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WTO and Impact on India

The World Trade Organization (WTO) is a global international organization dealing with the rules of trade between nations. The work of WTO moves around WTO agreements, negotiated and signed by the bulk of the world's trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business. India is a founder member of the General Agreement on Tariffs and Trade (GATT) 1947 and its successor, the World Trade Organization (WTO), which came into effect on 1 January 2012 after the conclusion of the Uruguay Round (UR) of Multilateral Trade Negotiations. India's participation in an increasingly rule based system in the governance of international trade is to ensure more stability and predictability, which ultimately would lead to more trade and prosperity. Impact on India Services exports account for 40% of India's total exports of goods and services. The contribution of Services to India's GDP is more than 55%. The sector (domestic and exports) provides employment to around 142 million people, comprising 28% of the work force of the country. India's exports are mainly in the IT and IT enabled sectors, Travel and Transport, and Financial sectors. The main destinations are the US (33%), the EU (15%) and other developed countries. India has an obvious interest in the liberalisation of services trade and wants commercially meaningful access to be provided by the developed countries. Since the Uruguay Round, India has autonomously liberalised its Services trade regime across the board. India's interest in services lies in the large pool of trained, qualified experienced manpower providing services by temporarily moving to provide services and then returning to India (Mode 4). Trade in Mode 4 accounts for only a minuscule 1% of global trade at the moment. India has asked for a commitment from the developed countries in Mode 4, inter alia in I.T and I.T Enabled Services, Engineering Services, Health Services, Education Services etc. The other manner in which India can deliver services is by way of remote supply of services with improved connectivity and vast pool of professionals in various services sectors (Mode 1). It includes outsourcing, BPO etc. Global trade in Mode 1 accounts for only 18% of total global trade. The major concern for India in the area of services is that the markets for services in the larger economies are not sufficiently open, particularly in respect of labour and labour-related services. Furthermore, in order to realise effective access in the larger markets, there is a need to ensure that predictable and transparent disciplines are put in

place for Domestic Regulations so that they are not abused to deny access or to create barriers. One of the primary objectives of the WTO was to substantially reduce the distortions that have plagued global agricultural markets, caused primarily through subsidies and protection by the developed countries. Discussions in WTO are aimed at reducing subsidies in developed countries and protection in developing countries. Although the negotiations in the Doha Round made a serious attempt to reduce farm subsidies, little progress has been made towards this end in real terms. Besides reductions in the high levels of farm subsidies, developing countries seeking market access have been seeking reductions in tariffs on agricultural commodities. The focus of the market access negotiations in agriculture has been on reduction in non-ad valorem tariffs that have been used in good measure by a number of developed countries. Protection of intellectual property rights (patents, copyrights, trademarks etc.) has been made stringent. It is argued that the TRIPs (Trade related Intellectual Property Rights) agreement goes against the Indian Patents Act, 1970. Only process patents can be granted in food, chemicals and medicines under the Indian Patents Act. TRIPs agreement provides for granting product patents also. Under TRIPs patents can be granted to methods of agriculture and horticulture, bio-technological process including living organism like plants and animals. The duration of patents under TRIPs is 20 years. Introduction of product patents in India will lead to hike in drug prices by the MNCs who have the product patent. This will hit the poor people who will not have the generic option open . The extension of intellectual property right to agriculture has negative effects on India. Presently, plant breeding and seed production are largely, in the public domain. Indian scientists have undertaken plant breeding and multiplication is in the hands of National and State Seed Corporations. Government, through this machinery, provides seed to Indian farmers at very low prices. Indian scientists, in future will find it extremely difficult to breed new varieties and Indian research institutions will be unable to compete financially with MNCs and will be denied access to patented genetic material. MNCs will get the control over our genetic resources and as such the control over food production would be jeopardised. The most important things for India to address are speed up internal reforms in building up world-class infrastructure like roads, ports and electricity supply. India should also focus on original knowledge generation in important fields like Pharmaceutical molecules, textiles, IT high end products, processed food, installation of cold chain and agricultural logistics to tap opportunities of globalization under WTO regime. India's ranking in recent Global Competitiveness report is not very encouraging due to infrastructure problems, poor governance, poor legal system and poor market access provided by India. Our tariffs are still high compared to Developed countries and there will be pressure to reduce them further and faster.

India has solid strength, at least for medium term (5-7 years) in services sector primarily in IT sector, which should be tapped and further strengthened. India would do well to reorganize its Protective Agricultural policy in name of rural poverty and Food security and try to capitalize on globalization of agriculture markets. It should rather focus on Textile industry modernization and developing international Marketing muscle and expertise, developing of Brand India image, use its traditional arts and designs intelligently to give competitive edge, capitalize on drug sector opportunities, and develop selective engineering sector industries like automobiles & forgings & castings, processed foods industry and the high end outsourcing services. It wont be a bad idea if Indian textile and garment Industry go multinational setting their foot in western Europe, North Africa, Mexico and other such strategically located areas for large US and European markets. Therefore, India must improve legal and administrative infrastructure, improve trade facilitation through cutting down bureaucracy and delays. Corruption will also have to be checked by bringing in fast remedial public grievance system, legal system and information dissemination by using e-governance.

Agricultural growth and National Income At dawn of Independence, share of agriculture was around 50 percent of the national income and around 90 percent of work force was engaged in primary sector. In the last six decades, share of agriculture reduced to less than one fifth. In 2011-12, share of agriculture was 13.9 percent. In the post independence years, agriculture production has increased manifolds and India has attained self-sufficiency in food grain productions. However, agriculture growth was relatively lower than the growth of industrial and service sector resulting in consistent decline in the share of agriculture income in total national income. Still there is no denying of the fact the agriculture production has stagnated in the country and its growth depends on the vagaries of the monsoon. In the post second five year plans also, public investment in primary sector is declined. Moreover, productivity in India is much less than most of the developed countries despite the fact that India is characterized by one of the most fertile tracts of the world. Major reasons for low productivity include weak framework for sustainable water management and irrigation, traditional methods of production, small land holding, inadequate infrastructure and services in rural areas, over-regulation of domestic agricultural trade, rural poor have little access to credit etc.

Numerous sector specific government interventions like low administered prices for food grains, ostensibly for food security reasons, also discriminated against agriculture. Product prices were kept so low that, despite large input subsidies on fertilizers, credit, irrigation, power etc, the agricultural sector remained net taxed. Simultaneously, excessive input subsidies led to inefficiencies, resource misallocation, and contributed to environmental degradation. The adverse terms of trade for agriculture resulted in a lack of incentive to producers to invest in output raising technologies. In addition, a major proportion of the costs of inefficient functioning of organizations like the Food Corporation of India were borne by the farmers. Large subsidies given on agricultural inputs also led to resource misallocation and placed an unsustainable burden on state and central finances and reduced the capacity of government to undertake large investments. However, these subsidies failed to compensate the farmers for the negative impact of lower administered price paid on outputs, higher input prices due to excessive protection given to industry. The net effect is that agriculture had negative protection and discriminated. Food and Agriculture Organization has suggested few measures to increase the productivity of Indian agricultureThe farmers should be provided wi th a stable price for their agricultural products at a remunerative level. There should be an expansion of adequate marketing facilities to sell the agricultural product. The land tenure system should be changed in favour of the cultivator. There should be a provision of cheap credit on reasonable terms especially to small farmers for better techniques of production. The modern inputs like fertilizers, pesticides and improved seeds should be made available to the farmers at reasonable prices. There should be provisions of education, research and extension of agro-economic services to spread the knowledge of improved methods of farming. The State should make provision for the development of resources which are not possible in the part of individual farmers e.g. large scale irrigation, land reclamation or resettlement projects. There should be an extension of land used and intensification and utilisation of land already in use through improved and scientific implements. Agriculture productivity must also be increased as livelihood of more than 50 percent of population depends upon growth of agriculture. Apart from above mentioned measures, other reforms should also be undertaken like allowing FDI in agriculture, improving distribution infrastructure etc.

Moreover, forward and backward linkages should be strengthened and rural infrastructure should be increased as a whole. Pooling of many land holdings may yield better results for which land laws for leasing with sufficient safeguards in place should be considered. Addressing infrastructure requirements in the agriculture sector, especially storage, communication, roads and market should be priority. The policy makers ought to devise appropriate region specific policy packages for reversing the trend of deceleration in agricultural growth registered in the post-reform period with a view to making a large proportion of workforce in agriculture share the benefits of high growth achieved by the economy after economic liberalisation and make the growth process more inclusive. This can only be done through according higher priority to agriculture and undertaking large public and private investments in rural infrastructure like power, roads and communications and above all in research and extension. In this manner, agriculture sector should be dovetailed with the rest of the sector of the economy which will help in aligning the agriculture growth with the growth of national income. Consequently, it will reduce the vast rural-urban inequalities as well as increase in agriculture returns will increase the income of countrys 50 percent households. Needs for improvement in agriculture sector is second to none and once Pt. Jawaharlal Nehru has rightly said that in an economy, everything else can wait but not agriculture. Roads of India, life line of 33 lakh Km Roads form the part of the basic infrastructure for a nation and in a developing country like India where distances between two major cities can be a couple of thousand kilometres, roads can be actually termed as lifeline of the nation. History of Indian roads is quite old. Ruling emperors and monarchs of ancient India had constructed numerous brick roads in the cities. One of the most famous highways of medieval India is the Grand Trunk Road. The Grand Trunk Road began in Sonargaon near Dhaka in Bangladesh and ended at Peshawar in modern-day Pakistan. In India, it linked several important cities from Kolkata in the east to Amritsar in the west, while passing through the cities of Patna, Varanasi, Kanpur, Agra, Delhi, Panipat, Ambala, Ludhiana and Jalandhar. At the time of independence, India inherited a poor road network infrastructure from Britain. Between 1947 and 1988, India witnessed no new major road development projects and there was poor maintenance of the existing ones. Predominantly all roads were single lane and mostly unpaved. India had no expressways and less than 200 kilometers of 4-lane highways.

In 1988, the National Highways Authority of India was established in India by an Act of Parliament. This autonomous entity came into existence on 15th June, 1989. The Act empowered this entity to develop, maintain and manage Indias road network through National Highways. However, even though the Authority was created in 1988, nothing much happened till India introduced widespread economic liberalization in early 1990s. Since 1995, the authority has privatized road network development in India. As a result over 70,000 kilometres of National Highways have been built by December 2011 out of which 16,500 kilometers are 4-lane or 6-lane modern highways. Till April 2012, India had completed and placed in use over 17,900 kilometres of recently built 4 or 6-lane highways connecting many of its major manufacturing centres, commercial and cultural centres. Presently the Indian road network of 33 lakh Km. is second largest in the world and consists of expressways, national highways, state highways, major district roads, rural and other roads. Out of these, expressways and national highways are the sole responsibilities of the central govt and are built and managed by the Central Public Works Department (C.P.W.D.). While state highways and other major district roads are built and managed by the respective state governments through its Public Works Department (P.W.D.). About 65% of freight and 80% passenger traffic is carried by the roads. The importance of National Highways can be judged from the fact that while they constitute only about 1.7% of the total road network of India, they carry about 40% of the total road traffic. The pressure on the Indian roads is always increasing and the number of vehicles has been growing at an average pace of 10.16% per annum over the last five years. This calls for a planned, purposeful and target oriented development of the road infrastructure in the country. Ministry of road transport and highways is the apex organisation under the Central Government and is entrusted with the task of formulating and administering policies for Road Transport, National Highways and Transport Research, in consultation with other Central Ministries/Departments and State Governments/UT Administrations with a view to increasing the mobility and efficiency of the road transport system in the country. The rate of new highway construction across India has accelerated in recent years. Some of the major projects that are being implemented include the National Highways Development Project, Yamuna Expressway and the KMP (Kundli-Manesar-Palwal) Expressway. Under former Prime Minister Atal Behari Vajpayee, India launched a massive program of highway upgrades, called the National Highway Development Project (NHDP), in which the main north-south and east-west connecting corridors and highways connecting the four metropolitan cities have been fully paved and widened into four-lane highways. Some of the busier National Highway sectors in India have been converted to four or six lane

expressways for example, Delhi-Agra, Delhi-Jaipur, Ahmedabad-Vadodara, Mumbai-Pune, Mumbai-Surat, Bangalore-Mysore, Bangalore-Chennai, Hyderabad-Vijayawada and GunturVijayawada. India has the distinction of having the world's second highest-altitude motor highway LehManali Highway, connecting Shimla to Leh in Ladakh, Kashmir. The longest NH is NH7, which runs between Varanasi in Uttar Pradesh to Kanyakumari in Tamil Nadu, at the southernmost point of the Indian mainland, covering a distance of 2,369 km and passes through Hyderabad and Bangalore. The shortest NH is the NH47A, which spans 6 km from Ernakulum to Kochi Port. The main roads in India are under huge pressure and in great need of modernization in order to handle the increased requirements of the Indian economy. In addition to maintenance, the expansion of the network and widening of existing roads is becoming increasingly important. This would then enable the roads to handle increased traffic and also allow for a corresponding increase in the average movement speed on India's roads. The World Health Organization compilation of road network safety data for major economies found India to have the highest number of road fatalities in the World. With over 135,000 deaths annually, the country has overtaken China and now has the worst road traffic accident rate worldwide, according to the latest report of National Crime Records Bureau or NCRB. The death toll rose to 14 per hour in 2009 as opposed to 13 the previous year. The low road densities per 1000 people have created significant congestion and slow speeds on existing roads inside cities. Because of the congestion the fuel efficiency of the vehicles in India is very low. This increases the overall fuel consumption and heavy pollution since the engines run inefficiently at such low speeds. Pollutants from poor road network and resultant poor fuel efficiencies include hydrocarbons, nitrogen dioxide, sulphur dioxide, methane, carbon monoxide and carbon dioxide - all of which cause health problems, adverse climate effects and related environmental damage. India is a vast country where roads serve the purpose of connecting one region to another, one state to another and one metro to another. Road network system of India is important if we want to become an economic superpower. Today there is the need to create more roads, broaden the existing ones and to make them safer so that India is on the road to become a developed nation. Are we heading for Presidential Form of Government in India? The declining trends in over six decades working of Parliamentary system of government in India has thrown open a debate as to whether it has lived up to the expectations of the founding fathers of the Constitution. Drawn from the system prevailing in U.K. for centuries and based upon the working of legislatures prior to Independence, Parliamentary system was considered to be the best suited for the existing geo-political conditions of India.

However, trends like dynastic politics, multiplicity of political parties, voters apathy, instability, adoption of dubious means to form government, absence of healthy debates, pandemonium, boycott, absenteeism, lack of quorum, skyrocketing cost of Parliamentary proceedings, bypassing of Parliament, electoral malpractices, poor polling, criminalization of politics, etc. have crept into the working of the Parliamentary system. In the light of aforesaid factors, Presidential form of government is often cited by critics as more suitable for the Indian political system. In the Presidential form of Government, the President is the real head. He is the head of state as well as the head of government. The President is elected by people. Neither he nor his ministers are drawn from the legislature. They are not accountable to it. They are independent of the legislature. He has a fixed tenure and cannot be easily ousted from office by the legislature. The only method of his ouster from office is impeachment which is a very difficult process. On the other hand, the President also cannot dissolve the legislature. Further, the judiciary is independent of both the executive and the legislature. Thus, there is not only separation of powers, but also check and balance in the Presidential system. Merits of Presidential form of Government Because of the twin principles of separation of powers and check and balance, there is no concentration of powers in the same man or in the same body. As a result, system is more democratic. As both the President and the legislature enjoy fixed terms of office, ther e is political stability. There is continuity of policy. Further, the government can think of long-term policies. In the USA, the President is directly elected by people. He has thus reason to think that he enjoys more of people's confidence and support than the Prime Minister in the Parliamentary system. The President is free to choose his ministers. (Or secretaries as they are called in America.) The Senate, the Upper House of American Congress, may or may not ratify such appointments, but it cannot impose its choice on the President. The President has thus the freedom to appoint very competent persons as his Ministers or Secretaries on the basis of their experience and expertise. They are accountable only to the President and not to the Congress. As a result, they have time to concentrate on their work and to do their duty efficiently. The President, being all powerful, is in a position to take bold and prompt decisions. His ministers, being subordinate to him, cannot tie hands. They may advise him, but they have to implement his decisions. This system is more effective in tackling emergencies as there is unity of control and concentration of executive powers in person (President). He can react quickly to any

national crisis by taking prompt decisions. There is hardly any need for him to convince others on the spot that the decision he going to take is good for the nation. The multiparty system is prone to political instability. Political parties with different interests pull the political system in diff directions. In order to check this, there is the need of a strong executive and the President government is best suited to establish stability in a multiparty system. The Presidential executive is of help in forging unity in the nation consisting of di verse regions, communities and cult As he is directly elected by people, they look upon him as the symbol of their unity. Demerits: The Presidential executive is likely to be authoritarian. As all executive powers are concentrated in the hands of the President and as he is not accountable to legislature, he may be tempted to abuse powers and behave in a dictatorial manner. As the President and his ministers are not members of legislature, they find it difficult to persuade the members of the latter to accept' proposals. The legislature is inclined to find fault with the President, and vice versa. Conflict between the executive and the legislature leads to deadlock in the administration. The executive is not accountable to the legislature. Nor is it ac countable to people. The people of America directly elect their President, they cannot recall him even if they find him incompetent or dishonest or useless. President can be removed from office by the legislature through impeachment and Impeachment is a very difficult process. The Presidential system is too rigid to adapt itself to sudden changes in circumstances. To manage a crisis, the ministers including the Prime Minister in Parliamentary system can be replaced. But, however great the need, the President in a Presidential system cannot be replaced during his tenure. In case Presidential form of government is introduced in India, executive and legislature will be separated and the ministers will not be drawn from legislature as happens. Indias past experience suggest that in such a scenario, decision making will be often hampered due to deadlock between two as legislature of often motivated by populist and short term measures. Moreover, most of the criticism of Indian political system is can be answered if electoral reforms are introduced. Dynastic politics, criminalization of politics, electoral malpractices, voters apathy, over expenditure in elections etc can be removed if proper electoral reforms are introduced. Both Presidential form of government and Parliamentary form of government have their merits and demerits and success of such governments depends on the conscience of the office bearers. Thus in India, need of hour is to clean the political system of the country by introducing major reforms. Changing the system from Parliamentary form of government to Presidential

form of government without cleaning the system will just start the debate whether India should revert back to Parliamentary system or shift with Presidential one. Procurement of grain is not a problem but preservation is. Green revolution of the 1960s made India a food surplus country. The states of Punjab, Haryana and Western UP were especially benefitted by green revolution and since then these states have been contributing majority of their produce towards the central pool of wheat and rice maintained by the Food Corporation of India, to ensure price stability, for catering to PDS and to cater to exigencies. Procurement of food grain is the process whereby govt. agencies (of both central and state governments) purchase the produce (wheat and rice) from the market and then this purchased grain is distributed all over the country as per the needs and demands of the states. Procurement is done by the designated staff of the purchase agencies of the govt. as and when the produce arrives in the market. Every year govt. declares MSP (Minimum Support Price) of the food grain that is to be purchased and all the produce is lifted from the market at that price. Hence there is no problem in the procurement of grain and the process goes on smoothly till the last grain is purchased and lifted from the market. However the problem starts right after the grains are purchased. This problem is that of storage and preservation. Scientific storage and preservation techniques are costly and it requires huge investment to create the necessary infrastructure. Therefore majority (around 60 %) of the purchased grains are kept in the open plinths (unscientific storage) and this reduces the life of the grain to a great extent. Wheat stocks in the open have continuous exposure to moisture, making them vulnerable to fungal attacks. Grains start turning black. Unbearable stench emanates from these stocks. Monsoon season makes it worse. Since these open godowns are located along national and state highways, they remain drenched in rain and flood waters not only for days but at times weeks together. Wooden plinths on which stacks of wheat bags are piled get saturated with water and the excess moisture by capillary action moves up to the food grains, making them highly vulnerable to attack by insects, pests and rodents. The rotten stocks are then either sold to poultry or cattle feed manufacturers or supplied to wheat flour mills for processing (for nonhuman use). The chairman of the Food Corporation of India (FCI), Siraj Hussain, admits that food worth Rs 50,000 crore is wasted every year. This comes roughly to 20 per cent of the total food produced by the country. Though this figure includes food that is lost in processing,

packaging, transportation and even marketing, yet a substantial portion of it is lost as rotten because of antiquated storage techniques. Though about one-third of Indias population is underfed, yet a huge amount of gra in gets wasted due to poor storage facilities. It is unfortunate that we waste grain when our countrymen sleep on an empty stomach, said Dr MS Swaminathan, former Director General of the Indian Council for Agriculture Research, while delivering a talk on "Shaping our agriculture future in an era of climate change" at Punjab Agriculture University, Ludhiana Dr Swaminathan suggested that silos be built for long-term storage to prevent deterioration and rotting of foodgrain on account of delays in transferring the same to consumption states. Silos are used in various countries to scientifically store food grains. They have automated temperature control mechanisms which help in keeping the grains healthy for years and hence prevent their wastage. While normal life of wheat stored in the open is six months, grains stored in godowns can best last for two years. This is a huge difference. By using scientific storage techniques the life of the grain increases drastically. This not only helps in optimum utilization of the food but also saves the government agencies from huge losses that result from the produce becoming unfit for human consumption. In the past three years, a little has been done to increase the food grain storage space in the two states. While Haryana has added only five lakh metric tonnes of new storage space, Punjab has added 12 lakh metric tonnes of new storage space till March this year. This is woefully less than the required space, and not even in consonance with the increase in crop production each year. However some steps have been taken by both govt. and private agencies to address to this problem of unscientific storage of food grains. NABARD has started Warehousing (Refinance) Scheme, 2012. Under this initiative, the NABARD extends financial support to banks at a concessional rate of eight per cent for setting up warehousing facilities in the state. The scheme was launched in September last year and financial support of Rs 245 crore has been extended to the banks in Punjab. Lately some private agencies have also shown keen interest in setting up scientific storage facilities. One recent initiative has been taken by LT Foods which has developed a silo with 50,000 MT capacity in Amritsar. More of such efforts are required by the govt. in collaboration with interested private parties to develop closed godowns and silos on PPP model for the benefit of the country.

From the above discussion it is clear that scientific storage of the food grains in the silos or in closed godowns is only solution to this problem. Considering the amount of food grains that become unfit for human consumption every year, some quick measures need to be taken and a major policy initiative is required so that instead of rotting in the open, these grains feed millions of poor, starving and malnourished people of this country. Eurozone Crisis and India The 'Eurozone' is the name given to the 17 European countries which use the Euro as their official currency, including Ireland, Spain, Germany, Portugal and Greece. The debt crisis basically came about because several Eurozone countries have lost control of their finances since the global recession and consequently, borrowing and spending more than they could realistically afford. However, before these loans were approved, the Governments of these countries had to agree to adopt 'austerity measures' to show they were doing what they can to tackle their economic problems themselves. This has led to mass public protests in Greece, with many people demonstrating against more job losses and tax rises as a result. A major concern is that if Greece is unable to keep repaying what it owes to other countries, the country could effectively go bankrupt - which would have an even more damaging effect on Greece's economy, and restrict its citizens' spending power even more. This could also have a knock-on effect on other Eurozone countries. It could damage their credit rating, meaning their Governments would have to pay more to borrow money and might have to introduce their own austerity measures. Impact on Indian Economy The Euro zone crisis, if not resolved early, will have a chain reaction. It may not only engulf the European countries, but could also have a severe impact on the developing economies such as India. With the crisis aggravating in Europe, the US Dollar will emerge as the most secure currency. With the collapse of the Euro, Dollar's rise against the Indian Rupee, which has already fallen to historic lows, will be steeper. Though India is primarily a domestic economy, Indias exports are positively linked to the global economic growth. This is likely to adversely impact Indias export growth in the coming months. However, growth will be only marginally affected by the slowdown in the euro region debt stricken countries as our exposure is low. This will lead to less capital inflows as foreign institutional investors would tend to be more conservative. Further, the stock markets can witness a slowdown in funds from this region. The foreign institutional investors (FIIs) and European banks will need funds to meet their

own requirements of capital adequacy, current obligations and domestic needs, and will not be able to spare much for investments in overseas markets. FDI has not been significantly affected by the crisis while the FIIs are showing outflow in the last couple of months. The fall of the rupee will make exports and services theoretically cheaper. But since India depends on imports to meet its fuel demands (generally paid for in US Dollars), fuel prices would go through the roof, making everything costlier. As forex reserves will dwindle fast, input costs will continue to rise and margins will drop drastically. Ultimately, it is likely to hit the Indian manufacturing sector, consequently reducing employment, rising prices and economic may be effected by stagflation. Growth in the booming Indian economy has slowed with the loss of export business in depressed European markets while business leaders are deadlocked with the Government over economic development plans and policy changes. Corruption scandals have not helped India's image while some foreign investors say they now get a cooler reception. International commodity price moderation is not being translated in domestic prices. Further, exchange rate depreciation would worsen the inflationary conditions in the economy. Therefore, the RBI would have to continue with its anti-inflationary stance in the near term if domestic conditions do not improve. According to Economic Survey 2011-12, volatility in the domestic stock market is likely to persist till the European debt turmoil is resolved, even though the impact has not been much on India. But India needs to take another more fundamental lesson from the European debt crisis. The European sovereign debt crisis is not an overnight development. Globalisation of finance; string-less credit conditions during the 20022008 period that encouraged high-risk lending and borrowing practices; international trade imbalances; real estate bubbles that have since burst; slow economic growth since 2008; fiscal policy choices related to government revenues and expenses; and approaches used by nations to bail-out troubled banking industries and private bondholders, assuming private debt burdens or socialising private losses have all contributed to this development. In India, unfortunately, successive governments have sacrificed fiscal consolidation at the altar of growth. The Union finance minister, for the financial year 2011-2012, announced that the fiscal deficit of the government of India stood at 5.9 per cent of GDP. But this number somehow hides more than it shows. In case of re-emergence of crisis in India, government is not in a position to give another stimulus package. Solution doesnt lie in insulating the Indian economy from the global economy as it will tantamount to stepping backwards but in strengthening the fundamentals of the economy. Understanding NIFTY

S&P CNX NIFTY is an Index computed from performance of top stocks from different sectors listed on NSE (National stock exchange). NIFTY consists of 50 companies from 24 different sectors. NIFTY stands for National Stock Exchanges Fifty. for NSE similarly SENSEX is for BSE Some mutual funds use NIFTY index as a benchmark meaning the mutual funds performance is compared against the performance of NIFTY. On NSE there are futures and options available for trading with NIFTY as underlying index. India Index Services and Products Ltd. (IISL) owns NIFTY. IISL is a joint venture of NSE and CRISIL. CRISIL is a subsidiary of Standard and Poor (S&P). And so NIFTY is also called as S&P CNX NIFTY. CNX ensures common branding of indices, to reflect the identities of both the promoters, i.e. NSE and CRISIL. Thus, 'C' stands for CRISIL, 'N' stands for NSE and X stands for Exchange or Index. The S&P prefix belongs to the US-based Standard & Poor's Financial Information Services. Nifty stocks represent about 63 percent of the Free Float Market Capitalization. Impact cost of the S&P CNX Nifty for a portfolio size of Rs.50 laks is 0.06%. Market impact cost is the best measure of the liquidity of a stock. It accurately reflects the costs faced when actually trading an index. For a stock to qualify for possible inclusion into the S&P CNX Nifty, it has to reliably have market impact cost of below 0.75 percent when doing S&P CNX Nifty trades of Rs. 50 Lakhs. S&P CNX Nifty is professionally maintained and is ideal for derivatives trading. S&P CNX Nifty always uses the best stocks possible for its index. The weakest stocks are removed from inside the S&P CNX Nifty and the new stock into it. The world changes, so the index should change. Yet, the change should not be sudden - for that would disrupt the character of the index. S&P CNX Nifty uses clear, researched and publicly documented rules for index revision. These rules are applied regularly, to obtain changes to the index set. Index reviews are carried out every six months to ensure that each security in the index fulfills all the laid down criteria. IDBI was once not listed; SBI was once illiquid; Infosys was once an obscure software startup. The world changes, and one by one, these stocks have come into the S&P CNX Nifty. Each change in the S&P CNX Nifty is small, so the continuity of the index is maintained. Yet, at all times, S&P CNX Nifty represents the 50 most important liquid stocks in the country, the best stocks to build an index out of. NSE has the best surveillance procedures in India, so the extent of market manipulation is minimum. In NSE, since, the professional staff of the surveillance department has no positions on the market, this elimination of conflicts of interest and generates a more The companies which form index of NIFTY may vary from time to time based on many factors considered by NSE. NIFTY is

honest focus upon eliminating market manipulation. On a day to day basis millions of shares get traded on the NSE generating huge order flows. Due to the liquidity and order flow from numerous market players manipulation of the closing price becomes very hard. NSE is the most liquid exchange in India. Hence, the prices observed there are the most reliable. NSE has the highest trading intensity and their bid-ask spreads are the tightest.

