that was traced to ISI-affiliate Sirajuddin Haqqani.

Taliban spokesman Zabiullah Mujahid took responsibility for the attack. In a statement
posted on a website, he claimed the attacker was an Afghan who blew up his SUV
stuffed with explosives outside the embassy. Indian security agencies, however, said
this could be a smokescreen to keep the ISI out of scrutiny.

Clearly suggesting a Pakistani link to the suicide bomb attack, India said the terrorist
act was the handiwork of forces which had their patrons residing across the border.
Undeterred by the suicide attack, India also reiterated its "unwavering commitment" to
the reconstruction of Afghanistan and its assistance to the Afghan people "in realising a
democratic, peaceful and prosperous" country.

Top military brass among 50 killed in Iran suicide blast


A suicide bomber killed seven commanders of Iran’s elite Revolutionary Guards and up
to 42 others on October 17, 2009, in an attack that President Mahmoud Ahmadinejad
charged had been plotted from neighbouring Pakistan.

The foreign ministry of Iran called in Pakistan’s charge d’affaires over the bombing,
which targeted one of the Islamic republic’s most prestigious institutions in a region
that has been a hotbed of Sunni insurgency against the Shi’ite Muslim regime.

Several tribal leaders in the majority ethnic Baloch Sistan-Baluchestan province also
died in the bombing which left many others wounded.

The chief prosecutor in Sistan-Baluchestan, Mohammad Marziah, said Abdolmalek Rigi,


the head of the shadowy Sunni rebel group, Jundallah (Soldiers of God) had "accepted
the responsibility" for the attack.
The Iranian president hit out at Pakistan over the bombing, accusing it of sheltering
Jundallah militants.

The Revolutionary Guards accused the United States of involvement. "Surely foreign
elements, particularly those linked to the global arrogance, were involved in this
attack," a Guards statement quoted by television said. Iran often uses the term "global
arrogance" to refer to the United States, its old foe.

FBI foils LeT plan to attack India


Pakistan-based terror group Lashkar-e-Taiba (LeT), blamed for the 26/11 Mumbai
terrorist attack, was planning to use an American national to carry out another major
terrorist attack in India, according to the Federal Bureau of Investigation (FBI) of USA.

The man, identified as David Coleman Headley, was arrested in early October 2009, by
FBI Joint Terrorism Task Force at O’Hare International Airport.

Headley, 49, along with a Canadian citizen of Pakistani origin, Tahawwur Hussain Rana,
have been arrested on charges of plotting a terror attack against the facilities and
employees of a Danish newspaper which had published cartoons of the Prophet
Mohammed in 2005.

Rana is the owner of several businesses, including First World Immigration Services,
which has offices on Devon Avenue in Chicago, as well as in New York and Toronto.

According to the FBI affidavit filed in a Chicago court, Headley was in close contact
with Ilyas Kashmiri and several unidentified leaders of LeT.

Kashmiri is the operational chief of Pakistan-occupied Kashmir section of Harakat-ul


Jihad Islami (HUJI), a Pakistani-based terrorist organisation with links to Al-Qaida.
WORLD TRADE
SAARC Ministers promise to free services sector
Trade Ministers from SAARC countries have decided to fast-track negotiations on
liberalising the services market within the region, a move that will enable freer
movement of people within the region and give a boost to investments in areas like
tourism, financial services and telecom.

Services could be incorporated into the South Asia Free Trade Agreement (SAFTA) soon.

SAARC Ministers, who met in Kathmandu in October 2009, also decided to work on
reducing the negative list of items that are not covered under SAFTA to make the free
trade agreement more "meaningful". SAFTA is an agreement for elimination of tariffs on
goods traded within the SAARC region, and was signed in January 2004.

Indian Commerce and Industry Minister Anand Sharma pointed out that India had
unilaterally reduced its negative list for LDCs in the SAARC region, from 744 items to
below 500 items. "We are also working towards reduction on negative list with
reference to non-LDCs of SAARC (which include Pakistan and Sri Lanka)," the Minister
said. The minister urged the non-LDC members to consider reviewing their respective
negative lists in respect of both LDCs and non-LDCs, so that intra-SAARC trade could be
further expanded.

Interestingly, Pakistan continues to trade with India based on a positive list of items it
allows from India. The SAFTA, however, requires all members to trade with each other
on the basis of a negative list, which means that all goods would be allowed to be
traded except the ones included in the negative list

The Union government, acting on a proposal made by Bihar Chief Minister Nitish Kumar,
has declared dolphin as a national aquatic animal. The animal has been declared as a ‘highly
endangered’ under the ICUN and Schedule I of Wildlife Protection Act (1972), Government
of India.

United Arab Emirates (UAE) has become the top destination for Indian exports in 2008-
09, displacing the US from the number one rank. India’s exports to UAE grew by
phenomenal 53% to $23.92 billion primarily due to sharp increase in gems and jewellery
export.

Cloud-based services are those services in which software is accessed over internet by a
company, and maintained at data centres of the service provider, instead of a company’s
computers.

Michael Jackson’s new single “This Is It” features backing vocals by Jackson’s brothers,
opens with a soft, soulful introduction and the lines: “This is it, here I stand/I’m the light of
the world, I feel grand.”
Delhi, a city people love to hate for its traffic, lack of civic services, civility and now its
inability to appear trussed and ready for the Commonwealth Games, has found a place of
honour in the National Geographic Traveller magazine’s "50 Places of a Lifetime." The
Capital and Fatehpur Sikri are the only two Indian destinations to make it to the prestigious
list that is part of the travel magazine’s compilation that comes after a decade-long gap. In
fact, the first list published in 1999 featured the Taj Mahal and put Kerala on the
international map after it was described as ‘Paradise Found’. The 25th anniversary special
October issue also includes cities like Berlin, St Petersburg and Mexico City while short-
listing Aleutian Islands in Alaska in its section on wild places and the Hawaiian island of
Molokai as paradise found.

India-born Nobel laureates: Ronald Ross (Medicine, 1902); Born in Almora. Rudyard
Kipling (Literature, 1907); Born in Bombay. Rabindranath Tagore (Literature, 1913) C.V.
Raman (Physics, 1930) Hargobind Khorana (Medicine, 1968) S. Chandrashekhar (Physics,
1983) Amartya Sen (Economics, 1998), Venkatraman Ramakrishnan (Chemistry, 2009).

Yudh Abhyas was the largest-ever ground combat exercise held jointly between India and
US armed forces at Babina, near Jhansi.

Kerala High Court has become the first in India to post details of the assets and liabilities
of all its judges on the Court’s official website.

Orissa has been renamed as Odisha and Oriya language has been renamed as Odia. The
proposed change will require amendment to the First and Eighth Schedule of the
Constitution to be officially accepted.

Major cities of India that have been renamed after independence include: Kanpur
(Cawnpore), Thiruvananthapuram (Trivandrum), Mumbai (Bombay), Chennai (Madras),
Kolkata (Calcutta), Pune (Poona) and Kochi (Cochin).

The world’s largest cruise liner, Oasis of the Seas, began its maiden voyage to Florida on
October 30, 2009, gliding out of a shipyard in Finland. With an amphitheatre, basketball
courts and an ice rink on board, the 16-deck liner spans 1,200 feet from bow to stern. Its
2,700 cabins can accommodate 6,300 passengers and 2,100 crew. The ship cost $1.5 billion
and took two and a half years to build. It boasts of four swimming pools, volleyball and
basketball courts, and a youth zone with theme parks and nurseries for children.

World Sight Day is observed on October 8.

World Standards Day is celebrated on October 14.

Global Iodine Deficiency Disorders Day is observed on October 21.

India has signed agreements with the World Bank for $4.2 billion (around Rs 20,000 crore)
credit to support the country's infrastructure projects and also for recapitalising the public
sector banks. State-run PowerGrid Corp of India, India Infrastructure Finance Company Ltd
(IIFCL) signed pacts for $1 billion and $1.195 billion, respectively. The Centre signed the
agreement for $2 billion to recapitalise the state-run banks. The funding to IIFCL has two
components, IBRD loan of $1.195 billion long-term finance to infrastructure projects and a
grant of $5 million for capacity building of IIFCL, which finances infrastructure projects. The
loan will be utilised for strengthening transmission systems for Sasan, Mundra and
Krishnapatnam Ultra Mega Power Projects and South-West interconnection.

The 150th birth anniversary of Rabindranath Tagore will be celebrated internationally by


the UNESCO in 2010 as a mark of respect to the Nobel Laureate whose literary work blends
universal humanistic values and sympathy for the poor. The agency will also celebrate the
100th birth anniversary of Chilean poet Pablo Neruda and 100th birth anniversary of Afro-
Martinican littérateur Aime Cesaire. The UNESCO will establish prizes and medals in the
name of these literary giants. It will also organise a series of seminars and conferences
across the world to spread awareness about their literary works.

Larsen and Toubro (L&T) has built India’s largest ship-building yard near Chennai.

India has announced sites for setting up light water reactor-based nuclear plants in
cooperation with the United States, France and Russia. Power plants would be set up in
cooperation with the US at Chhayamithi Virdi in Gujarat and Kovvada in Andhra Pradesh,
while Jaitapaur in Maharashtra has been designated as the site for the plant to be set up
with France’s assistance. Kudankulam in Tamil Nadu and Haripur in West Bengal have been
chosen as the sites for power plants to be set up in cooperation with Russia.

The new series of Index of Industrial Production (IIP) will have base year as 2004-05 for
calculating factory production.

Cope-India 09 was joint air exercise that Indian Air Force held with US Air Forece at
Babina, near Agra.

Four-time world champion and Khel Ratna awardee woman boxer M.C. Mary Kom was
India’s flag-bearer in the third Indoor Asian Games held at Hanoi.

Current Affairs: September 2009


CURRENT NATIONAL AFFAIRS

EDUCATION
Sakshar Bharat Mission
Jhajjar’s (Haryana) 49-year-old neo-literate Roshni Devi emerged as the most powerful
symbol of female literacy on September 8, 2009—a goal to which India re-dedicated
itself under the brand new Sakshar Bharat Mission, which was launched by Prime
Minister Manmohan Singh on the occasion of International Literacy Day.

The mission sets itself the goal of educating 70 million learners, 60 million of them
women, by 2012 through an investment of $1billion; it replaces the old adult literacy
mission that began in 1988. The final goal is to take national literacy levels from 64 per
cent currently to 80 per cent by 2017, and reduce the gender gap from 21 per cent at
present to 10 per cent, eventually.

The reconstituted mission will focus on women, who have 54 per cent literacy rate
against 75 per cent in males. Terming the mission as UPA’s first step towards fulfilment
of the promise (of female literacy) made in the President’s address in 2009, the Prime
Minister said resources would not be a constraint in the urge to “educate all”.
The mission, in fact, makes a welcome departure from the past by making PRIs the
fulcrum of literacy programmes. The mission seeks to put learners in touch with their
surroundings, hone their life skills, tell them of their arts, crafts and culture and impart
them continuing education, which was previously absent. The mammoth task would
require 10 million teachers (only matriculates and above to be recruited) three million
managers, 70 lakh literacy centres and 210 million books.

HEALTH
By 2020, India will have 10m dementia patients
This can come as a shocker for India, which is yet to put in place a health programme
for the country’s greying population. The global burden of dementia—disorders of the
brain that affect memory and language among the elderly—has been seriously under
estimated. The World Alzheimer’s Report 2009, prepared by King’s College, London
says that there would be 35 million people worldwide with dementia by 2010. That
number is set to almost double every 20 years to 65.7 million in 2030 and 115.4 million
in 2050.

What’s worse, almost 60% of people with dementia in 2010 will be from low and middle
income countries like India, rising to 70.5% by 2050. This is a 10% increase over the
earlier estimate made in 2005—meaning that the estimates made earlier for India will
also increase.

Worldwide, the economic cost of dementia has been estimated at $315 billion annually.
The total annual costs per person with dementia have been estimated as $1,521 in a
low income country, rising to $4,588 in middle income countries and $17,964 in high
income countries.

The report recommended that the WHO declare dementia a health priority, and that
countries, including India, develop a plan for dealing with the greater numbers of
dementia patients.

JUDICIARY
Gram Nyayalayas Act
The Central government has decided that the provisions of the Gram Nyayalayas Act
shall come into force in the areas to which this Act extends on October 2. The Gram
Nyayalayas Act, 2008 has been enacted to provide for the establishment of the Gram
Nyayalayas at the grass roots level for the purpose of providing access to justice to the
citizens at their door steps.
The salient features of the Gram Nyayalayas Act are as follows:
• Gram Nyayalayas are aimed at providing inexpensive justice to people in rural
areas at their doorsteps;
• the Gram Nyayalaya shall be court of Judicial Magistrate of the first class and
its presiding officer (Nyayadhikari) shall be appointed by the State Government
in consultation with the High Court.
• the Gram Nyayalaya shall be established for every Panchayat at intermediate
level or a group of contiguous Panchayats at intermediate level in a district or
where there is no Panchayat at intermediate level in any State, for a group of
contiguous Panchayats;
• the Nyayadhikaris who will preside over these Gram Nyayalayas are strictly
judicial officers and will be drawing the same salary, deriving the same powers
as First Class Magistrates working under High Courts;
• the Gram Nyayalaya shall be a mobile court and shall exercise the powers of
both Criminal and Civil Courts;
• the seat of the Gram Nyayalaya will be located at the headquarters of the
intermediate Panchayat, they will go to villages, work there and dispose of the
cases;
• the Gram Nyayalaya shall try criminal cases, civil suits, claims or disputes which
are specified in the First Schedule and the Second Schedule to the Act;
• the Central as well as the State Governments have been given power to amend
the First Schedule and the Second Schedule of the Act, as per their respective
legislative competence;
• the Gram Nyayalaya shall follow summary procedure in criminal trial;
• the Gram Nyayalaya shall exercise the powers of a Civil Court with certain
modifications and shall follow the special procedure as provided in the Act;
• the Gram Nyayalaya shall try to settle the disputes as far as possible by bringing
about conciliation between the parties and for this purpose, it shall make use
of the conciliators to be appointed for this purpose;
• the judgement and order passed by the Gram Nyayalaya shall be deemed to be
a decree and to avoid delay in its execution, the Gram Nyayalaya shall follow
summary procedure for its execution;
• the Gram Nyayalaya shall not be bound by the rules of evidence provided in the
Indian Evidence Act, 1872 but shall be guided by the principles of natural
justice and subject to any rule made by the High Court; Appeal in criminal
cases shall lie to the Court of Session, which shall be heard and disposed of
within a period of six months from the date of filing of such appeal; Appeal in
civil cases shall lie to the District Court, which shall be heard and disposed of
within a period of six months from the date of filing of the appeal; A person
accused of an offence may file an application for plea bargaining.

The Central Government has decided to meet the non-recurring expenditure on the
establishment of these Gram Nyayalayas subject to a ceiling of Rs. 18.00 lakhs, out of
which Rs. 10.00 lakhs is for construction of the court, Rs. 5.00 lakhs for vehicle and Rs.
3.00 lakhs for office equipment. Government has also estimated that the Gram
Nyayalayas upon establishment would incur a recurring expenditure of Rs. 6.4 lakhs per
annum on salaries etc. and proposes to share such recurring expenditure with the State
Government for the first three years within this ceiling.

More than 5000 Gram Nyayalayas are expected to be set up under the Act for which the
Central government would provide about Rs.1400 crores by way of assistance to the
concerned States/Union Territories.
The setting up of Gram Nyayalayas will be an important measure to reduce arrears.
The Gram Nyayalayas are likely to reduce around 50 % of the pendency of cases in
subordinate courts and also to take care of the new litigations which will be disposed
within six months. This measure will usher in great revolution in disposal of cases and
also to take justice to the doorsteps of the common man.

LAW POINT
No new shrines on public land: SC
The Supreme Court has directed all the States and the Union Territories not to allow
construction of places of worship, be it gurdwaras, temples, churches or mosques, on
government land, particularly roads.

A Bench, comprising Justices Dalveer Bhandari and M.K. Sharma, passed the order, also
asking all the State and UT governments to review case-by-case such structures that
had already come up, encroaching upon public land.

Directing the registry to serve notices on all the States and UTs within three days of
passing of the judgement, in view of the gravity of the situation which had "far-
reaching consequences," the Bench said the heads of each district (collectors,
magistrates or deputy commissioners) to file status reports to their respective Chief
Secretaries. The Chief Secretaries, in turn, would directly appraise the apex court of
the steps taken for keeping government land free from such encroachments, the Bench
said.

LEGISLATION
President signs Education Bill into law
Following the Presidential assent (granted on August 26, 2009), the government has
issued a gazette notification of the law, which seeks to provide free and compulsory
education to all children aged from 6 to 14 years. The State governments will have
three years from the date of notification of the law to implement it. During this period,
they will have to put in place neighbourhood schools, minimum education infrastructure
with notified pupil-teacher ratio and school management societies to ensure proper
implementation of the law.

Cost, by far, remains the gravest challenge in the implementation of the law, which
would require Rs 2 lakh crore over the next five years for its enforcement. The HRD
Ministry has already admitted to an estimated shortfall of Rs 60,000 crore over the
period, with minister Kapil Sibal saying additional allocations would have to be made.

All States, meanwhile, have put their foot down on the issue of finances, saying they
will require maximum possible funding from the Centre to implement the law. At a
meeting of the Central Advisory Board of Education, all State education ministers drove
home this point, with hill States like Himachal seeking 90 per cent central share in the
funding.

There are also some apprehensions over the definition of the term “free education”.
The matter was raised vociferously by Archana Chitnis, Education Minister of Madhya
Pradesh, who wanted the HRD Minister to clarify the meaning of term “free”. “Free
education would have to be defined by States,” Sibal said, adding that it could mean
free books, uniform, school bus travel or anything.

The States, however, feel leaving the definition of “free education” open could lead to
confusion. The government feels the model rules under the Act, expected to be
formulated soon, would clarify most of the points. Also on the cards is a new Centre-
State finance sharing formula, for which National University for Education Planning and
Research is developing fresh cost estimates after factoring in the inflationary trend.

PLANNING & ECONOMY


Govt okays one percent subsidy on housing loans
Keeping up with another promise made by Finance Minister Pranab Mukherjee in his
Budget speech of 2009, the government has approved one per cent interest rate
subvention for housing loans up to Rs.10 lakh. The Union Cabinet has also given an
approval for allocation of Rs.1,000 crore for the scheme. It will come as a major boost
to the housing sector and fuel greater development. The interest subsidy would be
provided through the commercial banks and housing finance companies registered with
the National Housing Bank.

In another major decision the government also approved a “Rehabilitation Package” to


provide additional relief to the victims of 1984 riots with a financial outlay of Rs.714.76
crore. The package was issued earlier by Ministry of Home Affairs on January 16, 2008
and was for States of Uttar Pradesh, Madhya Pradesh, Chhatisgarh, Haryana, Bihar,
Jharkhand, Jammu & Kashmir, Himachal Pradesh, Orissa, Maharashtra, Uttarakhand,
Punjab and the NCT of Delhi. The main aim of the proposal is fulfil the assurances given
by the government in both the Houses of Parliament on the Report of Justice Nanavati
Commission of Inquiry into 1984 riots.

A decision has also been taken to release Interest Subvention to Public Sector Banks
(PSBs), Cooperative Banks (Short Term Cooperative Credit Structure-STCCS) and
Regional Rural Banks (RRBs) and to NABARD for refinance to RRBs and Cooperative
Banks. This has been done to operationalise the announcement made in the Union
Budget for ensuring that the farmer receives short term crop loan at seven per cent per
annum (six per cent for prompt payers) with an upper limit of Rs.three lakh on the
principal amount.

The interest subvention is available to Public Sector Banks, Regional Rural Banks (RRBs)
and Cooperative Credit Institutions (CCIs) on disbursements out of their own funds and
to NABARD for concessional refinance to RRBs and CCIs. For the year 2009-10, the
target for flow of credit to agriculture sector has been revised from Rs.2,80,000 crore
in 2008-09 to Rs.3,25,000 crore, of which the total short term crop loan disbursements
by all banks is likely to be around Rs.2,00,000 crore.

NREGS gets e-transparent


A unique software solution adopted by Andhra Pradesh has brought transparency and
accountability in implementation of National Rural Employment Guarantee Scheme
(NREGS), the flagship programme of the UPA government. Developed by Tata
Consultancy Services (TCS), the web-based software package has helped check
corruption, fix loopholes in identification of beneficiaries and the works and resulted in
effective implementation of the scheme, covering nearly 11 million people in the State.

From the time a job seeker enrolls with a local panchayat office, to monitoring of
assigned work and final wage payment, the entire process is registered and tracked
online, using the software solution. The system allows the officials to sift through
entire data, including the number of job cards issued across 22 districts and identify
the loopholes.

The progress of the NREGS works could be monitored through an automated system and
the workers have been paid based on the amount of work they complete, independent
of the number of hours they put in.

In fact, Andhra Pradesh has been the first State to introduce social audit system to
effectively monitor implementation of the scheme. Social auditing involves a process
where teams visit the NREGS work sites in every gram panchayat and physically
crosscheck the work done with the records. Each team has been led by district resource
person and consists of four to five persons drawn from civil society organisations.

Property as gift to be taxed now


The Income Tax Act has been amended with effect from October 1, 2009, to provide
that any gift-in-kind—being an immovable property or any other property—the value of
which exceeds Rs 50,000, will become taxable in the hands of the donee. The tax would
have to paid by the recipient by including the amount in his taxable income.

Gifts received from local authorities, trusts or entities registered as charitable


institutions would not attract the provisions of the new tax norms.

But, the good news is that if the immovable property or property is received from a
relative or received under a will as inheritance it will not be taxed. Such a gift received
on the occasion of marriage of the individual is also exempt from tax. Prior to this
change in the Income Tax Act, cash gifts exceeding Rs 25,000 were subject to tax. Then
the Act was amended with effect from April 1, 2006, to tax all cash gifts having
aggregate value exceeding Rs 50,000. However, cash gifts continue to enjoy exemptions
as is available for gifts-in-kind.

FOREIGN RELATIONS
Trade, Tipaimukh dam to top Indo-Bangla talks
The entire gamut of bilateral issues, including the Tipaimukh dam issue, sharing of river
waters, trade, border management and combating terrorism, were discussed in a
“congenial ambience” during Bangladesh Foreign Minister Dipu Moni's four-day visit to
India in September 2009. This was his first official trip to India since the installation of
Prime Minister Sheikh Hasina's Awami League to power following the December 29, 2008
general elections in Bangladesh.

The installation of the Awami League and the Congress party to power in the two
countries created a congenial ambience to settle the long-standing issues through
constructive negotiations because of the historic links between the two parties since
the 1971 Bangladesh war.

Trade deficit is one such major issue. Business analysts said Bangladesh looked for
stepping up its exports to the landlocked seven north-eastern States and close the trade
imbalance if the barriers were removed.

The two countries also share over 50 common rivers and there had not been any
progress in distribution of waters of the seven other rivers, including the Teesta.

The proposed Tipaimukh dam on the Barak river in Manipur dominated the centre-stage
of Bangladesh-India-relations during the past several months, though New Delhi assured
Dhaka nothing would be done under the project that could affect Bangladesh.

India, Mongolia ink nuke pact


On September 14, 2009, Mongolia became the fifth nation to sign a civil nuclear pact
with India as New Delhi extended a 25 million US dollar soft loan to the Central Asian
nation to help it mitigate the effects of the global financial meltdown. The two
countries also inked agreements for cooperation in the fields of health, cultural
exchanges and statistical affairs. The accords were signed after wide-ranging talks
between Prime Minister Manmohan Singh and visiting Mongolian President Tsakhiagiin
Elbegdorj.

In a joint press interaction after the talks, Manmohan Singh said the two countries had
reviewed the entire gamut of bilateral relations and discussed issues of mutual
concern. He said the two countries had agreed on deeper cooperation in the field of
mining and agriculture. The two leaders also stressed on bilateral investment
protection and considering ways to avoid double taxation.

Great significance is being attached to the MoU between the two countries on
‘development of cooperation in the field of peaceful use of radioactive minerals and
nuclear energy’. Mongolia’s huge uranium reserves are expected to boost and energise
India’s starving civil nuclear fuel cycle.

India has already signed nuclear deals with France, Russia, the US and Kazakhstan after
it got an exemption from the nuclear suppliers’ group (NSG) in September 2008 to
undertake nuclear commerce.

Mongolia, which claims to have 6 per cent of the world’s uranium reserves, is not a
member of the NSG. However, it had supported India’s case for a clean waiver at the
International Atomic Energy Agency (IAEA) meeting prior to the NSG meet. Nuclear
experts believe that the supply of uranium is more crucial for India than access to
enrichment and reprocessing (ENR) technology.

Mongolia’s decision could be a big surprise for Australia, which has refused to supply
uranium to India as it was not a signatory to the nuclear non-proliferation treaty (NPT).
India hopes Australia would also give up its reservation sooner rather than later and
agree to supply uranium to India.

SCANDALS
Bofors buried as govt drops case
The Bofors case that led to Congress’s defeat in the 1989 Lok Sabha polls has been
given an official burial. With the government declaring its intention to drop proceedings
against the key accused, Ottavio Quattrocchi, and all other accused either dead or
acquitted, the case has reached a dead end. The decision not to pursue Quattrocchi, an
Italian businessman accused of taking bribes to facilitate the sale of Bofors howitzers to
India in 1986, was announced in the Supreme Court.

The decision to give a burial to the Bofors case, in which the FIR was filed during the
V.P. Singh regime in 1990 and the charge-sheet during NDA government’s reign in 1999,
was taken by the UPA government on the basis of a fresh opinion given by attorney-
general G.E. Vahanvati.

A closure of the case had looked imminent since UPA-I allowed Quattrocchi to take out
his money—allegedly his share of the Bofors kickbacks—from accounts with a bank in
London. It followed that up by not pressing hard for his extradition from Argentina and
by, subsequently, telling Interpol that he was no longer wanted in India.

TERRORISM; LAW & ORDER


New incentives for Maoists to surrender
The Centre, which usually remains tight-lipped about the kind of weapons the Maoists
have, has in its new guidelines for surrender-cum-rehabilitation of Naxalites indicated
that the Red ultras’ arsenal no longer consists of only looted police weapons. They
could, in fact, also have deadlier ones—sniper rifles and surface-to-air missiles—which
the ultras might have procured from outside. The Union government, through the new
guidelines for the Naxal-affected States, has offered different amounts as “additional”
incentives to those ultras who may surrender with such weapons. Sniper rifles, rockets,
missiles and light machine guns which can even target low-flying choppers and other
long-distance targets attract higher incentives to Naxalites if they surrender with such
weapons.
The incentive given for surrender of the arms will be deposited in the form of a fixed
deposit in the joint names of the surrenderee and a State government nominee and
may be given to the surrenderee at the time of completion of three years after
surrender, “subject to good behaviour by the surrenderee”.

Black Widow ultras surrender arms


Responding to September 15, 2009 deadline set by the Union Home Ministry, cadres of
proscribed tribal militant outfit, Dima Halam Daogah (J) or Black Widow have
surrendered their weapons to set the stage for a peace process with the government of
India. Total 374 cadres of Black Widow group have surrendered their weapons including
some sophisticated weapons to set the stage for peace negotiation. They have
deposited weapons at the headquarter of Fifth Assam Police battalion at Sontila in the
hill district.