Sister indexes of NIFTY S&P CNX Defty S&P CNX Defty is S&P CNX Nifty, measured in dollars. If the S&P CNX Nifty rises by 2percent it means that the Indian stock market rose by 2percent, measured in rupees. If the S&P CNX Defty rises by 2percent, it means that the Indian stock market rose by 2percent, measured in dollars.

S&P CNX 500 S&P CNX 500 is Indias first broadbased benchmark of the Indian capital market. The S&P CNX 500 represents about 86percent of total market capitalisation and about 78percent of the total turnover on the NSE. The S&P CNX 500 companies are disaggregated into 72 industries, each of which has an index called S&P CNX Industry Index. Industry weightages in the index dynamically reflect the industry weightages in the market. So for e.g. if the banking sector has a 5percent weightage among the universe of stocks on the NSE, banking stocks in the index would have an approximate representation of 5percent in the index. The S&P CNX 500 is a market capitalisation weighted index. The base date for the index is the calendar year 1994 with the base index value being 1000. Companies in the index are selected based on their market capitalisation, industry representation, trading interest and financial performance. The index is calculated and disseminated real-time. CNX Nifty Junior S&P CNX Nifty is the first rung of the largest, highly liquid stocks in India. CNX Nifty Junior is an index built out of the next 50 large, liquid stocks in India. It is not as liquid as the S&P CNX Nifty, which implies that the information in the S&P CNX Nifty Junior is not as noisefree as that of the S&P CNX Nifty. S&P CNX Nifty and the CNX Nifty Junior taken together constitute 100 most liquid stocks in India. S&P CNX Nifty is the front line blue-chips, large and highly liquid stocks. The CNX Nifty Junior is the second rung of growth stocks, which are not as established as those in the S&P CNX Nifty. A stock like Satyam Computers, which recently graduated into the S&P CNX Nifty, was in the CNX Nifty Junior for a long time prior to this. CNX Nifty Junior can be viewed as an incubator where young growth stocks are found.

As with the S&P CNX Nifty, stocks in the CNX Nifty Junior are filtered for liquidity, so they are the most liquid of the stocks excluded from the S&P CNX Nifty. Buying and selling the entire CNX Nifty Junior as a portfolio is feasible. The maintenance of the S&P CNX Nifty and the CNX Nifty Junior are synchronised so that the two indices will always be disjoint sets; i.e. a stock will never appear in both indices at the same time. Hence it is always meaningful to pool the S&P CNX Nifty and the CNX Nifty Junior into a composite 100 stock index or portfolio.

CNX MidCap The medium capitalised segment of the stock market is being increasingly perceived as an attractive investment segment with high growth potential. The primary objective of the CNX MidCap Index is to capture the movement and be a benchmark of the midcap segment of the market. The CNX MidCap Index is a market capitalisation weighted index with its base period of the index being the calendar year 2003 and base value as 1000.The distribution of industries in the CNX MidCap Index represents the industry distribution in the MidCap segment of the market. All companies are evaluated for trading interest and financial performance. CNX MNC Index The CNX MNC Index comprises 15 listed companies in which the foreign shareholding is over 50percent and/or the management control is vested in the foreign company. The index is a market capitalisation weighted index with base period being the month of December, 1994 indexed to a value 1,000. Companies in the index should be MNCs and are selected based on their market capitalisation, industry representation, trading value and financial performance. CNX PSE Index As part of its agenda to reform the Public Sector Enterprises (PSE), the Government has selectively been divesting its holdings in public sector enterprises since 1991. With a view to provide regulators, investors and market intermediaries with an appropriate benchmark that captures the performance of this segment of the market, as well as to make available an appropriate basis for pricing forthcoming issues of PSEs, IISL has developed the CNX PSE Index, comprising of 20 PSE stocks. CNX IT Sector Index With the Information Technology (IT) sector in India growing at a fast rate, there is a need to provide investors, market intermediaries and regulators an appropriate benchmark that captures performance of this sector. Companies in this index should have more than

50percent of their turnover from IT related activities like software development, hardware manufacture, vending, support and maintenance. The index is a market capitalisation weighted index with its base period being December 1995 with base value 1,000. NSE being the leading stock exchange in India, the NIFTY index is not only a prime index for the exchange itself but also it is an indicator of the booming Indian economy. Despite of the recent slowdown in the global economic scene the NIFTY index has sustained a regular growth after overcoming the sudden impact. The index for so many reasons has attracted investors not only from the domestic market but also from foreign countries. IMF and India The International Monetary Fund (IMF) was created on July 22, 1944 at the Bretton Woods Conference and came into existence on December 27, 1945 when 29 countries signed the Articles of Agreement. It was created to 1. Promoting global monetary and exchange stability. 2. Facilitating the expansion and balanced growth of international trade. 3. Assisting in the establishment of a multilateral system of payments for current transactions. Moreover, it also lends funds to countries with balance-of-payment difficulties, and provides technical assistance and training for countries requesting it. Background: India was one of the founding members of IMF and sought the assistance of IMF during dire needs. India is among one of the developing economies that effectively employed the various Fund programmes to fortify its fiscal structure. While India has not been a frequent user of IMF resources, IMF credit has been instrumental in helping India respond to emerging balance of payments problems on two occasions. In 1981-82, India borrowed SDR (Special Drawing Rights) 3.9 billion under an Extended Fund Facility, the largest arrangement in IMF history at that time. In 1991-93, India borrowed a total of SDR 2.2 billion and in 1991 it borrowed SDR 1.4 billion under the Compensatory Financing Facility. The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies (Euro, Japanese Yen, Pound Sterling and US $), and SDRs can be exchanged for freely usable currencies. With a general SDR allocation that took effect on August 28 and a special allocation on September 9, 2009, the amount of SDRs increased from SDR 21.4 billion to around SDR 204 billion.

Through productive engagement with the IMF, India formulated a consistent approach to expand domestic and global assistance for economic reforms. Whenever India underwent balance of payments crises, it sought the help of IMF and in turn the internationally recognized reserve willingly helped India to overcome the difficulties. Fund has provided India with technical assistance in a number of areas, including the development of the government securities market, foreign exchange market reform, public expenditure management, tax and customs administration, and strengthening statistical systems in connection with the Special Data Dissemination Standards. Since 1981 the IMF Institute has provided training to Indian officials in national accounts, tax administration, balance of payments compilation, monetary policy, and other areas. In 2009, India purchased IMF gold to lend money to developing countries. This proves that the fiscal reforms set in motion by the previous finance ministers have finally started gaining momentum, transforming India from fiscal borrower to major lender. The speed at which the gold was purchased by India on September 18, 2009 astonished the market observers, who later considered it as a smart move towards shoring its bullion funds and steadily trying to stake on the US dollar. Some analysts predict that India is purchasing gold to move forward for higher voting share in the IMF. India is also seeking for a considerable say in global fiscal affairs and greater account in the IMF. The Reserve Bank of India forfeited USD 1,045/ ounce of gold paying the amount in hard exchange and not in the IMF's internal division of account. Indias position at Present As of now, India has transformed itself from borrower to the lender to IMF and in June 2012, India pledged $10 billion. Almost 3 years ago, Dr. Manmohan Singh had said that India is ready to contribute to IMF based on its quota and this is an extension of that to the extent that India wants to have a greater say in the workings of the IMF along with other emerging economies and these type of steps will help it get that larger say. Indias current voting right is 2.34 percent and thats up from the 1.89 percent that it had three years ago. India boasts of an intimate relation with IMF where both had helped each other in time of crisis. However, recently, both India and IMF reiterated the needs for reform in each other. While International Monetary Fund (IMF) in April 2012 said India would need to accelerate economic reforms to achieve its 'potential' growth rate and expressed its concern over high inflation. Former Indian Finance Minister Pranab Mukherjee described pace of reform on quota and governance issues at the International Monetary Fund as disappointing and assured that India would continue to contribute towards a comprehensive review of the IMF quota formula by January 2013 and the completion of the next general review of quotas by January 2014.

IMF is controlled by a handful of developed nations and therefore, a dynamic process of reform is necessary to ensure the legitimacy and effectiveness of the IMF and the best possible means to improve governance and legitimacy is by ensuring that there is no slippage on crucial reforms. The IMF reforms are aimed at increasing the voting power of developing countries. Indeed, since its birth IMF has been instrumental in averting the economic crisis in many countries including India, its undemocratic set-up is also a concern. Therefore, reforms in IMF must be initiated at faster face to make it more equal in the more or less democratic world. SENSEX- A benchmark or barometer of economic development? SENSEX is the benchmark index of the Indian Capital Markets with wide acceptance among individual investors, institutional investors, foreign investors and fund managers. SENSEX is a free-float market capitalization-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange. The 30 component companies, which are some of the largest and most actively traded stocks, are representative of various industrial sectors of the Indian economy. If the Index price is increased, it shows the Economic progress of the country. It is used as a barometer of Economic development and vice versa. Initially, the index was calculated based on the full market capitalization method. Now, it is calculated based on a free float capitalization method. In this method, instead of using a company's total outstanding shares it uses its float, or the shares that are readily available for trading. The free-float method, therefore, does not include restricted stocks, such as those held by promoters, government and strategic investors. Globally, the free float market capitalization is regarded as the industry best practice. The objectives of the index are: To measure market movements Given its long history and its wide acceptance, no other index matches the SENSEX in reflecting market movements and sentiments. SENSEX is widely used to describe the mood in the Indian Stock markets. Benchmark for funds performance The inclusion of blue chip companies and the wide and balanced industry representation in the SENSEX makes it the ideal benchmark for fund managers to compare the performance of their funds. For index based derivative products

Institutional investors, money managers and small investors all refer to the SENSEX for their specific purposes The SENSEX is in effect the proxy for the Indian stock markets. The country's first derivative product i.e. Index-Futures was launched on SENSEX. Moreover, the criteria for selection and review of scrips for the SENSEX is based on following criteria Market Capitalization: The scrip should figure in the top 100 companies listed by market capitalization. Also market capitalization of each scrip should be more than 0.5 % of the total market capitalization of the Index i.e. the minimum weight should be 0.5 %. Since the SENSEX is a market capitalization weighted index, this is one of the primary criteria for scrip selection. (Market Capitalization would be averaged for last six months) Liquidity: (i) etc. (ii) (iii) Number of Trades: Number of Trades: The scrip should be among the top 150 Value of Shares Traded: Value of Shares Traded: The scrip should be among the top companies listed by average number of trades per day for the last one year. 150 companies listed by average value of shares traded per day for the last one year. Continuity: Whenever the composition of the index is changed, the continuity of historical series of index values is re-established by correlating the value of the revised index to the old index (index before revision). The back calculation over the last one-year period is carried out and correlation of the revised index to the old index should not be less than 0.98. This ensures that the historical continuity of the index is maintained. Industry Representation: Scrip selection would take into account a balanced representation of the listed companies in the universe of BSE. The index companies should be leaders in their industry group. Listed History: The scrip should have a listing history of at least one year on BSE. Track Record: Trading Frequency: The scrip should have been traded on each and every trading day for the last one year. Exceptions can be made for extreme reasons like scrip suspension

In the opinion of the Index Committee, the company should have an acceptable track record. Later, SENSEX Realized Volatility (REALVOL) was introduced which provides market participants with an accurate measure of the historic volatility of the SENSEX over fixed 1, 2, and 3-month time horizons, which are synchronized with BSEs 1, 2, and 3 -month futures & options expiration cycles. Each index is reset at the end of its respective cycle. The SENSEX Realized Volatility family of indices has several practical uses, like (iv)Can be used to create derivative products enabling traders to make directional bets on volatility, profit from volatility arbitrage trades, and hedge gamma exposure (v)Can be used to measure the difference in expected and actual volatility, allowing traders to better measure and mitigate market risk (vi)Can be used to improve volatility and correlation forecasts useful for portfolio allocation and risk management The movement of SENSEX tells whether the prices of shares listed on the stock exchange are going up or down as a whole. Movement of SENSEX is determined by the demand and supply of shares which is determined by the buyers and sellers. The behavior of buyers and sellers in the market basically reflects their opinion on future of the companys share that they are holding. So they act on what is very popularly known as market sentiments. These market sentiments are nothing but feelings of buyers and sellers on whether price of shares will go up or down in the future. These sentiments are created by various news that can have an impact on the fortunes of the company. Such news can be any news that can affect the performance of the company whose shares are bought and sold. However, while SENSEX is a good indicator of the performance of the economy, it cannot be taken as a barometer of the Indian economy. Movements in share prices always reflect market sentiments of investors. It is what the investors think that is reflected in the share price movements. In a way that is an opinion of the market on the expectations about the future performance of companies listed on the stock exchange. Movements in share prices can always indicate economic health, but never measure it. Measurement of health of an economy should always be left to key economic indicators and not share price movements that reflect sentiment.

Economic Disparities in India One of the serious problems faced by India's economy is the alarming growth rate of regional differences among India's different states and territories in terms of per capita income, socio-economic development, poverty and availability of infrastructure. Economic disparity is easily visible in the country by the fact that this is reflected by the fact that 50 percent of the populations in Bihar and Orissa live below the poverty line while states such as Delhi and Punjab exhibit very low poverty ratios. As a result of economic reforms, the southern and western States experienced accelerated economic and social development as compared to northern and eastern States. This has led to widening gap in income, poverty and other indicators of development between the two regions. Rural-urban divide had also widened in the wake of reforms. While large and medium cities experience unprecedented economic prosperity, the rural areas experience economic stagnation. As a result, there is widespread agrarian distress which results in farmers suicide and rural unrest. Socially backward sections, especial ly scheduled castes and tribes (SCs and STs) have gained little from the new prosperity which rewards disproportionately those with assets, skills and higher education. STs have often been victims of development as a result of displacement. The Eleventh Plan stresses the importance of more inclusive economic growth. It emphasizes the need for bridging the divides. Unless these are achieved in a time-bound manner, there could be serious adverse implications for the Indian economy, society and polity. Education and skill formation are principal vehicles for reducing all types of disparities in India. The various structural gaps which constrain the young people in the backward regions, rural areas and socially marginalized communities to receive quality education need to be removed without delay. This will positively impact on the economic growth by enlarging the pool of knowledge workers significantly. Rising economic disparities in India are often cited as the effect of high economic growth after economic reforms where southern and western states, urban areas showed exponential growth leaving behind the northern and eastern states and rural hinterland of the country in the race of economic prosperity. Now the question arises whether a high rate of economic growth along with widening disparities is sustainable or not. The growth in post liberalization years had created a few islands of prosperity in the ocean of poverty. In every state, there are few centers of growth while rest of the region is left with little development. For instance, In Maharashtra, Mumbai, Pune are witnessing growth while Vidarbha region is still marred by farmers suicide, similarly in Andhra Pradesh, growth is concentrated in

Hyderabad and Vishakhapatnam, Kolkata in West Bengal, Noida and Lucknow in Uttar Pradesh, Bangalore and Mysore in Karnataka etc also show similar trends. However, faster growth in post liberalization years and thereby globalization and reforms of 1991 cannot be blamed for the rising inequalities on the country because disparities are not the outcome of one becoming poorer but others becoming richer. Thus the growth process itself doesnt choose the subjects of its fruits and left others but it is an omission on the part of policy makers, administrators etc that such areas are left behind in the race of growth. Historically, it is found that growth follows the good economic and social infrastructure. Lack of better infrastructure in the some regions is the reason behind their economic stagnation. In any case, this lopsided growth is not sustainable. Already the sign of growth fatigue are visible in the country. In order to rejuvenate the growth, a big push should be given to the economy and this time, the big push should come from the regions which are lagged behind in the development. Nobel Laureate Simon Kuznet in his hypothesis, on the basis of empirical data showed that in case of high rate of growth, income inequalities rises in the initial stage of development but in the later stages, after growth gains momentum, inequalities tend to decrease. In Indian case, probably initial stage of development is yet to give way for other stage. It is clear that various dimensions of economic and social disparity- regional, rural-urban, social class or gender have aggravated in the recent period. That too during a period when India has been achieving accelerated economic growth and has been emerging as a global player. This trend, if not arrested and reversed fast, will have serious adverse implications for the Indian economy, society and polity. As of today, majority of Indians have been bypassed by the process of economic development either are able to contribute to the growth process or receive any tangible benefits. Balance of Payments: Genesis, problems and solutions Balance of Payment (BOP) is a record of all transactions made between one particular country and all other countries during a time period. BOP compares the difference of the amount of exports and imports, including all financial exports and imports. A negative balance of payments means that more money is flowing out of the country than coming in, and vice versa. BOP usually composed of two sub-accounts 1) Current Account 2) Capital Account

Current account is further divided into Balance of Trade (BOT) and Invisible account. BOT is takes into account only those transactions arising out of the exports and imports of goods (the visible items). It does not consider the exchange of services rendered such as shipping. An invisible account includes exports and imports of services. The capital account of the balance of payments is record of the flow of payments between one country and other countries that result from: (1) domestic purchases of financial and physical capital from the foreign sector and (2) foreign purchases of financial and physical capital from the domestic sector. In essence, the capital account tracks investment by the domestic sector in foreign assets going in one direction and investment by the foreign sector in domestic assets going in the other direction. When a countrys imports are more than that of its exports, there is a deficit in its current account which is financed by surplus on capital account. Foreign borrowings, FDIs and FII are included in the capital account and therefore, there inflow in crucial for ameliorating the BOP crisis arising due to high current account deficit (CAD). Since FDI and FII do not create debt, they are preferable mode of increasing investment. However, in recent times, Balance of trade account and CAD are exhibiting huge deficits to the tune of 8 and 4.3 percent respectively in 2011-12. Rising deficit in current account coupled with falling FDI and FII, depreciating Rupee and high rate of inflation were reason why global investment bank Morgan Stanley had warned that India faces a high risk of stress on the balance of payment. Stressed Balance of payment account of India is because of both internal and external factors. No country in todays globalized world can be fully insula ted from what happens in the global economy and India is no exception to the rule. As the country is increasingly integrated into the world, it cannot remain impervious to developments abroad. The unfolding of the euro zone crisis and uncertainty surrounding the global economy have impacted the Indian economy causing drop in growth, higher current account deficit (CAD) and declining capital inflows. Although, one of the measure of correcting BOP imbalance is devaluing/depreciating ones currency which is seen in Indias case during steep depreciation of Rupee. However, in order to correct BOP imbalance permanently, structural changes and reforms are needed to be incorporated. A sharp fall in rupee value may be explained by the supply-demand imbalance in the domestic foreign exchange market on account of slowdown in FII inflows, strengthening of the US dollar in the international market due to the safe haven status of the US treasury, and heightened risk aversion and deleveraging due to the euro area crisis that impacted financial markets across emerging market economies (EMEs). Apart from the global factors, there were several domestic factors that have added to the weakening trend of the rupee, which include increasing CAD and high inflation.

A trade deficit of more than 8 per cent of GDP and CAD of more than 3 per cent is a sign of growing imbalance in the countrys balance of payments. There is scope therefore to discourage unproductive imports like gold and consumer goods to restore balance. In this respect, some weakening of the rupee is a positive development, as it improves trade balance in the long run by increasing export competitiveness and lowering imports. High trade and current account deficits, together with high share of volatile FII flows are making Indias BoP vulnerable to external shocks. Greater attention therefore has to be given to improving the composition of capital flows towards FDI. Todays risk of BOP is nowhere near to the one which India faced in 1991 -92 when the country was on the brink of default with a meager forex reserves. Today, India has comfortable level of reserves and 1991 type risk is unthinkable. Nevertheless, exports in June 2012 registered a decline of more than 4 percent which is indicating the need of urgent measure for further stimulating the economy. Though external factors have their share in declining growth, but in view of huge domestic market, internal factors are more important than the external ones. Policy makers must not wait for another 1991 like crisis to take corrective measures and initiate them on urgent basis. GAAR : General Anti Avoidance Rules Avoidance is an attempt to reduce tax liability through legal means, i.e. regulating tax related affairs in such a way that one pays the minimum tax imposed by the Act as opposed to the maximum. A general anti avoidance rule (GAAR) is a set of broad and general principles-based rules enacted in the tax code aimed at counteracting such avoidance of tax. GAAR has been introduced in India due to Vodafone case ruling in favor of the company by the Supreme Court of India. The court had held on 20 January 2012 that the Income Tax department did not have the jurisdiction to levy Rs 11,000 crore tax on the offshore transaction between Vodafone International Holdings and Hutchison Group. Supreme Court decision was followed by the government proposal, also known as GAAR, in the Union Budget 2012-13 providing for a clarificatory retrospective amendment in the Income Tax Act, with effect from 1962, to restate the legislative intent that overseas deals which derive their value substantially from domestic assets can be taxed. Under the GAAR provisions, the Tax Commissioner is empowered to declare an arrangement as an impermissible avoidance arrangement (IAA) if The whole, a step or a part of the arrangement has been entered with the objective of obtaining tax benefit, and The arrangement 1)Creates rights and obligations not normally created in arms length transactions, or

2)Results in direct or indirect misuse or abuse of the provisions of the code, or 3)Lacks commercial substance in whole or part, or is not bonafide Indian Government is trying to give powers to income tax authorities as implementation of GAAR provides tremendous powers to deny tax benefit to an entity if a transaction has been carried with the sole intention of tax avoidance. Due to powers in the hand of taxmen, now innocents may be harassed by them. Moreover, the Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) money coming to India through Mauritius route will become taxable. While in the worst case scenario, onus lies on the assesse to prove that there is no tax benefit and the transaction is not an avoidance transaction. GAAR can be invoked as an alternative to or in addition to any other basis of making an assessment. It is applicable even if the main / overall purpose of the arrangement is not to obtain a tax benefit and only if a step / part of the arrangement is to obtain a benefit. It is also criticized for its ambiguous language, the lack of details, and the sudden onset of the provisions that among the factors that have upset foreign investors. However, on 25 June 2012, former Union Finance Minister Pranab Mukherjee proposed to defer the rollout of GAAR by a year to the financial year that begins in April 2013 to "provide more time" to both taxpayers and the tax office to address all related issues. Moreover, in the light of above criticisms, he proposed some measures likeTo remove the onus of proof entirely from the taxpayer and shift it to the revenue departments An independent member would be in the GAAR approving panel, while one member would be an officer of the level of Joint Secretary, or above, from the Ministry of Law On the proposed retrospective amendment in tax rules, the changes will not override the provisions of double-tax avoidance treaties India has with 82 countries. The retroactive changes will only impact those cases where a deal has been routed through low-tax and notax countries with whom India does not have tax treaties. The proposed retrospective changes in tax rules will not be used to reopen cases where assessment orders have already been finalized Non-resident investors of FIIs will be exempt from the rules, and there will be a monetary threshold from which GAAR will be implemented According to the draft, GAAR will come into effect from April 1 2013. According to the guidelines, FII not opting for treaty benefits and ready to pay taxes will not come under GAAR, but those who do opt for dual taxation avoidance agreements will come under its purview.

However, the rules of GAAR will be finalized after 20 July 2012 after seeking comments for other stakeholders. Ambiguities related to GAAR are needed to be resolved as soon as possible as it is likely to effect the FDI and FII which economy needs most at currently to upgrade its ratings. There is nothing wrong in a legislation which is aimed to curb the tax avoidance but such legislations must be designed to curb the tax avoidance only and not on strengthening the red tapism. Ozone depletion - How it will affect us? There has been a lot of fuss about ozone depletion over past several years. Have you ever wondered why it is of paramount concern? How will it affect you? Whether your answer is yes or no let us tell you that ozone depletion certainly seeks publics attention and it affects each one of us. Through this piece of article we would give you an insight to the process of ozone depletion from various angles. Ozone depletion refers to two different phenomena which affects the life on earth in a significant way. In the first phenomenon the volume of ozone is declining in the ozone layer and in another a significant decrease is being witnessed in a tmospheric ozone at the earths polar region. Both the phenomena differ to a certain degree but the reason behind their occurrence is somewhat same. Before proceeding further, it is important to understand what exactly ozone is and what is this ozone layer. Well, ozone is a gas, just like oxygen, which is made of three oxygen atoms rather than two and ozone layer is basically a deep layer of ozone (O3) in earths atmosphere, 20 to 30 kilometers above the ground. Although this gas appears to be quite similar to oxygen, yet it is very different than that. Had it been in our close surrounding in abundance, it would have produced a lot of smog into the air, making it unhealthy to breathe in. However, thankfully that is not the case and on the contrary it works in favor of life on earth from 20 to 30 kilometer above it. Although the ozone layer is a very small fraction of the gases present in the atmosphere yet it is of immense importance for the existence of life on earth. The thin ozone layer, miles above the ground, shields the entire human race and other living beings from harmful ultraviolet radiations. This harmful radiation is nothing but the UV rays that are emitted by the sun and very harmful for living beings. Apart from this, ozone is also a green house gas and its existence in the polar region is very crucial for earths climate. Around late 1970s, the intelligent minds of the earth (i.e. scientists) observed that the ozone layer is depleting. They analyzed that this depletion allows more UV rays to reach the earth surface and hence can be a serious threat to the life on earth. Hence, they started examining its causes. It was observed that over past few decades, various human activities

led to the production of several chemicals such as chloroflurocarbons, which were used in refrigerators, shaving sprays and for many other purposes. These chemicals were being carried away to the ozone layer by strong winds. Over there, UV radiations broke CFCs and released chlorine atmos. Each of these chlorine atoms broke around 100,000 ozone molecules. Thus ozone layer was depleting. Other such chemicals that adversely affect the ozone are methyl halons used in fire extinguishers, bromide used in pesticides and methyl chloroform used in businesses. However anti-ozone chemicals are not the only reasons accounting for ozone depletion. A new scientific study has also emerged up that suggests that volcanic eruptions might have also contributed to the ozone depletion. To arrive at this conclusion the ozone layer was observed by the satellites for a long period. During that time period the ozone layer depleted significantly at the time of two major volcanic eruptions. Now the questions that arise are- how impactful or hazardous the ozone depletion is? Is there anything to worry at all? Well, it affects the life on earth significantly and it might turn out to be hazardous if no effective actions are taken to prevent ozone depletion. Let us tell you why. The atmospheric ozone absorbs UVB (which is a spectrum of UV rays based on its wavelength) on the earths surface at the Polar Regions. With the depletion of this atmospheric Ozone more UV rays will reach at the earths surface without being absorbed and hence will be a serious threat to the global climate. Ozone in the ozone layer, miles above the ground is equally crucial for life on earth. The more it depletes the more UV rays would pass through. These UV rays are very harmful for both humans and animals. They lead to skin cancer, cataract, excessive production of vitamin D in the body etc. Excessive exposure of UV rays also affects crops. For instance, rice crops depend on bacteria that reside in it roots. These bacteria are very sensitive to UV light and might die off by excessive exposure to it. Due to the scientific findings regarding the use of chemicals that lead to the ozone depletion, an international treaty was signed to reduce the production of such chemicals. This treaty is called as Montreal Protocol and was signed in the year 1973. Since then, the ozone layer has been recovering significantly. However it must be noted that we have done nothing to improve the concentration of ozone in the ozone layer. We have only curbed the causes for its depletion. Then how is the ozone layer recovering? Interestingly, the UV radiation that is blocked by the ozone layer itself helps in forming the ozone layer. The high wavelength UV rays separate the oxygen molecules (O2) in the ozone layer which individually recombine with other O2 molecules to form ozone (O3). Indeed, the nature beholds tremendous powers which are beyond human reach.