The cadres are coming over ground under the leadership of a deputy commander in
chief senior leader of the outfit Daniel Dimasa, while commander in chief Niranjan
Hojai, who was believed to be in foreign soil, is still being expected to join the peace
process. Those who have handed over their weapons are now being kept under heavy
security at a Red Cross hospital at Jatinga in the hill district. They will be shifted to
designated camps once the government gives its nod for the peace process after
verifying the weapons surrendered by the outfit.

The chairman of the outfit Jewel Garlosa and another senior leader Partha Warisa had
been arrested by Assam Police from a Bangalore hideout on June 3, 2008, serving a
severe blow to the outfit which has been running amuck in North Cachar Hill district
and adjoining areas in Assam since 2004, perpetrating rampant killings and extortions.

Once their chairman fell into the hands of the police, the outfit declared unilateral
truce and appealed for peace negotiation with the government of India. However, the
Centre set the pre-condition that all cadres would have to surrender arms for a peace
process to happen.

Rampaging Black Widow militants jeopardised works on East West Corridor project of
National Highway Authority of India (NHAI), as well as a gauge conversion project of
Indian Railways, causing irreversible delay in implementation of these projects besides
causing huge cost escalation.

The Autonomous State Demand Committee (ASDC), the main tribal regional party in hill
areas has hailed the process of surrender of weapons by Black Widow cadres.

ISI knew of 26/11 plan, say LeT men


Ten months after the attacks on Mumbai, Lashkar-e-Taiba remains largely intact, may
have 1.5 lakh members and is determined to strike India again, according to current
and former members of the group, and intelligence officials. Despite pledges from
Pakistan to dismantle militant groups operating on its soil, and the arrest of a handful
of operatives, Lashkar has persisted, even flourished, since the Mumbai carnage in
November 2008.

Indian and Pakistani dossiers on the Mumbai investigations offer a detailed picture of
the operations of a Lashkar network that spans Pakistan. It includes four houses and
two training camps here in Karachi. Among the organizers, the Pakistani document
says, was Hammad Amin Sadiq, a homeopathic pharmacist, who arranged bank accounts
and secured supplies.

Indeed, Lashkar’s broader network endures, and can be mobilized quickly for elaborate
attacks with relatively few resources, according to a dozen current and former Lashkar
militants and intelligence officials from the US, Europe, India and Pakistan. In
interviews with New York Times, they presented a troubling portrait of Lashkar’s
capabilities, its popularity in Pakistan and the support it received from former officials
of Pakistan’s military and intelligence establishment.

One highly placed Lashkar militant said the Mumbai attackers were part of groups
trained by former Pakistani military and intelligence officials. Others had direct
knowledge that retired army and ISI officials trained LeT recruits as late as 2008.

Naga rebels reject peace package


The government’s efforts for formation of a Naga Common Platform, to find a political
solution to the vexed insurgency problem, have run into trouble with all the three rebel
groups—NSCN-IM, NSCN-K(GPRN) and NNC(FGN)—voicing their strong opposition to it. In
a joint statement issued to the local media, the groups have declared that they were
strongly opposed to any form of conditional package offered to the Nagas by the
Centre. The Naga Common Platform was not warranted at this juncture, they added.

Conveners of the joint working group for Naga reconciliation, V.S. Atem of the NSCN (I-
M), Zhopra Vero of the NNC (FGN) and Wangtin Naga of NSCN-K (GPRN), in a joint
declaration, stated their opposition to the issues was in line with the “Declaration of
Commitment” signed by them during the recent reconciliation meet held at Chiangmai
in Thailand. The three leaders during the meet affirmed to “work together in the spirit
of love, non-violence, peace and respect to resolve outstanding issues.”

The Central government was contemplating to offer a conditional peace package to the
State if the Naga rebels factions gave up their struggle. The package, which was still
being worked, was to include financial largesse and greater devolution of powers to the
State. However, the Centre had made it clear that any solution to the protracted Naga
political issue would be within the Constitution of India. The NSCN (I-M) had earlier said
such packages were “unacceptable” to it.

The reconciliation process is currently being taken care of by the Forum for Naga
Reconciliation (FNR). The FNR has been holding meetings both within and outside the
State with the different Naga political groups and NGOs. However, the FNR has limited
its role only to the reconciliation process and has shown no apparent interest in
formation of a common platform to facilitate political dialogue with all the rebel
groups.

CURRENT INTERNATIONAL AFFAIRS

ARMS RACE
US scraps missile-defence shield plan
President Barack Obama, in a major policy shift, has scrapped a controversial missile-
defence shield favoured by his predecessor, removing a thorn in U.S.-Russia relations
but earning criticism from some who accuse him of abandoning US allies in Europe.
Obama announced that he would be abandoning plans to base US interceptor missiles in
Poland and radar in the Czech Republic to protect Europe from Iranian missiles.
Instead, Obama has proposed deploying a system aimed at intercepting short- and
medium-range missiles. The President justified his decision by citing new intelligence
that shows Iran's long-range missile programme to be far less developed than previously
thought. Russia, which had vehemently opposed former President George W. Bush's plan
to place US military hardware on its border, said Obama's decision would go a long way
in resetting the relationship between the two countries.

GERMANY
Tough task at hand for Merkel after sweeping win
Angela Merkel set to work on September 28, 2009 on a new centre-right coalition after
clinching a second term, but warned Germans of a hard road ahead to revive the sickly
economy and rescue vanishing jobs. The conservative Chancellor secured another four-
year mandate with enough votes to dump an awkward “grand coalition” with the Social
Democrats (SPD) for an alliance with the pro-business Free Democrats (FDP). Voters
rewarded the 55-year-old leader, dubbed most powerful woman on Earth by Forbes
magazine for four years running, for shepherding Europe’s biggest economy through its
worst post-war downturn. Merkel’s bloc and the FDP have a comfortable 332 seats in
the 622-member Parliament.

WORLD ECONOMY
Global recession ending, says OECD
The global recession is coming to an end faster than thought just a few months ago and
may already be over, according to forecasts published by the Organisation for Economic
Co-operation and Development. The recovery may even prove a little stronger than
previously predicted, OECD chief economist Jorgen Elmeskov said.

The OECD forecasts show a third-quarter return to expansion of economic output, as


measured by gross domestic product, in the United States and the 16-country Euro
zone, led by its two largest economies, Germany and France. The forecasts showed an
annualised expansion of 1.6% in the United States in the third quarter, 0.3% in the Euro
zone and 1.1% in Japan.

The pickup that started with a “quite dramatic turnaround” in China and other Asian
emerging market economies in the second quarter remained heavily dependent on
government stimulus and ultra-low interest rates across the world, Elmeskov said.

The OECD’s 30-member countries do not include rising powers such as China, but do
include the long-industrialised ones where the trouble began in 2007 as the credit and
housing boom in the United States turned to bust, triggering a crisis in banking and
financial markets that infected the real economy.

The OECD is still predicting GDP contractions for 2009 as a whole across the G-7 group,
primarily because of a particularly bad first half, despite the improvement now in the
pipeline. But it sees annualised GDP rises of 1.2 and 1.4% in the third and fourth
quarters for the G-7 as a whole, also signalling an exit from recession at that level.

World requires a new currency: UN report


The dollars role in international trade should be reduced by establishing a new currency
to protect emerging markets from the confidence game of financial speculation, the
United Nations said. UN countries should agree on the creation of a global reserve bank
to issue the currency and to monitor the national exchange rates of its members, UN
Conference on Trade and Development said in a report.

China, India, Brazil and Russia, in 2009, called for a replacement to the dollar as the
main reserve currency after the financial crisis sparked by the collapse of the US
mortgage market led to the worst global recession since World War II. China, the
world's largest holder of dollar reserves, said a supranational currency such as IMF's
special drawing rights, or SDRs, may add stability.
There's a much better chance of achieving a stable pattern of exchange rates in
multilaterally-agreed framework for exchange-rate management, Heiner Flassbeck, co-
author of the report said. An initiative equivalent to Bretton Woods or the European
Monetary System is needed.

While it would be desirable to strengthen SDRs, a unit of account based on a basket of


currencies, it wouldn't be enough to aid emerging markets most in need of liquidity,
said Flassbeck, a former German deputy FM who worked in 1997-1998 with then US
Deputy Treasury Secretary Lawrence Summers to contain Asian crisis.

Switzerland out of ‘grey’ list of tax havens


The Organisation for Economic Cooperation and Development (OECD) has taken
Switzerland off from the list of non-cooperative tax havens, following the country
signing 12 taxation agreements with different nations, and most of them are significant
economic partners like the US and the UK. In April 2009, OECD, a grouping of rich
nations, had named many countries, including Switzerland, in a grey list of those which
are not fully-compliant with global tax standards. As per OECD norms, a country would
be removed from the grey list after it has signed at least a dozen double taxation
agreements.
Known for its banking secrecy practices, Switzerland has come under international
pressure in the wake of the global crackdown on tax havens. Switzerland has signed
treaties with Qatar, Denmark, Luxembourg, France, Norway, Austria, the UK, Mexico,
Finland, the Faroe Islands, USA and Spain.

ENVIRONMENT
EU summit targets India, China on G-20 climate financing
The European Union (EU) has challenged rising powers India and China to brake their
soaring greenhouse gas emissions in return for Western financial support. “We need to
make a credible financial commitment to the developing world. The equation is
straightforward: no money, no deal, but if there are no actions, no money,” European
Commission President Jose Manuel Barroso said.

According to estimates from the Commission, the EU’s executive, it will cost around
100 billion euros ($147 billion) per year by 2020 to fight climate change in developing
countries. But in a clear challenge to rising powers such as Brazil, China, India, Mexico
and South Africa, EU leaders stated that “this estimate pre-supposes appropriate
mitigating actions by developing countries, especially those that are economically more
advanced”.

The high-level EU and G-20 meetings came in the countdown to a critical United
Nations summit in Copenhagen, which is intended to seal a new global deal on fighting
climate change. EU leaders were at pains to point out the urgency of finding a deal in
December. “The climate is changing much faster than expected. ... This underlines the
urgent need to reach a global, ambitious and comprehensive agreement in
Copenhagen,” the joint statement said.
UN backs India’s stand on emissions
For the first time, a UN agency has endorsed India and developing countries on the
climate change front. In its World Economic and Social Survey Report 2009, the UN said
rich countries had consumed more than fair share of their carbon space and needed to
take deep emission cuts if the new climate agreement was to be equitable. The survey
said investments in energy infrastructure would have to be doubled from the existing
$500 billion per year to $1 trillion and there was a need to spend approximately $20
trillion by 2030 to move the world to a low carbon growth path.

The report has warned that industrialized countries had already emitted 209 giga-
tonnes of carbon. If the rise in global temperatures was to be kept below 2 degree
centigrade, industrialised countries would have to reduce their emissions by more than
100% below 1990 levels by 2050. At present, industrialized countries have not agreed to
reduce their emissions by even 40% below 1990 levels by 2030 and 80% by 2050.

The UN survey pointed out that in a fair deal, industrialized countries should only
occupy 21% of the global carbon budget. But it recorded that even under the most
ambitious proposal from the rich nations, they would end up consuming 48% of the
budget, at the cost of the poorer nations.

From the present emission stock of 209 giga-tonnes of carbon from the rich nations,
they would need to alter the lifestyles of their citizens to come down to 137 giga-
tonnes by 2050 and leave the rest of the space for poorer nations to develop
economically.

The authors of the report have recommended a global clean energy fund and a global
feed in tariff regime, besides a better carbon trading mechanism and forest-related
financing mechanism to ensure that needed funds are transferred from the rich to the
developing countries as part of the new deal.

NUCLEAR PROLIFERATION
A.Q. Khan nails Pak’s N-lies
An angry, humiliated, and wounded A.Q. Khan has finally made public what has long
been suspected: his nuclear proliferation activities, that included exchanging and
passing blueprints and equipment to China, Iran, North Korea, and Libya, were done at
the behest of the Pakistani government and military, and he was forced to take the rap
for it. “The bastards first used us and are now playing dirty games with us,” Khan
writes about the Pakistani leadership in a December 2003 letter to his wife Henny that
has been made public by an interlocutor. “Darling, if the government plays any
mischief with me, take a tough stand... They might try to get rid of me to cover up all
the things they got done by me.” Khan had also sent copies of the letter to his daughter
Dina in London, and to his niece Kausar Khan in Amsterdam through his brother, a
Pakistan Airlines executive. Pakistani intelligence agencies got wind of it and
threatened his family’s well-being, forcing him to recant and publicly take the blame
for the proliferation activities.

Pak ups number and capability of nukes


Pakistan’s rapidly ramped up nuclear arsenal is now 70-90 strong with increasingly
sophisticated bomb designs and smart delivery systems aimed primarily at India, two US
researchers have said, even as Islamabad is running from pillar to post seeking
international aid.

In a paper written for the Bulletin for Atomic Scientists, Robert Norris of the Natural
Resources Defence Council and Hans Kristensen of the Federation of American Scientists
say Pakistan is ‘‘busily enhancing its capabilities across the board,’’ with new nuclear-
capable ballistic missiles being readied for deployment, and two nuclear capable cruise
missiles under development. Two new plutonium production reactors and a second
chemical separation facility are also under construction, they said.

Al-Qaida seeking nuclear secrets from Pakistan


Al-Qaida is trying desperately to get its hands on nuclear secrets from Pakistan,
according to US Special Representative for Pakistan and Afghanistan, Richard
Holbrooke. He told a congressional reception, “Al-Qaida is still there in the region, ever
dangerous and publicly asking people to attack the US and publicly asking nuclear
engineers to give them nuclear secrets from Pakistan.” This alarming accusation is
being taken seriously in light of Pakistan’s history of leaking nuclear secrets and comes
on the heels of similar claims made in a report to US lawmakers.

According to the Congressional Research Service (CRS) report—“Pakistan’s Nuclear


Weapons: Proliferation and Security Issues”—Al-Qaida has also sought assistance from
the Khan network. Former Director of Central Intelligence George Tenet said the United
States “received fragmentary information from an intelligence service” that in 1998
Osama bin Laden had “sent emissaries to establish contact” with the network. Other
Pakistani sources could also provide nuclear material to terrorist organisations.

According to a 2005 report by the commission on the Intelligence Capabilities of the


United States regarding weapons of mass destruction, Al-Qaida “had established
contact with Pakistani scientists who discussed development of nuclear devices that
would require hard-to-obtain materials like uranium to create a nuclear explosion.”
Tenet explains that these scientists were affiliated with a different organisation than
the Khan network. Congressional Research Service, a bipartisan independent research
wing of the US Congress, prepares reports for lawmakers.

UN united on nuke-free world


In the years and decades to come, he may well be celebrated as Barack “No Bomb”
Obama. In a historic moment in time, the UN Security Council unanimously approved a
US-drafted, Obama-authored resolution in New York on September 24, 2009,
committing to work towards a world without nuclear weapons.

The new measure, formally titled UNSC Resolution 1887, expresses the Council’s grave
concern about the threat of nuclear proliferation and the need for international action
to prevent it. It reaffirms that the proliferation of weapons of mass destruction and
their means of delivery are threats to international peace and security and agrees on a
broad range of actions to address nuclear proliferation and disarmament and the threat
of nuclear terrorism.

Broadly, the resolution supports:

• A revitalized commitment to work toward a world without nuclear weapons,


and calls for further progress on nuclear arms reductions, urging all States to
work towards the establishment of effective measures of nuclear arms
reduction and disarmament.
• A strengthened Nuclear Non-proliferation Treaty (NPT) and a Review
Conference in 2010 that achieves realistic and achievable goals in all three
pillars: nuclear disarmament, non-proliferation and peaceful uses of nuclear
energy.
• “Universality” of the NPT, calling on all Sstates to adhere to its terms—an
oblique reference to hold-outs such as India and Pakistan—and makes clear the
Council’s intent to immediately address any notice of intent to withdraw from
the Treaty.

The resolution also calls for better security for nuclear weapons materials to prevent
terrorists from acquiring them, including through the convening of a Nuclear Security
Summit in 2010, locking down vulnerable nuclear weapons materials in four years,
minimizing the civil use of highly enriched uranium to the extent feasible, and
encouraging the sharing of best practices as a practical way to strengthen nuclear
security.

The Obama resolution was backed by Russia and China among other countries in what is
only the fifth meeting of the Security Council involving heads of government of its
member States, and the first time the US President has chaired such as meeting.

But, aside from presenting a time-table of agenda-packed conferences, the US


President did not present any specific numbers, metrics, or dates on the road to
eliminating nuclear weapons. He said the US will move forward with the ratification of
the Comprehensive Test Ban Treaty, and open the door to deeper cuts in its own
arsenal.

The pressure on India to sign the Nuclear Non Proliferation Treaty (NPT) is all set to
increase sharply with US President Barack Obama rsday leading the UN Security Council
to insist that all countries must sign the treaty that New Delhi has called
discriminatory. India made its resolve not to fall in line plain. The position was
conveyed by H.S. Puri, India’s permanent representative to the UN, to his US
counterpart as well as the Security Council. The US is the current UNSC head.

Stressing that India cannot accept obligations arising out of a treaty which it hasn’t
signed, the letter said nuclear weapons were vital for the country’s security. ‘‘This
position is consistent with the fundamental principles of international law and the Law
of Treaties. India cannot accept calls for universalisation of the NPT. As India’s Prime
Minister stated in Parliament on July 29, 2009, there is no question of India joining the
NPT as a non-nuclear weapon State. Nuclear weapons are an integral part of India’s
national security and will remain so, pending non-discriminatory and global nuclear
disarmament,’’ stated the letter.

INTERNATIONAL RELATIONS
US aid to Pak comes with ‘accountability’ rider
A new US Legislation triples US aid to Pakistan authorises military assistance to help the
country in its fight against Al-Qaida and other terrorists, but it also includes new and
painstakingly negotiated accountability measures to ensure that this aid is not misused.
India had expressed concern that Pakistan would divert US military aid toward
bolstering its defences against a perceived threat from India.

The so-called Friends of Democratic Pakistan got something to applaud when the US
Senate passed the compromise legislation in a voice vote. A statement from the sponsor
of an identical Bill in the House of Representatives said the legislation required that
military assistance be focused “principally on helping Pakistan with its critical counter-
insurgency and counter-terrorism efforts”. The bill addresses India's concerns, which
Congressional sources and South Asia analysts in Washington say are valid.

Congressional aides laboured hard to reach a compromise between the earlier Senate
and House versions of the Bill. The sticking points at the time had been language
governing oversight of funds to Pakistan's military. The House Bill had linked the release
of these funds to the President’s certification that the Pakistani government
“demonstrated a sustained commitment to and made progress towards combating
terrorist groups.”

The new version states that the President has to certify that Pakistan is “making
significant efforts towards combating terrorist groups ... including taking into account
the extent to which the government of Pakistan has made progress on matters” related
to counter-terrorism. The new version also doesn’t specify a dollar amount for military
aid, only saying “such sums as are necessary.”

Senator John Kerry, who along with Senator Richard Lugar co-sponsored the Bill in the
Senate, said: “The clear, tough-minded accountability standards and metrics contained
in the original Bill are carried through in this version.”

SUMMITS
G-20 Summit
The G-20 Summit was held at Pittsburgh, USA in September-end 2009. The G-20
leaders’ statement from Pittsburgh has a tough message for the finance community.
They have to raise far more capital, say bye-bye to bonuses that soar even if medium
term profits of the institutions they worked for do not, and face tough regulation,
starting with full compliance with the enhanced Basel II Capital Framework by 2011,
including a limit on borrowing. The leaders’ statement is unequivocal and tough:
“Where reckless behaviour and a lack of responsibility led to crisis, we will not allow a
return to banking as normal.”

With this bare-knuckled preface, the communiqué goes on to identify changes needed
in regulation, coordination among regulators across nations, increasing capital
adequacy, reforming compensation to remove incentives for risky short-term behaviour,
bringing compensation under the purview of regulators, fixing a ceiling on
remunerations as a proportion of net revenues, raising the capital requirement of banks
that fail to implement sound compensation policies and practices improving over the
counter (OTC) derivatives markets, tightening accounting norms and harmonising them
globally. The G-20 also wants commodity exchanges to become more transparent,
collect data on large trader positions on oil futures and derivatives markets and to
comply with the recommendations of the International Organisation of Securities
Commissions (IOSCO). There are timelines for achieving each one of these changes.

On reform of compensation the Summit statement said: “Excessive compensation in the


financial sector has both reflected and encouraged excessive risk taking. Reforming
compensation policies and practices is an essential part of our effort to increase
financial stability. We fully endorse the implementation standards of the FSB aimed at
aligning compensation with long-term value creation, not excessive risk-taking,
including by (i) avoiding multi-year guaranteed bonuses; (ii) requiring a significant
portion of variable compensation to be deferred, tied to performance and subject to
appropriate claw back and to be vested in the form of stock or stock-like instruments,
as long as these create incentives aligned with long-term value creation and the time
horizon of risk; (iii) ensuring that compensation for senior executives and other
employees having a material impact on the firm’s risk exposure align with performance
and risk; (iv) making firms’ compensation policies and structures transparent through
disclosure requirements; (v) limiting variable compensation as a percentage of total net
revenues when it is inconsistent with the maintenance of a sound capital base; and (vi)
ensuring that compensation committees overseeing compensation policies are able to
act independently.”
The G-20 has large ambitions on energy security and climate change and its Pittsburgh
communiqué binds members to phase out subsidies on fossil fuels over the medium
term. It also recognises that the poor might need subsidies to consume at least a
minimal amount of energy and calls for cash transfers to target beneficiaries, while
abandoning the policy of subsidising fuels in general. This would bring pressure on India
to abandon its present policy of subsidising kerosene and cooking gas and even diesel
and petrol when their prices rise above what the government thinks is above the level
of political tolerance.

Studies have shown that 40% of subsidised kerosene gets diverted for adulteration of
diesel. This not only foils the goal of offering subsidy on the fuel but also reduces
engine life across our transport fleets and adds to pollution and diesel consumption
through reduced fuel efficiency.

The Group of 20 (G-20), which includes developing nations like India, Brazil, and South
Africa, will replace the Group of 7 (G-7), the mostly-western club of rich industrial
nations, as a global forum for economic policy, it was announced during the Summit.
“Dramatic changes in the world economy have not always been reflected in the global
architecture for economic cooperation. This all started to change today,” the White
House said of the makeover, “The G-20 leaders reached a historic agreement to put the
G-20 at the centre of their efforts to work together to build a durable recovery while
avoiding the financial fragilities that led to the crisis.”

For India, this means a regular, perhaps annual or twice-yearly pow-wows beyond the
bi-laterals and clubby tri-laterals (IBSA—India, Brazil, South Africa) and quadri-laterals
(BRIC—Brazil, Russia, India, China) that it was fostering.

Collectively, the G-20 economies account for 85% of global gross national product, 80%
of world trade, and two-thirds of world population.

The new G20 will not have a permanent secretariat, and its chairmanship will be
rotated annually, with South Korea running the body next year and France in 2011 A
final agreement on a revamped representation structure will be completed in
negotiations at the International Monetary Fund (IMF), set to conclude by January 2011.
Under the proposal, the G-20 leaders will annually outline objectives for growth and
then ask the IMF to carry out a form of assessment or peer review to ensure member
states are following the plan’s objectives

Prime Minister Manmohan Singh returned from the G-20 Summit at Pittsburgh with some
major gains at hand that are making the rich nations now look at the developing world
in a new light. It was evident from the final communiqué issued by the G-20 leaders at
the end of the summit that it reflected a lot of what Manmohan Singh had been
pointing out prior to the summit.

In some of the other aspects of global financial structure, too, India’s stand was
reflected in equal measure—notably greater voting rights for developing countries in
the International Monetary Fund (IMF). In fact, the developing countries, mainly India,
China and Brazil, also managed to secure what was rather unthinkable even a decade
ago—a peer review of the economic policy framework of rich countries.

WORLD TRADE
Doha round impasse resolved
The informal meeting of the trade and commerce ministers of key World Trade
Organisation (WTO) member countries in Bew Delhi, in the month of September 2009,
agreed to resume negotiations in Geneva. A visibly pleased Commerce and Industry
Minister Anand Sharma at the conclusion of the two-day meet said, “The Delhi meeting
has managed to break the impasse of the Doha round.”

The global trade talks had been stalled since July 2008. This was an important step for
Anand Sharma, who as a new minister has been able to restart the stalled trade-talks
process. India has always been seen as a spoiler in the talks. However, this meeting re-
established India’s leadership role in the multilateral talks.

In July 2008, the talks had collapsed after India and other developing countries opposed
the agriculture subsidies offered by developed nations to their farmers. The developing
countries argued that the new subsidy would distort trade by making the produce of
their countries costly. India had insisted that developing countries should have the right
to impose steep tariffs to protect their farmers if there was an increase in import of
farm products under a new trading deal.

At the end of the two-day talks, it is very clear that there has been no change in the
position of these countries on the matter. The important issue that still remains is
about the position of the developed world—the US and EU—towards the developing
world like Africa, India, Brazil etc.

Lauding India’s initiative to revive the stalled WTO negotiations, US Trade


Representative Ron Kirk said: “The US Administration is committed to the completion
of the Doha Talks by 2010.” However, Brazil said the developing countries had already
made enough concessions and new demands should not be made on them.

The talks could produce a deal that boosts the global economy by $300-700 billion a
year, according to one recent study, although other estimates of the benefits have
been lower.

Oscar-winning musician A.R. Rahman has won the ‘Grassroot Grammy’ for the soundtrack
in the Tamil film “Godfather” in the Best Indian Album category at the ‘Just Plain Folks 2009
Music Awards’. Bangla band ‘Krosswindz’ and Ilayaraja were among others nominated in the
category. With over 50,000 members worldwide, the Just Plain Folks 2009 Music Awards is
aimed at supporting grass-root songwriters and musicians through networking, education
and promotional support. The awards received responses from over 163 countries.

Marathi film ‘Harishchandrachi Factory’ by theatre-veteran Paresh Mokashi has been


selected as India’s official entry to 2009 Oscars.

Vibrant financial markets and a sound banking sector has helped Indian economy move
up a notch to 49th place on the global competitive scale, while Switzerland has toppled the
US as the top-ranked nation, as per the Global Competitiveness Index 2009-2010. The US
has slipped to the second place and is followed by Singapore, Sweden and Denmark in the
top five of the world's most competitive economies. Among the 133 countries featuring in
the list, three nations in the BRIC grouping—India, China and Brazil—have moved up the
competitiveness ladder while Russia has witnessed a sharp drop.

Duke Fashions (India) Limited has been felicitated with the national award for Outstanding
Entrepreneurship, 2008.

The Union government has exempted with effect from September 1, 2009 transporting of
foodgrain, fertilizers and petro-products through rail and waterways from service tax.

Trident International Holdings has awarded a $400 million contract to Arabian Construction
Company (ACC) to build the world's tallest residential tower the 'Pentominium' in Dubai
Marina. The 124-floor Pentominium, whose name is derived from two words: penthouse and
condominium, will be one of the world’s tallest man-made structures and is projected to be
the second-tallest building in the world after Burj Dubai. Each apartment in the 618 metres
tower will consist of either half a floor, or an entire floor. The total built-up area will be
170,000 square metres and the construction duration is expected to take 48 months. The
Pentominium will be the tallest all-residential building in the world upon completion and it
currently has the highest projected height of any residential building under construction.

Sakshar Bharat Mission, launched by Prime Minister Manmohan Singh on September 8,


2009, on the occasion was International Literacy Day, sets itself the goal of educating 70
million learners, 60 million of them women, by 2012 through an investment of $1billion; it
replaces the old adult literacy mission that began in 1988. The final goal is to take national
literacy levels from 64 per cent currently to 80 per cent by 2017, and reduce the gender
gap from 21 per cent at present to 10 per cent, eventually.

Citizen SBI is a HR intervention project of State Bank of India that envisages multi-level
cultural and attitudinal changes in the organisation over the next two years.

“Tirupati laddoo” offered to devotees at the Lord Venkateswara Temple in Andhra Pradesh
has been awarded geographical copyright that bars others from naming or marketing the
sweetmeat preparation under the same name.

India is all set to recognise Vietnam as a market economy—a system where prices of goods
are determined in the market and not by the government. This clears the last hurdle in the
way of India’s Free Trade Agreement (FTA) with all ASEAN members.

The World Bank will provide $4.3 billion loan to India for four projects in order to aid the
country’s finance infrastructure building and for recapitalisation of state-owned banks. The
four loans include $2 billion loan to enhance banks’ capital, $1.2 billion loan to infrastructure
financing company IIFCL, $1 billion to help address power deficiency, and $150 million to
improve water supply in Andhra Pradesh. The loans are part of the World Bank’s $14 billion
crisis-related lending to India for a period of three years till 2012.

The International Conference on peaceful uses of atomic energy, 2009 was held in
September 2009 in New Delhi.

Hardeep Puri is India’s Permanent Envoy to United Nations.


Current Affairs: August 2009
CURRENT NATIONAL AFFAIRS

DEFENCE
Revised Maritime Policy
Just six months after the Indian Navy was given charge of the country’s entire coastal
security, it announced a revised maritime policy on August 28, 2009. The Navy will now
have an even sharper focus on the neighbourhood of the country. This means securing
the trade routes in the Indian Ocean region; extending the reach of the Navy to project
India as a major force and also preventing Mumbai-style sea-borne invasions by
terrorists.

The 2009 edition of the Indian Maritime doctrine was released by the Chief of Naval
Staff, Admiral Suresh Mehta. The original doctrine was published in 2004 to provide a
common understanding of universally applicable maritime concepts, not only for the
forces but also for the public at large. This revision was needed on account of the
rapidly changing geo-strategic environment and transformational changes in the
maritime domain.

The earlier doctrine was more generic in nature; this one will provide a sharper focus.
The Indian Navy’s role in the Indian Ocean has changed in the past 12 months. It has
been sent out to patrol the pirate-infested Gulf of Aden area to ensure safety of
international sea trade routes. Indian sailors have successfully foiled at least five bids
by pirates to take over ships and brought down instances of pirates using choppers
stationed on the ships. After the Mumbai attacks in November 2008, the government
handed over the entire command and control of the coast to the Indian Navy that has
been installing high-tech sensors along the coast. In coordination with the coast guard,
it is also buying fast-attack crafts for shallow waters.

JUDICIARY
PM for war on judicial backlog
Promising the judicial system that his government would “match each step of the
judiciary with two of our own”, Prime Minister Manmohan Singh has asked the Supreme
Court to play a “vital role” in the “war on arrears” of cases and wiping “every tear of
every waiting litigant”.

Addressing the day-long Joint Conference of Chief Ministers and Chief Justices, he,
however, made it clear that increasing the court strength to improve the low judge-
population ratio would depend on High Courts filling all 3,000 existing vacancies in the
lower judiciary.

Describing the executive and the judiciary as “two vital wheels of the chariot of good
governance”, Mr Singh said India suffered from “the scourge of the world’s largest
backlog of cases and time-lines that generated surprise globally and concern at home.
The expeditious elimination of this scourge was the biggest challenge for such
conferences and should constitute the highest priority for all of us”. Over 30 million
cases are pending in various courts across the country.

Calling for an “arrears-free judicial institution”, he expressed concern over under-trials


languishing in jails for unduly long periods. “Many such under-trials have been in jails
for periods longer than they would have served had they been sentenced. This is indeed
very disturbing,” he said.

The road map for judicial reforms, suggested by President Pratibha Patil in her address
to the joint session of Parliament in June 2009, was under preparation and national-
level consultation with jurists and stakeholders in that regard would be held very
shortly, Prime Minister said.

Further, there was need for comprehensive computerisation and ultimate linking of all
courts in the country into one “mega judicial information grid” for screening all
pending cases and disposal of “many old cases as moot or infructuous”.

In his address, Chief Justice of India KG Balakrishnan said there had been a “chronic
shortage” of judicial officers, especially at the subordinate level. There were also some
“structural obstacles that discouraged talented law graduates” from joining judicial
services. However, he did not elaborate on the issue. Citing a Law Commission report,
he said the judicial system had to be expanded at least five-fold in order to match the
judge- population ratio of developed countries.

SC judges to disclose assets


Bowing to intense public pressure and faced with division in their ranks, Supreme Court
judges have finally agreed to take a belated step towards transparency and make public
their assets and liabilities. Details of judges’ holdings will now be posted on the
website of the apex court. However, the landmark decision comes with a caveat: The
judges will not entertain any query relating to their assets and liabilities and how their
wealth has increased or decreased.

The decision to make public personal assets and liabilities as well as those of their
spouses and dependants was taken by Chief Justice of India K.G. Balakrishnan and the
judges at a full court meeting, marking a major climb-down on the part of the higher
judiciary. The outcome of the meeting was influenced by the growing pressure from
within for disclosure of assets with Justice D. V. Shylendra Kumar of the Karnataka High
Court publicly taking issue with the CJI for his stand that judges should not be required
to disclose assets. The CJI even described Justice Kumar as ‘publicity crazy’.

The judges have been declaring these details to the CJI since 1997 under an internal
resolution. But these remained a closely guarded secret with neither the head of the
judiciary nor the apex court entertaining any query, even under the RTI Act, relating to
these details.

PLANNING & ECONOMY


India ranks low in public health spending
As per a WHO study, India ranks 171 out of the 175 countries in the world in public
health spending. This is less than some of the sub-Saharan African countries. For a
country of one billion, India spends 5.2% of the GDP on healthcare. While 4.3% is spent
by the private sector, the government continues to spend only 0.9% on public health.
When the economic growth index is moving forward, the wellness index is dipping.

While India ranks among the top 10 countries for communicable disease, it is, today,
world leader of chronic diseases like diabetes, hypertension and coronary artery
disease.

One of the key findings of the commission was that by improving the health condition,
the economy of the country will improve. But it has been reverse in India. There is
growth in GDP but there has been no increase in healthcare spending. This inadequate
public health spending has forced the public to depend on private sector.

India’s health scenario currently presents a contrasting picture. While health tourism
and private healthcare are being promoted, a large section of Indian population still
reels under the risk of curable diseases that do not receive ample attention of policy-
makers.

New Direct tax code


Making the process of paying taxes simpler for the common man has always been on top
of the UPA’s agenda. This was amply demonstrated today with the government
initiating radical tax reforms by releasing the direct tax draft code that aims to
moderate tax rates and at the same time tries to make it easier for a layman to
understand and calculate his tax liability.
The reform of the tax regime introduced in 1961 is based on the objective of having a
tax system that is simpler, fairer, and easy to administer. The specific objectives of the
measures are to improve the responsiveness of the tax system, that is, to enhance the
automaticity in the increase in tax revenues with increases in economic activity;
improve tax administration by simplifying the tax system; and, lastly, promote tax
compliance objective as to reduce the scope for disputes and minimize litigation.

The goal of the new tax code is to consolidate and amend all direct taxes and simplify
language to ensure that the law can be reflected in the return form. The aim is also to
reduce scope for litigation and provide flexibility in accommodating changes without
need for frequent amendments.

Key gains from the new tax code will be: (a) Deduction (the popular section 80C)
increased to Rs 3 lakh from present Rs 1 lakh. Thus, a person with taxable income of Rs
10,00,000 is likely to save approx Rs 1,20,000 annually. (b) Corporate tax rates,
including for foreign companies, reduced to 25% from 34%. (c) Net wealth tax
exemption limit increased to Rs 50 crores from Rs 30 lakhs. (d) Wealth tax rate cut to
0.25% from 1%. (e) Indefinite carry forward of tax losses. (f) Deduction for donation
towards scientific research @ 125%. (g) Agriculture income stays outside tax net. (h)
Deductions for Royalty income of authors who are individual residents up to Rs three
lakhs and deduction for Royalty income on patents for individual residents up to Rs
three lakhs. (i) STT to be abolished. (j) Cost inflation adjustment to be available for
transfers anytime after one year from end of year in which asset is acquired (earlier 3
yrs, except for shares). (k) Base date for capital gains tax shifted from April 1, 1981 to
April 1, 2000—capital appreciation up to 2000 not taxable. (l) Maximum penalty down to
two times tax amount (from three times tax)

Key pains will be: (a) Branch profit tax to be introduced @ 15%. (b) Reintroduction of
capital gains tax on listed shares & MF units. (c) Tax saving schemes like PPF and
retirement benefit schemes to be taxed on withdrawal time on “Exempt, Exempt, Tax”
(EET) methodology of taxation, for savings done after introduction of the new code. (d)
Deduction for rent paid restricted to Rs 2,000 per month. (e) Profit-linked incentives
dropped. (f) Period consumed in recovering all capital and revenue expenditure same
as tax holiday. (g) Area based exemptions given earlier to continue. (h) Definition of
income to include all accruals and receipts of revenue and capital nature unless
otherwise specified. (i) Receipt of LIC policy taxable except for pure life insurance
policy. (j) Distinction between short term and long term assets done away with. (k)
Cost of acquisition/improvement nil if not determinable. (l) Roll over benefits for
capital gains tax exemption trimmed to only one residential house. (m) Profits on sale
of business capital assets/undertaking no longer treated as capital gains, but as
business income. (n) Loss on sale of business capital assets not allowable, to be only
depreciable. (o) Presumptive rent to be calculated at 6% p.a. of rateable value when
higher than contractual rent to compute income from house property. (p) For self
occupied property, no deduction for interest and principal loan repayment. (q) Income
from letting of machinery, plant, furniture included if letting of building is inseparable
from the same. (r) Rent free accommodation to govt employees made taxable. (s) MAT
linked to gross assets rather than book profit @ 0.25% for banking companies and 2% for
others. (t) No carry forward credit for MAT in later years. (u) In case of conflict
between double tax treaty and code, the one that is later in point of time shall prevail.

Some new concepts have also been added to the code. These are: (a) Tests for
residency changed. (b) Foreign companies, even if partly held/managed from India, will
become “resident”. (c) Concept of ‘resident but not ordinarily resident’ dropped. (d)
Income from business to be computed separately for each business. (e) Income-expense
model based on US, Canada, Australia and most Asian countries. (f) Three types of biz
expenses allowed: Operating expenditure, permitted financial charges and capital
allowances. (g) Scope of weighted deduction of 150% to be extended to all industries.
(h) ‘Scientific research’ to be defined. (i) Presumptive taxation for certain business to
continue. (j) Separate income determination regimes provided for hospitals, SEZ,
infrastructure, etc. (k) MF, VCF, Pension Fund etc. To be taxed as pass through
entities. (l) New tax regime for trusts, institutions carrying on charitable activities.

New Foreign Trade Policy


India has extended tax holiday and duty refund for exporters, while allowing duty-free
capital goods import under its Foreign Trade Policy to insulate them from protectionism
induced by recession abroad. The new five-year policy was released on August 27, 2009
by Commerce Minister Anand Sharma. It sets a target of $200 billion worth exports for
2010-11, a feat that India failed to achieve in 2008-09 due to a slump in global demand
in the face of financial crisis.

Extension of income tax holiday for export units for one more year and continuance of
duty refund scheme till December 2010 and enhanced assistance for the scheme for
development of markets are among the measures in the FTP. The aim of the policy,
which would be reviewed after two years, would be to "arrest and reverse declining
trend of exports”.
Exports have been on a decline for the past 10 months. Exports in FY'09 amounted to
$168 billion and the country hopes to maintain the same level in 2009-10.

The government would encourage exports through a “mix of measures including fiscal
incentives, institutional changes, procedural rationalisation and efforts for enhance
market access across the world and diversification of export markets”.
The policy would provide a special thrust to the employment-oriented sectors which
have witnessed job losses in the wake of recession, especially in the fields of textiles,
leather and handicrafts.

Highlights

• Aims annual growth of 15 pc in 2010-11.


• Double India’s exports of goods and services by 2014.
• A high-level panel to look into dollar needs of exporters.
• Six 'Made in India' shows to promote Brand India.
• Directorate of Trade Remedy Measures to safeguard exporters.
• Duty Entitlement Passbook Scheme extended till December 2010.
• A single window system for export of perishable agri produce.
• Value addition norm for tea halved to 50 per cent.

POLITICAL
Government to scrap Darjeeling Gorkha Hill Council
The Centre, West Bengal government and the Gorkha Janmukti Morcha (GJM) have
agreed to scrap the Darjeeling Gorkha Hill Council (DGHC) and bring in its place an
alternative administrative framework for the hill district to be finalised through mutual
consultation and agreement. At a tripartite meeting of representatives of the Centre,
led by Union home secretary G.K. Pillai, of West Bengal government led by chief
secretary A.K. Chakrabarty and of GJM led by Anmole Prasad, it was decided that the
DGHC Act, 1988 would be repealed and the proposal for establishment of a hill council
under the Sixth Schedule of the Constitution be dropped.
The press statement, however, makes no reference to the GJM’s central demand for a
separate Gorkhaland: a pointer to such a drastic concession being almost ruled out. The
alternative administrative framework to be worked out by the yet-to-be-named
interlocutor for the Gorkha talks will have due constitutional status and will be
supported by a full-fledged Act. It is also likely to be given more powers than DGHC.
However, working out its terms is likely to be a long-drawn affair, and, in all
probability, the new framework may come well after installation of the new
government in West Bengal.

During the tripartite talks, the Centre extracted an assurance from the GJM that it
would help maintain a peaceful and conducive atmosphere during the negotiations. GJM
has agreed to work along with the other parties “in a spirit of constructive cooperation
to carry the talks forward”.

The Centre also decided to push administrative works in the hill district by sending a
team of its officials to Darjeeling to review development works. Both the Union and the
West Bengal government suggested that elections to the panchayat samities, gram
panchayats and municipalities be held in the hill district “as an interim measure and to
restore the democratic process”. The GJM team offered to consult its brass on the
proposal and revert to the state government.

With nearly Rs 70 crore worth of special central assistance and even portions of the
Calamity Relief Fund lying un-utilised, it was agreed at the tripartite meeting that the
West Bengal government would send across a team to Darjeeling to discuss fund
utilisation.

FOREIGN RELATIONS
India, ASEAN ink free trade deal
In a major success in its ‘Look East' policy, India, on August 13, 2009, signed a Free
Trade Agreement (FTA) with the 10-member Association of South East Asian Nation
(ASEAN) bloc that would eventually eliminate duty on 80% of the goods traded at
present by 2016. The two sides have set an ambitious target of achieving an increase of
$10 billion worth of trade in the first year after the agreement comes into force from
January 2010. India's current bilateral trade with the ASEAN bloc is worth $40 billion.

The agreement was signed by Commerce and Industry Minister Anand Sharma and
Economic Ministers of ASEAN in Bangkok. Considered as a major breakthrough, the pact
comes after six years of intense negotiations. The FTA would bring down tariffs on
electronics, chemicals, machinery and textile goods.

However, talks on software and information technology services have been postponed
for December 2009. This is one area where Indian exporters of services could have
brought in good business and also offset setbacks received in the European and US
markets during the downturn. Of the total $936 billion worth of ASEANn imports,
services import account for $180 billion which is the primary focus of Indian industry.

ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the


Philippines, Singapore, Thailand and Vietnam.

Lobbying from the domestic industry has led to India excluding 489 items from the list
of tariff concessions and 590 items from the list of tariff elimination to address
sensitivities in agriculture, textiles, auto, chemicals, crude and refined palm oil,
coffee, tea, pepper, etc.
Visit of Defence Minister A.K. Antony to Maldives
Defence Minister A.K. Antony went on a three-day official visit to Maldives from August
20, 2009. He led a high-level delegation comprising Defence Secretary Pradeep Kumar;
DG, Armed Forces Medical Services, Lt Gen N.K. Parmar; DG, Coast Guard, Vice Admiral
Anil Chopra and Deputy Chief of Navy Staff Vice Admiral D.K. Joshi.

During his visit, Mr Antony held bilateral discussions with his counterpart Ameen Faisal
on ways of expanding defence cooperation between the two countries. He also
attended the closing session of the India-Maldives Friendship function, besides paying a
visit to the Indira Gandhi Memorial Hospital, the most visible symbol of Indo-Maldives
cooperation and friendship.

In a move that will serve security interests of both India and Maldives, the two
countries in the Indian Ocean region agreed on a series of measures to step up defence
cooperation. At discussions with Maldives defence forces, the emerging security
challenges in the region and the need to strengthen joint and collective mechanisms to
mutually counter them were highlighted. The purpose of his visit, Mr Antony said, was
not to enter into any agreement, but to expand cooperation within the existing robust
framework.

Visit of Nepalese Prime Minister


Amid an uncertain political situation back home, Prime Minister of Nepal, Mr Madhav
Nepal arrived in New Delhi on August 7, 2009 on a five-day visit to India—his first to the
country since he assumed office nearly three months ago.
Several important bilateral issues, including the proposed revision of the friendship and
trade treaties and the finalisation of a revised extradition treaty figured prominently in
the discussions between the two sides.

Besides meeting Prime Minister Manmohan Singh, the Nepalese Prime Minister also meet
President Pratibha Patil, UPA chief Sonia Gandhi, External Affairs Minister S.M. Krishna,
Finance Minister Pranab Mukherjee and Home Minister P. Chidambaram.

Prime Minister Manmohan Singh extended India’s full support to the peace process in
Nepal and also discussed the broad contours of a proposed revised trade treaty
between the two countries. The two leaders had a one-on-one meeting lasting about an
hour during which they discussed the entire gamut of bilateral relations as well as
international issues.

Intensifying economic partnership between the two countries remained at the centre of
the discussions with the focus on investment in hydro power sector. The issue of the
misuse of Nepal's territory by anti-Indian forces also came up during the talks.

Nepalese Prime Minister also addressed captains of the Indian industry, inviting them to
invest liberally in the Himalayan Nation in various sectors. He assured them of
conducive atmosphere for industrial growth. The visiting dignitary identified hydro
power, roads, bridges, infrastructure construction, tourism, agro-processing and
financial services as potential areas of investment.

Political events in Nepal since May this year had shaken the confidence of Indian
entrepreneurs after attacks by militant trade unions on a few firms, including a well-
known fast moving consumer goods firm. With India-Nepal trade expected to touch Rs
15,000 crore ($3 billion) in 2009-10, the commerce ministers of the two countries
discussed the proposed revised treaty to widen the scope of bilateral trade.
Nepal Prime Minister Madhav Kumar Nepal assured Indian investors that his office would
coordinate to ensure that investments coming from India get priority. Regarding the
ongoing violence and unrest in the country, the Prime Minister said the general law and
order condition in the Himalayan Kingdom was returning to normalcy. He said his
government would shortly unveil its security plans in consultation with all Nepalese
political parties, which would offer security to investments and ensure manufacturing
without interruption. The new security plan will address the issue regarding strikes and
disruptions, so that industrial production is maintained at steady pace and investors’
interests are adequately protected.

In a bid to support Nepal’s beleaguered peace process and check China’s growing
influence, India has decided to pump in crores of rupees into the neighbouring nation’s
infrastructure. The Indian government has taken a decision to fund three large
infrastructure projects, which will increase border connectivity and increase trade
between the two countries. The government has quickly pushed through funding for the
projects to show that India is serious in its efforts to help Nepal through the transitional
period.

With the development mantra in mind, the government will put in around Rs 200 crore
to set up the first two state-of-the-art integrated Customs point along the border at
Raxaul-Birganj and Jogbani-Biratnagar. The idea is to set up the ICPs so that trade
between the two countries becomes smoother, cutting down on current procedural
delays at the border. After the first two sites are set up, the two countries will then
look at setting up ICPs at Sunauli-Bhairahawa and Nepalgunj-Nepalgunj points.

The Indian government will also fund the first phase of the Terai road project at a cost
of around Rs 700 crore and set up two rail links worth Rs 700 crore. The Terai road
project looks at upgrading around 1,500 km of roads in the Terai region, with the first
phase covering 657 km. Additionally, India will also fund a Nepal Police Academy worth
Rs 300 crore in what is a capacity-building exercise. These infrastructure projects were
at the conceptual stage for the last couple of years but have not gotten off the ground
for one reason or another. By funding road and rail projects, India hopes to start a new
era of cooperation and send a strong message of support to Nepal and its government,
which has been struggling to push forward the peace process in the face of Maoist
opposition.

India’s current push for Nepal’s infrastructure also comes in the backdrop of China’s
continuing efforts in Nepal. China is currently helping Nepal build a cross border road
linking Nepal to the Tibetan Autonomous Area to improve trade and tourism. China has
put in vast amounts of money into Nepal in various sectors including hydropower,
health and IT.

India, Singapore ink pact on tourism


On August 4, 2009, India and Singapore signed a joint action plan on tourism
cooperation. Minister of Tourism Kumari Selja and Singapore Senior Minister of State for
Trade and Industry and Education S. Iswaran witnessed the signing by tourism officials
of India and Singapore. The plan reiterates provisions of cooperation enshrined in the
bilateral agreement on tourism signed between India and Singapore on January 24,
1994.

India, South Korea ink free-trade pact


India and South Korea have signed a comprehensive economic partnership agreement
which will make Korean consumer products and auto parts cheaper in India. The deal
excludes fully built-up vehicles and provides for easier movement of contractual service
providers and professionals between the two countries and treatment of investments
from one another’s country on a par with domestic investments.

This is the second CEPA signed by India, the other being with Singapore. This is also
India’s first bilateral trade agreement with an OECD country.

As per the agreement, South Korea will eliminate duties on 93% of its industrial and
agricultural products and India will do the same on 85% of its goods. India has excluded
sensitive items such as farm products, textile items and built-up automobiles from
tariff elimination commitments. Duties will be phased out on most products in the next
eight years.

TERRORISM
Death sentence for 2003 Mumbai blasts
On August 7, 2009, a special POTA (Prevention of Terrorist Activities Act) court in
Mumbai awarded death sentence to the three accused held guilty last week for the
2003 blasts that killed over 50 people. Six years after two blasts at the iconic Gateway
of India and Zaveri Bazaar, three Lashkar-e-Toiba members—Mohammed Hanif Sayeed
(46), his wife Fahmida (43) and Ashrat Ansari (32)—were sentenced to death. This is for
the first time that a couple has been convicted by a POTA court for carrying out blasts.

The special court judge observed it had been proved beyond reasonable doubt that they
had committed heinous acts resulting in numerous deaths. The court agreed with
special public prosecutor that this was a rarest of the rare case where capital
punishment was justified.

The trio was held guilty of planting two bombs in taxis that exploded at the Gateway of
India and Zaveri Bazaar on August 25, 2003, claiming 52 lives and injuring 244. They had
also planted a bomb on July 28, 2003, in a municipal bus in suburban Ghatkopar which
killed two persons. The three were given death penalty under section 3(2) of POTA, and
IPC sections 302 (murder), 307 (attempt to murder) and 120(b) (conspiracy).

Fahmida had played a major role in these bomb blasts. She had planted a bomb in a bus
on July 28, 2003, along with her husband’s friend Ashrat and on August 25, 2003, she
and her husband Hanif planted bombs in taxis at the Gateway of India.

Along with the couple Hanif and Fahmida, their 16-year-old daughter was also arrested
for her alleged involvement in the blasts. However, she was discharged since the
prosecution chose not to investigate the charges against her as she was a minor. Two
other accused, Mohammed Ansari Ladoowala and Mohammed Hasan Batterywala, were
also discharged from the case by the POTA court after the Supreme Court upheld a
POTA review committee report that said there was no case against the duo.

CURRENT INTERNATIONAL AFFAIRS

AFGHANISTAN
Elections to elect President
Taliban threats kept voter turnout low in the Kabul and the militant south on August
20, 2009, as Afghans voted to choose the next President for their deeply troubled
country. Militants launched scattered rocket and bomb attacks but no major assaults.

Taliban militants had pledged to disrupt the vote and circulated threats that those who
cast ballots will be punished. However, voters throughout Afghanistan came out to cast
their ballot, even if not in large numbers.

President Hamid Karzai, who has held power since the Taliban was ousted in late 2001
by a US-led invasion, is favoured to finish first among 36 official candidates, although a
late surge by former Foreign Minister Abdullah Abdullah could force a run-off if no one
wins more than 50 per cent.

Since Hamid Karzai’s election in 2004, violence in Afghanistan has increased more than
seven times, and particularly in the provinces of Helmand, Nangarhar, Zabul and
Kandahar where he had got over 80% of the votes.

Karzai’s closest rival in the elections was Abdullah Abdullah, a confidant of Northern
Alliance leader Ahmad Shah Masood.

India played safe and distant in these elections. There is a clear recognition that
despite India’s huge stakes in Afghanistan, there are no gains to playing sides in these
elections. No matter who wins, India will have a substantive playing field, except of
course if the Taliban return.

Karzai has been close to India, and even when the US was trying to dislodge him, India
stood by him. Abdullah is an old India hand, having lived in India with his family during
the Taliban years, with full support of the then Indian government.

Nearly 7,000 polling centres across Afghanistan were set-up for a total electorate of 17
million people. Ballots were counted by hand at each polling centre as soon as voting
came to a close. Counting process, however, is expected to be completed in September
only. To win the election, a Presidential candidate must get over 50% of the votes
cast. If no one receives this, a runoff election will be held within 2 weeks of the
announcement of the results.

JAPAN
Landslide win for Democrats
Japanese voters swept the opposition to a historic victory in an election on August 30,
2009, ousting the ruling conservative party and handing the untested Democrats the job
of breathing life into a struggling economy.

The win by the Democratic Party of Japan (DPJ) ended a half-century of almost
unbroken rule by the Liberal Democratic Party (LDP) and breaks a deadlock in
Parliament, ushering in a government that has promised to focus spending on
consumers, cut wasteful budget outlays and reduce the power of bureaucrats.

Democratic Party leader Hatoyama, grandson of a former Prime Minister, will take over
as the new Prime Minister.

The ruling party loss ended a three-way partnership between the LDP, big business and
bureaucrats that turned Japan into an economic powerhouse after the country’s defeat
in World War II. That strategy foundered when Japan’s “bubble” economy burst in the
late 1980s and growth has stagnated since. The Democrats will have to move fast to
keep support among voters worried about a record jobless rate and a rapidly ageing
society that is inflating social security costs.

The Democrats have pledged to refocus spending on households with child allowances
and aid for farmers while taking control of policy from bureaucrats. The Democrats also
want to forge a diplomatic stance more independent of the United States, raising
concerns about possible friction in the alliance.