Rio + 20 and Indian efforts The United Nations Conference on Sustainable Development, also known as Rio 2012 or Rio+20, was hosted from 13 to 22 June 2012 by Brazil in Rio de Janeiro. Rio+20 was a 20year follow-up to the historic 1992 United Nations Conference on Environment and Development (UNCED) held in the same city, also known as First Earth Summit. The conference was organized by the United Nations Department of Economic and Social Affairs and was participated by G-20 members. The summit reaffirmed its commitment to make every effort to accelerate the achievement of the internationally agreed development goals, including the Millennium Development Goals by 2015. This time, fighting climate change has not been a front-burner issue at the Rio+20 Earth Summit but it has been a priority that underlies many discussions and actions at Rio. From calls to end fossil fuel subsidies to discussions about energy for all, the real economic, environment and health impacts of climate change underline much of the urgency to see the real action. Many countries are taking action to build clean energy and curb greenhouse gas emissions but in a world where the damage from climate change is becoming part of our daily lives, we need to step up our commitments and actions to reducing our dependence on fossil fuels and curbing climate change. Many losses from climate change, such as loss of human lives and ecosystem services, are hard to monetize and often are not included in the financial loss projections of our government. This is particularly true in societies where there is widespread poverty and where people are dependent on ecosystem services. Access to electricity and transportation is critical and people deserve to have it done in a way that does not in turn cause deaths from extreme heat or loss of homes in flooding. Curbing climate change goes hand-in-hand with building economic prosperity and fighting poverty. It has already suffered the economic and human losses from floods and extreme heat. The urgency of climate change raises important questions about how we move away from the business as usual model of economic growth in a way that helps and does not hurt developing countries and especially the poorest within those countries. Equity and access for all to electricity and transportation need to be a top priority, fully integrated into the measures that we take to fight climate change. Indias recent domestic actions to develop a clean energy fund are a step in the right direction. The June 2012 UNEP report Global Trends in Renewable Energy Investment 2012 that tracked the finance flowing into green energy across the world since 2004 found that India had the world's fastest expansion rate for any large renewable market last year. India witnessed a 62% increase in capital funding in this market last year. This huge jump is yet another clear indicator of India's promise and potential to lead clean energy development. India's government and civil society leaders need to capitalize on this

momentum to ensure that the Indian markets continue to remain confident about clean energy investments. India continues to increase fossil fuel use. With its commitment to reduce energy intensity by 20-25 percent by 2030 from 2005 levels, India still needs to accelerate adoption of energy efficiency standards for buildings, get energy-efficient appliances into the market more quickly, ensure that the 20-gigawatts by 2022 target under the National Solar Mission becomes reality, redirect fossil fuel subsidies to clean energy -- with necessary safeguard for the poor, and deploy the National Clean Energy Fund. The fight against climate change will take a strategic jump in the 12th Five-Year Plan (20122017) with the government intending to plough in almost Rs 2 lakh crore through the various missions. The agriculture mission under the National Action Plan on Climate Change alone is to spend upwards of Rs 1 lakh crore over five years to make the primary sector more resilient to inevitable changes in climate change. The government had already committed internationally to reduce energy intensity of the country's economy by 20-25% below 2005 levels by 2020. National Action Plan on Climate Change was launched in 2008 and it includes eight missions : National Solar Mission: The NAPCC aims to promote the development and use of solar energy for power generation and other uses with the ultimate objective of making solar competitive with fossil-based energy options. National Mission for Enhanced Energy Efficiency: Mandating energy consumption decrease in large energy-consuming industries, with a system for companies to trade energy-savings certificates. Energy incentives, includes reduced taxes on energy-efficient appliances and financing for public-private partnerships to reduce energy consumption through demand-side management programs in the municipal, buildings and agricultural sectors. National Mission on Sustainable Habitat : To promote energy efficiency as a core component of urban planning, the plan calls for extending the existing Energy Conservation Building Code; a greater emphasis on urban waste management and recycling, including power production from waste; strengthening the enforcement of automotive fuel economy standards and using pricing measures to encourage the purchase of efficient vehicles; and incentives for the use of public transportation. National Water Mission: With water scarcity projected to worsen as a result of climate change, the plan sets a goal of a 20% improvement in water use efficiency through pricing and other measures. National Mission for Sustaining the Himalayan Ecosystem: The plan aims to conserve biodiversity, forest cover, and other ecological values in the Himalayan region, where

glaciers that are a major source of Indias water supply are projected to recede as a result of global warming. National Mission for a Green India: Goals include the afforestation of 6 million hectares of degraded forest lands and expanding forest cover from 23% to 33% of Indias territory. National Mission for Sustainable Agriculture: The plan aims to support climate adaptation in agriculture through the development of climate-resilient crops, expansion of weather insurance mechanisms, and agricultural practices. National Mission on Strategic Knowledge for Climate Change: To gain a better understanding of climate science, impacts and challenges, the plan envisions a new Climate Science Research Fund, improved climate modelling, and increased international collaboration. It also encourages private sector initiatives to develop adaptation and

mitigation technologies through venture capital funds. Over the past four decades, the world has increasingly realised that our natural resources are under serious pressure. A growing awareness of the need to ensure sustainability has led a new generation to consider the requirements of sustainable development in its decisions to produce or consume. Rio 1992 was a major step forward. Important legal texts on key issues were adopted. These conventions ensured important progress that we must maintain and build on. From now on, a three-dimensional approach to development is crucial, one that combines social, economic and environmental concerns. Rio+20 is the launch pad for this new development model. This is why one of the main topics of Rio+20 was to build consensus around the need for "sustainable development goals". They offer a blueprint for international cooperation on sustainable development for years to come. Growth Fatigue in India India registered an annual average growth of almost 9 percent during 2003-04 to 2007-08, successfully sailed through the great recession of 2008 and rebounded after a mild hiccup to a growth of over 8 percent in 2009-10 and 2010-11. However, in the year, i.e. 2011-12, GDP growth is just 6.5 percent and 5.3 percent in the first quarter of current fiscal. To make the matter worse, inflation rate is over 7 percent, a current account gap now at its widest since 1980 and a fiscal deficit has been allowed to swell to 5.9 percent of GDP owing to crippling subsidies. Moreover, the prospects for future are also bleak with falling investment rate, downfall in the credit rating of the country, falling FDI, high rate of inflation, falling exports, depreciating Rupee etc. Many economists believe deceleration in the growth of Indian economy as the inevitable consequence of a larger global dynamic while others attribute the growth fatigue to policy

paralysis. Also a section believes that years of high growth were the fruits of economic reforms of 1991 and a new wave of reforms are needed to fuel a new wave of growth. All the reasons mentioned are true to some extent as in the last few years, no substantial measure had been taken to augment the growth. Policy inertia and the absence of significant reforms to sustain growth have now turned India's slowdown from a cyclical one to something that is structural or systemic. Whatever measures that have been taken by the Reserve Bank of India (RBI) from time to time have proved too meagre to overcome the negative sentiments prevailing in the economy. sacrificing growth at the altar of inflation. On 25 June 2012, foreign institutional investors' (FIIs) ceiling on investment in government securities (G-Sec) has been raised to $ 20 billion from $ 15 billion by RBI. Moreover, the lock-in period for FII investment up to $ 10 billion into G-Secs has been reduced to three years from five years. However, steps taken by RBI are minimal as the industry is hoping for strong actions this time. Rupee has declined by about 25 per cent in the last 12 months. There is a need for more equity investment in the country and enhancing capabilities for raising exports as at present we import more and export less. A surge in foreign investment can solve a few of our problems quickly. The anxiety over funding our hefty current account deficit will abate. This would trigger a much-needed appreciation in the rupee and counter some of the inflationary pressures emerging from high oil prices. But to get our economics right, we need to set our political house in order. The current impasse in Indian politics and its drag on economic decision making stem from the fact of coalition politics where rival as well as coalition political entities are not supporting the reforms due to their narrowed interests. Thus the opposition seems to believe that its sole duty is to oppose whatever the government proposes, even if this goes against a larger collective interest. In fact, instead of criticising every policy measure, opposition should come forward with its own policy measures. Regional parties are focused purely on narrow local issues. They are quick to raise an alert whenever they imagine that national economic policy has the slightest chance to impinge on their local interests. This stalemate can only be broken if politicians of all hues take an enlightened view of the larger national interest reach across political aisles and work towards a consensus on key economic policies. For instance, its imperative to forge some agreement across party lines on fuel price rationalization. The under-recovery on a litre of diesel hovers at around Rs. 11 and if something is not done urgently, either subsidy will balloon or the oil marketing companies will go bust. More fundamentally, subsidizing fuel is antithetical to the very idea of conservation. Moreover, RBI is often criticised for

Similarly, new set of reforms must aim at reforming the agriculture sector also, with its huge backward and forward linkages; sector has enough potential to give required momentum to the economic juggernaut. Increase agricultural income means increasing the income of 60 percent of the work force, thus creating enough demand for the industrial and service sector and fuelling a consumption driven growth. Similar measures must be taken in secondary (more importantly manufacturing) sector and service sectors. Objective of the measure must not be limited to merely high growth but the gainful growth where its fruits are percolated to the resident of the country. Such reforms are necessary to make economy come out of fatigue and rejuvenate to tread on the higher growth path. Business of subsidies in India Although the term subsidy is widely used in economics, it is rarely defined. Often it is used as an antonym to a tax. While tax is transfer of money from a private entity to government, vice versa is subsidy. It can be defined as a sum of money granted from public funds to help an industry, business or individual keep the price of a commodity or service low. Subsidies are often criticized for intervening into the market mechanism by altering the price and thus consumption of the object. However, many times, their necessity is felt to provide the safety net to the vulnerable and downtrodden of the society. Since in India, more than one third of the population is living below poverty line (BPL), subsidy cannot be criticized on social grounds but it is criticized on economic grounds. According to the Budget proposals, the central government's subsidy bill on food, petroleum and fertilizers is estimated at Rs 1, 79,554 crore for the 2012-13. The oil subsidy, which is given to state-run oil marketing firms, such as Indian Oil Corp, BPCL and HPCL, for selling diesel, domestic LPG to households and kerosene through the PDS system, below cost, is estimated lower at Rs 43,580 crore in the fiscal year 2012-13. The government's food subsidy given to run the public distribution system is estimated to be Rs 75,000 crore. Food subsidy is provided to meet the difference between the economic cost of food grains and their sales realization at the Central Issue Price fixed under the public distribution system (PDS) and other welfare schemes. The fertilizer subsidy is also pegged lower at Rs 60,974 crore. Under the fertilizer subsidy, the government would provide Rs 13,398 crore for imported urea, Rs 19,000 crore for indigenous (urea) fertilizers, and Rs 28,576 crore for the sale of decontrolled fertilizers (DAP, MOP and complexes) at a subsidized rate to farmers. At the start of current fiscal year, subsidy burden was estimated to be 2.5percent of GDP and the Central Governments target is to trim the subsidies upto 2 percent this fiscal. Current economic prospects of the country are bleak marred by rising fiscal deficit, mounting inflation, reducing Foreign Direct Investment (FDI), policy paralysis, downfall in

international rating, all culminating into a growth fatigue. In order to realign the countrys economy with the high growth path, major reforms are to be undertaken in all the sectors including the subsidy budget. As already stated, ensuring employment, food, sanitation, potable water etc are tasks entrusted to the government; subsidy for such activities should not and must not be denied. However, the motive of subsidies is not just to provide food, water and sanitation etc at subsidized prices but a little more holistic. Subsidies must be designed in such a manner that they help in the strengthening the manpower and human resources of the country. Government has been providing subsides for the last sixty years since independence but dependency on subsidies has not been reduced which meant subsidy tool is not been effectively used in India. Need of hour is not to eliminate the subsidies but to better target the subsidies. In India, cost of an LPG cylinder which is sold at subsidized prices is same for CEO of a Fortune 500 company as well as for BPL family. Petrol prices are same for driving scooter as well as BMW etc. Moreover, the subsidies which are targeted for poor only are dont reach the designated person and even if reaches, it is hardly 10 percent of the initial amount. Therefore, in order to assure the effectiveness of subsidies, an effective monitoring mechanism is needed. Subsidies granted because of purely political motivations must be withdrawn. For example, free electricity is provided to the farmers in Punjab which not only causes the wastage of electricity but also resulted in overexploitation of ground water further negatively effecting the environment. Socio-economic conditions of the country dont call for withdrawal of subsidies but reform of subsidies. In Public Distribution System (PDS), huge subsidies are provided to feed the poorest sections of the population but entire PDS is marred by pilferage and rampant corruption. Here, a monetary transfer in the form of coupons can reduce the corruption as with those coupons, poor can buy food grains from open market. Similarly MNREGA, the flagship programme of UPA government is also witnessing corruption and is enriching the bank accounts of few influential persons only. A compulsory social audit every quarterly of half yearly can make a dent on the corruption. Currently, Indian economy is derailed from its track of high growth path and in order to grow at 9 percent per annum sustainably, it is important to assure that fiscal deficit doesnt become unsustainable. Unsustainable, increasing and ill-targeted subsidies are bound to increase fiscal deficit and thereby strengthen the inflationary tendencies.

Country needs a second generation of reforms which must be holistic in nature and starting these reforms from subsidy is not a bad idea as this will benefit those who are in dire need of benefits. Economies of India and China China and India have many similarities. Both of the two countries have long and respectable histories. Both of them had suffered invasions or colonial. Moreover, China and India are two of the most populous countries and the largest developing countries in the world.The emergence of China as a big economic power has been accompanied by a more relaxed, albeit still important, economic transformation in India. China and India had similar levels of per capita GDP (at market exchange rates) in 1980, but China grew much faster and had overtaken India by the early 1990s. Since then growth in China has been so fast that its per capita income is now more than three and a half times that of India. In March 2012, IMF estimated Indian growth rate at 7 percent while that of China at 8.5 percent. Moreover, China had more than 200 billionaires as compare to 70 of India in 2011. They spend around $192 billion in public health, where as India spent only $65 billion, when the population is now very close. Life expectancy is 75 year in China but in India it is around 65 only. Chinas expenditure on health care system is nearly 5 times that of India. 97 percent of Chinese children are immunized with DPT vaccine, in contrast with Indias meager figure of 66 percent. Agriculture forms a major economic sector in both the countries. However, the agricultural sector of China is more developed than that of India. Unlike India, where farmers still use the traditional and old methods of cultivation, the agricultural techniques used in China are very much developed. This leads to better quality and high yield of crops which can be exported. One of the sectors where India enjoys an upper hand over China is the IT/BPO industry. Seven Indian cities are ranked as the world's top ten BPO's while only one city from China features on the list. In spite of being a Socialist country, China started towards the liberalization of its market economy much before India. This strengthened the economy to a great extent. On the other hand, India was a little slow in embracing globalization and open market economies. While India's liberalization policies started in the 1990s, China welcomed foreign direct investment and private investment in the mid 1980s. This made a significant change in its economy and the GDP increased considerably.

Compared to India, China has a much well developed infrastructure. Some of the important factors that have created a stark difference between the economies of the two countries are manpower and labor development, water management, health care facilities and services, communication, civic amenities and so on. All these aspects are well developed in China which has put a positive impact in its economy to make it one of the best in the world. Although India has become much developed than before, it is still plagued by problems such as poverty, unemployment, lack of civic amenities and so on. In the field of research and development, India has not made a dent yet. The fact that in 2011, 12.3% of residential patents registered in the world are from China, a massive increase in its registration, suggests that they are truly emerging as a world leader in innovation. Recently the world has been taken aback with Chinas announcement of sending astronauts to the moon and sending a well designed space station after USA is abandoning its own. China became competitive faster than any other countries over the last one decade. This is one reason why companies would like to flock in China. According to the world competitive ranking China is at 31st position as compare to India, which is at 50th position. Another critical negative factor for Indias economy is the inflation and the unemployment rates, which much bigger than Chinas. Indias average inflation rate for 2011 was 9% ; where as Chinas inflation was less than 6%. The Unemployment rate of India was nearly 9%, when China had 4% which is considered negligible according to international standard. Indias credit rating is BBB- where as that of Chinas is AA-. This is one reason, why Indias overseas funds withdrew a net $380m in 2011 compared to record inflows of $29bn in 2010. Major factors responsible for divergence in India and China are China launched its economic transformation by using abundant, low -wage labor to establish manufacturing for export industries. In contrast, India developed a service export sector focussed on IT and BPO. China encouraged FDI by multinationals looking to set up export -oriented manufacturing operations, and was able to benefit from foreign intellectual property and know-how. In contrast, India followed an import substitution policy and relied on domestic resource mobilisation and domestic firms. More importantly, political setup in China ensures faster development as there are priva te rights. Land acquisition in China is much easier while in India, any acquisition is followed by number of litigations and protests. Prof. Amartya Sen had once said that the distinctions are important for the emerging economies which are trying to decide where to emerge. India needs no horse race competition with China in relation to the economic growth figure but with the other aspects

of social values developments, quality and standard of living developments, democratic values and political liberties. Thus, economically, India may be lagging behind China but importance liberalism, democracy etc to ensure human welfare are second to none. An economic growth at the cost of such virtues should not be acceptable. "More rain mean flood and meager rainfall is drought in India: causes and solutions" India is a vast country where almost every year, many regions face draught, others flood while a very few get sufficient rainfall. Most parts of peninsular, central and northwest India regions most prone to periodic drought, receive less than 1,000 mm of rainfall. The states falling within the periphery of "India Flood Prone Areas" are West Bengal, Orissa, Andhra Pradesh, Kerala, Assam, Bihar, Gujrat, Uttar Pradesh, Haryana and Punjab. The intense monsoon rains from southwest causes rivers like Brahmaputra, Ganga, Yamuna etc. to swell their banks, which in turn floods the adjacent areas. Thus, few regions face heavy rainfall causing flood while others face meager rainfall resulting in draught. The principal cause of drought may be attributed to the erratic behavior of the monsoon. The southwest monsoon, or 'summer monsoon' as it is called, has a stranglehold on agriculture, the Indian economy and, consequently, the livelihoods of a vast majority of the rural populace. The southwest monsoon denotes the rainfall received between the months of June and September and accounts for around 74% of the country's rainfall. In 2011, more than 60 people died and 4 million were affected by flooding in eastern India. India, being a peninsular country and surrounded by the Arabian Sea, Indian Ocean and the Bay of Bengal, is quite prone to flood. As per the Geological Survey of India , the major flood prone areas of India cover almost 12.5% area of the country. Every year, flood, the most common disaster in India causes immense loss to the country's property and lives. Several traditional measures to control floods have been tried so far like building embankments to control the flow of river and constructing reservoirs to ensure release of water at a controlled rate. However experience has shown that these structural measures to control floods are negated by large scale deforestation that has taken place over the years in several parts of the country. Advancement in construction technology has also has had a negative impact on flood control as large scale construction activities have started to take place on the flood plains. Economic factors become more important and those who support the construction activity on the flood plain turn a blind eye to the disastrous impact it can have on the environment. It has also been argued by some environmentalists that in order to control floods, the level of water in the reservoir of the dam should be kept at minimum level. However in order to

generate hydro-electricity and bring more agricultural area under irrigation, the level of the water in the reservoir is kept high which leads to flooding in the upstream areas. Thus the measure that is often touted as a solution to the flood woes itself becomes a cause of it. For instance, 2010 Delhi floods were caused by the release of water in Hathnikund Barrage in Haryana. Release of water was essential as storage above capacity may cause flash floods aggravating the crisis. Such projects are also necessary for irrigation and drinking water supply. Hence it is high time for the government to look for ecological measures that can help in the management of floods on a durable, long-term basis. Afforestation of the flood plains must be encouraged as trees not only absorb rainfall water but also obstruct its flow to the rivers. Those living in flood plains for these activities should have an efficient early warning mechanism that ensures their evacuation before the calamity strikes. With the advancement in space technology that India has achieved, remote-sensing should be effectively used for prediction of rainfall and floods. It is only with these comprehensive and holistic measures that an efficient management of floods can be ensured in India with least damage to life and property. Drought prone area should be made less vulnerable to drought associated problems through soil moisture conservation measures, water harvesting practices, the minimization of evaporation losses, and the development of the ground water potential and the transfer of surface water from surplus areas where feasible and appropriate. Pastures, forestry, or other modes of development, which are relatively less water demanding should be encouraged. Moreover, rainwater harvesting, micro-irrigation and modern irrigation facilities must be applied. In planning water resource development projects, the needs of droughtprone area should be given priority. Thus, different regions of the country face draught and flood according to the geographical and climatic conditions and therefore, control measures should also be applied accordingly. Since no one can control the vagaries of monsoon, control and mitigation apparatus must be strengthened to minimize the effect of floods and droughts. Agriculture Growth in India- Grave situation In 2011-12, agriculture and allied sectors grew by 2.5% and their share in the GDP fell from 14.7% in 2009-10 to 13.9% in 2011-12. This 13.9 percent of countrys GDP is distributed among more than 50 percent of the population which is dependent on agriculture. Moreover, since agriculture growth depends on the vagaries of monsoon, erratic agriculture production further threats food security. Population in India is consistently. Rapid growth in population growth is threatening Indian agriculture as the demand for food, which is expected to grow significantly, is degrading

land faster. Economic Survey 2011-12 has also warned that more than half the population is dependent on a sector whose share in the economy is shrinking, leading to a bigger urbanrural divide and threatening national food security. 4 percent consistent growth rate of agriculture is considered essential to increase the income of agricultural work force as well as provide food security to the billion plus Indians. Thus the survey rightly points out that the big challenge before the government is how to address "welfare of agricultural producers and consumers simultaneously". In one way, when around 60 percent of population is dependent on agriculture for its livelihood, welfare of agricultural producers will mean welfare of 60 percent consumers as well since every human being consumes agriculture produce. Objective of food security requires twin strategies of increasing agriculture productivity as well as controlling population also. Since it is practically impossible to bring more land under cultivation because of pressure of urbanisation, industrialisation and environment, productivity enhancement is the only solution left. Just like Economic reforms in 1991 spurred the economic grow of India, time has come for agriculture reforms to boost the agriculture growth. There are basically seven factors which need focused reforms in the short and medium terms. These are: (a) Price policy (b) Subisidies and investments (c) Land issues (d) Irrigation and water management (e) Research and extension (f) Credit (g) Domestic market reforms and diversification. The major underlying objective of the Indian Governments price policy i s to protect both producers and consumers. One criticism of procurement policy is that it is limited to few crops and few states only. Further, from consumer point of view also, off take from Public Distribution System (PDS) is also unequal across the states. In the context of globalization, tariff policy becomes important for agricultural commodities. In other words, it is important to monitor exports, imports, global supply and demand and fix tariffs accordingly. One major reform needed in agriculture sector relates to reduction in subsidies and increase in investments. Agricultural subsidies are fiscally unsustainable and encourage misuse of resources, leading to environmentally malignant developments. Moreover, rise in public and private investment is crucial for enhancing agricultural growth.

Some argue that small size of farm is responsible for low profitability of agriculture. Chinese and the experience of other East Asian countries show that it is not a constraint. The two major elements of such a reform are: security of tenure for tenants during the period of contract; and the right of the land owner to resume land after the period of contract is over. There are some emerging land issues such as increase in demand for land for nonagricultural purposes including special economic zones, displacement of farmers, tribals and others due to development projects. There is a need for careful land acquisition. Land alienation is a serious problem in tribal areas. Water is the leading input in agriculture. Development of irrigation and water management are crucial for raising levels of living in rural areas. Major areas of concern in irrigation are: decline in real investment, thin spread of investment, low recovery of costs, decline in water table, wastages and inefficiencies in water use and, non-involvement of users Both investment and efficiency in use of water are needed. Watershed development and, water conservation by the community are needed under water management. New watershed guidelines based on Parthasarathy Committees recommendations were accepted by the Central Cabinet in March 2009. The implementation has to be stepped up in order to obtain benefits in rainfed areas. The yield of many crops had flattened since last few years. National Food Security Mission (NFSM) has been launched in 2007 to increase 20 million tonnes of foodgrains (10 m.t. for rice, 8 m.t. for wheat and 2 m.t. for pulses) during the 11th plan period. It has already shown some results by increasing yields in different regions. There is a need to strengthen this mission to increase productivity. Funds as well as human resources must be earmarked to assure the development of new high yielding varities. Not only this, path from technology from lab to field must also be shorter one. All the farmers must be covered under institutional credit and their repayment instalments must be aligned with the harvesting season. For small and marginal farmers, marketing of their products is main problem apart from credit and extension. In recent years, there has been some form of contract arrangements in several agricultural crops such as tomatoes, potatoes, chillies, gherkin, baby corn, rose, onions, cotton, wheat, basmati rice, groundnut, flowers, and medicinal plants. There is a silent revolution in institutions regarding non-cereal foods. New production, market linkages in the food supply chain are: spot or open market transactions, agricultural co-operatives and contract farming. Thus, a sustainable agricultural growth needs a holistic approach, reforming every sector and linkages of agriculture. On the other hand, population control measures must also be adopted so that resources are more equitable shared among the masses. Once Pt. Jawaharlal Nehru said everything can wait except agriculture but in reality, everything had moved except agriculture. Need of hour is to make agriculture a gainful employment, thus provide food security as well as livelihood security to the masses.

Shrinking Resources of Drinking water in India

After air, water is the most basic requisite for life not just for humans but for all living beings. India supports more than 17 percent of the worlds population, but has only 4% of worlds renewable water resources with 2.6% of worlds land area. With a growing population and rising needs of a fast developing nation without commensurate recharge, water resources are shrinking in the country. A study by the Asian Development Bank showed that in 20 cities the average duration of supply was only 4.3 hours per day. No city had continuous supply. The longest duration of supply was 12 hours per day in Chandigarh, and the lowest was 0.3 hours per day in Rajkot. More than 100 crore population casts acute pressure on the resources. Fast economic growth is further causing erosion of resources. Rapid growth in demand for water due to population growth, urbanization and changing lifestyle poses serious challenges to water scarcity. Unsustainable economic growth is fast depleting the resources and is further aggravating the crisis. Low public consciousness about the overall scarcity and economic value of water also results in its wastage and inefficient use. This results in excessive exploitation of groundwater, which, though part of hydrological cycle and a community resource, is perceived as an individual property and is exploited inequitably and without any consideration to its sustainability leading to its over-exploitation in several areas. Adding to this, inequitable distribution and lack of a unified perspective in planning, management and use of water resources are aggravating the situation. Therefore, strategy to ensure water security must be a holistic one, incorporating not just economic use but also incorporating conservation, maintenance and the optimum utilization of the resources. As per present estimate, India receives on average annual precipitation of about 4000 Billion Cubic Meter (BCM), which is its basic water resource. Out of this, after considering the natural evaporation- transpiration, only about 1869 Billion Cubic Meter (BCM) is average annual natural flow through rivers and aquifers. Of this, only about 1123 BCM is utilizable through the present strategies, if large inter-basin transfers are not considered. Therefore, water availability for utilization needs to be enhanced to meet the increasing demands of water. Direct use of rainfall and avoidance of inadvertent evapo-transpiration are the new additional strategies for augmenting utilizable water resources. Rainwater harvesting is part of such techniques. Rain water harvesting should be made compulsory in all the upcoming buildings in the urban areas as seepage in urban areas is much lower compared to rural areas. Due to low seepage, there is fast depletion of ground water resources in our cities without commensurate recharge.

In rural areas, watershed development activities need to be taken in a comprehensive manner to increase soil moisture, reduce sediment yield and increase overall land and water productivity. To the extent possible, existing programs like MGNREGA may be used by farmers to harvest rain water using farm ponds and other soil and water conservation measures Moreover, There is a need to map the aquifers to know the quantum and quality of ground water resources (replenishable as well as non-replenishable) in the country. This should be periodically updated too. In areas, where ground water suffers over-exploitation, improved technologies of water use like incentivizing efficient water use and encouraging community based management of aquifers etc can be implemented. Many policy makers suggest transferring management of water resources to private sector so as to introduce efficiency and optimum utilization Further, market based water pricing is also suggested by many. However, since water is a community good, its transfer to private sector may not be appropriate but Public Private Partnership (PPP) in its management cannot be ruled out. Further, charging market based price for water utilization may make left a big chunk of population without potable water. Hence a cross subsidization in pricing can be considered. For a decent and healthy living, not just enough water is required but safe water is required. Most water sources are contaminated by sewage and agricultural runoff. Although access to drinking water has improved, the World Bank estimates that 21% of communicable diseases in India are related to unsafe water. Therefore, in order to augment the supply of safe drinking water supply in rural areas all over the country, Government of India launched a scheme called :Swajaldhara in 2002. Many NGOs are also involved in the implementation of scheme. It is community based scheme in which their participation is ensured. Water is essential for human civilisation, living organisms, and natural habitat and for their sustainable living, sustainable use of safe water is need of hour. It needs to be ensured that industrial effluents, local cess pools, residues of fertilizers and chemicals, etc., do not reach the ground water cleaning of underground water is practically impossible.

Patents in India Patent is a form of intellectual property rights (IPR) which apart from patents also includes trademarks, copyrights, geographical indicators etc. A patent is an exclusive right granted for an innovation, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem.