MYANMAR
Suu Kyi convicted as global outrage grows
Myanmar democracy icon Aung San Suu Kyi and her US co-defendant are to appeal
against their convictions as the ruling junta faced a global wave of anger over her
extended detention. US president Barack Obama led worldwide outrage at the military
regime’s decision on August 12, 2009, to give Suu Kyi another 18 months of house
arrest, a verdict that shuts the Nobel peace laureate out of elections in 2010.

A prison court sentenced her to three years of hard labour after finding her guilty of
breaching the terms of her incarceration, but junta strongman Than Shwe commuted
the punishment to a year and a half under house arrest.

In Washington, Obama called for Suu Kyi’s “immediate, unconditional release” and for
the freeing of more than 2,000 other political prisoners held in Myanmar. The US
president said the “unjust” sentence against Suu Kyi would never be able to stamp out
the people of Myanmar’s desire for freedom, accusing the regime of “continued
disregard” for UN Security Council statements.

NEPAL
Gurung is army chief
Lt Gen Chhatraman Singh Gurung, who received training at the Indian Military Academy,
Dehradun, was appointed to head the Nepal Army on August 9, 2009, after his
controversial predecessor General Rukmangad Katawal went on a month-long leave
ahead of his retirement in September. Gurung is the first from the rank of commoners
to head the army, which has been led by the country’s elite and the aristocracy. The
change of guard at the helm of 95,000-strong Nepal Army came amid a continued
blockade of Parliament by the Maoists demanding Katawal’s removal. The Maoists,
whose eight-month-old government fell in May 2009 after the reinstatement of
Katawal, had sought his dismissal and a debate in Parliament on the issue of “civilian
supremacy” in the country.

PAKISTAN
Politics allowed in Taliban land
On August 14, 2009, Pakistani President Asif Zardari lifted a ban on political activity in
the ethnic Pashtun tribal belt on the Afghan border, in an apparent move to loosen the
grip of militants on the lawless area. Pakistan’s seven tribal regions, known as the
Federally Administered Tribal Areas (FATA), are semi-autonomous and have never been
fully integrated into the country’s administrative and political system.

The FATA is a major sanctuary for al-Qaida and the Taliban plotting violence in
Pakistan, Afghanistan and beyond and analysts have long argued for it to be fully
integrated with the rest of Pakistan and brought under government writ. Zardari,
speaking at a ceremony to mark the anniversary of Pakistan’s independence from
Britain in 1947, said Pashtun tribesmen deserved to be treated the same as other
Pakistanis.

The FATA is governed under a system inherited from British colonialists with a
government-appointed political agent ruling through the tribes, which observe their
centuries-old codes, not Pakistani laws. Political parties have not been allowed to
operate in the FATA which analysts say helped to create a vacuum for hard-line Muslim
clerics to exploit.
ECONOMY
World financial crisis costs $11.9 tn
The world has earmarked a staggering $11.9 trillion to wriggle out of the financial
crisis, the sum which is enough to finance a $1,779 handout for every person living on
the planet, according to the International Monetary Fund.
Most of the cash has been handed over by developed countries, for whom the bill has
been $10.2 trillion, while developing countries have spent only $1.7 trillion the
majority of which is in central bank liquidity support for their stuttering financial
sectors.

The whopping total cost of crisis is equivalent to around a fifth of the entire globe's
annual economic output and includes capital injections pumped into banks in order to
prevent them from collapse, the cost of soaking up so-called toxic assets, guarantees
over debt and liquidity support from central banks.

Japan comes out of recession in Q2


Japan's economy climbed out of year-long recession in the second quarter, the
government said on August 16, 2009, expanding 3.7% at an annual pace and joining
Germany, France and other regions that appear to be emerging from the global
financial crisis. But economists and politicians sounded cautious, noting that the main
driver of growth was exports and that domestic consumer spending remained fragile
amid plunging incomes and rising unemployment.

The recovery in the April-June quarter was driven by robust demand for cars, video
recorders and other electronics goods, according to government data. Shipments to
China and other emerging markets were particularly strong, although exports to the US
and Europe also showed modest recoveries. Exports grew 6.3% from the previous
quarter, the highest rate in seven years.

Government stimulus measures have also helped, such as cash handouts and incentives
to buy ecological products. But economists said, the nascent recovery could quickly run
out of steam because domestic demand remains weak. Salaries are falling and the
unemployment rate has risen to a six-year high of 5.4% as companies such as Toyota
Motor Corp and Sony Corp have cut thousands of jobs.

The rebound in the world's second largest economy came after a steep, year-long
contraction in gross domestic product, including a worst-ever drop in the final quarter
of 2008, when the economy shrank at a 13.1% pace. The news from Japan comes amid
signs that the global economy may be recovering from its slump. Earlier, France and
Germany, Europe's two biggest economies, said they resumed growing in the second-
quarter, while Hong Kong also said it expanded after a year-long recession.

Economic recovery has begun: IMF


The global economic recovery has begun but sustaining it will require refocusing the
United States toward exports and Asia toward imports, according to the International
Monetary Fund’s chief economist, Olivier Blanchard.

"The turnaround will not be simple," Blanchard said. "The crisis has left deep scars,
which will affect both supply and demand for many years to come." He said US
consumption, which accounts for about 70 per cent of the US economy and a large
chunk of global demand, would not quickly return to pre-crisis strength as households
cope with trillions of dollars in losses from the falling housing and stock markets.
He said the financial crisis had made Americans more conscious of "tail risks"—events
that are unlikely to occur, but when they do have devastating consequences. That
means US consumers are unlikely to return to their free-spending ways, and both the
United States and its trading partners will have to adjust. Emerging Asian countries,
especially China, must play a big role.

ENVIRONMENT
India, China unite to take on West
India and China have agreed to jointly fight any attempt by Western nations to link
trade with climate change and impose trade-related penalties on developing countries
that fail to meet environmental standards.

India and China have agreed to coordinate their views on different aspects of climate
change before every major international meeting on the subject. These are expected to
be spelt out in form of an agreement. Both countries want to negotiate with West for
higher levels of financial assistance and technology transfer in return for promises to do
their best to tackle environmental problems. But they would not agree to any legal
binding on reducing emission norms because it would come in the way of their
development goals. India and China will also not agree to the creation of any trade
barriers on the excuse of climate change. India has also suggested China to consider
reducing carbon dioxide levels in power plants supplied by it to India. This would be
part of the mitigation activities that the two countries expect to carry out jointly.

INTERNATIONAL RELATIONS
Pak has modified Harpoon, India under threat: US
The US has accused Pakistan of illegally modifying the Harpoon anti-ship missile, sold to
it as a defensive tool by the Reagan Administration, to expand its capabilities to strike
land targets, a potential threat to India. The Obama Administration, reported 'The New
York Times' in a front page story, lodged its protest with Pakistan Prime Minister Yusuf
Raza Gilani in June, adding to the tension between the two countries.

Quoting unnamed officials from the Administration and the US Congress, the daily said
Washington has also accused Pakistan of modifying American-made P-3C aircraft for
land-attack missions, another violation of United States law.

The Obama Administration's accusation confirms New Delhi's assertion that the US
military aid is primarily used by Pakistan to strengthen and build up its army against
India.

The newspaper said Pakistan has refuted the charge that it modified the missiles and
claimed that it developed these itself. Between 1985 and 1988, the US had provided
165 Harpoon missiles to Pakistan.

Given the strong protest lodged by the Obama Administration, Pakistan has taken the
unusual step of agreeing to allow American officials to inspect the country’s Harpoon
inventory to prove that it had not violated the law. he latest round of dispute between
the US and Pakistan, however, reflects the “level of mistrust” between them.

TERRORISM
Pak Taliban chief Mehsud killed
Chief of Tehrike Taliban Pakistan (TTP) Baitullah Mehsud, who led a deadly campaign of
suicide bombs and assassinations in Pakistani cities, has been killed in a US drone
attack in first week of August 2009.
Intelligence officials said Mehsud was killed in a missile attack from an American drone
while he was having dialysis. Mehsud’s death means a spectacular development in the
campaign by Pakistan and the US against the Taliban and Al-Qaida fighters along the
border on Afghanistan. He was declared enemy No. 1 by Pakistani authorities for his
terrible suicide attacks that played havoc in Pakistan.

WORLD TRADE
China becomes Japan’s biggest trading partner
In a first, China has surpassed US to become Japan's largest trading partner. The move
is expected to have a softening effect on China-Japan disputes over an island and have
wide implications in Asian region including India. Japan's trade with the US accounted
for just 13.7% of its total world trade in the January-June period. Its trade with China
accounted for 20.4% of the total trade volume giving Beijing tremendous clout over its
neighbour's economy. South Korea, another neighbour, accounted for 6.1%.

The Solar Mission under the National Action Plan on Climate Change has got an in-
principle nod from the Prime Minister with an ambitious target of 20,000 MW solar power by
2020 being accepted.

Australia has decided to provide more than 80 lakh dollars to set up Australia India
Institute in Melbourne. A joint project of the University of Melbourne, La Trobe University
and the University of New South Wales, the new Institute will help Australians to know and
understand India better.

India ranks 171 out of 175 countries in public health spending.

International Youth Day is observed on August 12.

88 years ago, during a meeting of the Indian National Congress (INC) at Vijayawada in
1921, an Andhra Pradesh youth approached Mahatma Gandhi and showed him design of a
flag. Thus was born the Tricolour. But, it was over 88 years later that the designer of the
National Flag, Pingali Venkaiah, finally got his due: A commemorative postal stamp has
been released in the memory of the freedom fighter. India Post (Philately) division has
honoured Venkaiah by releasing the stamp, priced at Rs 5, on the occasion of his 132nd
birth anniversary.

Madden-Julian oscillation is a weather phenomenon that brings clouds and rains in the
tropics. Lasting between 30-50 days, this eastward moving system travels along the
equator and its flows generate cyclonic activity that at times perk up the south-west
monsoon in India.

The Centre has announced an increase of Rs 100 (per quintal) in the minimum support
price (MSP) of paddy for the 2009-10 fiscal. While the MSP for common paddy variety has
been increased to Rs 950 from Rs 850 per quintal, for grade ‘A’ type it would be Rs 980, up
from Rs 880 per quintal in 2008. Among pulses, the new MSP for arhar is Rs 2,300, a hike
of Rs 300 (15 per cent). The MSP for moong has seen a hike of Rs 240 (9.52 per cent); it
now stands at Rs 2,760 per quintal. Sesame MSP, too, has been increased by Rs 100 and
will now be Rs 2,850 per quintal.

For the fourth straight year, German Chancellor Angela Merkel has been ranked as the
most powerful woman in the world by Forbes magazine, while the US First Lady Michelle
Obama made her debut in the top 100 list. The US Federal Deposit Insurance Corporation
chairperson Sheila Bair is ranked at the second place and India-origin chief executive of
Pepsico Indra Nooyi at the third. Led by Indian National Congress president Sonia Gandhi at
the 13th spot, the list has three Indians. While ICICI Bank CEO and managing director
Chanda Kochhar has made her debut in the list at 20th position, Biocon's chairman Kiran
Mazumdar-Shaw is at the 91st place.

Reserve Bank of India (RBI) has put a cap on third-party ATM withdrawal (when a
cardholder is using other bank’s ATM) at Rs 10,000 per transaction and also limited the
number of such transactions to five in a month. For more than five third-party transactions
in a month, one has to pay Rs 20 per transaction. However, there will be no such limit when
a card-holder is using his/her own bank’s ATMs.

IISc has been ranked the number one engineering/ technology institute among top 67
science institutes in the country. IIT-Kanpur comes in at second place, followed by IIT-
Bombay, IIT-Kharagpur and Delhi at third, fourth and fifth position, respectively. The
ranking has been published in the Current Science. The other institutes within top 10
include Jadavpur University ranked 6, IIT-Madras 7, IIT-Roorkee 8, Anna University 9 and
IIT-Guwahati ranked 10.

Power outages nationwide cost Indians a staggering Rs 100,000 crore—enough to put up


power plants with a capacity of 25,000 MW of electricity, or almost 20% of the present
generation level. That’s what a survey by a big power company has found. Besides, Indians
spend Rs 30,000 crore every year maintaining and operating inefficient back-ups like
gensets and inverters, which substantially increase the carbon footprint. The study claims
back-ups release an additional 1.9m tonnes of carbon dioxide into the atmosphere.
According to one projection, the value of the lost opportunity due to outages in 2008-09
was Rs 2,89,000 crore.

An empowered Group of Ministers has fixed Rs 3,500 crore as reserve price for 3G
spectrum to be given to a maximum of five players initially. The eGOM has also decided a
base price of Rs 1,750 crore for pan-India WiMax (Wireless Internet) spectrum.

Sera the Tiger is the mascot of 2010 Commonwealth Games to be hosted by India in New
Delhi.

The economic upturn appears to have truly begun. The latest government data on Monday
showed the economy growing by 6.1% year-on-year during the first quarter (April-June) of
the fiscal—the fastest for any quarter since the global financial crisis began almost a year
ago—making officials expect 6.5% growth this year. This growth rate means India remains
the second-fastest growing major economy after China, which notched almost an 8%
growth rate. More importantly, it’s an improvement over the 5.8% notched up by India in
the previous quarter and 5.3% recorded in the quarter before that.

Engineers in Kochi are giving final touches to the 4.62-km-long rail bridge connecting the
mainland to the proposed international container trans-shipment terminal on Vallarpadam
island across the Vembanad lake in Ernakulam district of Kerala. Due to be commissioned in
November 2009, it will be the longest rail bridge in India. Currently, the record is held by
the Nehru Sethu near Dehri-on-Sone. Located on the Kolkata-Delhi Line, the Nehru Setu is
3.065-km long.

Current Affairs: July 2009


CURRENT NATIONAL AFFAIRS

BANKING & FINANCE


RBI gives nod to cash withdrawals using swipe machines in stores
The Reserve Bank has allowed cash withdrawals using swipe machines at retail shops.
The facility will initially be available to the 14.3-crore people holding debit cards
issued in India. One will be able to withdraw up to Rs 1,000 in a day.

To avail this facility, a card holder will have to pay a fee of 2 to 3%. In case the card-
holder also makes a purchase with the card, the receipt will have to separately indicate
the cash withdrawn. For this, the swipe machines, or point-of-sale (PoS) terminals, will
have to be upgraded. The banks will split the service charge with retailers to entice
them to offer this service. At present, merchants pay a fee of 1.5-2% for every card
transaction.

The move will particularly benefit customers in smaller towns and rural areas, which
have few ATM machines. It will also bring down the amount of money a retailer needs
to deposit in a bank every day as it can disburse the same for a fee. As for banks, the
increased debit card usage will translate into higher fee income.

RBI has said the facility can be made available at any merchant establishment
designated by a bank after due diligence.

RBI Policy Review


Announcing the first quarter policy review for Financial Year 2009-10, RBI Governor D.
Subbarao said the apex bank’s status quo on policy rates would anchor interest rate
expectations that could spur investment demand. With concerns over rising inflation,
the RBI has decided to leave Cash Reserve Ratio at 5 per cent and the repo and reverse
repo rates at 4.75 per cent and 3.25 per cent, respectively.

The RBI has projected inflation at 5 per cent from the 4 per cent forecast earlier.
India’s GDP is projected to grow to 6 per cent in March 2010 “with an upward bias”.
Export demand remains weak. The services sector is sluggish on lagged impact of weak
industry growth, but the business outlook has turned positive.

According to the RBI, its policy initiatives since mid-September 2008 aimed at providing
ample rupee liquidity and ensuring continued flow of credit to all productive sectors
has shown results. These actions have resulted in augmentation of actual/potential
liquidity of over Rs 5,61,700 crore. The liquidity situation has remained comfortable
since mid-November 2008 as evidenced by the LAF window where the Reserve Bank has
been absorbing nearly Rs 1,20,000 crore on a daily average basis during 2009-10.

COMMISSIONS
Liberhan Commission on Babri Masjid demolition
It was on December 16, 1992 that M.S. Liberhan, then a judge of Punjab and Haryana
High Court, was asked to probe the conspiracy leading to the demolition of Babri Masjid
—an event that took communal polarisation to a new scale, and shaped the politics of
the turbulent 1990s.

Seventeen years, 399 sittings, 100 witnesses, 48 extensions and Rs 9 crore later, Justice
Liberhan submitted his report to Prime Minister Manmohan Singh, indicting the BJP and
its leaders, including L.K. Advani and the Sangh Parivar for conspiring to demolish the
Mughal-era mosque at Ayodhya on December 6, 1992.

The indictment of other front-ranking Hindutva leaders is sharper, with former UP Chief
Minister Kalyan Singh, Uma Bharti, Murli Manohar Joshi, Ashok Singhal, Vinay Katiyar
and others all coming in for severe criticism for their individual culpability. As for
Congress, the criticism is limited to the “inaction” of former PM P V Narasimha Rao.

DEFENCE
‘One rank, one pension’ for officers, too
Defence Minister A.K. Antony clarified in the Lok Sabha on July 12, 2009, that "one
rank, one pension" recommendation of the Cabinet Secretary-led panel had been
accepted by the government for jawans as well as officers.

The decision is now nearer to the goal of “one rank, one pension” demand of nearly 1.5
million personnel, Mr Antony said during question hour. The total financial implications
on account of benefits to the personnel would be Rs 2,144 crore.

The committee has recommended inclusion of Classification Allowance for the


Personnel Below Officer Rank (PBOR) from January 1, 2006, and removal of linkage of
full pensions with 33 years from the same date. The committee also recommended
revision of pension of Lt Generals after carrying out a separate pay scale for them,
bringing parity between pension pre- and post-October 10, 1997, for PBOR pensioners
and further improving PBOR pensions based on award of Group of Ministers in 2006.

With regard to the separate pay commission, the Minister said it had been agreed, and
as and when necessary it would be set up in the future. The government has also
accepted the committee's recommendations regarding raising the pension amount for
those disabled or injured in war.

PLANNING & ECONOMY


Union Budget, 2009
“Aam Aadmi is now the focus of all our programmes and schemes”, declared Finance
Minister Pranab Mukherjee while presenting the Union Budget for 2009-10 in Parliament
on June 6, 2009. He further added that the UPA government has gone for a paradigm
shift for making the development process more inclusive, which involves creating
entitlements backed by legal guarantee to provide basic amenities and opportunities
for livelihood to vulnerable sections.
For industry as a whole the Budget turned out to be a mixed bag. While there is cause
for celebration that the Fringe Benefit Tax has been abolished, there is unhappiness
over the Minimum Alternate Tax (MAT) on booked profits being raised from 10 per cent
to 15 per cent. As a first reaction to the disappointment of investors in general, the
stock market tanked, with the BSE benchmark suffering the biggest fall on any Budget
day, and in the year too, by plunging over 869 points.

Highlights

• IT exemption limit raised; Rs 15,000 for senior citizens (65 yrs & above),
• Rs 10,000 for general tax payers and women.
• 10% surcharge on personal income tax scrapped.
• Fringe Benefit Tax, Commodities Transaction Tax abolished.
• Corporate Tax unchanged; Minimum Alternate Tax hiked to 15%.
• Legal services brought under Service Tax net.
• Defence gets Rs 1,41,703 cr, up 34%.
• Cosmetic & plastic surgery become taxable services.
• Rs 3,472 cr for Commonwealth Games.
• Stimulus for print media for another six months.
• Allocation for NREGA up 144%.
• Banks, insurance firms to remain in public sector.
• Unique ID card to citizens in 12-18 months.
• IT returns to be made simpler.
• Allocation for JNNURM up by 87% to Rs 12,887 crore
• Allocation for APDRP surged by 160% to Rs 2,080 crore
• Allocation for NHAI has been raised by 23%
• Allocation for Brihanmumbai Storm water Drainage Project raised to Rs 500
crore from Rs 200 crore earlier
• Budgetary allocation for higher education sector increased to Rs 9,600 crore.
• Divestment target for year set at Rs 1,120 crore.
• 100% tax exemption to electoral trusts.
• Collegium of commissioners to be setup to look into the cross-border tax issues.
• Subsidized 7% interest schemes for crop loans to continue and incentive for
regular payers who will get loan at 6% interest.
• Major tax-breaks for agro-processing industry.
• Uniform non-promoter public share holding for all listed companies.
• Sharp 13% increase in spending to continue to provide stimulus to economy.
• Fiscal Deficit 6.8% of GDP. Half of it to be met through market borrowings, the
rest by printing notes.
• Total subsidy bill for 2009-10 is Rs 1,11,276 crore.
• Tax burden on economy comes down to 10.9% of GDP, from 11.6% of GDP.
• Major tax holiday for future oil and gas producers.
• Tax exemptions to IT sector and EOUs extended by one more year.
• Simple deemed income scheme for small and micro enterprises with less than
Rs 40 lakh turnover per annum. They can opt to pay income tax on a fixed 8% of
their revenues and in turn be exempted from maintaining their books.
• New hand-loom clusters to be set up in West Bengal, Tamil Nadu and Rajasthan.
• Transport of goods by Rail to attract Service tax.
• Detailed Budget report is covered in Cover Story section.

Railway Budget, 2009


Mamata Banerjee spent the first couple of minutes of her first Budget speech
vehemently arguing that railway projects should be judged on social rather than
economic viability. For the next hour and a bit she showed that she values political
viability more than either. Railway ministers have traditionally lost no opportunity to
do their constituencies and home States a favour. But Mamata’s third rail budget—she
presented two in the NDA’s tenure in 2000 and 2001—comfortably surpassed all previous
efforts at regional partisanship.

It’s not as if her budget was harsh on other—neither passenger fares nor freight rates
have been touched. Not only does her home State, West Bengal, have 181 of the 309
stations identified for conversion into “Adarsh stations”, there were oodles of other
goodies like a rail coach factory, a huge chunk of new trains and proposed new lines,
nursing and medical colleges, and a de-congestion plan for the Kolkata metro.

Despite some brave talk from Mamata on how well the Railways were bearing up under
the strain imposed by the pay commission and the economic slowdown, the numbers
reveal the financial stress. The operating ratio—which tells you what proportion of
traffic receipts get used up in just keeping the railways running—is up to 92.5% from
75.9% just two years ago, a clear sign that less and less is available for investing in
future assets.

It’s no surprise, therefore, that Mamata asked for and got Rs 15,000 crore as support
from the government’s coffers against the Rs 10,000 crore her predecessor Lalu Prasad
had estimated in the interim budget.

Beyond West Bengal, the budget proposed a revamp of the Tatkal scheme, cutting the
advance period to two days from five, while also reducing the minimum mark-up to Rs
100 from Rs 150 and making it a percentage of the base fare rather than a flat
premium.

Highlights
• Tatkal revamped, advance period cut from 5 to 2 days, minimum premium
reduced from Rs 150 to Rs 100.
• 57 new trains, 27 extended, 13 made more frequent, 53 new lines being
considered. In addition, 12 non-stop long distance ‘Duronto’ trains. And AC,
seating long-distance Yuva trains for youth & low income passengers with cheap
tickets.
• Double-decker AC inter-city trains.
• Ladies only suburban trains for Delhi, Chennai and Kolkata.
• Rs 25 monthly ‘Izzat’ season ticket for distances up to 100km for poor.
• Student passes to be extended to madrasa students and to Kolkata Metro.
• 50 “world class” stations to be developed with public-private partnership. Also,
50 stations to have multi-functional complexes with shopping & budget hotels.
• 375 stations to be turned into ‘Adarsh stations’ with drinking water, toilet.
• On-board infotainment services for Rajdhanis, Shatabdis important distance
trains.
• Budget support to railways increased from Rs 10,000 cr to Rs 15,000 cr.

The impact of various populist measures announced by Mamata Banerjee as well as the
economic slowdown on the finances of Indian Railways has forced it to compromise on
investments that it will make during the year for future growth and efficiency. It has
pruned the appropriation to the depreciation reserve fund by Rs 1,675 crore to Rs
5,325 crore in 2009-10, as against Rs 7,000 crore in 2008-09. The fund is used for
replacing aging assets. The appropriation to capital fund, which boosts the reserves of
the corporation, has also been cut by a whopping Rs 4,322 crore to Rs 642 crore in the
current financial year, from Rs 4,965 crore in 2008-09.

However, the corporation decided to increase the dividend to the central government
by Rs 768 crore to Rs 5,479 crore, despite a dip of over Rs 3,000 crore in cash surplus on
account of a higher wage bill following implementation of the Sixth Pay Commission
award.

The cash surplus of the Railways during the current fiscal is estimated to dip to Rs
14,201 crore, from Rs 17,400 crore in 2008-09. The investible surplus of the corporation
is down by 36% to Rs 8,631 crore in 2009-10, from Rs 13,532 crore in the previous year.

Travel with ‘Izzat’: The scheme aims to provide an opportunity to the poorest of the
poor to travel with dignity. Under the scheme, a uniformly priced monthly season ticket
of Rs 25 would be available free of all surcharges for travel up to 100 km for members
of the un-organised sector with monthly income not exceeding Rs 1500.

‘Duronto’ to beat Rajdhani: For the first time in the history, non-stop train service is
being introduced in India. The non-stop train service 'Duronto' will have AC and non-AC
sleepers and will run between select cities throughout the country. The 12 new non-
stop fast trains announced by Mamata will take less time than even Rajdhani Express to
complete their journey.

Ladies special: Mamata proposed to run 'Only Ladies' EMU trains in Delhi, Chennai and
Kolkata on the lines of those in Mumbai during office hours in suburban services.
Women RPF personnel would be deployed for security of women passengers in trains.