Objective of patent is to grant the innovator of the product or process some benefits where invention/innovation cannot be commercially made, used, distributed or sold without the patent owner's consent. These patent rights are usually enforced in a court, which, in most systems, holds the authority to stop patent infringement. In India, patents are governed by Indian Patents Act 1970 which initially provided for the process patents only and not for product patents for food, chemicals and drugs. Suppose if product has been developed by an inventor, then he can file patent for the process through which that product has been developed and not for that product itself. In the case of inventions being claimed relating to food, medicine, drugs or chemical substances, only patents relating to the methods or processes of manufacturer of such substances were provided. Thus patent act of 1970 emphasized public interest over monopoly rights. However, under World Trade Organization (WTO), Trade Related Intellectual Property Rights (TRIPS) agreement provides for product patent for 20 years. After the expiry of 20 years, anyone can manufacture that product. All WTO members had to comply with TRIPS agreement before 2005 because of which Indian parliament passed Patent Amendment Act 2005 which brought product patent regime in India. Important features of 2005 Amendment Act and extension of product patent protection to all fields of technology including drugs, foods and chemicals were granted. Exemptions under 2005 Act are Frivolous claims contrary to natural laws Anything contrary to law or morality or injurious to public health Mere arrangement or rearrangement of duplication of known devices. A method of agriculture or horticulture Inventions related to atomic energy

Further, act also empowers the government to import, make or use for its own purpose. It also empowers import of drugs for public health distribution. It also empowers the government to revoke the patent which is found mischievous to state or prejudices to public. State can also acquire a patent to meet national requirements. Patents act is supposed to have most important bearing on the pharmaceutical industry. Drug manufacturing MNCs incur huge cost in the form of R&D for development of new drugs. In order to recover that cost, they sought patent and sell these drugs at exorbitant prices.

After the term of patent (20years) is over, every company is free to manufacture those drugs and price of these drugs reduces drastically as new companies dont engage in the R&D and its cost is reduced. Such drugs whose patent is expired are called as Generic medicines and Indian pharmaceutical companies produce these generic medicines at mush less cost than their western counterparts. Under the 1997 patent act, Indian companies could produce these drugs even before expiry of 20 years through different process but after 2005 amendment; they have to comply with the product patent. Therefore, it may have an adverse impact on price of medicines in India as they have to comply with TRIPS. Bolar Provision Bolar provision facilitates production and marketing of patented product immediately after the expiry of term of patent by permitting preparatory action by non patent companies during the term of the patent. According to this provision, despite the patent rights, research and tests for regulatory approval does not constitute infringement of patent. There have been few apprehensions in various quarters particularly for health sector regarding its impact on drug prices as it may rule out the availability of low cost drugs. However, it is said that 97 percent drugs manufactured in India are off patents and will remain unaffected. Further, legislation has strong provision for the outright acquisition of patents to meet national requirements. Besides, there is also Drug Price Control Order administered by National Pharmaceutical Price Authority. There are also adequate safeguards to protect the interest of domestic industry and common man from any increase in the prices of drugs. Although there are adequate safeguards are assured by the government, but some impact on prices cannot be ruled out which will further alienate the poor from the health due to rising cost of medicines. Since it is also nor immoral on part of the companies conducting extensive research on the development of life saving drugs, treatment can be assured to all the persons through universalization of Health Insurance which may be partially public funded. Just like government had imposed cess on petrol and diesel to recover the cost of High development, some cess can also be imposed to recover the cost of universal health programme. In 2009-10, as many as 34287 patents were filed out which only 6168 patents were granted. Moreover, only 17 percent of these patents were granted to Indian while rests were granted to the foreigners. In 2010-11, of the total 7,486 patents granted, Indians

could claim only 1,272. On the other hand, foreigners walked away with 6,214 patents. In the world, Japan is credited with maximum number of patents.

Monsoon is the Biggest Awaited Annual Phenomenon Indian monsoon is one of the most erratic and uncertain events in the country. The monsoon season starts from the month of July and lasts till August every year. But sometimes, there is a delay in the advent of the rainy season when it commences in late June or early July and continues till the middle of September. India, as we all know, is located in the interior part of the sub-continent and as result, it experiences very hot summers and extremely cold winters. Even the coastal areas which are supposed to ensure a mild and moderate temperature, experience a hot and humid weather which is very uncomfortable on the part of the citizens of the country. So after the scorching and stuffy summer season, people eagerly wait for the monsoon to arrive. During this time, the weather becomes cool and very comfortable. There is heavy shower all around accompanied by a cool and gentle breeze which rapidly brings down the temperature and makes the weather both delightful and pleasant. Monsoon is actually a tropical weather phenomenon. Winds blowing from the south- west direction (also known as the South West Winds) from the Indian Ocean enter the subcontinent and blow into India in June and lasts till September. These are generally the offshore winds which carry moisture resulting in heavy rainfall. These winds break- up into two branches- the Arabian Sea Branch and the Bay of Bengal Sea Branch. During this time, giant waves sweep across these two water bodies, putting them in a sudden unrest which, in turn, is an early sign of the upcoming monsoon. Hence, this season is eagerly awaited in the country because of its weather changing and economic role. During this time, a number of crops grow and mature before they are harvested. The primary crops which need a heavy rainfall to grow are rice, soybean, sugarcane, corn, lentils and cotton and such crops are chiefly grown in eastern India. Apart from these crops, certain other important crops are grown during this season in western and central parts of the country. Besides these crops, a large variety of vegetables are also grown in the country during the monsoon season. Vegetables like brinjals are predominantly grown during this season. This particular vegetable is useful in curing an enlarged spleen that is caused by malaria. Bottle gourd is also widely grown in the country during the monsoon season. The vegetable, when consumed in cooked form, provides relief and relaxation to the mind as well as body. It also normalizes blood pressure. Along with bottle gourd, ridge gourd is also grown during this season. It has a low content of saturated fat and cholesterol and is rich in dietary fibre, vitamin C, riboflavin, zinc, thiamin, iron, magnesium and manganese. It also has its own

cooling nature that is largely useful for the human body. At the same time, the crop possesses a high nutritional content and is hence, considered to be a healthy food and is also good for weight loss. Numerous herbs are also grown during this season. Indian Lilac or, in simple words, neem, is grown during this season. This particular herb has a high medicinal value and is largely useful in the treatment of malaria. It also serves as an antiseptic in curing infections. Basil or tulsi is yet another herb that heavily grows in the monsoon season. This herb is also rich in its medicinal use and cures cough and provides relief to a person with a sore throat. The herb, when jointly applied with powdered cardamom, is helpful in curing fever. Instead of undergoing an operation, one can remove kidney stones from the body by consuming tulsi leaves on a regular basis. Bitter gourd, or karela which reduces the high sugar level, is also grown during this time. One must consume the juice of two to three karela every morning to maintain a sound digestive system as well as to bring the sugar level within a normal range. This particular herb is extremely rich in vitamin A, vitamin B and vitamin C. The juice of this crop also helps in curing piles and in the monsoon season, this crop can effectively treat itching problems, ringworm as well as fungal infections and is also useful in treating boils. Another important herb of this season is turmeric or haldi. It serves as a very useful antiseptic in the internal as well as the external treatment of various skin diseases like infections and infestations. It is also mixed with sandalwood to ensure a fair complexion. It is also medically useful in removing worms from the body of an individual as well as an adult. From this, we can conclude that the monsoon season is a significantly useful season both in terms of agricultural output as well as in ensuring relief to the whole Indian population from the extreme heat of the summer season. Since the season assures the growth of a large number of crops ranging from food products like rice and soybean to the vegetables like brinjal and gourd, the season has an economic influence on the country. This particular season ensures a buffering production of food crops like rice which is often exported in order to earn valuable foreign exchange. Apart from enabling the country to earn foreign currency, the monsoon season also makes India self- sufficient in the production of vegetables as well as medicinal herbs like basil, turmeric and Indian Lilac. Therefore, one can easily figure out why the monsoon season is such a highly awaited season in the country. Firstly, the season helps in reducing the stress resulting from the extreme heat of the summer season. Secondly, the season leads to a bumper production of crops. Hence, this season is primarily important to the whole Indian population which enjoys this season a lot and is filled with joy and satisfaction.

Pound or Dollar which is More Bigger than Rupee and how It impacts ?

As we all know, rupee is the national currency of India. From the perspective of Indian economy, pound which is the national currency of England and dollar which is the monetary unit of United States of America are both foreign exchange and the country needs to maintain an adequate reserve of both these foreign currencies in order to make international trade with the various foreign countries, most of which like to purchase and sell goods and services in dollars. Since India makes an enormous amount of export and import which are mostly done in dollars and to some extent in pounds (when it comes to international transactions with England), both these monetary units have maintained a significant influence on the Indian economy. As far as the latest rupee- dollar exchange rate is concerned, one dollar is equal to 56.135 rupees. This means that the price of one dollar is 56.135 rupees. And as per the current rupee- pound exchange rate, 1 pound is equal to 85.6343 rupees. This implies that the price of one pound is 85.6343 rupees. From this information, we can have a clear idea that pound is much more stronger than rupee than what dollar is as compared to the same currency, i.e., rupee. Every year, India makes a large amount of export to a number of countries like China, United States as well as England. So, if there is any fluctuation in the rupee- dollar or rupee- pound exchange rate, it is bound to have a phenomenal effect on the Indian economy. If there is any increase in the rupee- pound exchange rate, it indicates a devaluation of rupee with respect to pound and likewise, an up valuation of pound with respect to rupee. This means that the English buyers can buy more of rupee than before with the same amount of pound. But on the contrary, the Indians will have to invest more of rupee than earlier in purchasing one pound. What it implies is that the Indian goods will become cheaper in the international market, thereby leading to a fall in the profit margin of Indian exporters. So the monetary value of countrys export will definitely fall. On the other hand, this sudden increase in exchange rate will create an adverse pressure on import as the foreign goods are likely to become costlier and if they are relatively inelastic goods, then the Indian importers will still have to purchase it even at a higher price. This will increase the monetary value of the countrys import. This is exactly what is happening in the Indian economy. The rupee- pound exchange rate has been constantly increasing at regular intervals and hence, the Government as well as the private importers have to spend more money in importing the commodities from England. This, in turn, increases the price of such goods in the Indian market. Now, in case of necessary goods which are relatively inelastic, the Government has to sell them at a subsidized rate which creates additional financial burden on the Government. But the Government cannot bear the entire margin by which the prices increase. A part of it has to

be borne by the ultimate consumers as a result of which, the general expenditure of the common mass is going on rising. So, on one hand, the countrys export is declining while on the other hand, its import is constantly rising which increases the gap between the total import and total export of the country. So, India has been suffering an adverse Balance of Payment (BOP) for almost three decades. India mostly imports items like petroleum, capital goods, chemicals, dyes, plastics, pharmaceuticals iron and steel, uncut precious stones, fertilizers, pulp paper and many more. It concentrates on the export of tea, sugar, spices, diamonds and various other goods. One must keep in mind that India is the largest processor of diamond and hence, diamond is one of the most popular items of export. There will be a huge adverse effect on the total quantity of import and export if the exchange rate of rupee and pound goes on fluctuating at such a frequent rate. Likewise, any increase in the rupee- dollar exchange rate creates a similar effect on the Indian economy. The money- value of the countrys export will fall while that of the nations import is going to rise, thereby leading to an adverse Balance of Payment. So, we see that the increase in exchange rate is very harmful as far as the countrys international trade is concerned. Thus, the Indian economy is often facing problem with the increase in exchange rate but the Government has still not been able to find a solution to this problem. But this is a kind of economic crisis which has to be overcome in a few years, otherwise the Indian economy is going to face ample difficulty in the long- run. The Government must come up with a sustained solution which can minimize the gap between the countrys import and export and hence can eliminate the adverse Balance of Payment. Understanding importance of Right To information Many a times we ignore subjects which look too sarkari and in the bargain, gap in information further deepens our ignorance. With this view article on understanding RTI might give insight of ACT. The Right to Information Act 2005 commonly known as RTI is an Act of the Parliament of India "to provide for setting out the practical regime of right to information for citizens to secure access to information under the control of public authorities, in order to promote transparency and accountability in the working of every public authority." Whereas the Constitution of India has established democratic Republic, which means that RTI extends through the entire Country including both states and Union Territories except the State of Jammu and Kashmir.

Under the provisions of RTI Act, any citizen of India may request to seek out information from a "public authority" which is then required to reply within thirty days in response to RTI filed. The Act also directs every public authority to take steps so as to provide enough information of its own to the public at regular intervals through various means of communications, including internet, so that the public have minimum resort to the use of this Act for obtaining information. RTI was passed by Parliament on 15 June 2005 and came into force on 13 October 2005. The genesis of RTI can be tracked down to early 1990s when Mazdoor Kisan Shakti Sangathana(MKSS) initiated a movement in order to bring in transparency in village accounts. Initially, MKSS influenced the then government officials to seek out information such as employment and payment records and bills & vouchers relating to purchase and transportation of different materials. At the time of Jan Sunwai (public hearings) those information were then crosschecked against the actual testimonies of workers. These public hearings were very successful in dragging attention to corruption and exposing potholes in the system. Several Activists throughout the country derived inspiration from the success of MKSS and led to a much broader discourse on the RTI in India. After a lot of hustling and juggling, Right to Information was enacted in few of the states of India. In 2000s a movement led by Anna Hazare in Maharashtra forced the state government to enact a stronger Maharashtra RTI Act. This Act was later considered as the base document for the Right to Information Act 2005, which was enacted by Union Government. The RTI Act empowers Indians to do the following: Request any information from any public office Take copies of the documents Inspect those documents Inspect the progress of works and Take samples of materials used at work sites Under the provisions of RTI Act, all authorities under its ambit must appoint their Public Information Officer (PIO) who shall be responsible for dealing with public regarding RTI. Any person may submit a request to the PIO for information in writing and it is the PIO's responsibility to provide information to citizens of India who request for the same under the RTI Act within the time constrains.

If the request pertains to another public authority whether in whole or part, it is the PIO's responsibility and not the applicants to forward the concerned request to a PIO of the other department within 5 working days. In order to seek out the information an applicant need not disclose any information or reasons other than his/her name and contact particulars. If in case the information is not provided within the specified time frame, it is treated as deemed refusal. Refusal with or without reasons may be a ground for further appeal or complaint regarding the same. Also, if the information is not provided within the time frame it is to be provided free of charge later. For Central Departments, there is a fee of Rs 10 for filing the request, Rs 2 per page of information and Rs 5 for each hour of inspection after the first hour. However, if the applicant is a Below Poverty Card holder, then he/she need not pay any fee at all. There is no doubt that RTI Act has empowered Indian citizens and has also brought transparency in the working of public offices. However, people must understand their responsibility while exercising RTI Act, as it makes pulls down the smooth and steady functioning of the public offices by overload of RTIs filed. Currently RTI is a media staple of news. At the 6th Annual Convention of Information Commissioners in New Delhi, Prime Minister Manmohan Singh called out for a critical look at the RTI Act. He further added by saying that the law should not adversely affect the deliberative processes in the government. Dr. Manmohan Singh said that the numbers of appeals or complaints before the commission were very large and public authorities must endeavor to voluntarily put information in the public domain without waiting for applications from information seekers. Indeed, RTI has proved to be an effective tool for creating transparency and curbing the rampant corruption in the working of public offices. The society has developed due to it. However keeping all that in mind, it must also be ensured that it does not slow down the efficient working of various public offices and concerned measures must be taken regarding the same. Very soon RTI Call Centre and Portal is being set up to redress grievances but in spite of best transparency if we citizens of India are not vigilant of our rights then best of laws cant be implemented effectively. "Greece debt crisis and its impact on India"

Greece is facing sovereign debt crisis because of the debt it accumulated since first half of the first decade of the present century when the market was highly liquid. As the crisis got deepened, there was a liquidity crunch in the world economy thereby making borrowings difficult as well as expensive and thereby improper debt repayments on time. As of now, the debt-GDP ratio of Greece is whopping 160 percent. The major factors behind the crisis were supposed to be the excessive expenditures, financial mismanagement and unregulated labour market. In 2010, almost 27 percent of the total working population of the country was part of bureaucracy. The crisis was further aggravated by the contemporary US Sub-prime crisis when the income and savings were facing a downward trend worldwide resulting in lower demand and thereby lower output and employment. This adversely impacted the labour market of Greece. Moreover, volatile capital markets due to liquidity crunch resulted in lower capital flows as a result, strict norms were made for banks to grant loans and rates were also increased thereby making borrowings costlier in Greece in comparison to the rest of the world. Overall, it adversely impacted the prime sectors like tourism shipping etc which had a significant contribution to the GDP. In order to accommodate its rising expenditures, it had to dwelt heavily on the external borrowings due higher internal interest rates. On joining the European Monetary Union, it discovered that it could borrow at lower rates equal to Germany without doing anything and continued to incurring expenditures and avoid reforms. Many solutions are being tried out since long; however, the desired results don't seem to be forthcoming. Impact of Greek crisis on India is not a direct one but it will affect the Euro zone, accounting for one fifth of Indias foreign trade. Therefore, if the crisis is not resolved early, it will have a chain reaction. It may not only engulf the European countries, but could also have a severe impact on the developing economies such as India. Further, 75 percent of these exports are from the manufacturing sector. A slowdown will affect demand from Europe for domestic products. Further, the job losses, budget cuts and other austerity measures will also impact demand. This will also have an adverse impact on the country's industrial production. As a slowdown will affect exports, it can lead to an increase in the already high current account deficit. High Current Account Deficit means that imports are much higher than the exports which will ultimately depreciate the Rupee further strengthening the inflationary forces in the country. The stock markets in developing countries can witness a slowdown in funds from Europe as the foreign institutional investors (FIIs) and European banks will need funds to meet their own requirements of capital adequacy, current obligations and domestic needs, and will not be able to spare much for investments in overseas markets.

Because of the vulnerability to European Union from the Greece crisis, Greece exit from the Euro zone is also not ruled out. However, even after the Greece exit from Euro zone, European banking system will involve pouring more money into Greece. The European Financial Stability Facility, the instrument for fixing the European liquidity crunch, is authorised to borrow up to 440 billion Euros, of which 250 billion Euros remained available after the Irish and Portuguese bailout. Coupled with this, Spain and Italy are facing the negligible growths which are supposed to be the most developed countries of Euro zone along with Germany and France. In such a situation, the US Dollar will emerge as the most secure currency. With the fall of the Euro, Dollar's rise against the Indian Rupee is likely which has already fallen to historic lows. Theoretically, the fall of the rupee will make exports and services cheaper. But since India depends on imports to meet its fuel demands (generally paid for in US Dollars), fuel prices would go through the roof, making everything costlier. This may further cause depletion in the forex reserves as a result input costs will continue to rise and margins will drop drastically. However, a positive for India is the fact that this is mainly a domestic economy. It is not primarily dependent on exports. Secondly, India has a diversified export portfolio, spread across various regions. These factors will help mitigate the impact of adverse conditions in the Euro zone to some extent. India needs to take another more fundamental lesson from the European debt crisis. The European sovereign debt crisis is not an overnight development. Globalisation of finance; unregulated credit conditions during the 2002 2008 period that encouraged high-risk lending and borrowing practices; international trade imbalances; real estate bubbles; slow economic growth since 2008; fiscal policy choices related to government revenues and expenses; and approaches used by nations to bail out troubled banking industries and private bondholders etc have all contributed to this development. In India, unfortunately, successive governments have sacrificed fiscal consolidation at the altar of growth. The Union finance minister, for the financial year 2011-2012, announced that the fiscal deficit of the government of India stood at 5.9 per cent of GDP. It is fiscal mismanagement that has spelt trouble for Europe. It is imperative that we draw the right lessons from this. India can cope with such crises but if we don't improve our fiscal management, we may be in for bigger trouble.

General awareness or GK is a must for cracking MBA entrance exams and for updating you on this MBARendezvous.com -India's content lead MBA website has started series of articles to equip MBA aspirants with general awareness with the hope that you would get success in various MBA entrance exams. Following article on The Green Revolution - Facts and Fallacies is part of our series on general awareness: Green Revolution refers to a series of research, development, and technology transfer initiatives, occurring between the 1940s and the late 1970s that increased agriculture production around the world beginning most markedly in the late 1960s. But in India, The Green Revolution refers to the increase in food production and in production of non-food items that has significantly and steadily taken place in India since 1966. Dr. Norman Borlaug, who is hailed as the Father of the Green Revolution first introduced genetically modified high-yielding wheat to India in 1963. But the honor of being the Father of Green Revolution in India goes to Dr. M.S.Swaminathan. He is a member of the Parliament, and also heads a foundation called M.S.S.R.F (M.S.Swaminathan Research Foundation) in Chennai, India. The other name written with golden ink in the history of Green Revolution of India is of Dr. M.P. Singh. He was very instrumental in introducing High Yielding Seeds [HYS] to agricultural world of the country. The use of HYS provided the success platform for the Green Revolution in India. Therefore, the introduction of high-yielding varieties of seeds and

the increased use of fertilizers and irrigation resulted in increase in production which was much needed to make India a self-sufficient country in food grains, and thus improved agriculture in India. All these steps collectively are termed as Green Revolution. Green Revolution not only resulted in good production but the use of chemical pesticides and fertilizers reduced the negative effects on the soil and the land such as land degradation. The Green Revolution led to sizable increases in returns to land, and hence raised farmers incomes. Moreover, with greater income to spend, new needs for farm inputs, and milling and marketing services, farm families led a general increase in demand for goods and services. This stimulated the rural non-farm economy, which in turn grew and generated significant new income and employment of its own. This was a general know how of Green Revolution, but of we speak technically, the Green Revolution was much more than just growing crops and using pesticides. So, what exactly was the Green Revolution in India? There were three basic elements in the method of the Green Revolution in India. They were: 1)Continued expansion of farming areas; The area of land under cultivation was being increased right from 1947. But this was not enough as the demand was rising in much faster pace than supply, but still the expansion of cultivable land continued. So, the Green Revolution continued with this quantitative expansion of farmlands. However, this is NOT the most striking feature of the Revolution. 2)Double-cropping existing farmland; This was a primary feature of the Green Revolution. Instead of one crop season per year, the decision was made to have two crop seasons per year. The one-season-per-year practice was based on the fact that there is only natural monsoon per year. This was correct. So, there had to be two "monsoons" per year. One would be the natural monsoon and the other an artificial 'monsoon.' which was to be created with the help of huge irrigation facilities. Dams were built to arrest large volumes of natural monsoon water which

were earlier being wasted. Simple irrigation techniques were also adopted. 3) Using seeds with improved genetics.

This was the scientific aspect of the Green Revolution. The Indian Council for Agricultural Research (which was established by the British in 1929 but was not known to have done any significant research) was re-organized in 1965 and then again in 1973. It developed new strains of high yield value (HYV) seeds, mainly wheat and rice but also millet and corn. The most noteworthy HYV seed was the K68 variety for wheat. The credit for developing this strain goes to Dr. M.P. Singh who is also regarded as the hero of India's Green revolution. As expected, the Green Revolution also contributed in creating plenty of jobs not only for agricultural workers but also industrial workers by the creation of lateral facilities such as factories and hydro-electric power stations as explained above. This gave better nutrition to the people by raising incomes and reducing prices, which permitted people to consume more calories and a more diversified diet. But a revolution of this magnitude was bound to create some problems of its own. Even today, India's agricultural output sometimes falls short of demand. The Green Revolution, howsoever impressive, has thus NOT succeeded in making India totally and permanently self-sufficient in food. In 1979 and 1987, India faced severe drought conditions due to poor monsoon; this rose questions about the whether the Green Revolution was really a long-term achievement. Also India has failed to extend the concept of high-yield value seeds to all crops or all regions. In terms of crops, it remains largely confined to food grains only, not to all kinds of agricultural produce. In regional terms, only Punjab and Haryana states showed the best results of the Green Revolution. The eastern plains of the River Ganges in West Bengal state also showed reasonably good results. But results were less impressive in other parts of India. But we cannot deny that Green Revolution did have its positive effect on the overall agricultural production. Some of them could be:

India is not self sufficient but is one amongst the countries with the highest agricultural production. It is also a food grain exporter. Green Revolution taught the concept and techniques of cash crops, and also adamantly pointed towards production of fruits and flowers. Production of Unit farmland increased by 30%, as compared to the production of 1947. Green Revolution provided scope for Industrial boost because together with HYS fertilizers, farmers also needed more water, more fertilizer, more pesticides, fungicides and certain other chemicals. With the irrigation purpose, more dams were constructed, which prompted construction of hydro electric power production and resulted in industrial growth. Nothing like the Bengal Famine has happened in India again, but it is disturbing to see that even today, there are places like Kalahandi (in India's eastern state of Orissa) where famine-like conditions have been existing for many years and where some starvation deaths have also been reported. Of course, this is due to reasons other than availability of food in India, but the very fact that some people are still starving in India, whatever the reason may be, brings into question whether the Green Revolution has failed in its overall social objectives though it has been a resounding success in terms of agricultural production. Therefore, The Green Revolution cannot be considered to be a 100 percent success. Viral Marketing is part of our series on general awareness: If explained technically, viral marketing could be described as a strategy that encourages individuals to pass on a marketing message to others, creating the potential for exponential growth in the message's exposure and influence. Like viruses, such strategies take advantage of rapid multiplication to explode the message to thousands, to millions. But in more casual terms, it is an idea that spreads and while spreading it actually helps market your business or cause. There could be two kinds of viral marketing. One, where you market for your product to sell it; it is the original classic viral marketing where the product has a self-amplifying cycle. Hotmail, for example, or YouTube. The more people use them, the more people see them. The more people see them, the more people use them. The product or service must be something that improves once more people use it.

A second kind has evolved over the last few years, and that's a marketing campaign that spreads but isn't the product itself. For instance, Anna Topi, T-Shirt, Posters, etc. during Annas movement in Ramlila Maidan, New Delhi. Th ey were everywhere, because people chose to spread them. It was viral (it spread) and it was marketing (because it made an argument--a visual one). Good Viral Marketing Techniques That Work: Funny videos are a great method to use for viral marketing b ecause video sharing is so popular today. Funny or weird videos get shared among friends and posted on blogs and get seen by a lot of eyes. Hotmail is often used as the classic example of viral marketing. When they started giving away free email addresses, everyone who used their service also advertised it because a link to Hotmail was automatically included at the bottom of every email sent. More and more people saw the link, clicked it and signed up for a free email address. All these new users then sent out the Hotmail link with every email they sent and so on. Giving away free ebooks or short reports is another viral marketing technique that is pretty popular today. The free report contains advertisements for your website with links back to it. But Viral Marketing failures are not uncommon even among big businesses with huge advertising budgets. It is difficult to predict what will take off and what will be a flop. Posting gossip or rumors on your blog can sometimes go viral as can post of any controversial statement. This is also called link baiting. The purpose here is always to create a murmur of people talking about your post and linking to it. All those web hits and back links will be good for your business as long as you do it right. You have to be careful about stirring controversy or making statements that are untrue because it might blow up in your face and even hurt your business. For example, the ad campaign of Satyamev Jayate. It openly said jab dil pe lagegi tabhi baat banegi, i.e., when the pain will be felt with heart only then there could be much needed change or only then the desired results could be achieved. It could have backfired if people were hurt or agitated with this statement but instead they got excited and the show is a declared hit. Few other good examples of successful viral marketing are organizations like CitiBank. During the expansion phase of credit cards, the "Referral Program - Member bring Member" introduced by CitiBank was a very successful program. At the same time companies like Amway, Hindustan Lever, Tupperware etc. has implemented such marketing concept in

India. Besides, Monster.com and Naukri.com are also the beneficiaries of this form of marketing. On the other hand, IIMs have decided to use the famous Soup song Kolaveri Di from a Tamil film '3' as a classic example of viral marketing. They have plans to dedicate a session to Kolaveri Di as part of its course on Contemporary Film Industry: A business perspective. Why this Kolaveri Di, which means 'Why this rage towards me, girl' has actually become a rage across the country and Traffic Police of states like Chennai, Bangalore and Kolkata are using the song to exorcise the cases of road rage and bring in peace and tranquility. The Kolkata traffic police is literally humming 'Why this herogiri di?' these days, urging errant bikers to wear helmets. The touch of humor, you see! Thus, the talk of the tinsel town of corporate is how the beautiful strategy used by Kolaveri Di can be used by companies to leverage their marketing activities? If analyzed, the video of this song makes it very clear that money isnt everything because promoting a song or service need not always involve huge budgets. With this, Social media will now finally take its place as a mainstream marketing vehicle alongside TV and radio. You just need to have a great product and an idea that connects. Then you need to keep it simple and it surely will touch hearts. Innovate or Perish is part of our series on general awareness: In todays competitive scenario, its no longer survival of the fittest, but survival of the most innovative. Once Steve Jobs was quoted as saying, Innovation distinguishes between a leader and a follower. This statement in itself distinguishes S teve Job and all the rest. Todays business environment is such that even the most fundamental elements of business success are being reevaluated and redefined. By this, one thing becomes increasingly clear; innovation is no longer a nice to have; its a must have. Its what we call The Innovation Imperative; if innovation distinguished between leaders and followers in the recent past, today it increasingly distinguishes between survivors and the barely breathing. Many organizations are replacing traditional brainstorming techniques with new, more inventive processes like SmartStorming and 3-D Ideation, i.e., they are looking for innovative ways to innovate. And this is done to challenge the system on daily basis because if you are not doing it, you will not move forward to world class results. We must find creative solutions to existing problems. Many highly educated, intelligent business executives know that fostering innovation is a smart thing to do, the right thing to do, the one thing that will set them apart from the competition and still they fail to innovate. Why? Because its tough, its time and energy consuming, and a sincere commitment is required to succeed. Its easier to keep doing things the way they have always been done. The problem with that is, you keep getting the same results again and again if that is what you have done earlier. The same results just dont cut it in this constantly changing world in which we

live. Another reason people might avoid being creative is because it isn t logical. Its easier to be a logical and analytical thinker than a creative thinker. Its also safer to be a logical, analytic thinker than to be a creative thinker. But a leader, not follower, thinks innovation. He not only thinks, but also applies and appreciates creative thinking. He leads his team into creative thinking by offering them different and unconventional solutions. Here are few tips for encouraging innovative thinking into your team. Get rid of mental locks and excuses of not bei ng creative as everyone is creative! Learn and teach creative thinking techniques and apply them! Move outside of your area of expertise Allow failures Create a process map as Edward Deming once said, If you cant describe the work you are doing in terms of a process, then you dont know what you are doing. Get your people involved Create an environment that supports innovate thinking Though history stands for the oath that not all innovators have seen their zenith, but only those who have kept on moving instead of standing tall and STILL. Need proof? RC Cola invented the first diet soda. RC Cola also was the first to put soda in a can. Does anyone drink RC Cola today? Not really. Coca-Cola and PepsiCo grabbed hold of that market and never let go. They were so much better at all the complementary skills such as distribution and marketing that they could afford to be a little late getting to the action. But then, till date, they have been on their toes. Need another example? Who brought the first hand-held calculator to market? It wasnt Hewlett-Packard or Texas Instruments, even though both made fortunes from their products. It was Bowmar Instruments, a company whose inventions won it a place in museums but not much else. If we talk about mobile innovation, then getting excited about a mobile pioneer such as Instagram is a bit like saluting RC Cola or Bowmar. Breakthrough ideas do have value, and the world needs those pioneers, but most of the time, the winners are the companies and individuals with creativity as well as sustainability at their finger tip and back of their mind, always. These examples made it very evident and clear that innovation is not static, its dynamic; its not the end of the road but beginning of a tremendously com petitive and spontaneous battle. One not only needs to be innovative but should also have the capability of maintaining it.