List of new trains


1. Vishakhapatnam-Secunderabad-Mumbai Superfast (bi-weekly).
2. Sriganga Nagar-Delhi-Nanded Superfast (weekly)
3. New Jalpaiguri-Sealdah Superfast (tri-weekly)
4. Bangalore-Hubli-Solapur Superfast (tri-weekly)
5. Howrah-Bangalore Superfast (weekly)
6. Pune-Daund-Solapur Superfast (daily)
7. Ranchi-Howrah (3 days via Ghatshila-Kharagpur and 3 days via Asansol); intercity (6
days a week)
8. Kamakhya-Puri Express (weekly)
9. Jabalpur-Ambikapur Express (tri-weekly)
10. Gandhidham-Howrah Superfast (weekly)
11. Delhi-Sadulpur Express (tri-weekly)
12. Ajmer-Bhopal Express (by integration of 9655/56 Ajmer-Ratlam and 9303/04
Ratlam- Bhopal express trains) (daily)
13. Bilaspur-Tirunelveli Jn. (Thiruvananthapuram) Superfast (weekly)
14. Mumbai-Karwar Superfast (tri-weekly)
15. Durg-Jaipur Express (weekly)
16. Dibrugarh Town-Chandigarh Express (weekly)
17. Delhi-Farakka Express (bi-weekly)
18. Hazrat Nizmmudin-Bangalore Rajdhani Express (tri-weekly), via Kacheguda
19. New Jalpaiguri-Delhi Express (bi-weekly), via Barauni
20. Mumbai-Varanasi Superfast (daily)
21. Mysore-Yesvantpur Express (daily)
22. Koraput-Rourkela Express (daily) via Rayagada
23. Agra-Ajmer Intercity Superfast (daily)
24. Mumbai-Jodhpur-Bikaner Superfast (bi-weekly)
25. Agra-Lucknow Junction Intercity (daily)
26. Hapa-Tirunelveli Jn Superfast (bi-weekly), via Thiruvananthapuram
27. Gwalior-Bhopal Intercity Express (5 days a week), via Guna
28. Kanyakumari-Rameshwaram Express (tri-weekly), via Madurai
29. Howrah-Haridwar Superfast (5 days a week)
30. Varanasi-Jammu Tawi Superfast (daily)
31. Gorakhpur-Mumbai Superfast (daily)
32. New Delh-Guwahati Rajdhani Express (weekly), via Muzaffarpur
33. Veraval-Mumbai-link service
34. Ranchi-Patna Jan Shatabdi Express (daily)
35. Jhansi-Chhindwara Express (bi-weekly) via Bina-Bhopal
36. Mumbai-Jodhpur Express (weekly)
37. Jamalpur-Gaya Passenger (daily)
38. Jhajha-Patna MEMU (daily)
39. Kanpur-New Delhi Shatabdi Express (6 days a week)
40. Bhopal-Lucknow-Pratapgarh Superfast (weekly)
41. Lucknow-Rae Bareli-Bangalore Superfast (weekly)
42. Shimoga-Bangalore Intercity Express (daily)
43. Madurai-Chennai Express (bi-weekly)
44. Guwahati-New Cooch Behar Express Intercity (daily)
45. Balurghat-New Jalpaiguri Express (daily), via Kishanganj
46. Alipurduar-New Delhi Jalpaiguri Express Intercity (daily), via Siliguri
47. Dharmanagar-Agartala Fast Passenger (daily)
48. Rewari-Phulera Passenger (daily), via Ringus
49. Shoranur-Nilambur Road Passenger (daily)
50. Coimbator-Shoranur Passenger (daily)
51. Mathura-Kasganj Passenger (daily)
52. Farakka-Katwa-Azimganj-Nawadwip Dham Express (daily)
53. Bangalore-Kochuveli Superfast (weekly)
54. Kolkata-Rampurhat Express (daily)
55. New Jalpaiguri-Digha Express (weekly)
56. Purulia-Howrah Express (bi-weekly)
57. Kolkata-Bikaner Express (weekly), via Nagore

India’s population may touch 2 billion by 2101


India’s future population could be much more than what is currently estimated. The
latest demographic projections by the Population Foundation of India (PFI) and the
Population Reference Bureau (PRB), USA, predict that India may have a population of
two billion by 2101, posing huge challenges in terms of distress migration, pressures of
the numbers on land, employment and environment, prolonged poverty and changes in
the demographic balance.

The study makes two more alarming conclusions: the population of 60 plus would
exceed that of those aged between 0 and 14 years, leading to substantial future ageing
in India by 2051. Further, Uttar Pradesh, Bihar, Madhya Pradesh and Rajasthan would
account for almost half of the country’s population by 2101. These four States, with
their high fertility rate, currently account for 40 per cent of the country’s numbers,
and are characterised by low literacy levels and low health indicators such as high
infant and maternal mortality.

There is, however, a difference between population projections of India by the


Registrar General of India (RGI) and those by the PFI/PRB. Contrary to the RGI’s
projection of 1,399 million population of India by 2026, the PFI/PRB projections
indicate 1,464 million by the said year. The new demographic study puts the country’s
population at 1825 million in 2051, reaching up to 2181 (crossing the two billion mark)
by 2101.

These differences stem mainly from the assumed total fertility rates (TFRs) in the
country’s four most populous States—UP, Bihar, MP and Rajasthan. Whereas the PFI
study concludes that TFR of 2.1 will be achieved in UP between 2051-56; Bihar (2061-
66); MP (2041-46) and in Rajasthan between 2051-56, the RGI assumes these States
would achieve the TFR targets much earlier.

As per the PFI, India, with the final TFR of 1.85, will achieve two billion population by
2101; growth will peak in 2081-2086, after which the population decline will start. The
population of Kerala and Tamil Nadu would start declining in 2041-2051; that of Andhra
Pradesh and West Bengal would do so around 2061.

The study adds: “The priority for India should be to contain the unacceptably high
numbers of maternal and infant deaths, improve quality health services for institutional
deliveries; meet the unmet needs of family planning services and focus on adolescents
and youth (10 to 34 years) to make them productive through gender-sensitive
education.”

Current account swings to a surplus in March


India’s current account may have swelled to a surplus in the March quarter, but that
couldn’t dam a wider deficit for the 2008-09 fiscal as imports rose and exports fell
sharply due to the global slump.

Latest RBI data shows India’s current account, which captures trade flows, boasting of a
surplus of $4.75 billion during the quarter Jan-March 2009, as against a deficit of $1.5
billion in the year-ago period, meaning the country has received more dollars from
selling goods and services to foreign countries than it paid to buy them in this period.
But the current account deficit for 2008-09 widened to $29.82 billion, or 2.6% of the
gross domestic product (GDP), against the previous year’s $17.03 billion, or 1.5% of
GDP.

The capital account, meanwhile, ended in a modest surplus of $9 billion compared to


$108 billion in the previous year. Remittances also grew, but not at the same pace as in
the previous year. India’s balance of payment surplus—the sum of current and capital
accounts—saw a sharp drop to $300 million against $24.99 billion in the previous year
driven by dollar outflows due to FII selling in the stock market and repayment of short-
term foreign currency loans by domestic corporates.

EDUCATION
Three-tier educational tribunal in the offing
The long awaited Educational Tribunal Bill, recommended by the Supreme Court in the
TMA Pai judgement and even by the Law Commission, envisages a three-tier structure
to deal with disputes between students and institutions, teachers and institutions as
well as disputes related to affiliation, unfair means adopted by students in examination
and by institutions.

The Bill proposes a National Educational Tribunal (NET) at the top. It will have the
power to settle any dispute between a higher educational institution and any regulatory
body except in matters of recognition. It will also adjudicate any dispute between any
two or more statutory regulatory bodies. NET will also adjudicate any dispute related
to matters of affiliation between a higher educational institution and the affiliating
university, where such a university is a Central Educational Institution.

At the state level will be the State Educational Tribunal (SET). It will have original
jurisdiction to settle any dispute related to matters of affiliation between a higher
educational institution and the affiliating university. SET will also exercise original
jurisdiction to adjudicate a dispute related to any Central Educational Institution in the
state. It can call for records and pass orders in any matter either pending or already
decided by any District Educational Tribunal if it feels DET has overstepped its
jurisdiction.

SET will also adjudicate any matter referred it by DET where there is a difference of
opinion between the chairperson and member of DET. Either on a complaint or suo
motu, SET at any stage can transfer any case pending before DET to another DET within
the State. SET will exercise appellate jurisdiction over any matter decided by any DET
in the State.

At the lowest level will be DET. It will have the power to deal with grievances
expressed by a teacher or any other employee of a higher educational institution
against the management or governing body, provided the teacher or employee has
availed of all remedies available in the service rules.

Civil courts and High Courts will not entertain matters that concern the educational
tribunals. Chairperson of all tribunals would be judicial officers: a district judge for
DET, High Court judge for SET and Supreme Court judge for NET. Judges at all levels
can be either retired or serving.

FOREIGN RELATIONS
India, Japan to work together on climate change
Cementing their strategic ties, India and Japan, on July 2, 2009, agreed to cooperate
on pressing global issues of climate change, disarmament and non-proliferation while
moving ahead in negotiations to stitch a comprehensive economic partnership pact.

External Affairs Minister S.M. Krishna, during his visit to Japan, held wide-ranging
discussions with the Japanese side on a gamut of bilateral relations during the third
strategic dialogue he co-chaired with his counterpart Hirofumi Nakasone.

On the issue of climate change, which they identified as an "important global


challenge," India and Japan hoped that all countries would participate constructively
and work towards an "ambitious" outcome at a crucial meeting on a pact to replace the
Kyoto protocol in Copenhagen later this year. During his talks with Krishna, Nakasone
asked India to play a leadership role "even more positively and in a broader
perspective" at the UN-sponsored 'COP 15' meeting on climate change in December to
discuss a new agreement to replace the Kyoto Protocol.

Japan is keen to get India's cooperation on persuading industrialised and emerging


countries to iron out differences over how to fight global warming ahead of the
Copenhagen talks. The new pact, a successor to the 1997 Kyoto protocol, is
controversial because key polluters like the USA and Europe want emerging economies
to also help cut global gas emissions.

Prime Minister’s visit to France


The progress on the nuclear front, fight against terrorism, economic ties and science
and technology cooperation were high on agenda during Manmohan Singh’s visit to Paris
on July 13-14, 2009. An agreement on up-gradation of 51 French-made Mirage fighters
was also discussed. The IAF had inducted Mirages into its fleet in the mid-1980s and the
upgrade is intended to increase its service life by another 25 years. The visit also
helped in putting the nuclear agreement with France on fast track.

Prime Minister Singh was the first foreign dignitary to be the Guest of Honour at the
Bastille Day parade on July 14. German President Horst Koehler and Cambodia’s Prime
Minister Hun Sen also attended the parade. Several top foreign dignitaries have
attended the French National Day celebrations in the past but the Indian Prime Minister
was the first to be accorded the honour of being the Chief Guest.

Nearly 400 personnel from the Indian armed forces also participated in the parade in
Paris alongside the men from the French Army, marking the commemoration of Indian
soldiers’ participation on French side and in French territory during the two World
Wars.

At the parade, the bonhomie between Mr Sarkozy and Mr Singh showed despite the
contrast between their personalities: the flamboyant Sarkozy dressed in dark suit with
his stunning wife, model-cum-singer-turned-first lady Carla Bruni in tow, alongside the
genial and soft-spoken Singh in his trade-mark sky blue turban. The body language that
the two leaders shared was an indication of the importance that they attach to the
growing economic and international engagement between New Delhi and Paris that has
seen their heads of governments routinely visiting each other.

France, an enthusiastic backer of India at 2008’s Nuclear Suppliers Group (NSG) and
International Atomic Energy Association (IAEA) meetings that ended its isolation from
the civil nuclear mainstream, is one of the few countries besides the US and Russia with
whom India has signed a nuclear cooperation agreement. Both countries continued to
hold joint naval exercises even in the aftermath of the nuclear test and their level of
comfort came to the fore when France was selected as the Indian Air Force’s first
partner for joint fighter level exercises in 2003. Trade, cultural and people-to-people
contacts are areas both sides are working on and French companies have a long
presence in India.

India de-links terror from composite dialogue


After three hours of hard-nosed negotiations on July 16, 2009, India and Pakistan came
out with a joint statement in which New Delhi appears to have bent somewhat on its
earlier steadfast position of keeping the focus on terror. The statement, issued after
the meeting between Prime Minister Manmohan Singh and his Pakistani counterpart
Yousuf Raza Gilani, on the sidelines of the NAM Summit, recognised that terrorism was
the “main threat to both countries’’ but delinked the menace from the resumption of
the composite dialogue process.

In fact, India even agreed with the Pakistani formulation that it is also a victim of
terror. Both reaffirmed their resolve to cooperate on this issue and share “real-time,
credible and actionable information on any future terror attacks”.

On its part, Pakistan conceded some ground to the Indian negotiating team by dropping
any reference to Kashmir though there was an implicit mention to this issue in the
statement which said, “Prime Minister Singh said that India is ready to discuss all issues
with Pakistan, including all outstanding ones.”

Later addressing a press conference, Manmohan Singh sought to downplay the reference
to delinking terror from the dialogue process, saying New Delhi’s position on the issue
remained unchanged. “Pakistan wants the dialogue to begin. We said it can’t
commence unless action is taken against those who masterminded the Mumbai terror
attack,’’ he underlined.

Asserting that the joint statement could not be termed as surrender by India, the Mr
Singh said India wanted an assurance that acts like Mumbai would not recur. He
emphasised that the India-Pakistan normalisation process would fail to move ahead if
no action was taken by Pakistan to check terrorism emanating from its soil

However, he reiterated that India could choose its friends but not neighbours.
“Dialogue is the only way forward but the composite dialogue has its history…we need
to think over it.’’ There was no decision on the nature of dialogue and the issue would
be sorted out by the foreign secretaries.

Pakistan scored over India by muscling in a mention to the troubled Balochistan in the
statement. “Prime Minister Gilani mentioned that Pakistan has some information on
threats in Balochistan and other areas,” the statement said. Islamabad has persistently
accused India of fomenting trouble in its largest province in response to New Delhi’s
charge that the Pakistani territory was being used for launching terror attacks against
India.

Many in the Indian diplomatic establishment were sceptical about the language of the
joint statement, which clearly gave an impression that India had diluted its tough stand
on the issue of terrorism, but Mr Singh pushed through his agenda in keeping with his
stand that good neighbourly relation between India and Pakistan presented a win-win
situation for both of them.

Amid Pakistan’s attempt to cash in on the reference to Balochistan in the India-Pakistan


joint statement, Afghanistan dismissed Islamabad’s charge that India was backing
insurgency in Pakistan’s restive province. Visiting Afghanistan Foreign Minister Rangin
Dadfar Spanta pointed out that this was not a new claim by Pakistan. India had never
used the Afghanistan territory against Pakistan. Islamabad’s claim of India’s
involvement in Balochistan was absolutely false, he said.

Pak dossier owns up to two more 26/11 attackers


Islamabad has acknowledged that besides Ajmal Kasab, two more of the 10 terrorists
who attacked Mumbai on 26/11—Imran Babar and Abdur Rahman Chota—were Pakistani
nationals.
The acknowledgment is part of the 26/11 dossier Pakistan handed over to India in July
2009, which says that the nationality of Babar and Abdur Rahman were determined on
the basis of DNA samples.

This marked the first time Pakistan accepted that the attackers of Mumbai, Kasab
included, were its citizens.

Initially, Pakistan had contested Kasab’s disclosure about his being a citizen of village
Faridkot in Okara district. Though investigation by a television channel and, later,
statements of Kasab’s kin forced them to accept the fact, it is the first time the
acknowledgement has been made in a document handed over to India.

Pak dossier names 10 LeT foot soldiers, including Amjid Khan and Muhammad Usman,
whose involvement in the 26/11 attacks is ‘established beyond reasonable doubt’. It
says evidence ‘connects’ Zaki-ur-Rehman Lakhvi, al-Qama and Zarar Shah with the
attack. India sees the three as the men who planned the terror strike.

Imran Babar, one of the two terrorists that Islamabad acknowledged as a Pakistani
citizen, called up a TV channel after landing in Mumbai, posing as a member of Deccan
Mujahideen—a concoction meant to mask the involvement of Pakistani terrorists
belonging to Lashkare-Taiba. Babar had grabbed the mobile phone of Holtzberg Gavriel,
a resident of Nariman House. Gavriel was among those who were killed by Babar and his
accomplice at Nariman House.

Abdur Rahman Chota had headed for Oberoi Trident Hotel where he snatched the phone
of Rita Sanjay Agarwal of Malabar Hill, Mumbai. Rita was later killed by the terrorists.
Besides matching the DNA samples, the identities of Kasab, Babar and Abdur Rahman
was established also with the help of records of families and schools, statements of
family members and voter list. The finding about the nationalities of the three
terrorists also validates the statement given by Kasab, the sole attacker to have been
nabbed by Mumbai police on the fateful night.

Visit of Secretary of US State Hillary


On her two-day visit to New Delhi, in July 20, 2009, US Secretary of State Hillary
Clinton drove straight from the airport to ITC Green, an energy-efficient building in
Gurgaon, to make a case that India could grow without hurting the environment.
Besides environment issues she discussed defence sales, civil nuclear issues and NPT
during her various meetings with the Indian establishment. But, she made climate
change her top priority.
On climate change, India firmly reiterated its position that it was not in a position to
take on legally binding targets on reducing emissions. This statement came even as US
secretary of state Hillary Clinton accepted that developed countries had made
“mistakes”, but that all countries need to take steps to reduce emissions. Ms Clinton
was speaking at the ITC Green Building in Gurgaon on the first day of the Delhi leg of
her India visit.

India stressed that its position on the on-going climate change agreement negotiations
is “clear, credible and consistent”. “We are fully alive to our global responsibilities as
well. We have done detailed modelling, the results of which are being released very
soon. The results are unambiguous. Even with 8-9% GDP growth every year for the next
decade or two, our per capita emissions will be well below that of developed country
averages. There is simply no case for the pressure that we, who have among the lowest
emissions per capita, face to actually reduce emissions. As if this pressure was not
enough, we also face the threat of carbon tariffs on our exports to countries such as
yours,” said Jairam Ramesh, Union Minister for Environment.

Reaching out, Ms Clinton reassured that “the US does not and will not do anything that
will limit India’s economic progress. The challenge is to create a global framework that
recognises the different needs and responsibilities of developed and developing
countries alike.” Mr Ramesh reiterated that “India’s position is that we are simply not
in a position to take on legally binding emissions reductions targets”.

India and the US have agreed on “concrete partnerships” in the area of energy
efficiency. “I want to say that both sides have agreed on the need of partnerships,
concrete partnerships, on projects in various fields like energy efficiency, solar energy,
biomass, energy-efficient buildings of the type that you are seeing here today. We have
made a good beginning. We have taken a small step today. We will continue our
engagements in multilateral forums. But we will also have bilateral engagements,” Mr
Ramesh said.

Ahead of the Copenhagen conference later in 2009, India and the US agreed upon the
need for a "fair" agreement on climate change and discussed ways of collaborating in
the fields of environmental planning, regulation, management and forestry.

Ms Hillary assured that the US would not do anything to limit India's economic growth
and was aware of the concerns of the developing countries that needed to eradicate
poverty. She, however, said poverty eradication was possible with sustainable
development.

India listed three areas of cooperation with the US in the area of climate change—
research through an Indo-US Foundation for Climate Change; collaboration in
environment planning, regulation and management, and building institutional capacity
for continuing research on the subject.

During her visit to Mumbai, Hillary Clinton paid homage to the victims who lost their
lives in the terrorist attacks. In a symbolic gesture she stayed at Taj Hotel Mumbai.
Among those who met Clinton included 13 staff members of the Taj and Oberoi hotels
who were injured in the attack, including Taj General Manager Karambir Kang who lost
his wife and children in the terror strike.

She sought action against the ‘syndicate of terrorism’ in Pakistan and the perpetrators
of the Mumbai terror attacks, but defended Islamabad’s commitment to countering
terror. Ms Clinton expressed faith in the Pakistani establishment saying that there has
been an ‘evolving commitment’ on Islamabad’s part to take action against terrorism
and recognition within the country that terrorists are an internal threat.

“Over the last six months, in the course of working with the government of Pakistan,
we believe there is a commitment to fighting terrorism that permeates the entire
government. We are watching it and hope they will make progress against the syndicate
of terrorism, including the Al Qaeda, Taliban and the other groups,” she said.
In Delhi, Ms Clinton, apart from calling on Prime Minister Manmohan Singh, met UPA
Chairperson Sonia Gandhi and Leader of the Opposition L.K. Advani. She held bilateral
talks with External Affairs Minister S.M. Krishna.

During her visit the two countries signed several major accords, including an end-use
monitoring agreement to bolster high-end arms sales and another on space launches.

She assured India that the Obama administration will honour the Indo-US nuclear deal,
in letter and spirit. Dispelling all misgivings, she promised not to block transfer of
nuclear technology to India, nor deny enrichment and reprocessing technology (ENR) to
India. She also announced that Mr Manmohan Singh would be the first State guest at the
Obama White House on November 24, 2009.

India and USA identified two nuclear sites which will kick off US nuclear business in
India, but due to the fact that the Indian government would have to announce it in
Parliament first, Krishna could not take credit for the announcement. The sites are in
Andhra Pradesh and Gujarat. But for those sites to draw in US businesses — GE-Hitachi
and Toshiba-Westinghouse are looking at jobs, investment, big business — India will
first have to sign the IAEA’s liability convention that will enable US companies to do
nuclear business here. Clinton gently nudged the Indian government on this saying the
next step would be for India to sign the liability act on nuclear damage.

India makes fresh bid for UNSC seat


India launched a renewed campaign for a seat in the UN Security Council using the
forum of the G-8 Summit. In an unusually feisty article written for the compendium of
the G-8, Prime Minister Manmohan Singh said, “The Security Council has not changed at
all and its present structure poses serious problems of legitimacy. The system of two-
tiered membership, which gives a veto to the five permanent members—the nations
that emerged victorious after the Second World War—is clearly anachronistic.”

In his article, Mr Manmohan Singh made a strong case for reforming all international
institutions, from the Security Council to institutions of global and financial
governance. “The problems faced by the institutions of governance charged with
handling the financial system are also relevant for other international institutions
dealing with political and security issues, trade, climate change, etc. They need to
update structures and upgrade work methods; reform decision-making and ensure
effective delivery,” he said.

JAMMU & KASHMIR


Governor gives clean chit to Omar, tells him to continue
J&K Governor N.N. Vohra has conveyed to Chief Minister Omar Abdullah that, based on
the information supplied to him by the Union Home Ministry, there was no basis for him
to resign. Omar had, on July 28, 2009, submitted his resignation to the Governor
following the PDP allegations in the Assembly of his involvement in the infamous sex
scandal of 2006.

The Chief Minister in his meeting with the Governor had requested the Governor to
inquire, on a time-bound basis, into the allegations made against his moral character.
Omar had requested him to accept his resignation immediately in case the Governor
was satisfied that there was any basis therein.

The rejection of the Chief Minister’s resignation set at rest speculations and
uncertainty that had prevailed in the political circles. Omar had himself made it clear
that unless any final decision was taken there was no lowering of guard on the
functioning of the government.

Srinagar sex scandal had made headlines in 2006. CBI filed charge sheet against 36
people in the case, but the investigations threw up a huge list of people who needed to
be questioned. The case, being heard by a division bench, passed its verdict in October
2007 after CBI “concluded” investigations and submitted its 4,000-page findings. The
two judges—Justices B A Kirmani and Hakeem Imtiaz Hussain—were unanimous in
terming investigation lax and deficient and asked CBI why certain influential persons,
who had been named and identified by witnesses, were left out.

LAW POINT
Delhi HC says homosexuality not a crime
On July 2, 2009, India took a giant, albeit belated, step towards globalization when the
Delhi High Court delivered a historic judgement to amend a 149-year-old colonial-era
law—Section 377 of the IPC—and decriminalize private consensual sex between adults of
the same sex. It is the biggest victory yet for gay rights and a major milestone in the
country’s social evolution. India has become the 127th country to take the guilt out of
homosexuality.

In a judgement that has aroused strong reactions from religious and political groups,
the court declared that Section 377 IPC—where it ‘‘criminalized consensual sexual acts
of adults in private’’—violated fundamental rights to personal liberty (Article 21 of the
Constitution), equality (Article 14) and prohibition of discrimination (Article 15).

A bench comprising Chief Justice A.P. Shah and Justice S. Muralidhar clarified that the
provisions of Section 377, enacted in 1860 to deal with an unspecified range of
‘‘unnatural offences’’, would hereafter be restricted to non-consensual penile ‘‘non-
vaginal sex’’ (rape by a homosexual) and ‘‘penile non-vaginal sex involving minors’’
(paedophilia).

Upholding the petition filed by Naz Foundation, the court ruled: ‘‘Indian constitutional
law does not permit the statutory criminal law to be held captive by the popular
misconceptions of who the LGBTs (lesbians, gays, bisexuals and trans-genders) are. It
cannot be forgotten that discrimination is antithesis of equality and that it is the
recognition of equality which will foster the dignity of every individual.’’

LEGISLATION
Education Bill
Seven years after Parliament approved an amendment to the Constitution making
education for children between the age of six and 14 a fundamental right, the apex
legislative body has passed the Right of Children to Free and Compulsory Education Bill,
2009.

Though an initial draft of the legislation had been prepared by the NDA government,
progress was slow with early elections. With the BJP-led alliance voted out, the task of
honouring the commitment was left to the UPA government. A draft law was prepared
by a committee headed by the current Human Resource Development Minister Kapil
Sibal.

Once the Right of Children to Free and Compulsory Education Bill becomes an Act, the
86th Amendment to the Constitution will be notified. As of now, free and compulsory
education is part of the Directive Principles of State Policy.

Both the Centre and States will be responsible for the finances. The Centre will prepare
the capital and recurring expenditure and provide it as grants-in-aid to each State from
time to time. The share between the Centre and States will be decided later.

The cost to the exchequer will be nearly Rs 12,000 crore every year. Even private,
unaided schools will get assistance, as 25% of their seats will have to be reserved for
poor children in the neighbourhood. However, the Bill is clear that schools which got
land at a concessional rate and were anyway obliged to give reservation to 25% poor
children in the neighbourhood will not be compensated. Compensation will be based on
per-child expenditure by government on education. Currently, per-child cost borne by
government is about Rs 3,000 per annum.

The legislation has a host of features that stress not only on reaching out to every child
in the 6-14 age group, but also on quality and accountability of the State and education
system. To ensure that the law gets effectively implemented, the Bill has provisions
that prohibits teachers from undertaking private tuition and not letting them being
used for non-educational purposes. To ensure that parents have equal stake in the
system, the Bill provides for school management committees in all government and
aided schools. Women have been given 50% reservation in the school committees. Each
committee will monitor and oversee the working of the school, manage its assets and
ensure quality.

Every State government would have to compulsorily define and set up neighbourhood
schools to educate every child aged six to 14 years. For this, the States will receive
financial assistance from the Centre. The Centre has left it to States to define
“disadvantaged groups”, mandating the inclusion of disabled children in this category.

The law puts the onus on States to notify its historic requirements—no child can be
expelled from school or be put through any exam, not even class V and VIII boards; no
child can be denied admission to any school for lack of birth or transfer certificate; no
capitation fee can be charged. Also, the States will have to ensure no non-teaching
work is given to teachers and quality teachers are recruited; untrained teachers would
have to upgrade themselves in five years.

For the first time, quality of schools has been mandated under law, with the
government listing minimum infrastructure requirements on the part of schools. It has
asked the States to identify schools that don’t conform, asking them to do so in three
years or face de-recognition.

There is also a provision that teacher vacancy should never exceed more than 10% of
the total strength. To monitor implementation of the law, the Bill proposes a National
Advisory Council at the Centre and State advisory council in each State capital. In case
of complaints of non-compliance, the initial complaint would go to local authority and
should be resolved within 90 days.

Nuclear Bill on civil liability


The proposed bill on nuclear civil liability—very high on the US priority list with India—
to cover accidents in nuclear installations will limit monetary accountability of the
operator to Rs 300 crore, while damages in excess will be borne by the Indian
government.

The limited liability clause could bring cheer to multinationals who are looking at
billions of dollars worth of business in India. Fixing the liability on operators is
important to US firms who are looking to supply nuclear reactors at Andhra Pradesh and
Gujarat as otherwise they cannot avail of insurance. With operators, not suppliers,
responsible for liability commitments, US firms can go ahead with their business
contracts.

The proposed Bill, besides limiting the liability of the operator, gives flexibility to
central government to decrease compensation amount on the operator. But in what
could be of significance, the Bill states that in each case where the government
decides to decrease the liability, it “shall not be less than Rs 100 crore”. The amount of
liability shall not include any interest or cost of proceedings.

The bill debars civil courts from entertaining any suit or proceedings in respect of any
matter which the claims commissioner is empowered to adjudicate.

The setting up of a six-member nuclear damage commission has been proposed to look
into the claims. The chairperson and members of the commission shall be appointed by
the central government on the recommendation of a three-member committee headed
by the cabinet secretary and having secretaries from the department of atomic energy
and the ministry of law as the other two members.