For instance, Xerox. Xerox has always had a proud tradition of being pioneer in the industry and with its competence; it continues to be in the forefront of innovation, unlike RC Cola, Bowmar and Instagram. So, its time to develop an innovation orientation - not tomorrow or next week or in the third quarter, its NOW ! Search actively for new, better, and more productive ways of doing things. Utilize proven innovation tools-advanced ideation techniques, new technologies, breakthrough processes. But also adopt an innovation mindset, asking yourself every day, How could I do this better? Turn yourself and your organization into an Innovation Machine. You will not only survive this evolutionary upheaval, you will thrive. How President of India is elected is part of our series on general awareness: Difference between democracy and republic is a minor one where democracy refers to the government elected by the people while republic refers to the Head of the state elected by the people. In India, Prime Minister is the head of government while President is the head of the state. In England, Prime Minister is head of government and Queen is the head of the state. Since Prime minister is elected by the people of England but Queen is not, England is a democracy but not a republic. But in India both the head of the government as well as state both are elected by the people of India, India is a democratic as well as republic. As per Article 52 of the Constitution of India, there shall be a President of India and the executive powers of the Union shall be vested in the President. The President of India is the first citizen and represents the Indian nation and does not, therefore, belong to any particular political party. Election of President is conducted by the Election Commission of India. He / She is indirectly elected by the people of India as the representatives of the people through an Electoral College. The main reasons behind the indirect election of President of India as discussed in the Constituent Assembly were If the direct election of the President were adopted, the Presidential candidate who has to carry on an election campaign from one corner of the country to another will certainly be put up by some party or the other, which may cause political excitement and generate party feelings. Thus the person elected to the Presidential office through this means will never be able to forget his party affiliations. A directly elected President may not be content with his position of a mere constitutional head and can claim to derive his authority directly from the people. So, if he wanted to assume real power, it would lead to a constitutional deadlock.

The Electoral College constitutes the elected members of Lok Sabha, Rajya Sabha and State Legislative Assemblies who elect the President through proportional representation single transferable vote. Candidate who corners the majority i.e. more than 50 percent of votes is the winner but it is possible that four aspiring candidates A, B, C and D gets 35 %, 30% 25 % and 20 % respectively and no one gains more than 50% of votes. In this case, single transferable vote is used where each voter gave preference to each candidate as first, second, third of fourth preference. Since in the said example, D gets least number of first preference votes, He will be eliminated from the race and his votes will be distributed among the other contestants on the basis of the second preference. The Proportional Representation is followed by assigning a value to the votes of MP and MLA. Each member of the Electoral College who is a member of a State Legislative Assembly will have a number of votes calculated as follows: On vote of MLA = Total population of state/ Number of MLAs in the state x 1000 Fractions exceeding one half being are counted as one. For example , The population of Punjab is 1,35,51,060. Let us take the total number of elected members of the Legislature of Punjab to be 117. Now applying the aforesaid process, if we divide 1,35,51,060 (i.e. the population) by 117 (i.e. the total number of elected members), the quotient is 115821.0256. Therefore, the number of votes which each member of the Punjab Legislature would be entitled to cast is 115,821.0256/1000 i.e. 116. The value of a vote of MP is = Total value of vote of all MLAs/ Total No. of MPs In 2012 Presidential elections, Value of vote of each elector in Parliament = 1025179/776= 1321(without fraction) Total value of votes of Parliament= 776 x 1321=1025096 Total value of votes of State electors (4120 MLAs) = 1025179 Total value of 4896 electors for Presidential election in 2012= 2050275 In this manner, total 4896 electors from the country will vote to elect the President of India through a single transferable vote. In order to be elected as President of India, he / she Must be a citizen of India. Completed 35 yrs in age. Eligible to be a member of Lok Sabha.

Must not hold any Government post Supreme Court inquires all disputes regarding President's election. President takes oath in presence of Chief Justice of India, or in his absence, senior most judge of Supreme Court.

Banking and it's challenges in India is part of our series on general awareness: Banks are the most important institution for institutional credit in India. Banking industry in India is almost two centuries old as the first bank opened in India was Bank of Hindustan opened by Europeans in 1779 in Calcutta while the first bank managed by Indians was Oudh Commercial Bank. Since then, Indian financial sector had covered a long distance. According to RBI data, there are 171 banks operating in India with more than 82,400 branches across the country. Apart from assisting in the rapid development of the economy through financial contribution, the commercial banks were also expected to expand the institutional base, directed lending to disadvantaged borrowers, and to provide credit provision at concessional rates of interest. Since private banks in early post independence period were majorly catering to the needs of the affluent sections of the society neglecting vast rural population, top 14 banks were nationalized in 1969 and later six more in 1980. But nationalized banks later itself become white elephants incurring consequent losses and become dependent on the budgetary support of the government. There was an urgent need of reforms and therefore government established Narsimhan Committee to recommend for reforms in Banking sector, meanwhile allowing private sector to set up banks and Axis Bank (earlier as UTI Bank), ICICI Bank and HDFC Bank were established. This move along with the rapid growth in the economy of India revitalized the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. Financial reform process which was initiated a decade ago has covered almost all the important facets of banking and has resulted in improved bank perform. However, of late, new challenges have emerged for the banking sector to cope with the local as well as global factors. Exposure to State power utilities (2-3% of total exposures), a large number of which are incurring losses, airlines (1.5-2%), and AP-based micro lending institutions has increased the vulnerability of banks of late. As a result, The Gross NPA percentage (for public and private sector banks) could increase to 2.3-2.7% as on March 31, 2012 from 2.3% the previous year. Further, if interest rates continue to rise, it could negatively impact asset quality. In order to attain the objective of financial inclusion, industry needs to proactively increase its activity in rural India. ICICI Bank Ltd. merged the Bank of Rajasthan Ltd. in order to

increase its reach in rural market and market share significantly. State Bank of India (SBI), the largest public sector bank in India has also adopted the same strategy to retain its position. It is in the process of acquiring its associates. SBI merged with its associate bank State Bank of Indore in 2010. However mere mergers and acquisitions are unlikely to attain the objective of financial inclusion. Globalization has also exposed the Indian banks to the vulnerabilities of global financial vagaries. The 2008-09 financial crises could not create a meltdown in like that in US but it certainly affected the performance of Indian banking industry. The growing competition increases the competitiveness among banks. But, existing global banking scenario is seriously posing threats for Indian banking industry. We have already witnessed the bankruptcy of some foreign banks. Though, as of now, there is no visible flaw in the risk management techniques of the Indian banks but they must be constantly upgraded to cope with the fast changing global financial scenario. Though large banks are found strong enough to cope with the global as well as local challenges but small and local banks face difficulty in bearing the impact of global economy therefore, they need support and it is one of the reasons for merger. Some private banks used mergers as a strategic tool for expanding their horizons. There is huge potential in rural markets of India, which is not yet explored by the major banks. Therefore ICICI Bank Ltd. has used mergers as their expansion strategy in rural market. They are successful in making their presence in rural India. Over the last few years, the falling interest rates, gave banks very little incentive to lend to projects, as the return did not compensate them for the risk involved. This led to the banks getting into the retail segment big time. It also led to a lot of banks playing it safe and putting in most of the deposits they collected into government bonds. The banking sector in India needs to tackle these challenges successfully to keep growing and strengthen the Indian financial system. Transparency and disclosure norms as part of internationally accepted corporate governance practices are assuming greater importance in the emerging environment. Banks are expected to be more responsive and accountable to the investors. Banks need to disclose in their balance sheets a plethora of information of assets and liabilities, lending to sensitive sectors, movements in Non Performing Assets (NPAs), capital, shareholdings of the government, value of investment in India and abroad, operating and profitability indicators. Furthermore, the interference of the central government with the functioning of Public Sector Banks (PSBs) should stop. A fresh autonomy package for public sector banks is in offing. The package seeks to provide a high degree of freedom to PSBs on operational matters. This seems to be the right way to go for PSBs.

Banking is the most vital sector of any economy and turmoil in the industry affects the entire economy. Therefore, growth of the banking sector will be one of the most important inputs that shall go into making sure that India progresses and becomes a global economic super power. Metals wealth of India is part of our series on general awareness: Metals constitute an important role in the countries development. They constitute the vital raw materials for many basic industries and are a major resource for development. Iron and steel is a basic industry to develop a countrys basic infrastructure without which ship building, automobiles, construction industries etc cannot grow. Similarly, copper wealth is essential for the dissemination of electricity, aluminum is significant for development of aviation sector. When India ushered a planned development in the post independence period, development of its metallic resources was given a significant place as a result of which, today it is a huge industry with a turnover of Rs 41828.44 crore in 2010-11. Haematite and magnetite are the two important iron ores from which iron is extracted. Of these, haematite is considered to be superior owing to its high grade. It is the basic raw material for iron and steel industry. Steel is an alloy that consists mostly of iron and has carbon content between 0.2% and 2.1% by weight, depending on the grade. Iron is extracted from ore by removing oxygen and combining the ore with a preferred chemical partner such as carbon. This process is known as smelting. Iron and steel together form the largest manufactured products in the world and each of them enters into every branch of industry and is a necessary factor in every phase of our modern civilization. It is used widely in the construction of roads, railways, other infrastructure, appliances, and buildings. Most large modern structures, such as stadiums and skyscrapers, bridges, and airports, are supported by a steel skeleton. Even those with a concrete structure will employ steel for reinforcing. In addition to widespread use in major appliances and cars, despite growth in usage of aluminum, it is still the main material for car bodies. Steel is used in a variety of other construction materials, such as bolts, nails, and screws. Other common applications include shipbuilding, pipeline transport, mining, offshore construction, aerospace, heavy equipment such as bulldozers, office furniture, steel wool, tools, and armour in the form of personal vests or vehicle armour. Chhattisgarh, Orissa, West Bengal, Jharkhand are the major iron ore producing states of the country. Andhra Pradesh, Goa, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan also produce ore. Currently Aluminium is also the second most used metal in the world after steel. Due to the consistent growth of Indian economy at a rate of 8%, the demand for metals, used for various sectors, is also on the higher side. As a result, the Indian aluminium industry is also growing consistently. India is world's fifth largest aluminium producer accounting almost 5% of the total aluminium production in the world.

India is also a huge reservoir of Bauxite with a Bauxite reserve of 3 billion tones. Bauxite deposits are found in western Bihar, southwest Kashmir, Central Tamil Nadu, and parts of Kerala, U.P, Maharashtra and Karnataka. 1) In transport, aluminium is used in cars (engine blocks, cylinder heads, transmission housings and body panels), trucks and buses (sheet and plate for bodies), in railway stock and in aircraft. 2) In construction, aluminium is used in sheet products for roofing and wall cladding, in extrusions for windows and doors, and in castings for builders' hardware. 3) In packaging, aluminium is used in the form of alloy sheet for beverage can bodies and tops, as foil for household and commercial wrap, and in manufactured packaging products such as cartons for fruit juice and packaging for pharmaceuticals. 4) In the electrical sector, aluminium is used in the form of wire, normally reinforced with steel to form cables. Copper is broadly used in the manufacturing of electrical machinery, brass, coins, utensils and other alloys. Copper ore bearing areas are Agnigundala in Andhra, Singhbum in Bihar, Khetri and Dartiba in Rajasthan and parts of Sikkim and Karnataka. Zinc is bluish-white to silvery-grayhard and brittle metal. Zinc is mostly used as an anticorrosive agent in other metal products. It is used in the process of galvanization. Galvanization is the coating of other metals with iron or steel, which zinc is used in, is what 50% of the worlds zinc is used for. Galvanization is used on chain-link fencing, guard rails, suspension bridges, light posts, metal roofs, heat exchangers, and car bodies. It is also used as an anode material in batteries. A sheet of metal is used as the case in zinc-carbon batteries. Zinc is alloyed with copper to create brass. Bass is used a wide variety of item such as pipes, instruments, communication equipment, hardware and water valves. It is also used in sunscreens and baby diaper rash products as a barrier protector. It is used in toothpaste to prevent bad breath and in shampoos to stop dandruff. Sphalerite or zinc blende is the most important zinc ore as it contains 64.06% zinc. Important zinc-lead deposits mostly localized within. Zinc production in India initially was done by government through a public sector company i.e. Hindustan Zinc Limited (HZL). It was the biggest company in India, which took care of mining to extraction of zinc. HZLs operations include three lead-zinc mines (Agucha in Bhilwara district, Zawar in Udaipur district and Rajpura-Dariba in Rajsamand district in Rajasthan), three zinc smelters (Debari and Chanderiya in Rajasthan; Vizag in A.P.).

Nickel ore is found in Cuttack and Mayurbanj in Odisha. Nickel is used in many products some of you may use everyday including electric guitar strings, magnets and rechargeable batteries. The magnetic properties of nickel actually make it very important for use in computer hard drives. Nickel is also added to a very important metal alloy- stainless steel. Stainless steel has numerous applications. It is used in cookware, cutlery, kitchen appliances, hardware, surgical instruments, storage tanks, firearms, car headlights, jewelery and watches. Apart from other mentioned metal, numerous other metals are also found in India in varying quantities in various regions. India also produces third quarters of the world's mica. The manganese mining areas are Madhya Pradesh, Maharashtra and Bihar-Odisha area. Chromites deposits are found in Bihar, Cuttack district in Odisha, Krishna district in Andhra and Mysore and Hassan in Karnataka. The Ramagiri field in Andhra, Kolar and Hutti in Karnataka are the important gold mines. The Panna diamond belt is the only diamond producing area in the country, which covers the districts of Panna, Chatarpur and Satna in Madhya Pradesh, as well as some parts of Banda in Uttar Pradesh. India also possesses the all-too valuable nuclear uranium as well as some varieties of rare earth elements Thus India posses a huge wealth in form of metals which are the basic prerequisite for the development of host of industries.

Late Earl Nightingale, also known as the Dean of Personal Development, believed that there exist two types of people: RIVER PEOPLE and GOAL PEOPLE. Both experience achievement and success in life, but in different ways. Goal people are individuals who believe in timetable approach. They write down their objectives and focus on attaining them one by one whereas River people don't follow such a structured route to success. They dont have a concrete plan with measurable goals,

but are still successful because they are so passionate about their area of interest that they only rest once they have achieved their much awaited destination. By laying out a roadmap of future achievements in front of them, goal people provide a clear set of stimuli to their creative minds to work upon and their subconscious minds brew only those ideas and insights that will compliment their set roadmap of achievements. River people, on the other hand, are happiest and most fulfilled individuals, who like to wade in a rich "river" of interest; a subject or profession about which they are very passionate. This helps them in recognizing breakthrough opportunities that are generally invisible from the mental radar of the more narrowly focused goal people. From the standpoint of knowledge, river people are explorers. They continually seek out for learning opportunities and new experiences, unlike goal people for whom learning things apart from their stated objective is like a deviation from their path. And from the standpoint of creativity, river people are more likely to benefit from serendipity, because they tend to be more open to new ideas, points of view and insights than single-minded, focused goal people. In our day-to-day life, we encounter people who show the traits of both personalities. For instance, a creative person in a timetable job! In his full-time job, he is expected to be goal oriented. He has specific personal and departmental objectives for which he is responsible. At the same time he gets excited about being a creative writer and wants to learn new skills and collect new information about innovation and technology for writing and nurturing his growing Web site! So at different scenario, people embody characteristics of both the personalities. Likewise, most of us embody traits of both the personalities in different situations. To strategize success on personal and professional level, it is important for us to distinguish between our tasks and related personality, i.e., when do we need to strategize and when should we just go with the wind! The important point is to recognize and nurture both aspects of our

personality as there is so much more to explore and know that we ought to make time in our lives for both our goal and river personas. After all, both bring richness and fullness to our lives. Thus, the basic strategy for success is not to strategize it, but to be on the lookout for new experiences and learning opportunities on a daily basis. You never know when they're going to appear -- the key is to recognize them when they do!

Open economy Vs closed economy is part of our series on general awareness: Concept of economics is older than the origin of the subject. As soon as the concept of society took birth, economics also took birth. In ancient times, every society exchange goods with other societies, thus even the most conservative societies in the world are open societies engaged trade with the rest of the world. Even the 5000 years old Harappan civilization was an open economy and was engaged in trade with the contemporary Mesopotamia civilization. Today almost every country is engaged in trade as no country produces every commodity enough to satisfy the want of its citizens. For instance, India had to import petroleum products while gulf countries import food grains. In modern world, closed economy is considered as one which does not have any sort of economic relation with rest of the world but is confined to itself only. A closed economy does not enter into any one of the following activities (i)It neither exports goods and services to the foreign countries nor imports goods and services from the foreign countries. (ii)It neither buys shares, debentures, bonds etc. from foreign countries nor sells shares, debentures, bonds etc. to foreign countries, thus it is financially also as closed economy. (iii) It neither borrows from the foreign countries nor lends to the foreign countries. (iv) It neither receives gifts from foreigners nor sends gifts to foreigners. (v) Normal residents of a closed economy cannot go to other countries to work in their domestic territory. No foreigner is allowed to work in the domestic territory of a closed economy. Situation where no external trade occurs is also called autarky. Due to above mentioned reasons; Gross Domestic Product and Gross National Product are the same in a closed economy. However, in strict sense, absolutely closed economies are non-existent today as every country trades with the rest of the world. However a closed economy term is used for the economies with high tariff walls, having relatively low level of foreign trade. India before globalization was considered as a closed economy because it was very apprehensive towards foreign trade and protected its domestic boundaries through high tariff walls.

Foreign investment was also not promoted due to the bitter experience of East India Company of England. On the other hand, an open economy is one, which is not only involved in the process of production within its domestic territory but also can participate in production anywhere in the rest of the world. An open economy involves itself in the following activities. (i)t buys shares, debentures, bonds etc. from foreign countries and sells shares, debentures, bonds etc. to foreign countries. (ii)It borrows from foreign countries and lends to foreign countries. (iii)It can send gifts and remittances to foreigners and can receive the same from them. (iv)Normal residents of an open economy can move or be employed and are allowed to work in the domestic territory of other economies. (v)Due to these reasons, Gross Domestic Product and Gross National Product are not same in an open economy. It is to be noted that at present all economies of the world are open economies. Most economies in their initial stages of development follow relatively closed economy policy as their fear that the competition from MNCs may crush their nascent domestic industries. Such policies were followed by India, USA etc in their initials stages of development. Thus the self reliance was a major objective behind the closed economic policies. Once their domestic industries developed to take the might of MNCs, they adopted the open economic policies. Many economists held that domestic industries must be protected in the initial stages of development but once the domestic industries gathered strength, country must adopt the open economic policy. According to them nurse the baby, rear the child and free the adult i.e. with the gradual development, industries must be freed to take on the world competition. In case of agriculture, India still follows the closed economy policy as Indian farmers are still vulnerable to the highly subsidized agri-products of developed world. Another argument which favors the closed economy is the insulation of domestic economy from the cyclical upswings of the world economy. More a country attached to the foreign trade and investment, more it is vulnerable to the global slowdown. If India didnt have foreign trade and investment with USA, it would not have been impacted by the financial crisis of 2008-09. In 1930s, due to the relative insulation of Russian economy from the other capitalists economies of the world, it wasnt impacted by the Great Depression of 1930s. In this manner autarky also provides a shield from the global upheavals However, the benefits of open economy quite outnumber the advantages of closed economy. An open economy widens the market of a country to such an extent which a closed economy can never realize. If Indian and Japanese, both are a trillion dollar market, by entering into a free trade pact, both countries widened their market to the tune of 2 trillion dollar, thus bringing upon the huge prospects for their companies in an enlarged market. Benefits of an open economy can be surmised by comparing Indias economic

performance in the pre and post globalization years. In the pre globalization era, the globalization years, GDP growth rate of India was sarcastically called as Hindu Growth rate while in the post globalization years, Indian economy has emerged as one of the fastest growing economy of the world. Moreover, in an open economy, prices are also found to be low and the qualities of products are better due to increased competition. Consumers also have more choices for consumption. When India was a closed economy, if you have to buy a car, there were only three choices, Maruti, Fiat and Ambassador, while now; there is a vast array of companies. Another benefit of an open economy is that it is more flexible. An open economy has a greater chance of adjusting itself with the changes taking place in world economy. Though it is true that an open economy is vulnerable to the global risks like slowdown but it is true that open economy is also a partner in the faster, vibrant global growth. Despite of inherent risks with the open economy, it is worth to be followed because of the immense direct and indirect benefits associated with it.

The origin of the word Entrepreneur is from the French word entreprendre. French for "to undertake". It should be noticed that the word accentuate on an attempt to act, and not on the end product of that action. Every manager of an organization should think like an entrepreneur and act like a leader by making every employee feel like a business partner as it will motivate them to do their best. It will not only bestow upon them a sense of ownership in the organization, but will make them feel as an indispensible part of the organization and you will have the most valuable asset of your organization performing their level best for the benefit of the organization.

Encouraging an entrepreneurial mindset goes beyond profits and benefits. Its a motivating attitude instilled in others by you, the manager. A manager with an entrepreneurial mind set is a great strategist and a master at getting others excited about helping him grow the business. He should make each and every member of his team an entrepreneur who activates his intuitions and sees the entire task as a whole responsibility, who can understand the entirety of the task assigned, the oneness of it and the integrated unity of it as opposed to merely their own assigned parts to perform. In todays competitive and swiftly changing work environment, employees should know far more about the tasks and projects than just how to do their specific jobs. So the manager must help his team members in understanding the entire task or project and its completion process, so that they could gain a clearer perspective of how the organization operates, learn what the competition is doing and develop the ability to take intelligent risks and to be creative at the same time. By doing so, the manager helps his employees feel a sense of ownership and pride in their work and a sense of commitment to the organization and its goals. Some more useful ways by which a manager could instill an entrepreneurial mind set in his team could be:

To Experiment The manager should challenge his team members to push a project forward, without analyzing it himself. And protect his team from those who may question this approach. By Broadcasting Results He should share the results of this experimental project with other leaders in his company and encourage them to support the project. This will also popularize this method in the organization and other leaders and managers will also start following the pioneer. By Managing it closely - The manager should also observe the process throughout to ensure that the costs never exceed the organization's acceptable budget, so the team can clearly see the upside of acting fast. When the manager helps his employees think in terms of the big picture and understand the domino effect of every action they take,

he put the seed of an entrepreneurial mindset in them which creates a winning and motivated team and a successful organization as a consequence. Entrepreneurial mind set can help the employees of, virtually, any field or profession. The currently available products and services in the area of expertise of the organization, despite of doing well, always have possibility of improvement to serve the customers better. A true leader only can instill the entrepreneurial mind set in his team. There are some key characteristic of a true leader like he is driven to succeed, a self-starter and go-getter, i.e., he is so motivated to achieve his goals that he takes initiatives rather than waiting for someone to issue instructions. He always sees opportunities where others can see problems. He bears responsibility for his own actions, instead of playing the blamegame. He thrives on change and welcomes it. When an organization survives and thrives, its generally because the managers and leaders of that organization know how to change with changing scenario. And sometimes they even keep ahead of the changes around them. Thats certainly so when they allow or even encourage innovative thinking among their employees. That means that managers need to help their employees feel motivated for developing out-of-the-box thinking.

In todays multifaceted environment, direct, comprehensible and coherent communication is necessary to drive the success towards the organization and the reward for this success goes to its leaders. Listening, conflict resolution, and communicating uniformly are

important communication skills. There are 7 Cs of communication that provides a checklist for making sure that your meetings, emails, conference calls, reports, and presentations are well constructed and clear so your audience gets your message.

These 7 Cs of communication are Clear, Concise, Concrete, Correct, Coherent, Complete and Courteous. When a communication has all these ingredients, the communication is communicated successfully. For example: If a manager posts a notice to all staff in his section telling them that there will be a staff meeting at 3.30 that afternoon, everyone will get the message loud and clear. On the other hand, if a receptionist leaves a message on your answer phone, asking you to call back your manager in Sales before 5.00pm, there is a probability that you check that message after 5.00pm and miss this important call. Similarly, if a company encloses a slip of paper in every employee's salary information sheet at the end of a month informing them of the new mission statement that the company has decided upon, it is very obvious that each and every employee will go through it once they collect their salary statement. But if this slip is inserted in the menu of the canteen, it is not certain if everyone who gets one will read it.

Successful communication is a skill, which is inbuilt in many leaders but also can be learned by those who are eager to improve their communication for success, both at personal and professional level. One, who wishes to be a good communicator, will have to appreciate its very foundations of 7 Cs.

Here are some important points that we should consider for effective and successful communication:

To know what we want to say and why? How will we say it?

Listen to know the feedback Reach understanding, agreement or consensus.

A successful leader or manager is one who understands the key issues of the employees by asking them several questions and analyzing them. Also, by demonstrating some sense of responsibility about being aware of their concerns and suggesting them that he would tackle them in the right manner. When a manager shows these traits, people get influenced and appreciate him as they believe in his message and what he represents.

Good communication skill has other essential elements as well, like:

Acknowledging others communicating with you by listening to them. It is also an excellent idea to rephrase and repeat what is being said to you. This, not only, insures that you understood what u heard but more importantly what the speaker meant. Using examples or personal experiences to explain is also helpful in communicating your ideas. Speaking clearly and distinctly is extremely important. You can communicate with a positive attitude whenever you speak. People will be more interested in what you say if you are using a positive sentence structure. Reading between the lines i.e., analyzing what is being said is also very important as many people have a hard time expressing themselves. You can help them by trying to interpret what they mean. You also need to build a trust and honesty bond between you and your employees in the conversation. This could be done by making them feel more at ease and so that they are more likely to

exchange ideas. Successful communication requires a connection between the parties to a conversation. Try to build a connection. This could be best done by finding a common ground or common interest to open the way to a good conversation.

If there is any disconnection in the communication, you should keep on asking questions and taking responses, until you get to the heart of the key issues and ensure that there are no any hidden agendas, motives, assumptions or unconscious beliefs amongst your employees. Once these barriers are removed, you can be assured of positive and successful outcomes.

We should always remember that we have the power to change the results we are getting in our life. Its up to us to take ownership of our thoughts and actions to achieve our desired results.

Liberalization and globalization have made the global market very competitive. Every Company of this global market needs to maintain its competitive advantage for long term survival. The cutthroat external competition makes it absolutely necessary for the companies to benchmark with similar organizations or organizations of different industry.

Benchmarking is the measurement against defined standards, i.e., benchmark. It is essentially the setting up of principals of the best practices in relation to both products and the processes by which these products are created and delivered. It is applied by the senior management of a company, keeping in view:

The detailed existing business processes Business processes of similar or different organizations. The analysis of comparison of the business performance with that of own past records and other organizations And finally, taking the necessary action to fill the performance gap, if any

Benchmarking should be an on-going process in any industry or organization. There are many types of benchmarking process that senior management applies in various departments depending upon the various scenarios. They could be Strategic Benchmarking which is used as a tool by the senior management to re-align those business strategies which have become inapt or obsolete. Or it could be the Performance or Competitive Benchmarking, Process Benchmarking, Functional Benchmarking, Internal Benchmarking, External Benchmarking, International Benchmarking etc.

Almost every activity can be benchmarked. For example a banking company can benchmark on loan processing time from the competitor's practices. A call center can benchmark on the reduction of number of dropped calls from one of its competitor. Or an auto ancillary industry can benchmark on reducing the number of defects from the quality practices adopted from the competitor. Be it any industry or any organization, benchmark is not only possible but also need of the hour.

It is also important as it helps the senior management to chart the organizations performance. If you want to determine the effectiveness of your company, you will have to put together the inhouse metrics that show the organizations capabilities and improvements. If you want to prove your organizations worth to the overall industry, you will have to use benchmarking to show how you are measuring up your efforts and effectiveness vis--vis similar efforts at other companies.

The Indian organizations are becoming world class, both in terms of size and performance. Therefore, there is a greater need to become superior in performance consistently. Quality is becoming the hallmark for both products and services. Indian and multinational organizations are increasingly becoming quality conscious and try to deliver high quality products and services to customers.

Quality delivery which was considered as the property of foreign companies like General Electric, Ford, General Motors, Xerox and AT&T had become the buzzword in many corporate circles in India as well. From Software major Infosys to Automobile giant Mahindra, from educational institutes like IIMs and IITs to Steel manufacturing giants like TATA, everyone is adopting best in class technology, borrows and adopt best ideas, incubate and implement them as part of their corporate strategy.

Even Indian Government considers Benchmarking as an important mechanism for introducing accountability in service delivery. Recognizing its importance, the Ministry of Urban Development, Government of India constituted a Core Group on Benchmarking under the chairmanship of Joint Secretary. This group has finalized a Handbook of Service Level Benchmarks, which provides (i) a common minimum framework for monitoring and reporting on service level indicators, and (ii) guidelines on how to operationalize this framework in a phased manner. Government of India has extended implementation support for the SLB framework in about 26 pilot cities so that they can serve as role models for other cities

across the country.

The Ministry of Urban Development, Government of India has formulated benchmarks for key performance indicators for water supply, waste water/sanitation, solid waste management and drainage to enable cities to measure and improve their own performance vis--vis the benchmarks. It is now well recognized that a sustained process of benchmarking comprising (i) developing comprehensive and disaggregated baseline data on service levels (ii) information system improvement to enhance quality of planning and (iii) performance improvement plans to attain new standards , is critical to ensure optimal use of investment and to sustain outcomes in service delivery. Benchmarking enables urban local bodies to identify strengths and weaknesses in their own practices and to reach out and learn from the practices of others to achieve excellence in service delivery. It also increases accountability and transparency to citizens.

Thus, the process of benchmarking, although very important, is very complex as well. It does require a great degree of systematic process review and constant control apart from flexible planning, detailed analysis, qualitative implementation, constant review and progressive change management.

Understanding CESS is part of our series on general awareness:

Cess is a form of payment which is imposed on public for accomplishing a particularly defined task. For instance, Road cess is imposed on Petrol/diesel to fund the National Highway Development Project; education cess is imposed on all indirect taxes to fund the cost of universalization of education. Therefore, the cess is also known as an earmarked tax It is different from tax in such a manner that while imposing tax, the government never defines the avenues in which the proceeds of a particular tax will be spend. As indirect taxes are of two types viz. Ad valorem

and specific duty, cess can also be ad valorem or specific where former is imposed on the basis of specific attributes of a commodity like weight, size, volume, length etc. The Road cess in India imposed on sale of High Speed Diesels and petrol comes under this category as government collects Rs2 on every litre of fuel sold. The education cess is Ad valorem in nature as it is imposed on the value of tax. For instance, if indirect tax estimation of a commodity is Rs1000, then 2 percent education cess means Rs20 which depends on the value of tax but not on the specific attributes of the commodity or services. Another quality of road cess is that it is based on the benefit approach of tax theory according to which, tax/cess is collected by those who will use the services. Since most of the vehicles in all likelihood ply on National highways, the disadvantage suffered by them in paying the tax is compensated by the benefit derived by plying on good roads in the form of saving of time and fuel among others. In the 11th plan (2007-12), the Government is estimated to have collected Rs 38,771 crore as road cess and Rs 54,898 crore should be generated through road cess in the 12th plan to meet the huge funding requirement of central road projects. Recently, a Working Group on Urban Transport headed by former Delhi Metro chief E Sreedharan suggested that to generate resources for public transport projects, a green surcharge of Rs 2 per litre on petrol, a green cess of 3 per cent of the annual insured value of all private vehicles, and a urban transport tax on purchase of new cars and two-wheelers at 7.5 per cent of the total cost of petrol vehicles and 20 per cent in case of personal diesel cars may be levied. Since all these proposed charges are aimed at particular goal, they can also be kept under the category of cess. Education cess was introduced in 2004, when the Central Government levied a 2% education cess on practically all the major central taxes. Reportedly, an estimated amount of Rs 60,000 crores has been collected till December 2011. Prarambhik Shiksha Kosh (PSK) has been established since November 2005 as a dedicated non-lapsable fund to receive the proceeds of the cess. Education Cess is not a part of the net proceeds of the divisible pool of sharable taxes based on constitutional provisions and as per the recommendations of the Twelfth Finance Commission, the proceeds of Education Cess credited into a non-lapsable fund called Prarambhik Shiksha Kosh (PSK) are utilized exclusively for Sarva Shiksha Abhiyan (SSA) and Mid-Day Meal (MDM) Scheme. Expenditure on SSA and MDM Scheme is incurred from PSK after the funds provided by way of Gross Budgetary Support (GBS) are fully utilized. No specific allocation is made separately to States/UTs against the amount collected through Education Cess. Assistance under PSK is released to States/UTs as per the schematic pattern and budgetary allocation for SSA and MDM Scheme.

The 1% secondary and higher education cess was introduced in Budget 2007-08 to fund secondary and higher education as well as for the expansion of capacity by 54% for reservation for socially and educationally backward classes. However, education cess is criticized because its utilization is unclear. There is no accountability about how the education cess has been used. The irony is that neither Ministry of Finance nor HRD are coming out with one clear figure. The total amount of cess collected seems to vary as per the estimates of both the ministries. There are other cesses also imposed by state and local governments also like coal cess, water cess, Solid waste management cess etc to ensure supply of clean water and proper waste disposal in the city. The advantage of cess over tax is that former has a clear direction regarding the development activities for which it must be spent and thus the authorities are more accountable for proper utilization of cess proceeds but such accountability is lacking particularly in case of education cess in India. Further, when the fundamental purpose of government revenue from all sources of taxes on income, sales, excise etc is to fund development expenditure & then the need of cess to fund the spending on basic education, public health and basic infrastructure means that primary revenue has been diverted to non-development avenues.

Much has been said and written on MBO since Druckers first references in practices of management in 1954. Some firms say it is very successful while for other it was not that propitious. Methods and approaches used by managers differ greatly resulting in great variation in the results of MBO itself. Some use it for the organization as a whole; others prepare sub units of the

organization and imply MBO on the smaller unit, whereas few others like to go for MBP instead. MBP or Management by Project is relatively a newer concept. It could also be seen as an invigorating improvement over MBO. If given a serious thought and strong foundation, MBP could be the next great frontier of exemplary leadership and management. According to Kevin Forsberg, Management by Objectives is a technique used to manage people based on documented work statements mutually agreed to by manager and worker. Progress is periodically reviewed, and in a proper implementation, the worker's remuneration is tied to performance". While the MBP approach efficiently converts any organisation into a number of small franchises and gives the authority to the senior executives of the organisation for effective distribution of the projects across a range of project management practitioners. Thus, Management by projects is an organizational philosophy which helps an organisation in moving beyond ad hoc projects and portfolios of projects to deliver its strategic objectives by a matrix (cross functional) approach. Although, for a definite success, senior executives have to use trained and accountable project teams in MBP. As we all now, change is the only constant phenomena. So it is not very surprising to monitor a huge increase in the number of corporations worldwide which achieve their strategic objectives using the 'Management by Projects' or MBP approach. Also, few organizations following MBO reported some sever problems among their employees like unhealthy internal competition, unethical behavior, and a work environment of fear and greed which, ultimately, is not in the best interest of clients or the employees or the organization as a whole. This situation could be explained using an example. Lets assume two graduate students are working for a leading company that offers loan. Employees are given monthly targets that decided their monthly emoluments and promotions as well. These targets contribute to an environment of intense competition among the loan officers. Fear for one's job in case the target is not achieved also existed because if an employee did not make his/her numbers, it will be viewed solely as the loan officer's fault. In this

unhealthy competition scenario, the loan officers did not reveal their secrets to the other loan officers. This could damage the very basics of a healthy management style which includes knowledge sharing and coordinated teamwork. But Employees working under MBO may resort to self-centered conduct which could harm the best interest of the organization. The Princeton office of Albert Einstein had a sign that stated "Not everything that counts can be counted, and not everything that can be counted counts". Maybe thats why; the shared purpose of the Walt Disney Company is "to make people happy, it isn't "to make people 5% happier this quarter". MBO tends to focus attention on internal supervisor-subordinate relationships and morphs into internal gamesmanship while MBP focuses on shared performance, not individual performers. Thus, a crucial difference between MBO and MBP is that in MBP, objectives are defined in terms of project-focused outcomes, not by numerical targets for organizational functions and individuals, like in MBO. But ultimately, the decision lies in the hands of the senior management of the organization because just like every individual, every organization is also unique and distinctive in itself. So are the issues and challenges in front of these institutions. So, whichever philosophy the organization follows, it should always remember that in this world of fierce competition, its the survival of the fittest.

Sustainable Growth is part of our series on general awareness: Sustainable growth refers to the inexhaustible growth which is of continuous nature. Sustainable growth entails the concept of sustainable development. Brundtland Commission defined sustainable developments as the process in which needs of present generation are fulfilled without comprising the needs of the future generation. Important thing to note is that needs of neither present generation nor future generation are compromised. Compliance of environmental standards is the most important tool in achieving

sustainability. For a policy, program, project or plan to be sustainable, it has to take into consideration all three dimensions of sustainability such as economic growth, social equity and ecological integrity. The concept of sustainable growth is applicable to almost sectors of the economy but it is more relevant to the agriculture, mining, energy and their impact on environment.

Agriculture has been a way of life and continues to be the single most important livelihood of the masses. Agricultural policy focus in India across decades has been on self-sufficiency and self-reliance in food grains production. Considerable progress has been made on this front. Food grains production rose from 52 million tonnes in 1951-52 to 244.78 million tonnes in 2010-11. However, the current growth rate of agriculture cannot be called as sustainable on any account as its growth rate fluctuate every year ranging from negative to as much as 6 percent per annum depending upon the vagaries of monsoon. In 2011-12, it grew at 3.0 percent per annum, in 2010-11 6.6 percent while it was just 0.2 percent in the preceding year. Growth of agriculture is important not only for agriculture but other sectors also because of its huge backward and forward linkages. Further the, the techniques of food production also not conducive for the sustainable growth. Major reasons responsible for this are excessive use of chemical fertilizers, chemical pesticides, flood irrigation, absence of water harvesting, etc are doing irreparable damage to the mother earth resources and put a question mark on the sustainable growth in agriculture. Excessive use of chemical fertilizers and pesticides distort the chemical balance soil which is unsuitable for the long term agriculture production. These chemical fertilizers and pesticides also seep with the irrigation water and seeps to the ground water and river water and pollutes them. Excessive extraction of ground water itself is a threat to environment sustainability and in many areas of Punjab, Haryana and Uttar Pradesh, tube -wells have dried and lands have become barren. This cannot be called as sustainable growth and to follow sustainable growth, exploitation and conservation of resources must go together. While extracting the underground water, refill of the underground water must also be ensured through techniques like rain water harvesting and water savvy irrigation techniques like sprinkler irrigation, drip irrigation etc. Moreover, bio fertilizers and bio-pesticides must be increasingly used along with their chemical counterparts to minimize their impact on environment. The primary goal of sustainable industrial growth is to promote sustainable development at the global, regional, and local levels. Many Indian companies are recognizing the challenge of going global and looking at the implications of sustainable development. They are promoting the sustainable use of renewable resources and minimal use of nonrenewable ones. Though every industry should follow the goal not just of growth but of sustainable growth but it is more relevant for the industries like chemical, mining and energy. To foster sustainable growth of the chemical industry, there is a need for uniform standards in environmental management across the globe.

Every organization should be equipped with tools to monitor measure and evaluate the implications on the environment and risks at its areas of operation. This should be audited regularly by the organizations themselves and then reviewed by certified authorities. Mining is an activity which utilizes natural resources and plays a crucial role in the economic as well as social development in the country. In enhancing the contribution of mining to sustainable development, actions at required are: To apply the precautionary and polluters pay principles making producers financially liable for the environmental effects from process production activity. Enhance the participation of local and indigenous communities to play an active stakeholder role in mining development through the life cycles of mines and post mining (after closure) activities. Participation of local community is important for mining sector because in India, the naxal menace is found in the areas which are rich in mineral wealth but constitute bulk of poor population. To actively promote eco-design, eco-labeling and other transparent, verifiable and nonmisleading consumer information tools. Though there are environmental standards for emission, effluent, and groundwater contamination in place as well as hazardous and toxic management guidelines. Nevertheless, mining industry still does not comply due to weak law enforcement, lack of monitoring capability and skilled human resources. Without the growth of energy sector, growth of an economy is unthinkable. Similarly without the sustainable growth of energy sector, sustainable growth of economy cannot be conceived. In India, more than 40 percent of the energy needs of the country are provided by coal which is a non-renewable resource. Apart from this, petroleum products form another bulk for energy consumption. With the faster growth, depletion of such resources is likely to be faster. In order to follow a sustainable growth path, share of renewable energy like wind, solar, hydro, tidal energy must increase more than that of non-renewable energy. Moreover, quality of public services must be improved so that people prefer public transport to personal transport. It can be done only if such services are efficient, cost effective and tame saving. The time is running out and effective implementation of sustainable growth techniques is important for future generation to enjoy the fruits of environment friendly sustainable growth. The efforts required are not to be concentrated at one level but they should be followed at every level- local, regional, national and global as well. Understanding Instrument of Equities is part of our series on general awareness:

Financial markets are of two types, long term and short term. The markets dealing with short term financial markets are called as money market while the long term are called as capital market which deals with financial securities of more than 364 days of maturity. The government securities as well as corporate securities are the part of capital market and equities are part of corporate securities along with other instruments like bonds and debentures. An equity or share is an instrument through which the holder of that instrument claims share in the assets and profit of the company whose share it holds. Thus equities dont assure fix returns but gives a share in profit. The equities are tradable instrument, traded at stock exchange like Bombay Stock Exchange (BSE), National Stock Exchange (NSE). When a company releases its new share to garner funds, they are called as initial public offering (IPO). Through IPOs, company offers its shares for sale to the public. The shares are sold in the market at a price (offer price) determined by the company along with investment bankers or underwriters who also promote the offer. These days, public issues are targeted at various sectors of investing fraternity. Companies now allot certain portions of their offers to different segments. Traditionally there are three segments viz; qualified institutional buyers (QIB), high net worth individuals and retail investors (general public). The funds raised by the company through equity are available to the company on unsecured basis i.e. the company does not offer any of its assets as a security to the investors. Returns paid by company on the shares are in the form of dividends. Dividends are paid at the face value of the shares, not at the market value. Advantages of equity over other instruments : There is no compulsion to pay dividends. If the firm has insufficiency of cash it can skip equity dividends without suffering any legal consequences. Equity capital has no maturity date and hence the firm has no obligation to redeem. Because equity capital provides a cushion to lenders it enhances the creditworthiness of the company. In general others things being equal the larger the equity base the greater the ability of the firm to raise debt finance on favorable terms However, there are some disadvantages also: Sale of equity shares to outsiders dilutes the control of existing owners. The cost of equity capital in high usually the highest. The rate of return required by equity shareholders is generally higher than the rate of return required by other investors.

Equity dividends are paid out of profit after tax whereas interest payments are tax deductable expenses and this enhances the relative cost of equity. Partially offsetting this advantage is the fact that equity dividends are tax exempted whereas interest income is taxable in the hands of investors. The cost of issuing equity shares is generally higher than the cost of issuing other types of securities. Underwriting commission brokerage costs and other issue expenses are high for equity issues.

Equity market is further divided into primary and secondary market. The primary market or the new issue market refers to the raising of new capital in the form of equity shares or debentures. It is not necessary that company must be entirely new enterprise but a company already in business may go public to expand its capital base. Going public means becoming a public limited company and thus to be entitled to raise funds from general public in the form of IPO. For inducing public to invest their savings in new issues, service of specialized institutions (underwriters and stock brokers) is required. The secondary market or old issue market deals in securities or equities already issued by the companies. The main purpose of such a market is to provide liquidity (easy convertibility into cash) to such securities. The stock exchange is an institution for orderly buying and selling of listed shares. Listed shares are those shares that appear on the approved list of a stock exchange. India has more than 20 stock exchanges five of which are of national stature while rest regional ones. Market capitalization (often called M-cap) is another important concept which refers to the total value of the tradable shares of a publicly traded company. It is equal to the share price times the number of shares outstanding. For example, if XYZ company has 100 shares outstanding and a share price of Rs.20 per share then the market capitalization is 100 xRs.20 = Rs.2000. Markets capitalization could be used as a proxy for the public opinion of a company's net worth and is a determining factor in some forms of stock valuation. The concept of M-cap is used for the formulation of indices like Sensex, Nifty etc. Sensex is weighted index shares of 30 companies listed at BSE with largest M-cap. Similarly, Nifty is the index of top 50 companies at NSE. The movement of Nifty and Sensex manifest the macroeconomic sentiments of the economy. As a part of the process of economic liberalization, the stock market has been assigned an important place in financing the Indian corporate sector. Besides enabling mobilizing resources for investment, directly from the investors, providing liquidity for the

investors and monitoring and disciplining company management company managements are the principal functions of the stock markets.

Success as a professional is as much about avoiding the wrong things as much as it is about doing the right things. Making an excuse or worst, blaming others, is a habit one should always abstain from. Benjamin Franklin once said He that is good for making excuses is seldom good for anything else. So, instead of playing the game of passing the buck, we should stand and take the charge. This not only makes us a good leader, but also a good team player. In general, we all have the habit of passing the buck. Its like, we wake up in the morning, grab a cup of coffee, take a shower and take the Blame Game box, put it under our arms and head out into the world. Even in television advertisements these days, we can notice how we put blames on others of being insensitive, careless and dishonest, while actually doing nothing on our part to change the scenario because its easier said than done. There are many other habits in a person that make him/her incompetent and liability for others like habit of being vague in objective, inconsistent performance, lack of orientation and implementation, bad listeners, etc. but the habit of passing the buck is most irritating as it not only say Dont blame me, but its your fault. Somewhat similar situation is happening in our country in 2G Spectrum Scam. In this case, A Raja is accused in the court by CBI of rigging the allocation of 2G Spectrum in 2008 to largely benefit Swan and Unitech two companies who reportedly cost the

Government Rs. 2200 Crore. Both sold equity to foreign investors for significant profit after they were given their licenses. While NDA (the opposition) blames the ruling Government (UPA) for the scam, the UPA is holding NDA Government of 2003 responsible for the faulty start of 2G Spectrum allocation. According to them, the first-come-first-serve policy of NDA Government actually went against the decision of the cabinet of that time. So, we can see how the bucks are being passed from one party to the other. The attitude of passing the buck has always been criticized, especially by the leaders who have courage inbuilt in their system. They are leaders only because they have the guts to stand in front and lead. One such campaign was started by The Times of India called The Lead India campaign. Through this campaign, a clear message has been sent in the public that to achieve something in life, one needs to stand and take responsibility instead of passing the buck on others. The video of The Lead India campaign showed how a small kid took the initiative of removing a big tree trunk from the road that was causing a traffic jam. Although the tree trunk in itself was huge and beyond his capacity, but still he tried and others who were present there also supported him and ultimately they removed the block and traffic went smoothly. The kid showed the leadership attitude and instead of waiting for someone who will come and remove the tree trunk, he himself took the initiative of removing it. These types of campaign show it very evidently that leaders never pass the buck. Thus, passing the buck is like acknowledging your responsibilities and blaming others for non compliance of duties that were primarily assigned to you. This clearly signifies that shouldering responsibility, however onerous it is, is the hallmark of a person of integrity. So, let us then learn to accept and tackle challenges head on and emerge triumphant in this ultimate test of our character and utilize every opportunity as stepping stone to success instead of passing the buck

A topic like "Work-Life balance" is the best food for thought. You can brood, debate, discuss and pass judgments over it but are you sure you practice it in your daily life?

We know how important it is to maintain a Life-and-Work-Balance, but do we actually take it seriously? Most of us dont ever feel like we have worked for enough time and work longer and longer hours to get all our jobs done. What we should always remember is that if we dont maintain a good life & work balance, theres a real threat of burn out. It will not only cause emotional and physical stress, but will also affect everything we do our tasks at work and our tasks at home.

Its a fact that we cant do everything for everyone; we must understand that we cant be perfect in all aspects of our life and work. The best we can do is to try - try to please people related to our work and our life by maintaining a commendable work & life balance. That does not mean we should not step up and do the needful to accomplish an important task, but we must also think of our personal self and make sure we take time out to refresh.

One can maintain this balance by getting organized. Time

management is the main essence when it comes to maintaining work-life balance. Spending more time in office doesn't necessarily translate into productivity. One who doesnt have a good work-life balance can be successful but not happy. To achieve both, it's necessary to focus on four life quadrants: work, family, friends and self. All four are equally important. If we focus on all these and maintain discipline, it's more-or-less a done deal.

This fact was illustrated in an excellent way by a professor of philosophy in his class. When he stood before his class, students noticed that he had some items in front of him. When the class began, wordlessly, he picked up a very large and empty pickle jar and proceeded to fill it with golf balls. He then asked the students if the jar was full. They agreed that it was.

So, the Professor then picked up a box of pebbles and poured them into the jar. He shook the jar lightly. The pebbles rolled into the open areas between the golf balls. He then asked the students again if the jar was full. They agreed it was.

The Professor next picked up a box of sand and poured it into the jar. Of course, the sand filled up everything else. He asked once more if the jar was full. The students responded with a unanimous "yes".

The Professor then produced two cups of coffee from under the table and poured the entire contents into the jar, effectively filling the space between the grains of sand.

"Now," said the professor, as the laughter subsided, "I want you to recognize that this jar represents your life. The golf balls are the important things--your family, your children, your health, your friends, and your favorite passions - things that if everything else

was lost and only they remained, your life would still be full. The pebbles are the other things that matter like your job, your house, and your car. The sand is everything else -the small stuff.

"If you put the sand into the jar first," he continued, "there is no room for the pebbles or the golf balls. The same goes for life. If you spend all your time and energy on the small stuff, you will never have room for the things that are important to you. Pay attention to the things that are critical to your happiness. Play with your children. Take time to get medical checkups. Take your partner out to dinner. Play your favorite sport.

There will always be time to clean the house and fix the disposal. Take care of the golf balls first, the things that really matter. Set your priorities. The rest is just sand." One of the students raised her hand and inquired what the coffee represented. The Professor smiled. "I'm glad you asked. It just goes to show you that no matter how full your life may seem, there's always room for a couple of cups of coffee with a friend."

Therefore, after this beautifully explained scenario, we must look at life beyond professional achievements. We strive for professional success where we dedicate ourselves to the job and at the end of the year our list of achievements gives us a promotion or a hike. What we can do is to have a list of personal goals as well and keep striving to achieve them. Personal competency with respect to our family and personal enhancement is as important as professional competency. This will keep our loved ones as happy as we try to keep our boss. This certainly will provide us with our much needed Life & Work Balance. Understanding Service Tax in India is part of our series on general awareness: Service tax in India was introduced in 1994-95 to correct the asymmetric treatment of goods and services in the tax framework and to widen the tax net. Need to introduce service tax was felt due to the fact that service sector contributed to around half of GDP but it wasnt taxed. The numbers of services liable for taxation wer e gradually raised from 3 in

1994-95 to virtually all service in budget 2012-13 except for the services enlisted in the negative list. The negative list includes the services by Government or a local authority, services by the Reserve Bank of India, Services by a foreign diplomatic mission located in India, services relating to agriculture, Service of transportation of passengers, Funeral, burial, crematorium or mortuary services etc. In the last eight odd years, after a modest beginning, service tax had become one of the most important sources of government revenue. Budget 2012-13 increased the service tax rate from 10 percent to 12 percent. Already, a cess is imposed on all indirect taxes including service tax to finance secondary and higher education. In 2011-12, Rs 95,000 crores are expected to mop up through service tax and for 2012-13, target is to collect as much as Rs.1.24 Lakh crores. The increase in service tax is opposed by different section of the business community.