The chairperson of the commission will be a person who will be qualified to be a judge
of a High Court.

POLITICAL
No dilution in foreign policy, says Manmohan
Prime Minister Manmohan Singh, July 17, 2009, had difficulties in selling the idea of an
engagement with Pakistan where the action on terror was delinked from the composite
dialogue process. He claimed that there was no dilution on India’s stand on cross border
terrorism and that ‘meaningful dialogue’ with Pakistan would depend on steps taken by
Islamabad to end cross border terrorism.

BJP leader Arun Jaitley, during his clarification, had pointed out that India’s consistent
position on cross-border terrorism and use of terms like State-sponsored terrorism were
at variance with what is stated in the joint statement on delinking terror issues from
the composite dialogue process. He further pointed out that India’s national
commitment is going to be the joint statement and not other statements.
The Indo-Pak joint statement said that “action on terrorism should not be linked to the
composite dialogue process and these should not be bracketed.”’ This is followed by a
line that says India is “ready to discuss all issues with Pakistan, including all outstanding
issues.”

The reference to Baluchistan in the joint statement also invited criticism as Pakistan
for long has accused India of fomenting trouble. There is acknowledgment that New
Delhi’s concession to Pakistan will enable it to claim parity with India as a terror
victim.

Mr Singh in a statement in both Houses of Parliament maintained that a “meaningful


dialogue” would depend on Islamabad fulfilling its pledge on terrorism “in letter and
spirit”. “It has been and remains our consistent position that the starting point of any
meaningful dialogue with Pakistan is a fulfillment of their commitment, in letter and
spirit, not to allow their territory to be used in any manner for terrorist activities
against India,’’ he said.

The Prime Minister further said that India would take the call on broadening the
dialogue with Pakistan. “Whether, when and in what form we broaden the dialogue
with Pakistan will depend on future developments,’’ he said, and added that the
foreign secretaries would meet often and report to the Foreign Ministers who will meet
on the sidelines of the United Nations General Assembly.

Mr Singh further maintained that he got an assurance from Mr Gilani on bringing the
perpetrators of the Mumbai terror attack to justice and that he had been told that
there is growing consensus within Pakistan against the terror infrastructure.

Invoking his predecessor Atal Behari Vajpayee, Prime Minister Manmohan Singh, on July
29, 2009, silenced the critics of his recent foreign policy initiatives in the Opposition,
asserting that there was no dilution in India’s stand on terror while strongly pitching for
remaining engaged with Pakistan in the larger interest of peace in South Asia.

Setting at rest fears that India had capitulated to Pakistan by agreeing to delink terror
from the composite dialogue process, the Mr Singh explained ‘’this is not correct. The
joint statement emphasised that action on terrorism cannot be linked to dialogue.
Pakistan knows very well that action on terror is an absolute and compelling imperative
that does not depend on the resumption of dialogue.’’

On the controversial reference to Balochistan in the joint statement, he said his


Pakistani counterpart Yousaf Raza Gilani raised the issue during their Sharm-el Sheikh
meeting. “I told him we are willing to discuss all these issue because we know we are
doing nothing wrong. I told PM Gilani that our conduct is an open book.”

Underlining that dialogue was the best way to move forward, he asserted that India was
not diluting its resolve to defeat terrorism by talking to any country. “Unless we talk
directly talk to Pakistan, we will have to rely on third parties to do so,” a route which
has its own limitations.

In this context, he cited the example of Vajpayee, recalling how his predecessor
demonstrated political courage of visiting Lahore in 1999, which was followed by the
Kargil conflict, and the hijacking of an Indian Airlines plane to Kandahar. Still Vajpayee
invited then Pakistan Pervez Musharraf to Pakistan in July 2001 and tried to make
peace.

Noting that the global scenario was changing fast, he narrated how the US and Iran had
also come to the negotiating table after 30 years of hostilities. “Unless we want to go
to war with Pakistan, dialogue is the only way out,” he added.

SCANDALS
R.K. Anand is guilty: SC
Talking tough on the deteriorating professional standards among lawyers, the Supreme
Court upheld the punishment awarded to the noted criminal lawyer R.K. Anand for
influencing a key witness in the BMW hit-and-run case. The court asked the Bar Council
of India and the Bar Councils of the States to take remedial measures for restoration of
the professional standards among lawyers for proper dispensation of criminal justice
system in the country.

Dismissing the appeal of Anand, a bench comprising Justice B.N. Agrawal, Justice G.S.
Singhvi and Justice Aftab Alam said, “the sting recordings were rightly made the basis
of conviction and the irresistible conclusion is that the conviction of R.K. Anand for
contempt of court is proper legal and valid calling for no interference”.

The court sought within two months a reply from Anand as to why his punishment
should not be enhanced which may include a jail term and extending of his period of
prohibition from appearance in the Delhi High Court and its sub-ordinate courts. “He
does not show any remorse for his gross misdemeanour and instead tries to take on the
High Court by defying its authority,” the bench said entertaining the plea of
enhancement of Anand’s punishment in the case.

The bench, however, allowed the appeal of special public prosecutor I.U. Khan who was
convicted for criminal contempt for colluding with the defence in the case. The court
also set aside the fine slapped on Khan and asked the full court of the Delhi High Court
to consider the issue of stripping of Khan’s status of a senior advocate.

The Delhi High Court, on August 21, 2008, had prohibited both Anand and Khan by way
of punishment, from appearing before it and its sub-ordinate courts for a period of four
months. It, however, left them free to carry on their other professional work, such as
consultations, advises, conferences, opinion etc. It had also said the both Anand and
Khan had forfeited their right to be designated as senior advocates and recommended
to the full court to divest them of the honour.

TERRORISM; LAW & ORDER


ISI spreading terrorism in India, says US
A top US military strategist has affirmed that Pakistan has been fomenting terrorism in
India and Afghanistan, endorsing New Delhi’s and the Indian Army’s long-held view at a
time when the two neighbours are sparring over the issue. The damning public US
indictment of Pakistan’s use of terrorism came from US Admiral Mike Mullen, who told
the Arabic television network Al Jazeera, ahead of his meeting with General Deepak
Kapoor, that in the long run the ISI has to change its strategic thrust, which has been to
foment chaotic activity in its border countries.

When the surprised anchor asked, ‘‘What do you mean when you say the ISI has had a
strategic thrust to foment chaos in bordering countries?’’ Mullen did not mince words.
‘‘What I mean is that they have clearly focused on support of ... historically, of militant
organizations both east and west. I mean that’s been a focus of theirs in Kashmir,
historically, as well as in FATA. And I think ... that fundamentally has to change.’’

Mullen’s observations are critical because Pakistan has lately taken to accusing India of
fomenting insurgency in Balochistan and even backing the Taliban to offset its
indictment in Kashmir, charges that have been scoffed at in both New Delhi and
Washington. The prevailing Pakistani narrative, encouraged by some of its high
officials, is that India and Afghanistan are in cahoots with Washington in destabilizing
Pakistan, including the use of Pakistan’s own proxy, Taliban, against it.

Islamabad has also complained repeatedly to the US about the strong Indian influence
in Afghanistan where Pakistan is now largely despised, except in Taliban strongholds.
There is palpable agitation in Pakistan over closer military ties between New Delhi and
Washington, even though many in India itself are still leery and distrustful about the
US.

Kasab confesses, names Pak masters


Springing a surprise on the 65th day of 26/11 attack trial, lone surviving Pakistani
terrorist Mohammad Ajmal Kasab pleaded guilty before a special court on the charges
of executing the terror strikes in Mumbai along with his accomplices, that claimed over
180 lives. He followed up his confession with a plea for an early sentence.

22-year-old Kasab, who had earlier backed off from his police confession admitting his
role in the Mumbai mayhem stating that it had been made under duress, confessed
before the court mid-way through the hearing, admittedly upon discovering that
Islamabad had accepted his Pakistani nationality. He confirmed to the judge that that
he was not confessing under duress.

Kasab’s confession began right from his journey from Karachi on the Lashker-e-Taiba-
orchestrated terror mission and narrated the entire sequence of events leading up to
Mumbai carnage, including terror training of the attackers at Pakistani camps, their
boarding the rogue ship Al Husseini from Pakistani waters, hijacking an Indian vessel
midsea and then landing on the Mumbai coast in a boat along with nine other terrorists.
Importantly, he claimed that an Indian named Abu Jindal had taught Hindi to the
Mumbai attackers during their training in Pakistan.

Kasab, in his confession, described in detail how the 10-member LeT attack team split
into smaller groups after landing in Mumbai, with he getting paired with terrorist Abu
Ismail, and the two went on to fire indiscriminately at the CST station, before
proceeding to Cama Hospital, killing ATS chief and Mumbai top cops Vijay Salaskar and
Ashok Kamte, and then driving away to Girgaum Chowpatty.

Kasab’s sudden confession came as a complete surprise to the prosecution. Special


public prosecutor admitted he was “surprised” at the “unexpected” confession, but
added nevertheless that it had come has a big victory for the prosecution. Even Judge
Tahiliyani seemed to have been taken aback by Kasab’s decision to plead guilty and
called lawyers from both sides to figure out the significance of the under-trial’s
statement.

Pakistan, however, questioned the “quality” of Kasab’s confessions. “They


(confessions) are no evidences. These were provided by a person who is behind the
bars. We cannot crackdown on people based on his statements,” Pakistan’s Defence
Minister told a private TV channel. The statement has raised questions about Pakistan’s
sincerity.

Maoists plan to take battle to new fields


If the Centre has its action plan ready to deal with Maoists, the Red ultras have a
counter-plan in place which talks about expanding their “guerrilla war to new areas” to
“disperse the enemy force (security personnel) over a sufficiently wider area”.

Taking note of what Home Ministry has planned to counter them, the politburo of CPI
(Maoist)—an umbrella organisation of naxal outfits in the country—in its meeting on
June 12, 2009 came out with a detailed plan, asking its armed wing, People Liberation
of Guerrilla Army (PLGA), to carry out “tactical counter-offensives” keeping in mind
strengths and weaknesses of government forces.

A copy of the naxals’ plan was seized by security agencies during operations in
Jharkhand, Chhattisgarh and Orissa. It explains how the ultras are fanning out to
different States to deviate police and paramilitary forces from Abhujmaad—an area
comprising nearly 4,000 sq km of dense forest in Chhattisgarh, considered to be the
Maoists’ safest base.

Though the politburo considered government forces to be “superior”, it noted that that
it would be difficult for the Centre to send enough forces required by each state in near
future as raising of central forces would take time. “Keeping this in mind, we have to
further aggravate the situation and create more difficulties for the enemy (security)
forces by expanding our guerrilla war to new areas, on the one hand, and intensify the
mass resistance in existing areas so as to disperse the enemy forces over a sufficiently
wider area,” the Maoists’ politburo said. Realising that any mistake on their part would
be utilised by government forces to isolate them, the politburo has issued certain dos
and don’ts for its cadre.

Mumbai blasts case


A special court set up under the Prevention of Terrorism Act (POTA) has found three
persons guilty of carrying out two bomb blasts at Zaveri Bazaar and the Gateway of
India in Mumbai on August 25, 2003 and has sentenced them to death.

Judge M.R. Puranik of the special court found the three—Hanif Sayyed, 46, his wife
Fahmeeda, 43, and Ashrat Ansari, 32—guilty. Three other persons had been let off
earlier by the court. One of the three, the daughter of the Sayyed couple who was a
minor at the time of the incident, was made an approver in the case. This is said to be
the first instance of a couple being found guilty under POTA. The two have another
daughter who was four years old at the time of the incident.

The blasts claimed the lives of 52 persons injured 184 others. According to the
prosecution, the trio was responsible for attempting to set off a series of bomb blasts
across Mumbai in retaliation for the 2002 post-Godhra riots in Gujarat. They were part
of an outfit called the Gujarat Revenge Force formed to carry out the attacks.

Apart from the blasts at Gateway of India and the Zaveri Bazaar, the three had
allegedly planted explosives at the Santa Cruz Export Processing Zone in December
2002 and in a BEST bus some weeks before the deadly blasts. While the bomb at SEEPZ
was defused, the blast in the bus claimed two lives.

Investigators probing the blasts had first picked up Ansari whose interrogation led them
to the Sayyed couple and their daughter. Two others, Rizwan Ladoowala and Hassan
Batterywala, who were also arrested in connection with the case, were let off following
an order of the Supreme Court in 2008. According to the prosecution a third accused
Nisar Ahmed, who was the brain behind the blasts, was killed in an encounter shortly
after the others were arrested.

Pak admits LeT hand in Mumbai attack


Pakistan has finally admitted the complicity of Lashker e Taiba in the 26/11 terror
strikes on Mumbai and has filed a charge-sheet against the plotters of the attack.

The second and supplementary charge-sheet in the 26/11 case, filed by the Pakistani
investigating authorities in the Adiala court, names five LeT operatives, including
operations chief Zaki-ur-Rehman Lakhvi and communications head Zarar Shah, as
accused in planning and launching the Mumbai strikes. The five—Lakhvi, Shah, Abul Al
Qama, Shahid Jamir Riaz and Hamad Amin Sadiq—will be tried in the anti-terror court in
the garrison city of Rawalpindi. The trial will held in camera within the high-security
Adiala Jail for security reasons.

The supplementary charge-sheet came close on the heels of Pakistan’s admission in a


fresh 36-page dossier submitted to India, that LeT indeed was the terror outfit that had
launched the daring attack on November 2008. This was after investigations by
Pakistan’s Federal Investigation Agency (FIA) confirmed the findings of the Indian probe
linking LeT bosses in Pakistan to the 26/11 mayhem. While the latest charge-sheet
names Zaki-ur-Rehman Lakhvi as the main mastermind, Zarar Shah is described as the
leader in charge of LeT’s communications and Ajmal Amir Kasab identified as a
Pakistani national.
CURRENT INTERNATIONAL AFFAIRS

AFGHANISTAN
US launches biggest operation against Afghan Taliban
On July 2, 2009, thousands of US marines stormed deep into Taliban territory in an
Afghan river valley, launching the biggest military offensive of Barack Obama’s
presidency. The marines said that Operation Khanjar, or Strike of the Sword, will be
decisive and is intended to seize virtually the entire lower Helmand River valley, the
heartland of the Taliban insurgency and the world’s biggest opium poppy producing
region.

The Taliban has vowed to fight back. “Thousands of Taliban mujahideen are ready to
fight US troops,” Mullah Hayat Khan, a senior Taliban commander, said. Meanwhile,
Pakistan’s army deployed more troops to a stretch of the Afghan border to stop Taliban
militants fleeing the major US offensive in Afghanistan.

CHINA
Uighur unrest
China faced its worst unrest in decades in July 2009 when tensions between the
dominant Han Chinese and the Turkic-speaking, Muslim Uighurs descended into violence
in the regional capital of Urumqi. Nearly 200 people died in the unrest. Chinese
officials said that police killed 12 people during July 5 rioting—a rare acknowledgment
by the government that security forces opened fire in the worst ethnic clashes to hit
the region in decades.

The chairman of the Standing Committee of the Xinjiang Regional People's Congress
blamed the riots on "three forces"—extremism, separatism, and terrorism—both at home
and abroad. Eligen Imibakhi, the top legislator in Xinjiang, said authorities will speed
up local legislation against separatism in the western region that has a long-running
independence movement by minority Uighurs. He added that the public's lack of
understanding about laws is also an "urgent problem," and the government plans to
distribute legal booklets in ethnic minority languages to farmers and herdsmen across
the region.

The violence began when police in Urumqi intervened at a peaceful protest by Uighurs,
who went on a rampage, smashing windows, burning cars and beating Han Chinese. Two
days later, vigilante groups of Han took to the streets and attacked Uighurs.

Even as additional security personnel and machinery poured into Urumqi, the capital of
western Xinjiang province, the Chinese foreign ministry got into action asking several
countries, including Pakistan, to prove their friendship by taking a stand on the issue.
Beijing wants several countries to unearth the links between their citizens and the
World Uighur Congress, which Beijing claims is behind the violence in Urumqi. The
government had earlier issued a white paper, which claimed that several Xinjiang
terrorists were trained in training bases in Pakistan.

A worried Hu Jintao, President of China, left the G-8 summit in Italy and rushed back to
Beijing as it dawned on Chinese authorities that the Urumqi violence might set off a
chain reaction and eventually affect the party position.

NIGERIA
Troops rout ‘Taliban’, kill 200
On July 30, 2009, Nigerian forces put Islamist extremists to fight in a brutal all-out
assault on their northern stronghold after an uprising led to clashes that have left
hundreds dead. Nigerian troops raided the Islamists headquarters in the northern city of
Maiduguri, killing some 200 followers of the self-styled Taliban sect, along with its
deputy leader.

Maiduguri has seen the worst of the unrest in northern Nigeria which started in nearby
Bauchi State. At least 600 people have been killed in the clashes in Borno and three
other northern States, according to figures from police and witnesses.

Boko Haram, also called ‘Nigerian Taliban’, is a sect led by Mohammed Yusuf, an
Islamic scholar who wants sharia law across Nigeria. Based in Maiduguri, his followers
include former university lecturers and students as well as illiterate, jobless youths.
Mohammed Yusuf is in his mid-30s and has considerable wealth. His followers say he
was educated in Iran.

Boko Haram means “western education is sinful” in Hausa language. Boko Haram
followers pray in separate mosques and believe their wives should not be seen by any
men other than themselves Nigeria has equal numbers of Christians and Muslims. In
2002, 215 died in rioting in Kaduna after a newspaper article suggested Prophet
Mohammad would have married a beauty queen at a Miss World contest held in Abuja. A
protest against Danish cartoons of the Prophet in 2006 sparked riots, killing 157.

PAKISTAN
Emergency was unconstitutional: SC
In a landmark judgement, the Pakistan Supreme Court on July 10, 2009, declared as
illegal and unconstitutional the emergency imposed on November 3, 2007, by former
President Gen Pervez Musharraf and all his subsequent actions, including sacking of 60
judges.

The judgement, which has far reaching legal and political implications, termed
Musharraf a “usurper” whose actions were subversive of the Constitution. The
imposition of provisional Constitution order (PCO), under which Musharraf purged the
judiciary and packed it with pliant judges, was also declared unconstitutional.

In a significant move, the apex court allowed protection to some of Musharraf's actions,
including holding of general elections, oath administered by Justice Dogar to President
Asif Zardari and the ordinance creating command and control authority for security and
safety of country's nuclear assets.

Prior to announcing the judgement delivered by a 14-judge bench, Chief Justice Iftikhar
Chaudhry declared that the court was looking forward to a kind of verdict which should
not be disruptive. “Huge unconstitutionality and illegality had taken place under
Musharraf's emergency,” he observed, adding: “But we have to be very careful in order
not to rock the boat and destroy the democratic system.”

The court also declared as illegal the action of the present PPP government to enhance
the number of judges of the Supreme Court from 17 to 29 through the Finance Bill that
contained the budgetary proposals in June 2008. The creation of Islamabad High Court
was also declared unconstitutional as this step required a Constitutional amendment by
Parliament and not through the amendment introduced by Musharraf as the army chief.

The judgement was widely acclaimed across the country and people raised slogans, and
distributed sweets. President Asif Zardari welcomed the judgement and promised to
implement it.

USA
Hillary spells out US international agenda
Secretary of State Hillary Rodham Clinton delivered a major foreign policy speech in
Washington in July 2009, in which she pledged her commitment to "smart power" while
acknowledging an international agenda that is "unforgiving."

Speaking at the Council on Foreign Relations, Clinton noted that the wars in Iraq and
Afghanistan, conflict in the South West Asia, ongoing threats of violent extremism and
nuclear proliferation, global recession, climate change, hunger and disease, and a
widening gap between rich and poor are all challenges that affect America's security
and prosperity. "And all threaten global stability and progress." she said.

In approaching these foreign policy challenges, she said, the US has to deal with the
urgent, the important and the long-term all at once.

She was confident that the Obama administration had the right strategy, the right
priorities and the right policies. "We have the right President. And we have the
American people, diverse, committed, involved and open to the future," she said.
Defending the administration's willingness to talk with perceived foes of the US, she
said this was not a sign of weakness to be exploited. "We will not hesitate to defend our
friends, our interests and above all our people, vigorously and when necessary with the
world's strongest military," she said.

Discussing Afghanistan and Pakistan, Clinton said the US was committed to disrupting,
dismantling, and ultimately defeating Al-Qaida and its extremist allies. Yet, she
admitted, "Americans often ask as to why do we ask our young men and women to risk
their lives in Afghanistan when Al-Qaida's leadership is in neighbouring Pakistan?" She
went on to answer that question, saying, "We and our allies fight in Afghanistan
because the Taliban protects Al-Qaida and depends on it for support, sometimes,
coordinating activities. In other words, to eliminate Al-Qaida, we must also fight the
Taliban."

Priorities of Obama administration

• Reverse the spread of nuclear weapons, prevent their use, and build a world
free of their threat.
• Isolate and defeat terrorists and counter violent extremists while reaching out
to Muslims around the world.
• Encourage and facilitate the efforts of all parties to pursue a comprehensive
peace in South West Asia.
• Pursue global economic recovery and growth — by strengthening the US
economy, advancing a robust development agenda, expanding trade that is free
and fair, and boosting investment that creates decent jobs.
• Combat climate change, increase energy security, and lay the foundation for a
prosperous clean-energy future.
• Support and encourage democratic governments that protect the rights of and
deliver results for their people.
• And stand up for human rights everywhere.

INTERNATIONAL ECONOMY
IMF pegs 2010 global growth at 2.5%
The International Monetary Fund (IMF) has raised its 2009 growth forecast for Asia's
developing economies from 4.8% to 5.5% but cautioned that a sustained rebound will
depend on recovery in developed economies. It cited improved prospects for regional
giants China and India. In a report, it raised its 2009 growth outlook for China by one
percentage point to 7.5%, and for India by 0.9 percentage points to 5.4%.

IMF also raised its outlook for the global economy in 2010, but said recovery from the
worst recession since World War II would be sluggish. The IMF boosted its 2010 global
growth forecast to 2.5%, an improvement of 0.6 percentage point from its April
forecast. The updated IMF forecast was marginally worse for 2009, showing a
contraction of 1.4% across the global economy.

IMF to issue bonds to combat crisis


The International Monetary Fund has decided to issue bonds for the first time in its 60-
year history in an effort to win contributions from emerging economies such as China,
Brazil and Russia. China has already said it will invest $50 billion, while Russia and
Brazil have pledged $10 billion each through the new bond offer. It would mark the first
time that developing countries have made contributions to the IMF. The bonds will be
issued in the IMF’s own currency, known as Special Drawing Rights, which is based on a
basket of currencies made up of the dollar, euro, yen and British pound. The bonds will
be issued for a maximum of five years.

Thanks to Asia, economic crisis is rolling back: UN


The current economic crisis is rolling back due to the significant progress made by
countries in Asia like India and China, according to a top UN official. The financial
stimulus packages and reforms announced by these countries could help in creating a
more integrated and coordinated Asia and the Pacific that builds up on collective
regional strengths and resources. During the course of the UN Economic and Social
Council session in Geneva, UN Economic and Social Commission for Asia and the Pacific
(ESCAP) Executive Secretary Noeleen Heyzer highlighted the need for appropriate
investments in infrastructure to create economic corridors that link less developed
countries to economic centres in the region, thereby increasing intra-regional trade.
Heyzer added that her organization has responded to the crisis by encouraging policies
that include social programmes such as health coverage, pensions, education and
agricultural extension services, as well as investment in small and medium scale
enterprises.

ENVIRONMENT
Climate talks stall as West asks India, China to cut emissions
Attempts to forge a global consensus to battle climate change suffered a serious
setback as developed countries tried to wriggle out of any short-term commitment to
reduce greenhouse gas emissions and instead, demanded that developing economies
such as India and China accept emission reduction targets.

At a meeting of the Major Economies Forum in Rome on July 9, 2009, the developed
countries tried to renege on their commitment to use 1990 as the base year for
reducing emissions. Nor would they spell out what quantum of commitments they would
accept in the run-up to 2020. The developed nations insisted that India, China and
other emerging economies like Brazil and South Africa agree to a long-range target for
reduction of GHGs with the burden-sharing formula remaining ambiguous.

Sources termed the deliberations at the Rome meeting as “tense” with India and China
having to join hands to counter pressure from the developed world led by the US. The
India-China partnership had staved off a similar challenge at the Bonn climate change
talks.

India blinks on emission caps


At the Major Economies Forum (MEF) meeting in Italy, India has gone back on some key
principles— like a refusal to accept emission caps—that it had held to be non-negotiable
till just before the G8 meet in Italy. In the course of some tough negotiations, India
appears to have relented in the face of pressure from industrialized countries. Its
biggest compromise at the MEF was to accept that all countries would work to reduce
emissions in order to not let global temperatures rise more than 2°C above pre-
industrialization levels.

When this declaration, signed by PM Manmohan Singh, is turned into targets for
different countries, this may imply substantial emission reduction targets for India even
if rich countries take a hefty 80% cut in their own emissions by 2050. While an 80% cut
is the most ambitious target ever considered for the developed world, India and China
would still be faced with large cuts.

Till date, India had insisted that the science behind the 2°C target has been questioned
even by the UN climate science panel. It demanded that unless rich nations put figures
on the table about what sort of reductions they were willing to accept collectively by
2020, and then again by 2050, India would not agree to any commitments for the long
term which the 2-degree agreement places on them.

According to several Indian observers, the recent decision would tie India’s hands as it
goes into talks at the formal UN negotiations. India for the first time has officially
agreed that there is a global target and it may now, in due course, spell out what it will
take to reach it. Now the global target of emission cuts instead of equity would become
the over-arching argument in the negotiations.

N-PROLIFERATION
Myanmar close to testing N-bomb
As world concerns remain focused on the clandestine nuclear programme of North
Korea and Iran, reports are filtering in of Myanmar’s isolated military junta may be just
a few years from testing its first atomic bomb. The key far-eastern nation is building a
secret nuclear reactor and plutonium extraction facilities with North Korea’s help,
Sydney Morning Herald has reported citing two key junta defectors. The Herald
identified the two defectors as an officer with a Myanmar army’s secret nuclear
battalion and the other a former executive and leading regime business partner, Htoo
Trading, who handled nuclear contracts with Russia and North Korea.

The Myanmarese military is said to have the reactor located in mountain caves inter-
linked by deep tunnels at Naung Laing in Northern part of the country, apparently to
camouflage it from detection by satellites.

The secret complex, the paper said, runs parallel to a civilian reactor being built at
another site by Russia, which both Moscow and Yangon authorities say will be put under
international safeguards.

The revelations by the Australian Daily come as US Naval Warships recently shadowed a
North Korean commercial vessel bound for Myanmar, suspecting it to be carrying
contraband nuclear and missile components. However, the ship was not intercepted.
China and other Asian nations had helped persuade Myanmar to turn back the North
Korean freighter.
A month back Japanese police had arrested a North Korean and two of its own nationals
allegedly trying to export illegally to Myanmar magnetic measuring device that could be
used to develop missiles.

Washington, the report said, is increasingly concerned that Myanmar is the main
nuclear proliferation threat from North Korea, after Israel destroyed in September 2007
a reactor that North Koreans were apparently building in Syria.