At present, service sector contributes more than 55 percent of GDP and its share is likely to increase in future as it is poised to grow between 8-10 percent in next decade along with the reduced share of primary sector. This offers tremendous revenue potential to the Government. It is expected that in due course, service tax would reduce the tax burden on international trade (Customs duty) and domestic manufacturing sector (Excise duty). So a planned growth of service tax would be commensurate with the goals of economic liberalization and globalization. This process requires levy of taxes on new services without substantial rise in the rate or cost of collection. The service tax promises many opportunities as well as challenges to realize the opportunities. For instance, increased revenue through service tax will help in bridging the fiscal deficit, finance the social services, reduce the burden on commodity taxes etc. The challenges include providing more simplified tax administration in the country which will reduce the tax evasion. Further, department should intensify the field survey operations to ensure that all taxable service assessees are brought into the tax net and service tax due from them are collected without hitch. While the basic tenet of voluntary compliance of service tax law has to be adhered to, the habitual evaders of service tax must be booked for appropriate action under the law. Effective use of Audit and Anti-evasion tools for ensuring the compliance on the part of the assessee and curbing the instances of irregularities and tax evasion are the need of hour. Greater emphasis should be laid on training the staff in Information Technology skills necessary to carry out effective, systematic and result oriented analysis of data available in

the system, to achieve the target. Electronic Tax Administration (ETA) system for service tax should be effectively implemented so that service tax could be administered as a pioneer e-tax of the country. Adequate staff must be deployed along with suitable infrastructure and conveyance to implement service tax law effectively. In future, service tax will be integrated with commodity taxes to give rise to the Goods and Service Tax (GST). The proposed Goods and Service Tax is the part of the tax reforms that centre around evolving an efficient and harmonized consumption tax system in the country. Presently, there are parallel systems of indirect taxation at the Central and State level. The existing service tax system poses an imminent challenge to reform its synergies to eventually harmonize itself in the GST regime. Successful integration of goods and service tax would give India a world-class tax system and will bring in improved tax collection. In a way, it will boost our economy and enable us to compete at the global front. As a result, our system will eventually match the international standard in the sphere of indirect taxation. It will also end the long standing distortions of differential treatments to the manufacturing and service sectors. GST would be a single comprehensive indirect tax to be levied on goods and services. It would be levied at every production and distribution chain with the eligibility to claim indirect taxes paid on procurement chain. Under the current regime, there is a fractured credit mechanism where businesses don't get credit for all the taxes they pay. The effort to prepare for a smooth integration with the GST without any hardship to public is a big challenge, which needs to be handled at the field as well policy level. GST is the future of all indirect taxes in India for which a consensus is needed between the central and state governments. It was supposed to be implemented from 1 April 2010 but is postponed every year due to lack of consensus. The delay in the implementation is causing loss to the tune of thousands of crores every year which could have gained in by increased efficiency. The central government should come forward with some form of incentive driven plan to bring the GST regime in the country which poised to put the fiscal administration of the country at higher level.
23rd March, 2012 NEWSLETTER

"Healthy Competition is more beneficial than detrimental"

"competition in the area of business raises the welfare of the general public"

One such step of Indian Government was to introduce the new foreign education bill which will allow the entry of foreign universities into India. Schools like Duke Universitys Fuqua, York Universitys Schulich and Georgia Institute of Technology have expressed interest in setting up campuses in India
Competition is a fact of life, and it's everywhere you look: in athletics, business, and academics politics. We compete institutionally, interpersonally, and intrapersonally. Competition is innate and as old as human history. Competition can be healthy or unhealthy, evoke our best or worst; it can build or destroy and anyone can use a contest structure to engage in either kind. Healthy competition encourages everyone involved to push themselves harder than they would have without competition, and as a result they achieve more personal or professional growth whether they won or lost. It expands the boundaries of what you believed was possible for you and encourages you to admit to others, that youre ambitious. Unhealthy competition is when your reaction to others success is negative, rather than inspiring and motivating to you. It is where you hope others have limitations because you are afraid your limitations will cause you to lose unless they are somehow held back. Unhealthy competition is where you associate shame with losing rather than see your own nobility for trying. Healthy competition requires courage. Doing your best at something you care about, with others watching, is "practicing being vulnerable in things that matter," which is nothing but courage. Another definition of courage could be being afraid and doing something anyway. If there is no fear of losing whatsoever, it doesnt take courage. Courage is what it takes to maintain the Never say Die attitude. There is a very famous quote by His Holiness the 14th Dalai Lama - Never give up. No matter what is happening. No matter what is going on around you, never give up. Its not only an individual who need to take on healthy competition but also the institutions and companies to maintain their rising trend. The government of a country also tries to bring in competition for their domestic business so that they can raise their parameters of success to match the global standards. One such step of Indian Government was to introduce the new foreign education bill which will allow the entry of foreign universities into India. Schools like Duke Universitys Fuqua, York Universitys Schulich and Georgia Institute of Technology have expressed interest in setting up campuses in India. Now the question is - Will the Foreign Education Bill enhance competition or is it a threat or challenge? Well, healthy competition is always good for the development of the overall quality standards. We should welcome the Indian Governments move to increase fore ign direct investments in education by allowing foreign institutions to set up base in India, and we

should believe that the new regulation will create a level playing field allowing all good quality institutions whether Indian or international to thrive. We can hope that the competitive framework will lead to the creation of many more world-class institutions in India, which will eventually develop and strengthen the overall ecosystem of faculty and research, apart from making India an attractive destination for top-notch global talent. Similar step was taken by the Indian Government in case of electricity distribution in 2003 with the introduction of The Electricity Act 2003 that laid down a roadmap for utilities to transform from vertically integrated monopolies to unbundled autonomous commercial entities. It encouraged private participation in electricity distribution by providing for multiple distribution licensees and non-discriminatory open access for consumers. Thus the sustainable competition in electricity distribution is proving to be the key in delivering benefits to the end customers. The Government is trying to introduce competition on each and every level, but it is also determined to prevent practices having adverse effect on competition. For this purpose it introduced the Competition Law. "The main objective of competition law is to promote economic efficiency using competition as one of the means of assisting the creation of market responsive to consumer preferences. The advantages of perfect competition are three-fold: allocative efficiency, which ensures the effective allocation of resources, productive efficiency, which ensures that costs of production are kept at a minimum and dynamic efficiency, which promotes innovative practices." Thus, healthy competition is a source of efficiency. This is particularly vivid in the area of economy- relating to production, delivery of service and the like. This means that consumers or customers are now getting, for the same or less amount of money, more commodity or service (be it in quality or quantity) than they used to get. Thus, competition in the area of business raises the welfare of the general public. Be it the competition between the The Times of India vs The Hindu, Horlicks vs Complan, Thumbs-Up vs Pepsi, Airbus vs Boeing or Amazon vs Flipkart, the ultimate advantage of the competition lies in the hands of the end consumer. These competitions not only benefit the consumer but also enhance the hidden talent of companies and their employees by making them compete, not only with their competitor, but with their own self. In todays cut-throat competition everyone is expected to deliver more than their 100% if they really wish to be well ahead of their competitors. So the underlying fact is that its not the case of our belief, like or dislike, its veracity; we need to face day-to-day competition and challenges, keeping in mind that we could like competition considering it to be healthy or we can hate it, but we most definit ely cant ignore it. Subsidies in India is part of our series on general awareness:

Subsidy is a benefit given by the government to groups or individuals in the form of a cash payment, kind or tax reduction. It is the difference between the market price of a

commodities and the amount paid by consumer to access that commodity which is usually borne by Government. A government subsidy is typically used to keep an industry from going out of business or to encourage economic activities that would not occur otherwise, apart from providing a safety net to the vulnerable section of society. Subsidies are converse to the indirect taxes as indirect taxes used to increase the price while subsidies tend to reduce the price. The subsidy is usually given to remove some type of burden and is often considered to be in the interest of the public. Major form of subsidies in India includes food subsidy, fuel subsidy, fertilizer subsidy, education subsidy etc. A subsidy may take the form of direct payments from the government, as is the case in a variety of agricultural crop and livestock production programs. The purpose of direct payments to wheat, cotton, wool, and other agricultural producers is to ensure adequate production to meet domestic and foreign demand and to protect or supplement the income of farmers. On the other hand, governments also frequently provide subsidies to finance wholly or partially the acquisition of fixed assets such as technology, plant, and equipment. Such subsidies may be paid only once or a limited number of times and therefore are often referred to as non-recurring subsidies. During, 2011-12, subsidies are estimated to be 2.4 percent of the GDP however the target was supposed to be 2.0 percent for the said period. Food subsidy bill for the 2011-12 fiscal is projected to be Rs 605 billion. Fertilizer subsidy during the year 2011-12 is expected to be Rs 500 billion and the fossil fuel subsidy of Rs.1200 billion which is in the form of burden to Indias public sector oil marketing companies [OMC] who struggle to stay afloat even as global oil majors make super profits. In 2012-13, subsidies are expected to be Rs2.16 trillion or 2.5 percent of GDP and government has set a target of bringing them to 1.75 percent of the GDP in the next three years. The fuel subsidies comprise of 3 major components. The subsidy on Kerosene for the lower income group distributed through the public distribution system (PDS), the subsidy on domestic LPG and the subsidy on diesel. In India, subsidies are often criticized because of following issues: (i) (ii) (iii) Budgetary subsidies are beneficial in short term but are harmful in the long run. Many wrong goods/services being subsidized. Over subsidization had become unsustainable and will lead to harmful effects

The increasing amount of subsidies, apart from other expenditure, is the prime cause of widening fiscal deficit which if grew unabated, may derail the balance growth of the economic system. Subsidies also distort the market structure by altering the price system, due to which, it is often seen that sectors availing the subsidies develop black market. The

politicians often create their elections agenda out of the subsidies and push back the real meaning and use of subsidies. In international trade also, subsidies provide extra edge to the exporting countries by making the market price of exporting commodity artificially low which results in the destruction of domestic industry in the importing country. It is because of this reason that World Trade Organisation provides a ceiling on the amount of subsidy that can be availed by the exporting countries. Subsidy provided by US and EU to their agriculture sector is the major bone of contention in the WTO talks. The whole issue of subsidies is an economic as well as a political issue. The subsidy policies in India are being advocated by those same policy makers who appear in public as pro-poor, but are driven by the political implications of their actions. Subsidies in India never reach their intended target i.e. the poor. Despite of the continuously rising food subsidies, hunger and malnutrition prevails in the entire county. The most alarming aspect of the surging subsidies is not the size, but the manner and purpose of spending on them. Subsidies provided in India suffer from both inclusion error (wrong kind of people benefiting) and exclusion error (deserving people left out of subsidies). Efficient subsidies must be transparent, targeted and-in most cases-temporary whose motive must be to remove temporary and short term mismatches. Though subsidies may not be good from economic point of view but they are important from the welfare point of view. A developing country like India indeed needs subsidies due to various reasons. Providing minimum consumption entitlement to the poor by subsidizing the items consumed by them is extremely important for the welfare of the economy. However, the benefits can be maximized only when the subsidies are transparent, well targeted, and subsidies designed for effective implementation without any leakages. These days, one can hardly see the benefits of the subsidies and often the government is criticized for granting subsidies which do not reach their target. The objective of subsidies is not only to reach the target population but also to bring out an effective change in the economy. For instance highly subsidized nitrogen (N) fertilizers against the potassium (K) and phosphorous (P) fertilizers resulted in skewed ratio fertilizer use. This subsidy must be altered in order to ensure the ideal combination of fertilizers. Similarly, in Punjab, electricity is provided free of cost to the farmers which lead to the depletion of ground water apart from deteriorating the condition of ailing power sector. Gradually water is becoming a scarce commodity therefore modern irrigation techniques like drip irrigation, sprinkler irrigation can be subsidized. Thus subsidies are in important tool in the hand of policymakers to bring about a change in the consumption, distribution and production pattern of the society. Therefore effort should

be not on eliminating the subsidies but on transforming the subsidies according to needs of the economy.

"Most of us consider ourselves to be good listeners"

"Listening skills fuel our social, emotional and professional success"

To be interesting, be interested. Ask questions that other person will enjoy answering. Encourage them to talk about themselves and their accomplishments
"Listening" is the foundation of good communication. It requires attention, focus and processing the information to gain an understanding of what the speaker is saying, both from the words that they speak and from their unspoken words. Research shows that about 85% of what we communicate is nonverbal. This includes our posture, physical movements, eye contact and our psychological presence. So, when someone is speaking to you, is your posture inclined toward the speaker, so as to invite and encourage expression? Or is your back turned or your arms or legs tightly crossed which discourages and cuts off involvement? Most of us consider ourselves to be good listeners, but how often do we really listen to what other people are saying? Poor listening skills can impact our business and personal life leading to conflict, misunderstandings, relationship problems, losing customers and contracts, unhappy staff, increased costs and lower profitability. Good listening skills, on the other hand, are vital to healthy relationships. Whether you're strengthening a relationship, resolving a conflict, or offering support in a crisis, good listening skills can be a lifeline to peace. Good listening results in better relationships, clearer communication and a happier and more successful business and personal life because when you display good listening skills, the person you are listening to, feels understood and valued and is more likely to be open and honest with you. By giving them the opportunity to share their thoughts and feelings, you understand a person better, which in turn improves your interpersonal skills.

Listening skills fuel our social, emotional and professional success. Between friends, greater communication brings greater transparency. Parents listening to their kids helps build their selfesteem. In the business world, listening saves time and money by preventing misunderstandings. And we always learn more when we listen than when we talk. Good listening includes a package of skills, which requires knowledge of technique and practice very similar to good writing or good speaking. Many people believe that good listening skills are easy to learn or automatically part of every person's personality. Neither is correct. Poor listening habits are very common. Indeed, poor listening skills are more common than poor speaking skills. We are sure that you must have witnessed on many occasions, two or more people talking to (by) each other at the same time. People cannot talk and be an effective listener at the same instance! Doesnt this remind you of our assembly sessions where everyone is interested in speaking and no one is ready to let others speak? Not even the speaker is able to speak (Well. that certainly is an irony). We all have noticed in past few years what all changes have occurred in Indian politics, especially in the state of Bihar and Uttar Pradesh. Two states, that no one ever believed, would be able to give clear mandate to any one party. But when it happened, one thing was very evident in both of these wins. Both Mr. Nitish Kumar and Mr. Akhilesh Yadav, offered to the public their empathy and not sympathy. They travelled the very distant corners of their state and presented themselves in front of the voters and made them feel listened to. They gave an impression that now the oppressed and suppressed will get an opportunity to speak their heart out and those who were never ever asked were given platform to raise their voice. Nothing else could have delighted them as much as this act of empathy did. Result commendable. Our Government and judiciary, from time to time, also make sure to give platform to the people of the country to put forth their grievances and make separate body and laws to listen to them. Consumer Forum and Consumer Court are result o f such admirable actions. Not only this, the MNCs and other Companies of the country also attract their employees by setting up separate departments such as, Grievance redressal cell, HR Forum, etc. Thus, the bottom line is that anything and everything could be solved and resolved through effective listening. Rather listening is considered as one of the most important characteristic of a leader. Until and unless a leader is a good listener, he/she cannot be a good orator.

The knowledge and confidence of speaking comes straight from ones habit of effective listening and observation. Be it Mahatma Gandhi or Nelson Mandela, both were gifted with the skill of listening. In some profession like medical or judiciary, listening is the key to success. A doctor until and unless listens to his patient, will not be able to cure him. In the same way, it is important for a lawyer to listen to his client and note down all the little bit of details of the case to present it in front of the judge in the court of law. There is a very famous quote by Dale Carnegie - To be interesting, be interested. Ask questions that other person will enjoy answering. Encourage them to talk about themselves and their accomplishments. Everyone desires to be heard. When we listen to others, we validate their need to be acknowledged and understood. Deep down inside, we all want to know that we matter, that we are important. Although we should not pretend to be interested in hopes of being liked, but rather we should pay attention to this often overlooked and forgotten skill. In addition, to improve your personal and professional relationships, you should be a good listener as listening helps to prevent misunderstandings and facilitates cooperation. Iran Nuclear crisis and its impact on India-Iran relations is part of our series on general awareness: Independent India and Iran established diplomatic links on 15 March 1950 and since then both have friendly relations except for the last decade when both the countries could not agree over two issues- Iran-Pakistan-India gas pipeline and Irans nuclear programmes. Both the issues have genuine reasons for Indian disagreement. In the former case, nonreliable nature of Pakistan was the sole cause of di sagreement while in case of Irans nuclear programme; India is already have two nuclear powers and cannot afford to have one more nuclear power in the South Indian region. India already have not so friendly relations with China and Pakistan so nuclear Iran is definitely a threat for the security of South Asia. Background of Irans nuclear programme The nuclear program of Iran was launched in the 1950s with the help of the United States as part of the Atoms for Peace program. Iran signed the Nuclear Non-Proliferation Treaty (NPT) in 1968 and ratified it in 1970, making Iran's nuclear program subject to IAEA (International Atomic Energy Agency ) verification. In 1978, Iran and the USA signed a nuclear agreement in which Iran agreed to implement safeguards beyond NPT requirements. In return, the US granted Iran the "most favored nation" status for reprocessing so that Iran will not be discriminated against when seeking permission to reprocess spent nuclear fuel supplied by the USA. However, following Iran's Islamic revolution, the US stopped supply of highly-enriched uranium for the Tehran Research Reactor.

In 1985, with help from China, Iran opend a nuclear research center at Isfahan. Later, Russia also agreed to rebuild the war-damaged Bushehr nuclear power plant for Iran. This lead to the widening of differences between Iran and USA. US opposed Iran's nuclear energy program under the assertion that Iran had sufficient oil and gas reserves for power, and work on the nuclear reactor is indirectly contributing to the weapons program. In 2000, US President signed the Iran Nonproliferation Act, which allows the USA to sanction individuals and organizations providing "material aid" to Iran's nuclear, chemical, biological and ballistic missile weapons programs. In 2002, US President George Bush described Iraq, Iran and North Korea as an "axis of evil", warning of the proliferation of long-range missiles being developed in these countries. The speech caused outrage in Iran and was condemned by reformists and conservatives alike. Later in 2002, The National Council of Resistance of Iran (an exiled opposition group) alleged that Iran is building two secret nuclear sites - a uranium enrichment plant at Natanz, and a heavy-water production plant in Arak. President Khatami publicly acknowledges the existence of Natanz and other facilities. He invited International Atomic Energy Agency (IAEA) to inspect them. IAEA inspectors found small traces of highly enriched uranium at Iran's Natanz nuclear plant. Iran said that traces had come from imported equipment. The IAEA gave Iran 30 days to prove it is not building nuclear weapons. In 2004, Iran acknowledged having secretly bought nuclear reactor parts from

international sources and but insisted that its goal was electricity production, not nuclear weapons. Later, Iran was rebuked by the IAEA for failing to fully cooperate with an inquiry into its nuclear activities. In 2006, Iran broke open the IAEA seals at its Natanz nuclear resear ch facility. UN Security Council voted to impose sanctions on Iran's trade in sensitive nuclear materials and technology. In 2007, IAEA held that Iran could develop a nuclear weapon in three to eight years. In 2011, Iran's first nuclear power plant, Bushehr I reactor was officially opened. In November 2011 the IAEA released its latest report on Iran's nuclear programme, presenting new evidence suggesting that Iran is secretly working to obtain a nuclear weapon. Iran has dismissed the claims as fictitious.

In an effort to thwart Irans nuclear program, the United States and the European Union took significant steps to cut Iran off from the international financial system, announcing coordinated sanctions aimed at its central bank and commercial banks. In addition, the United States also imposed sanctions on companies involved in Irans nuclear industry, as well as on its petrochemical and oil industries, adding to existing measures that seek to weaken the Iranian government by depriving it of its ability to refine gasoline or invest in its petroleum industry. In retaliation to the sanctions, Iran vowed to block the Strait of Hormuz, a vital oil transit point. The February 2012 IAEA report showed that Iran was preparing to install thousands more centrifuges based on an erratic and outdated design, both in its main enrichment plant at Natanz and in a smaller facility at Fordow buried deep underground. However, in March, 2012, Iran gave permission to inspect a site at Parchin, a place where the IAEA claimed that high-explosives research pertinent to nuclear weapons had taken place. Later, EU and US announced that they had accepted an Iranian offer to resume negotiations that broke off in stalemate more than a year before. It is quite evident that, some form of nuclear programme is taking place in Iran and because of this perception, despite close relations and convergence of interests with Iran, India voted against Iran in the International Atomic Energy Agency in 2005. Main reasons responsible for vote against Iran wereLike the US and Israel, India has its reasons to be concerned over Iran's nuclear programme, which is following the same path as Pakistan's. The late Zulfiquar Ali Bhutto and Zia-ul-Haq used to project Pakistan's programme as totally peaceful, but they secretly developed a military nuclear capability. Iran probably clandestinely procured its uranium enrichment capability and technology from Pakistans A Q Khan, with the knowledge and connivance of Pakistan's Army. India worries for the danger of the fundamentalists coming to power in Pakistan and taking control of its nuclear arsenal. She should be more worried about Iran, where the fundamentalists are already in power. Pakistan's sponsorship of cross-border terrorism in India is somewhere under the impression, that its nuclear arsenal has given it immunity against possible Indian retaliation. Neither India nor the US or Israel want this to be repeated in Iran. Though Indias vote against Iran at IAEA didnt go well with Iran but it didnt led to the deterioration of relations as both the nations continued to engage each other in economic, political, cultural development. India has always opposed to any military solution of Iranian crisis. The Iran nuclear issue poses a serious policy dilemma for India where on one hand it had to co-operate with the international community in preventing the emergence of another

military nuclear power with security implications for India, while not allowing our traditional good relations with Iran to be jeopardized. A nuclear Iran will disturb the stability and a balance of power in the region. This instability naturally means dramatic fluctuations in oil and gas prices that are detrimental to consumers as well as producers. A military solution is not advisable to the issue as it may temporarily weaken the nuclear weapons program, but a strike could also convince the Iranian political elite and Iranian citizens that they should pursue a more secretive, resilient nuclear program to protect themselves from the West. We now live in a world where it is impossible to stop any sufficiently committed country from developing a weapons program. Therefore the best response would be to engage in dialogue.

"Currently, the refinery gate prices of petroleum products are computed based on the Import Parity Principle"

"Indian retail prices for petrol and diesel are surprisingly among the highest in South-Asia"

With the dismantling of APM from April 2002, oil companies stand exposed to the vagaries in the international prices of crude oil and products. Hence, their profitability is now governed by different set of factors. Post-APM dismantling, import of oil, mainly from the Gulf countries, has become a serious threat to domestic players
Petroleum product pricing in India is frequently seen as a black hole of subsidies. Economists and oil companies complain about the impacts those subsidies have on public finances, financial performance of oil companies and demand-side management. However, on closer analysis, the issue of petroleum product pricing in India is more complex than the one-way flow of subsidies that is mostly reported. The artificially low prices of petrol and diesel, however, do not reflect the realities of the high crude and refined product prices. These low prices offered to the public are subsidized by the government through the issuance of oil bonds, which are given exclusively to public sector fuel retailers in India. The price of fuel in different countries is affected by many factors. Few major ones could be the cost of buying finished product in the country (country supplies usually cheaper than importing product), excise and tax rates levied by the Government, Government subsidies for fuel, Currency fluctuations or stability of the respective country, etc. India was traditionally operating under an Administered Pricing Mechanism (APM) for petroleum products. This system was based on the retention price concept under which the oil refineries, oil marketing companies and the pipelines were compensated for operating costs and were assured a return of 12% post-tax on net worth. Under this concept, a fixed level of profitability for the oil companies was ensured subject to their

achievement

of

specified

capacity

utilization.

But then in 1997, the Indian government took a strategic decision to deregulate the oil sector and dismantle the administered price mechanism (APM) existing in the Indian oil industry in three phases by the end of March 2002. It was broadly known as APM dismantling. Since then, the Indian oil industry had been undergoing a transformation stage from administered price mechanism to market-determined price mechanism. During this period of transition, the government also cleared the oil pool deficit by completely abolishing it and transferring the deficit and to the general budget. The government has repaid most of the oil companies' outstanding through the payment of oil bonds. It also reduced the subsidies on petro-products. With the dismantling of APM from April 2002, oil companies stand exposed to the vagaries in the international prices of crude oil and products. Hence, their profitability is now governed by different set of factors. Post-APM dismantling, import of oil, mainly from the Gulf countries, has become a serious threat to domestic players. Currently, the refinery gate prices of petroleum products are computed based on the Import Parity Principle. In the computation of import parity prices, the principal elements are the FOB price, customs duties, ocean freight and a few other associated items. These elements, except for the FOB price, are not relevant in computing export parity prices. So how does India differ from the rest of developing Asia?

Up to this point, the story of Indias petroleum product pricing appears a typical reflection of fuel subsidies throughout developing Asia and many other countries. Governments force public sector companies to indirectly subsidize consumption while simultaneously insolating the fiscal position of the government to the extent possible. However, conventional wisdom and economic theory show that consumption subsidies that keep commodity prices artificially low distort economic decision making. Subsidies result in higher consumption and distort the choice between fuel alternatives that might have positive social and economic externalities but are not subsidized. So how does India compare with its neighbors on petroleum product pricing?

Indian retail prices for petrol and diesel are surprisingly among the highest in South-Asia and other developing Asian regions, even exceeding prices of more developed economies. Still Indian companies are incurring huge under-recoveries on the sale of products due to the range of taxes and duties levied on the petroleum products. The complex and opaque system of taxes, charges, duties etc makes it difficult to arrive at a net position of the actual subsidies in the system.

Thus, there is still need to review the pricing of sensitive petroleum products (petrol and diesel) to provide relief to consumers as well as corporate and also to rationalize pricing in the context of exports of the order of 20% of production of these products. Inflation: Measures and Control is part of our series on general awareness: Inflation management is one of the hardest tasks an economic policymaker has to undertake. It is one of the most dreaded as well as one of the most misunderstood of economic phenomena. One needs a profound knowledge of statistical information and an indepth understanding of economic theories to understand and control it. Inflation can have positive and/or negative effects on an economy. Negative effects of inflation could be a decrease in the real value of money and other monetary items over time; uncertainty about future inflation cal also discourage investment and savings, and high inflation might lead to shortages of goods if the consumers begin hoarding out of concern that the prices will increase in the future. Positive effects of inflation include a mitigation of economic recessions and debt relief by way of reducing the real level of debt. Many economic factors cause inflation to rise in a country. It tends to rise when the Government of a country prints money in excess, then the prices increase to keep up with

this increase in currency and this leads to inflation. An increase in production and labor costs has a direct impact on prices of the final product and this as well results in inflation. High demands, when the number of goods and services produced are comparatively low, can also pull inflation. Costs push inflation or supply shock inflation is the situation, where the non availability of a commodity leads to increase in prices. Many a times, countries borrow money; in such case they also need to cope with the interest burden. This interest burden causes inflation. The high tax rates on consumer products can also result in inflation. Similarly, there are many other factors that cause inflation in the economy. Inflation in India is calculated as per Wholesale Price Index (WPI). 435 commodities are used for the WPI based inflation calculation and base year for the WPI calculation is 199394. The WPI is available at the end of every week (generally Saturdays), for a period of one year ended that day. There are broadly two ways of controlling inflation in an economy Monetary measures and fiscal measures. Monetary Measures - The most important and commonly used method to control inflation is monetary policy of the Central Bank. Most central banks use high interest rates as the traditional way to fight or prevent inflation. It also includes - Bank Rate Policy, Cash Reserve Ratio (CRR) Operation and Open Market Operations. Fiscal Measures - Fiscal measures to control inflation include taxation, government expenditure and public borrowings. The government can also take some protectionist measures such as banning the export of essential items such as pulses, cereals and oils to support the domestic consumption, encourage imports by lowering duties on import items etc. India is right now in the midst of an inflationary episode. It began in December 2009, when the WPI inflation climbed to 7.15%; it continued to rise, peaked in April 2010, at just short of 11%. Although after that, there was a broadly downward trajectory but it was disappointingly slow with a small pick-up in December 2011. But it did fall to a 25-month low of 6.55% WPI inflation for the Month of January 2012. But this is also not at an acceptable level and it should fall further. Both the government and Reserve Bank have taken a number of steps to address the issue of high inflation, including the reduction of import duty on essential commodities. The latest development on inflation is that now India will start releasing monthly Consumer Price Index (CPI) inflation data from February 21st, 2012, which will also capture price movement in the services sector, to provide internationally comparable data on retail prices.

This stand was taken considering the fact that the price movement in the services sector, which constitutes around 55% of Indian economy, is not reflected in the WPI. The new CPI series will have 2010 as its base year and aims to provide retail price movements across rural and urban India. The series, which will cover retail prices in five major groups of food (a weightage of 49.71%), fuel & light (a weightage of 9.49%), clothing (a weightage of 4.73%), housing (a weightage of 9.77%) and education (a weightage of 26.31%), will provide a comprehensive reference point for policymakers. On 21st February 2012, India released first annual inflation rate, based on the consumer price index (CPI) for January 2012. The Central Statistics Office (CSO) data showed that inflation was at 7.65% for January 2012 on point to point basis (January 2012 over January 2011). According to CPI data released, rural retail inflation was at 7.38%, while the urban inflation rate for January was 8.25%. The inflation in Food and beverages group for the month stood at 4.11%, with 4.18% in rural area and 3.98% in urban areas. The data showed that inflation in Fuel and light group in January was at 13.13%, with 13.70% in rural India and 12.43% in urban areas. The CPI data showed that inflation in the Clothing group was at 14.25%, with 13.78% in rural and 15.39% in urban areas. Within the food group, vegetable inflation was at -24.83%, fruits 10.62%, milk 16.53% and cereals 2.69%. After 13 policy rate hike since March 2010, the RBI paused the rate hike cycle and in its latest monetary policy cut the CRR by 25 basis points. India's GDP growth target has been revised downward to around 7% from earlier 8.4%. The popular measure of inflation based on Wholesale Price Index (WPI) will continue to exist along with the Consumer Price Index (CPI).

National Board of Accreditation (NBA) is organizing summit on accreditation - WOSA 2012 from March 25-28, 2012 at Hotel Ashok, New Delhi. The theme of the summit is Achieving Excellence through Accreditation. To understand the need and complexity of accreditation and to know more on summit, we at MBARendezvous.com Indias only content lead MBA Portal interviewed Dr D K Paliwal, Member Secretary, NBA & Convener, WOSA and excerpts of the interview are as follows: MBA Rendezvous Kindly share with us overall perspective of WOSA 2012. Dr Paliwal WOSA is a culmination of various activities undertaken by NBA to create an environment of Global Competitive Quality Standard on Indian campuses imparting technical and professional education to help seamless mobility during academic studies and supporting students to take up career with industries. WOSA would seek to bring together diverse global organizations/ institutions committed to quality education to work towards evolving a borderless common benchmark and standards in teaching and learning. Fast emerging global society, common quality benchmarks would greatly help in promoting research, leadership and mutual learning across the technical, management and other professional campuses.

WOSA is a unique platform to get into the area of globalization of educational services and in pursuit of mobility of students and professionals. Accreditation would play a major role on acceptance of qualifications from one university to the other university and that would equally facilitate transfer of credit. At WOSA, it is hoped that accreditation standards would be discussed which would help mobility of students and professionals with global quality. MBA Rendezvous Achieving excellence through accreditation, theme of WOSA is achievable or is it just a slogan? Dr Paliwal Of course it is achievable. We in India are expecting 10% economic growth. Hence, we need more economic activities, more productivity, more manpower and trained professionals so the government has rightly given opportunities for having more institutes. Number of schools pass outs is increasing at a phenomenal growth but the question of quality is still a crux of the matter. Accreditation is not equivalent to regulatory authority. Accreditation gives advice whereas regulatory authority either accepts or rejects the proposal. Achieving excellence through accreditation is a buzz word at WOSA. MBA Rendezvous How international accreditation of management programs will help Indian Management Education? Dr Paliwal AACSB International is already here and we are expecting accreditation agencies from UK should also participate. International accreditation would help management students for global movement and quality of MBA pass outs would be same at world level. Hence, MBA institutes would be proud that their students will be accepted with global standards. MBA Rendezvous Policy issues in higher education for achieving Indias competitiveness while involving both state and centre needs attention. Dr Paliwal Format of WOSA is as such that we would listen from the leaders in accreditation and would raise our standards at least become closer to world standards. The time is opportune for us to relook at our policy matters and equally it is important to listen to corporate and to know that what is their expectations. In Indian context, our need is not to copy but to raise our standards. Hence, accreditation would play extremely vital role.