INTERNATIONAL RELATIONS
Medvedev threatens US over missile shield
Russian President Dmitry Medvedev has warned the United States that if it did not
reach agreement with Russia on plans for missile defence systems, Moscow would
deploy rockets in an enclave near Poland. In sharp contrast to his positive words during
President Barack Obama’s visit to Moscow in first week of July, 2009, when the two
reached broad agreement on nuclear arms cuts, Medvedev used a news conference at
the G8 summit to return to Russia’s earlier tough rhetoric on arms control.

Referring to an order he gave in early 2009 to prepare deployment of short-range


Russian missiles in the western enclave of Kaliningrad to answer to any U.S. deployment
of a missile shield in central Europe, Medvedev said: “If we don’t manage to agree on
the issues, you know the consequences. What I said during my state of the nation
address has not been revoked.”

In Moscow, Medvedev and Obama agreed a target for cuts in nuclear arms and a year-
end deadline for a reduction deal. Obama had praised Medvedev as a “straightforward
professional” leader. Before his Moscow visit, Obama had made clear, though, that he
would not accept any effort by Moscow to link arms control to missile defence, and
reiterated Washington’s stance that any system would be to protect against a threat
from Iran, not from Russia.

Obama meets Putin


US President Barack Obama held his first meeting with Russian Prime Minister Vladimir
Putin in Moscow on July 7, 2009, and hoped that talks between them would put
bilateral relations “on a much stronger basis”.

Obama, on his first visit to Russia since becoming President, met Putin at the Prime
Minister’s country residence, a day after inking a landmark strategic arms reduction
treaty with President Dmitry Medvedev. After exchanging pleasantries, Putin told
Obama that Russia is hoping for better relations with the US, following the
disagreements that arose with the previous administration. Obama said the meeting
provided an opportunity to “put US-Russian relations on a much stronger basis”.

Ties between the two Cold-War rivals have been marked with several strains, including
over arms control, NATO expansion, and US missile defence plans for Europe. The two
leaders had traded barbs ahead of the US President’s visit, with Obama terming Putin a
man who has ‘one foot in the past’ and the Prime Minister responding by saying that
‘Russians do not stand with feet apart’.

SUMMITS
G-8 summit
On July 8, 2009, G-8 leaders held their summit meeting at L’Aquila, a mountain town in
Italy. According to the summit draft, G8 leaders believe the world economy still faces
“significant risks” and may need further help. The draft also reflected on failure to
agree climate change goals for 2050.
Discord over environmental measures was underlined by withdrawal from the meeting
of Chinese President Hu Jintao, who returned to Beijing because of unrest in north-
western China in which 156 people were killed.

The Group of Eight—United States, Germany, Japan, France, Britain, Italy, Canada and
Russia—kicked off with debate on the economic crisis, after what one analyst called a
“reality check” in recent times on the prospects for rapid recovery. G8 leaders badly
underestimated the economic problems facing them when they met in Japan in 2008
and now focused on what must be done to prevent another meltdown.

President Barack Obama and his G-8 summit partners held tense discussions about how
both rich and emerging nations can live up to new clean climate goals adopted by
leading industrialised nations. Confronting global warming, a trend scientists say could
unleash devastating droughts, floods and disease if left unchecked, was a dominant
theme again G-8.

The G8 summit wound up with a wry acknowledgement of its growing irrelevance as the
world’s premier power bloc. Phoenix-like, the G14 is rising from its ashes, much more
inclusive, with developed and developing countries together on an equal footing.

The intimation of G8’s impending demise came from the host of the summit, Italian
premier Silvio Berlusconi. ‘‘We saw that G8 is no longer a suitable format to show a
global economic way of doing. Instead, a consolidated G14 representing 80% of the
world economy could create a real dialogue. We want to see if the G14 is the best
solution to make debates which will bring to us unique results.’’

The deliberations of G8 and G5 saw even French president Nicolas Sarkozy making a
strong case for G14 to deal with the issues of global governance after Brazil’s President
Lula spoke about the idea of a new group.

After dealing with issues of climate change, trade and global economic downturn, the
G8 and G5 countries turned their attention to food security, pledging to mobilise US $20
billion over three years by substantially increasing aid to agriculture for achieving food
security across the nations.

The leaders also committed themselves to reducing trade distortions and refrain from
raising new barriers to trade and investment and to implement WTO-consistent
measures to stimulate exports. To this end, the ‘L'Aquila Joint Statement on Global
Food Security and Regional Organisations’ said the nations would aim at an ambitious,
comprehensive and balanced conclusion of the Doha Development Round and called for
renewed and determined to bring it to a timely and successful conclusion.

Admitting the global economic crisis had serious and alarming implications for growth
and poverty eradication in developing countries, the declaration said G8 and G5
countries were determined to engage responsibly with low-income countries, especially
those in situations of fragility. It resolved that partner countries should continue
reforming financial system regulation to prevent boom and bust cycles in economy. The
declaration admitted international financial institutions needed reform to make them
compatible to the reality of the new world financial order.

The G-8 nations also asked international bodies to study ways of intervening in oil
markets to block speculation.
The next Summit will be held at Muskoka in Canada in 2010.

NAM Summit
Leaders from Non Aligned Movement countries, including India, met in Sharm el-Sheikh
in Egypt on July 15, 2009 to hammer out a strategy to tackle the world financial crisis
and sought international solidarity to fight terrorism and enhance peace and
development.

Opening the two-day 15th NAM Summit of the 118 developing nations at this Egyptian
Red Sea resort city, Cuban President Raul Castro said the grouping believes that all
countries in the world should search for effective and justified measures to tackle the
current financial crisis.

In his address, Egyptian President Hosni Mubarak, who took over the NAM Chairmanship
from Castro for a three-year term, sought serious efforts and international solidarity to
enhance world peace and development. Mubarak spoke about the international
financial system and the need to deal with on war-footing challenges like climate
change, food security, peace and security, disarmament, human rights and rule of law.

The Summit aimed at evolving a new international order to effectively face


contemporary world challenges.

Founded in September 1961 by first Indian Prime Minister Jawaharlal Nehru, former
Egyptian President Gamal Abdel-Nasser and ex-Yugoslav President Josip Tito, NAM now
groups 118 member states, 16 observer countries and 9 observer organisations. The
grouping, which represents nearly two-thirds of the UN member countries and
comprises 55 per cent of the world population, focuses on interests of developing
world.

At the two-day Summit, the leaders discussed the global financial crisis, climate
change, the Mideast peace process, food security, energy and nuclear issues. They also
signed the Summit's Final Document and Sharm El Sheikh Declaration and approved the
NAM's strategy and action plan for the future three years.

Sharm El Sheikh Summit Declaration reiterated the strong commitment to the purposes
and the principles of the United Nations Charter and the principles of international law,
international humanitarian law and human rights law. The member-States desired to
enhance the strengthening and revitalization process of the Movement through
concrete measures, at all levels.

The declaration said NAM will continue to promote disarmament and international
security and stability on the basis of equal and undiminished security for all, bearing in
mind that total and complete Nuclear Disarmament remains the only route to establish
a world free from Nuclear Weapons, taking into consideration related issue of Nuclear
Non Proliferation in all its aspects and the inalienable right of all states to the peaceful
uses of nuclear energy. NAM will engage constructively with concrete actions towards
the implementation of the unequivocal undertaking by the Nuclear Weapon States, as
well as the recent statements made by leaders of some Nuclear Weapons States to
eliminate their nuclear arsenals and work towards realizing a World Free of Nuclear
Weapons, including through the establishment of Nuclear Weapon Free-Zones,
particularly in the Middle East region;

NAM will also ensure that the current comprehensive review of Peace Keeping
Operations takes duly into account the position of the Movement, in particular the
demands of Troop Contributing Countries, and to ensure that the review processes of
the Peace Building Commission and the Peace Building Fund will achieve their
objectives to support all countries emerging from conflict, based on the principle of
national ownership and coordinated activities within the United Nations system;

NAM will reinforce and build new momentum in addressing human rights issues based on
a cooperative and balanced approach focused on constructive dialogue and capacity
building, while taking duly into account the diversity of societies, political, economic,
social and legal systems, cultures and religions, and avoiding selectivity, double
standards and any attempt to exploit or use human rights as an instrument for political
purposes, with a view to reinforcing the commitment to the promotion and protection
of all human rights and fundamental freedoms for all, in particular the right to
development,

NAM will continue to uphold the fundamental and inalienable right of all peoples,
including all non-self governing territories, as well as those territories under foreign
occupation and colonial or alien domination to self determination, the exercise of
which, in the case of peoples under foreign occupation and colonial or alien
domination, remains valid and essential to ensure the eradication of all these situations
and to guarantee universal respect for human rights and fundamental freedoms;

NAM also demanded achieving a just and comprehensive peace in the Middle East based
on relevant United Nations Security Council Resolutions, Madrid Terms of Reference,
land for peace, and the Arab Peace Initiative in its entirety; and said that NAM firmly
supports the inalienable rights of the Palestine people to self-determination and the
establishment of their independent, contiguous and viable State in Palestine with East
Jerusalem as its capital, and a just and agreed upon solution to the Palestine refugee
question on the basis of resolution 194.

The declaration also seeks to restore the balance between the Principal Organs of the
United Nations and reaffirm the role and authority of the General Assembly, while
asserting its fundamental role in international peace and security and in promoting
multilateralism.

On climate change the declaration asked to strengthen the political momentum in


preparation for the Copenhagen conference in a manner that duly reflects the views of
NAM countries with regard to mitigation, adaptation, finance, technology transfer,
capacity building and shared vision in accordance with the principle of Common but
Differentiated Responsibilities, and fully utilize the high level meeting to be convened
by the Secretary General of the United Nations at the beginning of the 64th session of
the General Assembly to highlight the concerns of the NAM countries.

On terrorism the declaration aspired to strengthen NAM solidarity in combating


terrorism in all its forms and manifestations, wherever and by whomsoever committed,
in accordance with the principles of the United Nations Charter, international law and
the relevant international conventions. In this context, it stressed that terrorism should
not be associated with any religion, nationality, civilization or ethnic group.

The Heads of State and Government recognised the long history of Nelson Mandela’s
leading role in and support for Africa’s struggle for liberation, self determination and
Africa’s unity and also his outstanding contribution in the creation of a non-racial, non
sexist, and democratic South Africa. They expressed their support for and solidarity
with the Nelson Mandela Day International Campaign and called on Non-aligned
Movement member States and peoples to join in the campaign, including by
contributing 67 minutes of their time in service of their communities in recognition of
Madiba’s 67 years contribution in service of humanity. They also endorsed the
declaration to observe July 18, Madiba’s birthday, as Nelson Mandela International Day,
and requested that a resolution to this effect be adopted by the UN General Assembly
at its 64th session.

INTERNATIONAL TERRORISM
Pak nurtured terrorism: Zardari
In an astonishingly candid admission—a first by any Pakistani head of State—President
Asif Ali Zardari has admitted militants and terrorists were wilfully created by past
Pakistani governments and nurtured as a policy to achieve tactical objectives.

‘‘Militants and extremists emerged on the national scene and challenged the state not
because the civil bureaucracy was weakened and demoralized but because they were
deliberately created and nurtured as a policy to achieve short-term tactical objectives.
Let’s be truthful and make a candid admission of the reality,’’ he told a gathering of
civil servants in Islamabad on Tuesday night.

‘‘The terrorists of today were heroes of yesteryear until 9/11 occurred and they began
to haunt us as well,’’ Zardari said. He also pointedly said that future generations won’t
forgive the current leadership if it does not take corrective measures.

India has long charged Pakistan with sponsoring terrorism in Kashmir by providing arms,
ammunition and training to militants who have been engaged in a war of secession.
Zardari’s admission is bound to create a major flutter in Islamabad, particularly within
the Army.

Criticising former military rulers—itself an act of derring-do—Zardari said concentration


of power in one individual was against the spirit of democracy and good governance.
‘‘Too much power in one hand lasts for a short time,’’ he said. ‘‘For power to be
effectively used for long lasting public good, it must be dispersed as widely as
possible.’’

India responded by saying that Pakistan President Asif Ali Zardari's “confession” about
nurturing of terrorists had vindicated its stand and hoped Islamabad would now make a
“determined” effort to end terrorism across the border.

Making statements in both Houses of Parliament, External Affairs Minister SM Krishna


said Pakistan must “expose” and “take action” against “conspiracies and conspirators”
for terror attacks launched in India from across the border, as future of dialogue is
premised on an atmosphere free of the threat of violence.

According to data released by the Central Statistical Organisation, India's per capita
income has increased by over one-third from Rs 26,003 in 2005-06 to Rs 37,490 in 2008-
09. Per capita income is the amount an individual earns, of the yearly income that is
generated in the country through productive activities. It means the share of each individual
when the income from the productive activities is divided equally among citizens.

The growth in real gross domestic product at factor cost declined from 9 per cent in 2007-
08 to 6.7 per cent in 2008-09. The sector-wise growth of GDP in agriculture, forestry and
fishing in 2007-08 was 4.9 per cent, but declined to 1.6 per cent in 2008-09. Industry
witnessed a growth of 8.1 per cent in 2007-08, but it reduced to 3.9 per cent in 2008-09.

Bharti Airtel has picked up the title sponsorship of the Champions League T20 cricket
tournament 2009, for Rs 170 crore.

Developers of Special Economic Zones (SEZs) will now get a blanket exemption from
stamp duty on land purchases within the notified area for non-core activities such as
building hotels, housing complexes, shopping malls and golf courses. For the developers of
the 500-odd SEZs in the country, slated to bring in investments of over Rs 100,000 crore,
this ends the uncertainty that had cropped up after some States had voiced their
opposition. The exemption, however, will be available only after formal approval of the
zone. For land bought after in-principle approval, the State government may either give the
exemption upfront or collect the duty and refund it after the zone has been set up. If under
some circumstances, notification of a zone is cancelled, the State government will be
entitled to withdraw the concession and recover the same from the developer.

Gail India, country’s largest gas transportation company, will invest Rs 7,600 crore in
building India’s longest gas pipeline from Jagdishpur in Uttar Pradesh to Haldia in West
Bengal.

Haryana has become the first State in India to have ten eco-sensitive zones. Union
ministry of environment and forests has notified around two national parks and eight wildlife
sanctuaries of Haryana.

Indian film industry is the world’s largest in terms of number of films produced as well as
the number of cinema-goers. It produces almost as many films as the next three—the US,
Japan and China— combined. The Indian film industry, with its major centres at Mumbai,
Chennai and Hyderabad, produced 1,132 feature films in 2007. In comparison, the
American film industry in 2008 produced 520 feature films, Japan 418 and China 400. As for
theatre admissions, India’s count of 3.3 billion for 2008 was higher than the combined total
of the next nine biggest film producing countries. The US was the only other country to
have more than a billion admissions. These facts have been put together by European
Audiovisual Observatory, a public service body gathering and distributing information on the
audiovisual industry, in its publication, ‘Focus 2009-World Film Market Trends’.

Indian Railways has introduced a new train, Andolan (agitation) Express that will run from
Singhur to Howrah. According to Railway Minister Mamta Banerjee the name “signifies the
victory of the poor farmers of Singur against the forcible acquisition of their farmland”.

India's external debt went up by $5.3 billion or 2.4% to $229.9 billion as of March 2009,
according to RBI. The debt denominated in US dollar accounted for 57% of total external
debt.

Milan has been named as the world’s top fashion city in the Global Language Monitor’s
(GLM) annual global survey. Mumbai is at 16th and New Delhi at 17th position. Following
Milan are New York, Paris, Rome and London.

Netbooks are low-cost notebook PCs designed for internet surfing and other Web-based
applications.

Prime Minister Manmohan Singh has become the first head of State to be Chief Guest at
France National Day. The celebrations commemorate the 1789 invasion of the Bastille prison
that sparked the French Revolution. Also, the parade down the Champs Elysees was lead by
Indian Army’s Maratha Regiment contingent.

Quotes that various Finance Minister of India quoted in their Budget speech: Manmohan
Singh, in his path-breaking 1991 speech paraphrased the French writer Victor Hugo to
declare ‘No power on earth can stop an idea whose time has come”; P. Chidambaram opted
for the Tamil seer-poet Thiruvalluvar’s lines, “Iyattralum, eettalum, kattalum, katta;
Vakuthalam vallath arasu (To be able to increase wealth, to lay it up and guard; And also
well to distribute it, marks a royal lord) in his first Budget speech and stayed with him for
every successive speech. Yashwant Sinha was noted for quoting Ramdhari Singh Dinkar’s
lines, “The stars of the dark night are fading. The whole sky belongs to you,” in his first
Budget speech, and then his own Prime Minister, AB Vajpayee, in his second. Pranab
Mukherjee, in his 2009 Budget speech, quoted extensively from Kautilya’s Arthshastra.

Revising the growth projection to 6.5% from the earlier 5.7% for 2009-10, Reserve Bank
of India has said it expected inflation to go up to 5.4% by 2009-10-end. In its macro-
economic review, RBI, however, said indications are that dampened growth impulses may
continue due to significant delay in monsoon in certain parts of the country and persistence
of global recession. The review, ahead of the quarterly review of RBI's annual monetary
policy, quoted the RBI’s Professional Forecasters Survey to indicate that the average
inflation in the fourth quarter of 2009-10 will be around 5.4%.

The Union government has decided to change the base year of the Wholesale Price Index
(WPI) series from 1993-94 to 2004-05. The move is aimed at tracking changes in price level
accurately.

US citizens continued to be on the top of the list of those who found the country attractive
enough to travel. Latest figures released by the Home Ministry show that India received as
many as 52,78,852 foreign visitors in 2008, against 50,96,990 in 2007, an increase of 1.81
lakh, quite less than what the country witnessed during 2004-07 when it recorded an
addition of over five lakh visitors every year. US, along with the UK, accounted for nearly
30% of the total foreigners who visited India in 2008.

World Population Day is observed on July 11.


Current Affairs: June 2009
CURRENT NATIONAL AFFAIRS

New SEZs cleared


On June 2, 2009, the Union government approved ten special economic zones and
allowed one-year extension to four projects, including Reliance Industries' Mukesh
Ambani-promoted Rewas Ports, for land acquisition.

The Board of Approval (BoA) in the Commerce Ministry gave formal approvals to eight
proposals, including those of Gulf Oil Corporation, Emmar MGF and Larsen and Toubro.
Two other proposals were also given 'in-principle' approvals.

The board also allowed DLF to withdraw four of its IT/ITeS tax-free enclaves, asking the
realty major to refund Rs 6-7 crore worth of fiscal sops the company would have availed
of. DLF had cited economic downturn as reasons for seeking withdrawal.

However, the BoA outrightly rejected the proposals of Videocon Realty and Writers and
Publishers for SEZs in Indore, on the ground that the promoters have not acquired "even
an inch" of land.

The two proposals that have got in-principal approval include: Krishnapatnam Infratech
in Kota Mandal (Andhra Pradesh) and Maharaja Multitrade in Nashik (Maharashtra), for
multi-product and multi-services SEZs, respectively.

Since 2006, when the SEZ Act was notified, formal approvals have been granted for
setting up 568 SEZs, of which 315 have been notified.

Yashpal panel report on Education sector


The beginning of bold reforms in the higher education sector was made on June 24,
2009, with the 24-member Yashpal committee—constituted last year to suggest revamp
measures—scripting the end of regulatory mechanism era in India and rooting for
university autonomy. In its report submitted to the government, the panel favoured
vesting universities with full academic responsibility by allowing them the freedom to
self regulate, choose the courses they want to offer and even design them.

The panel said institutes of excellence like the IITs and the IIMs should function like
world-class universities, offering a range of courses in science, astronomy,
management, psychology and philosophy in line with the global trends of inter-
disciplinary approaches.

On the regulatory mechanism front, the panel’s report, “Renovation and Rejuvenation
of Higher Education”, said the UGC, AICTE and MCI should not have a regulatory role
and could be merged with the new National Commission for Higher Education and
Research, which the committee recommended.

It called for a constitutional amendment to create the seven-member panel, which


would function like the Election Commission. The Prime Minister, Leader of the
Opposition and Chief Justice of India would select the members.

The commission would work as a facilitator to higher education institutes, which would
be armed with the necessary legal mechanisms to offer courses of their choice.
Notably, the commission is a part of the UPA’s promises and was mentioned by the
President in her June 4, 2009 address to the Parliament. To bring it to life, the
government would now have to bring a draft Bill.

On UGC and AICTE, Yashpal said a new commission could not be created unless old
structures were removed. His report takes note of the delays, excessive inspection and
corruption in the universities’ dealing with governments.

President’s address to the Parliament


More than six months after the Mumbai terror attacks, India, on June 4, 2009, extended
olive branch to Pakistan with President Pratibha Patil asserting that the new UPA
government would reshape the relationship with Islamabad provided the neighbouring
country sincerely dealt with terrorist groups acting against India.
Emboldened by a reasonable participation by the people in the recent elections in
Jammu and Kashmir, she also declared the UPA government’s resolve to constructively
engage with all groups that abjure violence in the State, as also in North-East and other
parts of the country.
Laying the road-map for the new UPA government in an address to the joint session of
Parliament, President Patil announced that the government would maintain utmost vigil
in the area of internal security by pursuing a policy of zero-tolerance towards
terrorism, set up a national counter-terrorism centre to take anti-terrorism measures
and seek an early approval of the bill for the prevention of communal violence.

As the first woman President of the Republic addressed the members from the two
Houses in the Central Hall of Parliament, seated on her left was another woman—Meira
Kumar—who made history a day before by becoming the first woman Speaker of the Lok
Sabha.

Noting that creativity, innovation and enterprise held the key to people and nations
realising their potential, the President observed that the ‘dreary desert sand of dead
habit’ must be left behind. The young people were tearing down the narrow domestic
walls of religion, region, language, caste and gender that confined them. “My
government will ensure that its policies for education and science and technology are
imbued with a spirit of innovation so that the creativity of a billion people is
unleashed,” she said, declaring that the next ten years would be dedicated as a
‘Decade of Innovation’.

Describing the armed forces as the nation’s pride, she announced that they would be
fully enabled with modern technology to repel any threat from land, sea or air. To
enhance combat efficiency as also to address the requirements of modern day warfare,
a number of steps were under way.

The address to Parliament also talked at length on the government’s pro-poor policies,
and moves to strengthen welfare schemes and boost the economy. There were promises
to enlarge the scope of NREGA, which has proved to be an effective social protection
measure; introduce a new right to food Act; address the challenges in the health sector
such as infant mortality, nutrition and pre-emptive cure; make quality education a right
through the enactment of a new law; set up a national literacy mission for women;
raise the target of rural housing for the next five years to one lakh twenty crore units;
introduce a major housing scheme for the urban poor; and take up initiatives for skill
development.

India-Bahrain pact to protect workers


India and Bahrain have inked a key agreement to ensure protection for Indian workers
against unscrupulous employers. The agreement included housemaids who were not
covered by Bahrain’s Labour Law and was signed during the visit of Overseas Affairs
minister, Vayalar Ravi in June 2009. As per the agreement, a committee will be
constituted to ensure that directives in the agreement are implemented and will
consist of officials from Bahrain’s Labour Ministry and Indian Overseas Affairs Office.
Employers who want to recruit Indian workers will now have to specify the nature of
the work they will be doing and the required professional skills. Other required details
include the duration of contract, an agreed salary and end-of-contract benefits, health
services and holidays.

Prime Minister Manmohan Singh meets Pak President


A significant meeting between Prime Minister Manmohan Singh and Pakistan President
Asif Ali Zardari, held at Yekaterinburg, Russia on June 16, 2009, sent out a clear
message that India and Pakistan were edging towards the normalisation of bilateral
ties, nearly seven months after the Mumbai terror attacks. They directed their foreign
secretaries to meet within the next one month and discuss the “primary issue of
terrorism” before the two leaders meet again on the margins of the NAM Summit in
Egypt on July 15-16.

“I am pleased to meet you, His Excellency, I have a limited mandate to tell you that
the territory of Pakistan should not be allowed to be used for terrorist acts against
India,” Manmohan Singh firmly told the Pakistani leader right at the start of their 40-
minute meeting. President Zardari was virtually rendered speechless for a while as
neither he nor any member of his delegation expected such strong words from the
Prime Minister.
The three conditions laid by Manmohan Singh for the resumption of dialogue were:
Pakistan must take strong and effective action against forces representing terrorism,
act against the perpetrators of terror attacks in India and dismantle the terrorist
infrastructure. He also conveyed to Zardari India’s disappointment over the release of
Hafiz Saeed, chief of the Jamat-ud-Dawa (Jud), one of the key plotters of the Mumbai
carnage.

The beleaguered Pakistan President, who is facing the heat from the Pakistan Army, as
well as the ISI back home, explained to Manmohan Singh the steps being taken by
Pakistan to tackle terrorism and the problems the country was facing to deal with the
menace.

Maoists banned
The Cental government, on June 22, 2009, formally listed CPI (Maoist) as a separate
terrorist outfit under the Unlawful Activities (Prevention) Act. Though the decision will
make little difference on the ground as the ban on CPI (Maoist) was already in effect by
virtue of its constituents—CPI(ML), People’s War Group and MCC, along with all their
formations and front organisations—featuring in the list of terrorist outfits under the
UAPA, it is aimed at clearing any ambiguity regarding the illegal status of CPI (Maoist).

The CPI (Maoist) is the 35th organisation to be listed as terrorist outfit under UAPA.

It was formed by the merger of CPI (ML)-People’s War Group and MCC in September
2004. The question of a separate ban on CPI (Maoist) had come up soon after the
merger, but the law ministry then took the view that there was no need for such ban as
the UAPA clearly listed the formations and front organisations of CPI (ML)-People’s War
Group and MCC as terrorist outfits, thus also including in its ambit CPI (Maoist). Besides,
there were some differences within the constituent Naxal outfits regarding the
acceptability of the merger—the Maoists in Nepal had at the time refused to recognise
the merge—leading the Centre to settle for status quo.
The question of a separate ban on CPI (Maoist) cropped up again when Union Home
Minister P. Chidambaram took a closer look at status of Naxalite outfits under UAPA.
The minister is said to have insisted on a fresh ban on the merged outfits, CPI (Maoist),
under which the Left-wing extremists were now operating in most States.

The Criminal Law Amendment Act, 1908, empowers the State government to declare an
association as “unlawful.” Accordingly, while Orissa, Jharkhand and Tamil Nadu have
declared CPI (Maoist) as an unlawful association, Bihar has listed MCC and CPI(ML)-PW
as unlawful. Andhra Pradesh, MP and Chattisgarh have enacted their own separate
State legislations declaring the CPI (Maoist) as an unlawful outfit. Under UAPA, last
amended in December 2008, the Centre is also empowered to declare an association as
unlawful.

The Act also defines a terrorist organisation in Section 2(1)(m), which are then
specifically listed in the Schedule to the Act.

Security forces take control of Maoist-controlled areas in West Bengal


On June 30, 2009, security forces took control of Kantapahari, setting up a police camp
after four years in the hub of Maoist-backed tribal agitation, with the West Bengal
Government claiming that 95 per cent of the areas have been wrested from the ultras
in West Midnapore district. Around 1,600 personnel of paramilitary forces, police and
COBRA, the special anti-Naxal force, reached Kantapahari from both Lalgarh and
Ramgarh ends as a helicopter kept an aerial vigil.
The Maoists set off a landmine and fired at the security forces in a forested area
between Pirakata and Lalgarh but the troops retaliated. In Kolkata, Chief Minister
Buddhadeb Bhattacharjee said the joint forces had been able to liberate nearly 95 per
cent of the areas. The operations had been bloodless with no major encounter.

Earlier, the Maoists had gone on a rampage, targeting ruling CPM cadres and offices and
had virtually taken control of a large area in West Midnapore district after driving away
the police and paramilitary forces.

Today’s Bengal is a throwback to the Naxalbari uprising of the 1960s after tribals killed
a police sub-inspector. The year was 1967, and the Left-led United Front was in power
in the State. The recent Maoist violence has also ignited memories of the Sainbari
killings in Burdwan in 1969 where CPM laid a siege. Forty years later, the State seems
set for another round of bloodletting with the main opposition, Trinamool Congress,
adopting the same tactic as the Left in the ‘60s: upstaging the ruling party on people’s
insecurity. Ballot and bullets have ruled these parts since 1999 with rival groups in far
flung pockets in West Midnapore, Bankura, Purulia, Birbhum and Hooghly fighting
protracted gun battles. Violence and counter-violence are a major tactic of political
parties to command support in the villages.

Babus to be insulated from netas


The end of the transfer/posting raj is in sight. Bureaucrats are set to get a new deal
with the Centre readying a legislation that will not only assure babus of fixed-tenure
postings but also protect them from political interference in their day-to-day
functioning. Besides, all bureaucratic appointments, transfers and postings will be
subject to Parliamentary scrutiny. As a consequence, IAS and IPS officers in the country
will no longer be at the mercy of the whimsical transfer regime that operates currently.

However, along with these comforts will come added responsibility. The government
plans to bring in a new public service code that will lay down a strict performance
evaluation regime for promotions and postings of babus. All these provisions are
expected to be part of the Civil Services Bill, 2009, a draft of which is being fine-tuned.

The Bill, which incorporates various suggestions of the second Administrative Reforms
Commission, envisages setting up of a new Central Public Service Authority which will
not only professionally manage civil services but also serve the interests of babus and
citizens alike through checks and balances.

The Civil Services Bill moots: fixed tenure of three years per posting for all IAS and IPS
officers; a new agency, Central Public Services Authority, to work as a watchdog
against political interference in the bureaucracy. It will also keep a watch on
performance of babus; Postings to be strictly on basis of performance evaluated on a
number of tasks assigned to bureaucrats over the years.

CURRENT INTERNATIONAL AFFAIRS

Iran’s Presidential polls


On June 14, 2009, hardline President Mahmoud Ahmadinejad was declared winner of
the Presidential election held on June 12. The result was, however, bitterly contested
by the opposition candidate Mir Hossein Mousavi. Ruling out any recounting of votes
country’s supreme leader Ayatollah Ali Khamenei said President Mahmoud
Ahmadinejad’s re-election victory was credible and insisted that the Islamic republic’s
election mechanisms allowed no cheating. He said the street protests to pressure for
change were not acceptable.

Khamenei insisted the elections showed off the country’s religious democracy for the
world to see, shrugging an unprecedented challenge to the country’s ruling clerics by
opposition supporters, who claimed the June 12, 2009 Presidential election was rigged.
He said there was “definitive victory” and no rigging in the disputed Presidential
elections.

“There is 11 million votes difference, Khamenei said. “How one can rig 11 million
votes?” “The enemies (of Iran) are targeting the Islamic establishment’s legitimacy by
questioning the election and its authenticity before and after (the vote)”.

On June 14, 2009, the Iranian police clashed with people protesting in Tehran against
the re-election of hardline President Mahmoud Ahmadinejad. The unrest that rocked
Tehran and several other cities was the sharpest expression of discontent against Iran’s
leadership for years. Supporters of defeated moderate Mirhossein Mousavi, who
dismissed Ahmadinejad’s triumph as a “dangerous charade”, gathered in central
Tehran, chanted his name and threw stones at police.

The scale of Ahmadinejad's triumph upset widespread expectations that the race would
at least go to a second round, and his victory is unlikely to help unblock a standoff with
the West over Iran's nuclear programme. Interior Minister Sadeq Mahsouli, an ally of
hardliner Ahmadinejad, declared that the President had been re-elected to a second
four-year term with 62.6 per cent of the vote, against 33.7 per cent for Mousavi, in a
record 85 per cent turnout.

The bitter election campaign generated strong interest around the world and intense
excitement inside Iran. It revealed deep divisions among establishment figures between
those backing Ahmadinejad and those pushing for social and political change.
Ahmadinejad accused his rivals of undermining the Islamic Republic by advocating
detente with the West. Mousavi said the President’s “extremist” foreign policy had
humiliated Iranians.

The three-week election campaign was marked by mudslinging, with Ahmadinejad


accusing his rivals of corruption. They said he was lying about the economy. Inflation,
officially put at 15 per cent, and unemployment were core issues in the debate.

On June 22, locked in a continuing bitter contest with Iranians who were of the view
that the Presidential polls were rigged, the authorities finally acknowledged that the
number of votes cast in 50 cities exceeded the actual number of voters. But the
authorities insisted that discrepancies, which could affect three million votes, did not
violate Iranian law and the country’s influential Guardian Council said it was not clear
whether they would decisively change the election result. Iran’s top election body,
however, ruled out cancelling the disputed Presidential vote as the world voiced
increasing alarm at the violent crackdown on opposition demonstrators, posing the most
serious challenge to the Islamic regime in 30 years.

Israeli PM endorses Palestinian Statehood


Under pressure from the US President Obama’s administration, Israeli Prime Minister
Benjamin Netanyahu has for the first time endorsed a two-State solution in the Middle
East, drawing praise from the West but flak from Palestinians who rejected the offer
citing the tough conditions attached.
In a policy speech on June 15, 2009, that came a week after US President Barack
Obama’s address to the Muslim world, Netanyahu said the “Palestinian State” would
have to be demilitarised and recognise Israel as a State of the Jewish people.

The hardliner Israeli Premier had resisted agreeing to a two-State solution to the Israel-
Palestinian conflict all through his political career and his veiled acceptance was
couched under several other conditions, including refusal to allow Palestinian refugees
to settle in Israel and keeping united Jerusalem the capital of Israel.
The address at Bar Ilan university, considered the bastion of Israeli right, came in the
wake of Obama’s insistence that Israel impose a complete freeze on West Bank
settlement construction and recognise the two-State solution.

President Obama welcomed the speech as an “important step forward” while the
European Union described it as “a step in the right direction”.

However, the Palestinians were skeptic and angry. “Netanyahu’s remarks have
sabotaged all initiatives, paralysed all efforts being made and challenges the
Palestinian, Arab and American positions,” said Nabil Abu Rdeineh, a close aide to
Palestinian Authority (PA) President Mahmoud Abbas. Reacting angrily to Netanyahu’s
assertions that Palestinian refugees will not be allowed to settle in Israel and undivided
Jerusalem will stay its capital, Rdeineh said, “this will not lead to complete and just
peace”.

Nepal revokes army chief’s sacking


In order to avoid possible tussle between President Dr Ram Baran Yadav and Prime
Minister Madhav Kumar Nepal, the newly formed Cabinet decided to uphold Yadav’s
decision to retain the sacked Chief of Army Staff Rookmangud Katawal to his post.

The Cabinet has also nullified the controversial decision taken by the Unified
Communist Party of Nepal–Maoists (UCPN-M)-led government to appoint Lt. Gen Kul
Bahadur Khadka as the acting Chief of army.

After receiving pressure from the party rank and files, including the commanders of the
Maoists combatants, the then Prime Minister and UCPN-M chairman Prachanda’s
cabinet, on May 3, 2009, had sacked Katawal unilaterally and appointed Khadka as
acting chief. As a result it had invited serious political and constitutional tussle
between the President and the then government that finally forced the Maoist
chairman Dahal to step down on May 4.

The meeting has annulled the May 4 Cabinet decision where the Dahal-led Cabinet’s
last meeting had dubbed the President’s move to retain sacked army chief Katawal as
“constitutional coup” and asked President Yadav to correct his unconstitutional move
to uphold the civilian supremacy. However, Yadav had refused to do so saying that
whatever he had done was based on good faith and it was his responsibility to protect
the constitution as Head of the State and avoid possible rift within the national army as
its patron.

Burqa not welcome in France


The Islamic burqa is “not welcome” in France because it is not a symbol of religion but
a sign of subservience for women, as per a statement by President Nicolas Sarkozy. “We
cannot accept to have in our country women who are prisoners behind netting, cut off
from all social life, deprived of identity,” he said.

“It will not be welcome on the territory of the French republic,” Sarkozy told a special
session of Parliament. He further added that he was in favour of holding the inquiry
sought by some French lawmakers into whether Muslim women who cover themselves
fully in public undermine French secularism and women’s rights.

But the president added “we must not fight the wrong battle; the Muslim religion must
be respected as much as other religions in France”.
The proposal to hold an inquiry has won support from many politicians from both the
Left and Right, but France’s official Muslim council accused lawmakers of wasting time
focusing on a fringe phenomenon.

In France, the terms “burqa” and “niqab” often are used interchangeably. The former
refers to a full-body covering worn largely in Afghanistan with only a mesh screen over
the eyes, whereas the latter is a full-body veil, often in black, with slits for the eyes.

France had enacted a law in 2004 banning the Islamic headscarf and other conspicuous
religious symbols from public schools, sparking fierce debate at home and abroad.
France has Western Europe's largest Muslim population, an estimated five million
people.

One billion go hungry world over


One in six people in the world or more than one billion are now hungry, a historic high
due largely to the global economic crisis and stubbornly high food prices, according to
Food and Agriculture Organization (FAO). Compared with 2008, there are 100 million
more people who are hungry, meaning they receive fewer than 1,800 calories a day,
FAO said. Almost all the worlds undernourished live in developing countries, where food
prices have fallen more slowly than in the richer nations, the report said. Poor
countries need more aid and agricultural investment to cope, it said.

The silent hunger crisis, affecting one-sixth of all of humanity, poses a serious risk for
world peace and security, said the Director-General of FAO, Jacques Diouf. Soaring
prices for staples, such as rice, triggered riots in the developing world in 2008. Hunger
increased despite strong 2009 cereal production, and a mild retreat in food prices from
the highs of mid-2008. However, average prices at the end of 2008 were still 24% higher
in real terms than in 2006.

Globally there are now about 1.02 billion people hungry, up 11% from 2008’s 915
million. The estimates are based on analysis by the US Department of Agriculture. Asia
and the Pacific, the world’s most populous region, has the largest number of hungry
people at 642 million. Sub-Saharan Africa has the highest hunger rate, with 265 million
under-nourished, representing 32% of the region’s population.

G-8 nations see signs of economic stability


Citing “signs of stabilisation” in their economies, G-8 Finance Ministers have decided to
ensure that such trends emerging in the global economy should be nurtured and asked
the IMF to study exit strategies to “unwind” their hefty stimulus packages. On
macroeconomic conditions, the Ministers recognised that the coordinated policy action
implemented so far has borne some fruit, citing a recent rise in stock prices, a decline
in interest rate spreads, and improved business and consumer confidence. “There are
signs of stabilisation in our economies,” said a joint statement of the ministers from
the G-8 countries—Britain, Canada, France, Germany, Italy, Japan, Russia and the
United States—after their two-day meeting in Lecce, Italy, in June 2009.

The G-8 ministers said they discussed “appropriate strategies” on how to find a way out
of big fiscal spending once their economies recover. They, however, noted that the
framework for unwinding the unusual measures taken so far to fight the global
economic crisis should “vary from country to country.”

US treasury secretary Timothy Geithner warned after the meeting that nations should
not implement policy restraint too early as the global economy has yet to enter a
recovery phase despite recent signs of improvement. But he echoed the G-8
statement’s call for charting the future course for the restoration of fiscal balances,
saying financial and economic recovery “will be stronger and more sustainable if we
make clear today how we get back to fiscal sustainability when the storm has finally
passed.”
The ministers also reaffirmed the importance of combating all forms of money
laundering and the financing of terrorism. In addition to macro-economic issues, major
items on the meeting agenda were climate change, food security, financial regulation
and strengthening the lending capacity of international organisations to assist
developing countries.

IMF bond plan attracts emerging nations


The International Monetary Fund's plan to issue bonds for the first time has attracted
several large emerging countries looking to diversify investments to the detriment of
the dollar, whose lustre is dimming under the mushrooming US budget deficit.

After the G-20 major developed and emerging market countries pledged in April 2009 to
boost the IMF's resources by $500 billion, each country must determine just how to
deliver. To help gather such a colossal sum, the 185-nation IMF has decided to take the
unprecedented step of issuing bonds.

Three countries lined up for the notes in the space of two weeks: Russia, China, then
Brazil. Both Russia and Brazil are in the market for $10 billion worth, while China is
aiming for $50 billion. Other G-20 members could follow, such as India or Saudi Arabia.

The new bonds will be offered in the IMF accounting unit, Special Drawing Right (SDR),
whose value is based on a basket of currencies, re-balanced daily, in which the dollar
represents only a 41% share. It is the dollar's relative weakness in SDRs that has raised
market concerns that some countries are seeking to distance themselves from the
greenback, the world's reserve currency.

For some, the announcements by Russia, China and Brazil are troubling rumbles for the
US. "It is a clear sign that these countries are not comfortable with their large dollar
holdings and should be read by the US as an additional signal of market unease about
their large budget deficit," said Desmond Lachman of the American Enterprise Institute,
a Washington think tank.

Green energy investments in developing nations rise 27%


The global economic crisis hasn’t deterred the developing countries from their green
energy investments, which surged 27% in 2008 to $36.6 billion. According to a recent
report of United Nation Environment Programme (UNEP) on Global Trends in Sustainable
Energy Investment, 2009, global investment in clean energy witnessed a four-fold
increase in 2008, compared to 2004.
Of the $155 billion invested in 2008 in clean-energy companies and projects worldwide,
China, India, Brazil and African countries, among others, contributed almost a third of
the amount. While China led investments in Asia with an 18% increase over 2007 to
$15.6 billion, green energy investments in India grew 12% to $4.1 billion in 2008.

However, growth in clean energy sectors stalled in developed countries, said the
report, which is being jointly prepared by the UNEP and global information provider
New Energy Finance.
The total transaction value in the sustainable energy sector—including corporate
acquisition, asset refinancing and private equity buyout— during 2008 was $223 billion,
an increase of 7% over 2007. However, the capital raised via stock markets fell 51% to
$11.4 billion as share prices of clean energy companies lost 61% of their value during
2008.

According to UNEP estimates, the world needs $750 billion to finance a sustainable
economic recovery by investing in the greening of five key sectors: buildings, energy,
transport, agriculture and water.

Pak diverted US aid to N-programme


Pakistan diverted a whopping sum of over $5 billion provided as aid by the US to fight
Taliban militants into its nuclear programme, according to a report by security expert
Andrew Cockburn. "Most of the aid we've sent them over the past few years has been
diverted into their nuclear programme," the report published in 'Counter Punch' quoted
a senior national security official in the Obama administration as saying.

Most of this 'diverted aid' was officially designated "Coalition Support Funds" for
Pakistani military operations against the Taliban.
The report said the US allowed Pakistan's nuclear programme to continue in violation of
its policy of non-proliferation, as it needed its help in defeating the Soviets in
Afghanistan, among other things, and even the Obama administration has not changed
this policy.

Pakistan has also misused a substantial amount of military aid from the US, meant to
fight terrorism, to build up its army with modern weapons and equipment for a
conventional warfare against India, according to released Pentagon documents. All this
was done with the knowledge of the then Bush administration, which not only provided
$1.9 billion in Foreign Military Financing (FMF), but also signed agreements with
Pakistan for military sales worth nearly $5 billion during the period.

While the Taliban and Al-Qaida gained ground in the tribal areas of Pakistan bordering
Afghanistan, Islamabad bought eight P-3C Orion maritime patrol aircraft and their
refurbishment worth $474 million. It also placed orders for 5,250 TOW anti-armour
missiles worth $186 million.
Besides buying more than 5,600 military radio sets worth $163 million, Pakistan bought
six AN/TPS-77 surveillance radars worth $100 million and six C-130E transport aircraft
and their refurbishment worth $76 million.

Under the Excess Defence Articles (EDA), it was granted 20 AH-1F Cobra attack
helicopters, which were then refurbished.

Pakistan also used a substantial chunk of America’s FMF to purchase up to 60 mid-life


update kits for F-16 A/B combat aircraft valued at $891 million. Of this, it paid $477
million from the FMF funds given by the United States.

Similarly, of the $87 million worth order for 115 M-109 self-propelled howitzers, it paid
$53 million from FMF. And all this happened while Pakistan’s economic situation
deteriorated.

US President Obama calls for a new beginning between Islam and West
On June 4, 2009, extending a hand of friendship to the Muslim world, US President
Barack Obama called for a “new beginning between the United Sates and Muslims
around the world,” saying together they could confront violent extremism across the
globe and advance the timeless search for peace in the West Asia. “This cycle of
suspicion and discord must end,” he said.

In a speech that was littered with references to the Quran, Mr Obama, who has been
trying hard to repair ties with the Muslim world that has been alienated by US policy,
rolled out his plan for engaging with the Muslim world. The President also used his own
Muslim roots to push across the message that the US was not against Islam or the
Muslim world.

President Obama started his highly anticipated Cairo speech by going back in history
and tracing tensions that were rooted in history. “The relationship between Islam and
the West includes centuries of co-existence and cooperation, but also conflict and
religious wars,” he said. After going into history, he also touched on the main sources
of current tension including the situation in West Asia, Afghanistan and the nuclear
stand-off with Iran.

On West Asia, the US President said that he understood both the Israeli and Palestinian
position. Expressing sympathy for the Palestinian cause, he supported an independent
Palestinian State that co-existed peacefully with Israel. Saying he would not see the
conflict from just one side, he said that Israelis must acknowledge that just as Israel’s
right to exist cannot be denied, neither can Palestine’s and that Israel must live up to
its obligation to ensure that Palestinians can develop their society.

On Afghanistan, he said the US had gone to Afghanistan out of necessity after the 9/11
attacks in which the al-Qaeda killed 3,000 people. He further said the US did not want
to keep troops in Afghanistan. “We would gladly bring every single one of our troops
home if we could be confident that there were not violent extremists in Afghanistan
and Pakistan determined to kill as many Americans as they possibly can. But that is not
yet the case,” he said.

Finally on Iran, President Obama said the US has made it clear to the Iranian leadership
that it is prepared to move forward. He said he understood the protest that some
countries have weapons that others do not. “No single nation should pick and choose
which nations hold nuclear weapons. That is why I strongly reaffirmed America’s
commitment to seek a world in which no nations hold nuclear weapons.” He said that
any country, including Iran, had the right to access peaceful nuclear power if it
complies with its responsibilities under the nuclear Non-Proliferation Treaty.

All in all, his speech was largely well-received and there was anticipation that this
could set the stage for an easing of tension between the US and Muslim world.

SCO and BRIC nations meet at Yekaterinburg


Participating in back-to-back SCO (Shanghai Cooperation Organisation) and BRIC (Brazil-
Russia-India-China) summits at Yekaterinburg, Russia, in June 2009, Prime Minister
Manmohan Singh called for greater global cooperation to defeat terrorism and reform of
international financial institutions.

Delivering his first speech at an international forum during his second term as the Prime
Minister, he told the SCO Summit that terrorist crimes today were transnational in
nature, adding "it is imperative that we genuinely cooperate with one another and on a
global scale to resolutely defeat international terrorism."
India, along with Iran, Pakistan and Mongolia, participated as an observer at the summit
of the SCO, a six-nation regional grouping that brings together Russia, China and the
Central Asian Republics of Uzbekistan, Tajikistan, Kyrgyzstan and Kazakhstan.

This was the first SCO summit at which an Indian Prime Minister participated. The SCO
leaders had decided to include observer countries in full-format discussions at their last
summit in Dushanbe.

Prime Minister Manmohan Singh later attended the first BRIC Summit along with the
Presidents of Russia, China and Brazil. In a joint statement adopted by the BRIC
leaders, the four nations strongly demanded reforms of international financial
institutions to reflect changes in the world economy. "The emerging and developing
countries must have a greater voice and representation in international financial
institutions, and their heads and senior leadership should be appointed through an
open, transparent and merit-based selection process."

On the global economic situation, the BRIC leaders emphasised that the poorest
countries had been hit the hardest by the financial crisis. “The international community
needs to step up efforts to provide liquidity for these countries. The international
community should also strive to minimise the impact of the crisis on development and
ensure the achievement of the millennium development goals."

The four nations called for strengthening coordination and cooperation among BRIC
States in the field of energy, including among producers and consumers of energy and
transit states, in an effort to decrease uncertainty and ensure stability and
sustainability. They also underlined the need for a more democratic and just multi-
polar world order based on the rule of international law, equality, mutual respect,
cooperation, coordinated action and collective decision-making of all States.

The BRIC nations condemned terrorism in all its forms and manifestations and
reiterated that there could be no justification for any act of terrorism anywhere or for
whatever reasons.

Pak among top 10 failed States


Pakistan, split in the middle with terrorist attacks and facing an economic crisis,
remains among the top 10 failed States, says an index prepared by the Fund for Peace,
an independent research organisation. The country, placed ninth among all countries in
2008, in terms of its overall achievement, has improved its position only by a notch—it
was placed 10th in the index for 2009. The annual exercise, now in its fifth year, ranks
countries on the basis of the following factors: demographic pressure,
refugees/internally displaced persons, group grievance, uneven development, and
economic decline, de-legitimisation of the State, public service, human rights,
factionalised elites and external intervention.

The top 10 failed States in the latest list are: Somalia, Zimbabwe, Sudan, Chad,
Democratic Republic of Congo, Iraq, Afghanistan, Central African Republic, Guinea and
Pakistan.
India is placed 87th among the 177 countries under study, with its score showing an
improvement over 2008.

Singapore’s civil servants are the most efficient among their Asian peers, according a
business survey on 12 economies, but they tend to clam up unhelpfully when things go
wrong. India’s “suffocating bureaucracy” was ranked the least-efficient by the survey, which
said working with the country’s civil servants was a “slow and painful” process. The survey
ranked Hong Kong second. Thailand was ranked third. China was ranked 9th.

In the first month of 2009-10, the six core industries together clocked the fastest growth
rate in 10 months. Power, crude oil, refinery products, coal, cement and finished steel grew
4.3% year-on-year, recovering from a low of 1.1% in December 2008.

The Bandra-Worli sea link in Mumbai, seen as an engineering marvel, weighs equivalent
to that of 50,000 African elephants! The steel wire used is equivalent to the circumference
of the earth. The 5.6 kilometre-long cable stayed bridge is 63 times the height of the Qutub
Minar. It has consumed 90,000 tonnes of cement, which would suffice to make five ten-
storied buildings. The eight-lane 5.6 km-long Sea Link is India’s first bridge to be
constructed in open sea conditions with a 4.7 km, twin, 4-lane carriageway. It has been
decided to name the link as Rajiv Gandhi Setu.

Ram Pradhan Committee was formed to probe the 26/11 terror attacks.

An Indian Army regiment based in Western Assam district of Dhubri is set to enter in
Guinness Book of World Records after it has planted 4.48 lakh saplings within a span of 24
hours in a massive plantation drive conducted in coordination with the Assam Forest
Department on June 13, 2009. About 300 personnel from 21 Jat Regiment of Indian Army
set out on a plan to plant 5 lakh saplings on an area of 180 hectares on a denuded forest
land in Dhubri district at 3-30 p.m. on June 12 and ended up planting 4.5 lakh saplings at
3.30 p.m. on June 13, thereby toppling the current world record held by the Mexico Forest
Department that had planted 3.40 lakh sapling in 24 hours.

Qualified Institutional Placement (QIP) is a capital raising tool, whereby a listed


company can issue equity Shares fully and partly convertible debentures, or any securities
other than warrants, which are convertible into equity Shares, to a Qualified Institutional
Buyer (QIB). Apart from preferential allotment, this is the only other speedy method of
private placement for companies to raise money. It scores over other methods, as it does
not involve many of the common procedural requirements, such as the submission of pre-
issue filings to the market regulator. The specified securities can be issued only to QIBs,
who shall not be promoters or related to promoters of the issuer. The issue is managed by a
SEBI-registered merchant banker.

India's external debt rose by 2.4 per cent at $230 billion during 2008-09 due to an
increase in commercial borrowings and short-term debts. With a rise of $5.3 billion over the
previous fiscal, the external debt rose to 22 per cent of the GDP from 19 per cent in 2007-
08. On the positive side, India's debt service ratio was the third lowest, above China and
Malaysia. Of the total external debt, the share of commercial borrowings was the highest at
27.3 per cent, followed by the short-term debt at 21.5 per cent. Non-Resident Indian
deposits accounted for 18.1 per cent, while multilateral debt was 17.2 per cent of the total
debt. The debt service ratio declined to 4.6 per cent at the end of March 2009. In terms of
international comparison, India was the fifth most indebted country after China, Russia,
Turkey and Brazil.
Section 377 of the IPC criminalizes homosexuality. There is a debate going on within and
outside government to repeal this section of IPC.

Former Indian cricket captains Sunil Gavaskar and Saurav Ganguly, and former ICC
President Jagmohan Dalmiya have been invited to give lecture at the University of Oxford,
England, as part of ICC centenary celebrations.

The Eastman Kodak Company has decided to retire its most senior film Kodachrome,
which became the world’s first commercially successful colour film in 1935, spent 74 years
in Kodak’s portfolio. It enjoyed its heyday in the 1950s and ’60s but in recent years has
nudged closer to obscurity.

Union HRD Minister Kapil Sibal has been nominated as member of the honorary senate of
the Lindau Foundation, which supports the annual Nobel Prize winners meetings at Lake
Constance in Germany. The foundation was created in year 2000, on the initiative of Nobel
Laureates. The annual Nobel Prize winners’ meetings enable young researchers’ to interact
with Nobel Laureates, besides allowing transfer of knowledge between the Laureates
themselves.

After the Kullu shawl, Kangra tea and the Chamba “rumaal”, it is now the turn of the
Kinnauri shawl to acquire a patent and a GI (Geographical Indication) stamp, a hallmark for
quality and authenticity. Threatened with the loss of its distinctiveness to the machine-made
Ludhiana shawls, the traditional Kinnauri shawl will be community patented, paving way for
its marketing in the international market. With the Kinnauri shawl being registered under
the Geographical Indications Act, 1999, the product made on wooden looms in practically
every home of the tribal district of Kinnaur, will be protected from being lost in the race for
modernity. Moreover, with the GI stamp on it, the product, it is hoped, would fetch
handsome prices. The Kinnuari shawls have religious significance as the range of colours
used in designs symbolise mythological background. The unique wrap made out of wool,
pashmina and angora are known for their intricacy and finesse in weaving.

Biobin, India’s first biodegradable bags meant as an alternative to non-bio-degrable plastic


bags, a main source of environment pollution, has been introduced in Tamil Nadu. This is
the first time in India that bio-degradable bags with disinfectant properties and fragrance
have been launched. These bags have special characteristics that help them degrade faster.
The Sunstar Trading Corporation, jointly with Exnora International, has designed and
launched the biobin bags.

The State Bank of India has launched car loan scheme “SBI Ezee” for financing new cars
at interest as low as 8 per cent for the first year.

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