MBA Rendezvous -Corporate Perspectives on accreditation is likely to help industry to get talent? Dr Paliwal -Of course, corporate always say that our students are lacking in standards and becoming unemployable. So, we need to bridge all parameters of qualities and once it is done industry will be happy. MBA Rendezvous -Share some opportunities that WOSA may provide to B schools. Dr Paliwal - WOSA has already created a platform which is full of enormous opportunities. Not only B schools will get first hand info from accreditation bodies and networking opportunities with them as well as keynote speakers besides Deans and Directors of management institutes. Teaching academia of Indian origin at abroad is very keen to give back to the country in form of education as they are equally keen that higher education standards should rise immensely. The summit will bring renowned speakers from education domain which include Dr. Eileen Peacock, Sr. Vice President, AACSB International, USA (Asia HQ, Singapore); Prof. Krishna S. Dhir, Henry Gund Professor of Management, Campbell School of Business, Berry College; Dr. Pritam Singh, Director General, International Management Institute, New Delhi, India; Mr. Stephen Parker, Director, Balboa City School of International Studies, San Diego, USA; Dr. Kai Sang Lock, Former President, Institution of Engineers, Singapore and among the 18 confirmed key speakers.

Understanding Significance of Gold in India is part of our series on general awareness: In ancient times, India was referred as Golden Bird and in the modern times, She has emerged as the largest consumer of gold in the world. The importance of gold can be understood in the saying all glitters are not gold. Gold is an important participant in Indian culture, traditions and economic policy. Gold has several applications or uses and the main reasons why Indians take to gold are: 1)Gold is considered an equivalent for liquid cash: Gold is highly liquid and portable as a Security or Asset. It can be converted to cash anytime when an emergency arises and is considered a friend in need.

2)Gold is considered as Status Symbol: Especially in India gold symbolizes wealth. Often, gold is important constituent of the bridal wealth in the wedding. Indian weddings without gold are unimaginable. 3)Gold is a very good investment: Gold is an asset which has consistently increased in value and thereby considered as a safe and secure investment. Gold is considered an effective diversifier which helps to reduce portfolio risk. 4)Gold is considered as a good gift item: Gold is precious and worthy across all cultures and times. The gold jewelry is given as gifts during weddings, festivals and other special occasions. 5)Gold has great religious significance: Gold is the symbol of the Hindu Goddess Lakshmi and considered highly auspicious. Gold is brought or presented on festivals like Dhanteras and Akshaya Tritiya. Toe rings are never made of gold as it represents the goddess of wealth and should not be soiled by touching a human's feet. 6)Great Ornamental Value: Women of every age and time have always loved wearing gold ornaments. Moreover, Gold Ornaments are never out of fashion. It also may be remembered that Wedding rings are also traditionally made of gold to mark a long lasting relationship. 7)Great value as Heirloom: Gold jewelry is something which can be passed down from one generation to the other as ancestral property. Not only in India, but in rest of the world also, gold is also one of the most valuable assets. Like most of the commodities, gold prices are also determined by demand and supply. The global demand for gold has many layers. For the last 5 years, jewelry has consisted of 68% of the overall demand for gold. The major players for gold jewelry with over 50% of the demand are China, Turkey, and the Middle East. Gold, as gold coins or bars, adds another 20% of the demand where the United States, India, and Europe play a vital role. Industrial demand lead by Japan makes up the last 12%. Mining constitute 59 percent of the global gold supply, net official sales constitute 6 percent and recycled gold provides 35 percent of the global gold supply. But many other factors also play their role in determining the gold prices like dollar prices, crude oil prices, inflation etc. Even today, despite of US Dollar being acceptable in international trade, gold is still considered the safest option. It is because of this reason gold prices are often affected by the change in Dollar prices. Anyone who follows the gold and currency markets closely will realize that the US$ gold price and the Dollar Index generally trend in opposite directions. The reason that gold and the dollar generally trend in opposite directions is that in one respect gold is just another currency.

As a result, when the dollar weakens on the foreign exchange market over an extended period then the US$ gold price will generally rise during the same period; and when the dollar strengthens over many months the US$ gold price will usually fall. There are, of course, leads and lags and there's no reason to expect that percentage changes in one will be accompanied by equal-and-opposite percentage changes in the other, but when charts of the dollar and gold are compared it quickly becomes apparent that the two have been inversely correlated. On the contrary, gold prices and crude oil prices tend to rise and fall positively with one another. There are two reasons for this- historically, oil purchases were paid for in gold. Even today, a sizable percentage of oil revenue ends up invested in gold. As oil prices rise, much of the increased revenue is invested as it is surplus to current needs and much of this surplus is invested in gold or other hard assets. The second reason is that rising oil prices place upward pressure on inflation. This enhances the appeal of gold because it acts as an inflation hedge. Over the last 50 years or so, gold and oil have generally moved together in terms of price, with a positive price correlation of over 80 percent. Apart from above factors, gold also provides hedge against inflation and therefore there is a positive relationship between gold price and inflation. During times of economic growth there is an increase in wealth which leads to higher demand for luxury goods like gold. During times of economic recession, gold can be used as an asset that protects against inflation and devaluing paper currencies. The Reserve Bank of India (RBI) has concluded the purchase of 200 metric tonnes of gold from the International Monetary Fund (IMF), under the IMFs limited gold sales programme. This was done as part of the Reserve Banks foreign exchange reserves management operations. RBIs decision to shore up its gold reserves needs to be seen in the context of other central banks across the globe increasing their gold reserves. In fact, the share of gold in Indias total reserves has dwindled over the decade. In March 1994, the share of gold in the total reserves of the country was 20.86%; by the end of June 2009, gold constituted only 3.7% of the total reserves. The purchase resulted in increasing the share of gold in total assets of RBI to 6percent. RBIs foreign currency assets consist mainly of sovereign bonds, mainly US tr easuries. So, buying more gold had helped the Indian central bank to diversify its assets. RBIs foreign exchange reserves consist of foreign currency assets, gold, special drawing rights (SDR) which is an international reserve currency floated by International Monetary Fund (IMF) and RBI funds kept with IMF. India is the largest consumer of gold in the world, consuming around 18 per cent of the total world's production. India has to import around 70 per cent of its total gold consumption, thus imparting a lot of foreign exchange to major gold producing countries.

With the development of the stock markets, especially on-line trading systems, urban India is slowly shifting its investment focus from gold to the other avenues of investment such as stocks, bonds, mutual funds etc, but, rural India still has its major investments in the form of gold. Around 65 per cent of the total demand for gold in India is from people involved in agriculture and allied industries which contributes to around 30 per cent of the GDP of the nation. Thus gold is still as important for Indian economy as it was ever. Gold is also the important source of income for many least developed countries of Africa where countries like Mali, Ghana get majority of foreign exchange from the export of Gold.

Influence of Indian MNCs in the World is part of our series on general awareness:
A Multi National Corporation (MNC) is a company that has its facilities and assets in at least one country other than its home country. Such companies have offices and factories in different countries and usually have a centralized head office where they co-ordinate global management. Multinationals are sometimes also referred to as transnational corporations. The term multinational is more of an American term whereas the term transnational is European. Conservatively counted there are about 63,000 multinational corporations in the World. The first multinational appeared in 1602 and was the Dutch East India Company. These corporations originated early in the 20th century and proliferated after World War II. Today, some of the very large multinationals have revenues that exceed the GDP of many developing countries. For instance, Wal-Marts global revenue in 2007 was $287,989mn while GDP of Norway same year was $250,805mn. Similarly, Shell Groups revenues were $268,690mn and South Africas GDP was $213,100mn. About a decade back, all major multinationals were American, Japanese or Western European, such as Nike, Coca-Cola, Wal-Mart, AOL, Toshiba, Honda and BMW etc. This is true to some extent today also but as of now, India also boasts of many MNCs like Wipro, Infosys, Tata, Reliance, ONGC, GAIL, ITC etc are to name a few. Many Indian MNCs had made their global presence felt to others. Following facts give an insight into the significance of Indian MNCs1)Tata Motors sells its passenger-car Indica in the UK through a marketing alliance with Rover and has acquired a Daewoo Commercial Vehicles unit giving it access to markets in Korea and China. 2)Dr Reddys Laboratories became the first Asia-Pacific pharmaceutical company outside Japan to list on the New York Stock Exchange in 2001

3)Asian Paints is among the 10 largest decorative paints makers in the World and has manufacturing facilities across 24 countries. 4)Small auto components company Bharat Forge is now the Worlds second largest forgings maker. It became the Worlds second largest forgings. Its workforce includes Japanese, German, American and Chinese people. It has 31 customers across the world and only 31 percent of its turnover comes from India. 5)Essel Propack is the world's largest manufacturers of lamitubes - tubes used to package toothpaste. It has 17 plants spread across 11 countries and a turnover of Rs 609.2 crore for the year ended December 2003. The company commands a staggering 30 percent of the 12.8 billion-units global tubes market. 6)About 80 percent of revenues for Tata Consultancy Services (TCS) comes from outside India 7)Infosys has as many as 30 marketing offices across the world and 26 global software development centers in the US, Canada, Australia, the UK and Japan. 8)Sundram Fasteners, a nuts and bolts company decided to acquire a plant in China. The plant in Jinxing city in the Haiyan economic zone has ensured one fact: that its customers who were earlier buying Sundram products in Europe and the US, did not have to go far from home to access the product. 9)Vedanta Resources, the holding company of the Sterlite group raised a record $1 in its maiden public offering on the London Stock Exchange (LSE). 10)Aurobindo Pharma is already part global with eight subsidiaries across the World, two JVs in the US and a new acquisition in China. Half of its revenues come from exports, which accounted for 47 percent of the total sales. It has strong presence in emerging markets of Asia, Brazil and Latin America. Indian MNCs before the advent of the global slowdown in 2007 were actively involved in acquiring companies around the globe like Infosys Technologys acquisit ion of Expert Information Services, Australia; Bharat Forge purchased Carl Dan Peddinghaus, Germany; Wockhardt acquired CP Pharmaceuticals, UK; Cadilla Health acquired Alpharma SAS, France; Wipro acquired NerveWire Inc, US; acquisition on Oryzalin Herbicide, US but United Phosphorous are to name a few. However, the picture of all Indian MNCs is not that rosy. As per a study by the Hindu Business Line, in 2009 about 40% of all Indian MNCs suffer from negative performance of their overseas subsidiaries. The presence, growth, and competitiveness of Indian companies in overseas markets is primarily being driven by two factors - One, the process of liberalization and globalization of

the Indian economy has led to the development of competitive capabilities by the Indian companies and has brought about intensive interaction with global corporations, professionals, capital, ideas, and practices. Two, the transforming impact of information and communication technology (ICT) on the world of business has resulted in the emergence of new types of businesses and Indian companies utilized both the factors for best use. There is no element of doubt that liberalization has supported the Indian economy and enabled it to churn the wheels of development and progress moving. The advent of multinationals in India has evolved through various stages but even as of now these companies have not come of age. Globalization has, of course, provided wings to the activities of investment, financing and operations of Indian companies. Indian multinationals have just begun to mark their global presence. The coming of age of these multinationals would mean revenues, profits and assets at par with those leading in the World. Indian multinationals are performance-wise improving every year. But what still matters are global presence and reach to a much larger extent. Further, presence of Indian MNCs are more tilted in service and energy sector and they are absent in primary sector. Thus, not only Indian MNCs should strive more aggressively to take on other companies in increasingly competitive environment but also participate more actively in handling their corporate social responsibility.

"In last concluded MAST, over 500 jobs have been generated"

"MAST is an assessment on employability skills"

MAST will create a channel to leverage more employment opportunities for B schools

Its an open secret that both companies and B schools are finding it difficult to match each others requirements. Placements are getting tougher and companies are equally hunting for the talent. In this background, AIMA has reinvented their product MAST and to unfold the objectives, we at MBARendezvous.com interviewed Mr Kamal Singh, Director, AIMA-CMD and excerpts of interview are as follows: Management Aptitude and Skills Test (MAST), initiated last year by All India Management Association is the latest offering for the benefit of both recruiters and B school graduates. The forthcoming test will be held on September 23rd, 2012. Objective of MAST is twofold. On one side, the objective is to test B-schools graduates for employability and on the other side, it will also connect Bschool graduates with companies as that will usher opportunities of employment. In last few years, it has been observed that companies are not able to get right and suitable talent what they actually need. Similarly, B-schools are KAMAL

SINGH

also not able to place their own students whom they should have placed with right companies. Hence, there is a huge gap and MAST is expected to bridge this gap. MAST is basically a test to assess MBA graduates on Psychometric assessment, General Aptitude and Domain Knowledge. Employability is a key challenge in particular tier 2 & 3 B schools as they find it difficult to place their students even after they have groomed them. Hence, MAST gives them a second opportunity not only to reduce their burden of placement but students are equally benefitted as they are creating their new horizon of exposure to the reality of corporate world. In last concluded MAST, over 500 jobs have been generated and many a students have been placed with reputed companies. When companies go to B-school, they are not sure that what kind of quality of students they are likely to receive for hiring. Sometimes they come back with a big disappointment since they dont get the suitable candidates. Now companies have well recognized and rely on MAST as it is a secure and standardized common measurement yardstick to assess candidates from across the B schools in India. In forthcoming MAST, many more students are expected to take the test. Common perception that after having cleared MAST, placement is assured is partially true because it depends upon employability skills of the student and his/ her adaptability to the needs of job being offered by corporate. Although the clearance of MAST by student can be treated as a certificate but MAST is a passport, not a visa to corporate world. Time is opportune for those B schools who might realize that placement is going to be tougher year after year and students would find it really difficult to get placed until they have employability skills, aptitude and domain knowledge. MAST is an opportunity which can be availed by students and B schools should create an aura of trust and responsibility

of making students employable.

E- Commerce is the process of buying or selling products on the internet. The process of buying and selling products through the internet has become quite popular these days. Ecommerce also involves activities like developing products, marketing them and also delivering them to the consumers. However, it was only in 1979 that Michael Aldrin invented online shopping. During the late 1980s and 1990s, the big companies and business houses entered the market of online shopping.

It was during the 1995-2000 that the world experienced a dot com bubble after which the face of e-commerce transformed completely. E-commerce is an amazing way of buying and selling products. E-commerce is also definitely a more comfortable way of shopping. Which is the better idea- if you have to go out to different shops and spend hours on buying things that you want? Or the idea of being able to shop for things that you need from within the comforts of your home and at prices lesser than what you would usually pay? India is the second fastest growing economy in the world. In the last few years, Indian has developed radically. There has not only been economical development but the country has also become technologically advanced. In India, the year 1990 marked the year of science and technological advancement in the country. In the last two decades, the country has come a long way. Computer and internet have become available in almost every home. This has created a market for e-commerce in India. Also the consumers have become quite smart and are looking for ways which prove they can make profitable purchase. India is not only ready for e-commerce; e-commerce has already become quite popular in India too. There are many reasons which make India a suitable market for e-commerce. Here are some of the reasons: 1.The mindset of consumer has changed: The consumers have become quite technological friendly these days. Earlier, consumers in India preferred going out and shopping in the

markets. However, e-commerce does not only provide one with comfort but also gives them a chance to avail on various kinds of offers which helps the consumer to save money. Thus, consumers have now started developing a penchant for e-commerce rather than shopping in the markets. 2.Internet friendly users: In India, people have become quite internet friendly these days. The numbers of users have grown phenomenally over the years. According to a survey, there were only 7 million internet users in India in 2001. The number had grown to 100 million in 2010. Since people are becoming quite internet friendly these days, e-commerce is becoming a comfortable option for the people. It is believed that around 75 million household are ready for e-commerce in this nation. 3.Entry of big names in the Indian e-commerce market: Many big names have entered the market of e-commerce in India. Thus, the consumers get the best of the options while sitting at home only. These big names are investing in the e-commerce market from a long term perspective rather than small term. Thus, the e-commerce market is to grow even more bigger and better in times to come. 4.The success of the some of the sectors in the e-commerce market: Some of the sectors like travelling and retail have already proved to be quite successful in the field of ecommerce. These sectors have already made a lot of profit through the e-commerce market. The success of these sectors has incited other sectors to enter the market of ecommerce and this is precisely the reason why the e-commerce market has expanded so quickly in India.

Above mentioned are some of the reasons which make India a suitable market for ecommerce. However, there is still a slight bit of reluctance in the Indian Consumers regarding online shopping and e-commerce. Eventually this hesitation and reluctance will go with better services and offers and this is precisely the reason for believing that the market for e-commerce will only grow in India in times to come. According to a survey, it is believed that the number of e-commerce consumers will grow to 460 million individuals by 2024-2025. Flipkart, Superbazaar.com, olx. Com, snapdeal are some of the e-commerce of online shopping websites that have already made it big in the Indian e-commerce market. With bigger and better online shopping sites like Amazon to enter the Indian e-commerce market in the near future, it would be right to say that the future of e-commerce is quite bright in India. For such topics of Basic understanding on the subject matter which will keep you motivated to crack GD & PI at CAT 2011, NMAT, XAT, SNAP and forthcoming exams ATMA, MHCET 2012, CMAT 2012 along with various other state specific MBA entrance tests. This would

also be useful for WAT, Extempore speaking, Essays. Waste management in India is part of our series on general awareness: Management of solid waste may be defined as the control of generation, segregation, storage, collection, transfer and transport, processing, and disposal of waste based on scientific principles. This includes all technological, financial, institutional, and legal and policy aspects involved for solving the whole spectrum of issues related with solid wastes. The term waste usually relates to materials produced by human activity, and the process is generally undertaken to reduce their effect on the health and environment. Waste that is not properly managed can create serious health or social problems in a community In many countries, solid waste management has become a top priority. Solid Waste Management (SWM) is a system for handling of all type of garbage. The end goal is to reduce the amount of garbage clogging the streets and polluting the environment. Climate change and effects of greenhouse gas emissions have made SWM, one of the most pressing environmental challenges globally as well as locally. It is well understood that inappropriate SWM practices, such as improper incineration and uncontrolled disposal of wastes are major contributors to greenhouse gas emissions. Based on the source of generation, solid waste can be classified into residential, commercial, institutional, industrial, agricultural etc. There are mainly two categories of wastes based on the type-biodegradable and non-biodegradable. This classification is based on physical, chemical and biological characteristics of wastes. Biodegradable wastes mainly refer to substances consisting of organic matter such as leftover food, vegetables and fruit peels, paper, textile, wood, etc, generated from various household and industrial activities. Because of the action of micro-organisms, these wastes are degraded from complex to simpler compounds. Non- biodegradable wastes consist of inorganic and recyclable materials such as plastic, glass, cans, metals, etc. There are various functional elements associated with the management of solid wastes such as segregation, collection, transportation, processing and disposal which are given below: Waste generation: Wastes are generated at the start of any process, and thereafter, at every stage as raw materials are converted into goods for consumption. The source of waste generation determines quantity, composition and waste characteristics. Waste storage: Storage of waste after collection and before transportation to the processing/disposal site is an important functional component. The time of storage depends on the type of waste. For example, the biodegradable waste cannot be stored for long in a storage container because of its putrescible nature. There are many bins (for institutions and commercial areas or servicing depots), etc. options for storage like plastic containers, conventional dustbins (of households), used oil drums, large storage

Waste collection: Collection refers to mainly two aspects; collection from the source of generation to the next collection point and collection from that point to the large vehicles for transportation or to the transfer stations and finally to the processing plant/disposal area. Collection depends on the number of containers, frequency of collection, types of collection services and routes. Collection is done either directly through the municipal services to franchised services or contracts. Recently, collection of waste from the source to the next step is carried out by Self Help Groups (SHGs) in many cities in India, which is very common in the state of Kerala. Transfer and transport: This functional element involves transfer of wastes from smaller collection vehicles to larger ones at transfer stations and the subsequent transport of the waste to disposal sites Processing: Processing of waste is the most important functional component of SWM system, which leads to various types of resource recovery, recycling, energy generation, production of organic manure, etc. There are many processing techniques, which will be discussed in detail later. Disposal of final rejects: Disposal of final rejects after resource recovery is one of the important functional components of SWM system. This is mainly achieved through construction of engineered sanitary landfill. Engineering principles are followed to confine the wastes to the smallest possible area, reduce them to the lowest particle volume by compaction at the site and cover them after each days operation to reduce exposure to vermin. Climate has a major influence in SWM planning. In cold climates like in Srinagar, Shimla etc, drifting snow and frozen ground interfere with landfill operations, and therefore, trenches must be dug in summer and cover material stockpiles for winter use. Tropical climates, on the other hand, are subject to sharp seasonal variations from wet to dry season, which cause significant changes in the moisture content of solid waste, varying from less than 50% in dry season to greater than 65% in wet months. Collection and disposal of wastes in the wet months are often problematic. High temperatures and humidity cause solid wastes decompose far more rapidly than in colder climates. In India usually a community storage system is practiced where individuals deposit their waste in bins located at street corners and at specific intervals. The containers generally are constructed of metal, concrete, or a combination of the two. Community storage may reduce the cost of waste collection, and can minimize problems associated with lack of onsite storage space. However, unless these community storage arrangements are conveniently located, householders tend to throw their wastes into the roadside gutters for clearance by street sweeping crews. Even where storage arrangements are conveniently

located, wastes tend to be strewn around the storage area, partly due to indiscipline and partly as a result of scavenging of the wastes by rag-pickers and stray animals. Commercial sector like shops, offices, hotels, etc. all use the community waste bins in most of the places and their wastes are also collected along with the household wastes except in a rare number of commercial complexes where they pay a negotiated fee to the Municipal Authorities for collecting waste from their premises. The larger proportion of organic matter in MSW indicates the desirability of biological processing of waste. Though composting was a prevalent biological processing practice in India, in the past due to non-availability of adequate space in the urban centers and poor segregation of wastes, composting has been discontinued as a practice. Recently efforts are being taken to popularize waste segregation and composting. Waste management is now gaining the importance it deserved from the policy makers because of its significance in making the quality of life better particularly at urban centers. The Ministry of Urban Development (MoUD) has approved a project to Centre for Environment and Development to set up a Centre of Excellence (CoE) on Solid Waste and Waste Water Management . The basic objective was to develop the capacity of the institution to support the Urban Local Bodies (ULB) in the country on solid waste and waste water management related activities. The CoEs will work with selected ULBs to develop strategies and framework to implement activities. Now a days, three important concepts have emerged in the waste management1)Waste hierarchy - The waste hierarchy refers to the "4 Rs" concept (reduce, reuse, recycle and recover), which classify waste management strategies according to their desirability in terms of waste minimization. It remains the keystone of most waste minimization strategies. The main aim is to extract the maximum practical benefits from products and to generate the minimum amount of waste. 2)Polluter pays principle - It is a principle where the polluting party pays for the impact caused to the environment. Here, it refers to the requirement for a waste generator to pay for appropriate disposal of the waste. 3)Extended producer responsibility EPR is a strategy designed to promote the integration of all costs associated with products throughout their life cycle (including end-of-life disposal costs) into the market price of the product. This means that firms which manufacture, import and/or sell products are required to be responsible for the products after their useful life as well as during manufacture. It is required to make the solid waste management a comprehensive strategy, above mentioned three concepts must be integrated with any waste management strategy. Apart

from the general solid waste, proportion of e-waste (electronic waste) is consistently increasing likely to increase more with the increasing use of mobile phones, computers laptops and other electronic gadgets etc. Therefore above concepts must be integrated with electronic industry in order to reduce the hazards of e-waste. In 2000, the Municipal Solid Waste (Management and Handling) Rules lay down the steps to be taken by all municipal authorities to ensure management of solid waste according to best practices. However solid waste management in India is yet to get the desired place but programmes like Jawaharlal Nehru National Urban Renewal Mission (JNNURM) provide incentive for good waste management. Greater Hyderabad Municipal Corporation was awarded the Best City for 2009-10 for its efforts to improve Solid Waste Management under the Jawaharlal Nehru National Urban Renewal Mission. Though in 2010, only 27.8 percent of total population was residing in urban areas but urban population is growing at much faster rate than rural one and therefore, urban areas will witness a spurt in growth. In this scenario, if waste management is not properly followed, instead of witnessing urbanization, India may witness the slumisation. India is full of Natural Resources but are we conscious of this fact? A countrys economy largely depends on the amount and preciousness of the natural resources it possesses. Yes, industries and agricultural factors do contribute the economy, but these are all secondary factors. If we concentrate on India particularly, we will see that the main economy of India heavily depends on these natural resources. The cultivable land in India almost comprises 57 percent of the whole land area. The water resources are plenty, having several major rivers crisscrossing across the country. However though these are important natural resources for any country, let us concentrate on the mineral resources which are abundantly found in India. Heres a list of some of the mineral resources that are abundantly found in India and their use: Coal (India is the fourth largest producer of industrial and domestic coal) Mainly used in the power generation sector. Bauxite Aluminium, whose usage ranges from making planes to utensils, is extracted from this ore. Manganese This is mainly used in the manufacture of ferromanganese and steel. Titanium ore Used in the steel industry, among others. Petroleum Mainly used as a fuel for running vehicles.

Limestone Used in the cement industry. Thorium (the Kerala beaches account for the worlds largest thorium deposits) Used as a fuel in nuclear power plants Iron ore Used for manufacturing raw iron which is used for making heavy machines for industries. Mica Used in condensers, transformers, electronic tubes, and radio or radar circuits. Chromite Used in the manufacture of stainless steel. Natural gas Used a fuel for vehicles. Diamonds Their main usage is for making jewelleries and cutting glass. Coal: India has the fourth largest coal reserves in the world. The total amount of coal reserves in India is expected to be around 267 billion tons. It is also one of the top nations in the world when it comes to the usage of energy derived from coal in heavy industries. The notable areas in India where coal is found and, as a result mined are Orissa, Chhattisgarh, Jharia, Nagpur and Chandrapur, Raniganj, Jharkhand, Neyveli, Singrauli and Umaria coalfields. The coal found in India has high ash contents and low calorific coal. However these are combustion friendly and needless to say this is the reason behind the underground fires which occur in a few mining districts. Almost 94 percent of the coal produces is from the Government sector companies. In the 2011-12 period the total production has been reported to be around 680million tons, while the demand was 731million tons. This vast use of this singular reserve has led to its depletion in recent years, and it has been predicted that India will run out of its coal reserves within 2040. This stresses the need to employ new mining technologies and the use of alternative fuels to run the heavy industries. Petroleum: India ranks next to China in terms of its oil reserves in the Asia-Pacific region, china being the leading producer. Most of these reserves are located along the western coast of India, namely Mumbai High and the north-east region of the country. Though underdeveloped, some reserves have been recently found in the Bay of Bengal along the eastern coast of India and in Rajasthan. The sector is dominated by the state-owned enterprises, namely Oil and Natural Gas Corporation.

The usage is much more than the production, and this result in India having to import oil from foreign nations to meet its rising consumption levels. Statistics show that India is a net importer of oil, as 70percent of its oil needs is imported from countries like Saudi Arabia and Iran. The rest 30percent is produced within the country. This is because the demand for oil is somewhere around 3million barrels per day, whereas the production is only a meagre 500 thousand. Natural Gas: As of April 2010, India has an approximately 1437 cubic metres of natural gas. Of this a huge percentage comes from the Mumbai High reserves. Assam, Andhra Pradesh and Gujarat also have reserves which produce considerable amount of natural gas. In terms of production volume, ONGC is the leading producer of natural gas in India. Among the private enterprises, Reliance Industries play a big role in this sector due to the large reserve found in the Krishna Godavari basin. India has to import small amounts from Qatar and likewise nations. At this level of production and consumption, the reserves are predicted to last for around 29 years. Iron ore: Possessing one of the richest reserves of iron ore in the world, India holds a leading position in the world in terms of its iron ore production. The haematite deposits found in India are spread throughout the country, though the huge deposits are concentrated in a few regions like Chikkamagaluru, Singhbhum etc. Many iron and steel industries are located near these mines. The nearness of the industries not only reduces transportation costs but also reduces the times taken to produce the final products. The ores found in Goa are mainly shipped to Japan. Export of iron is mainly done from the ports of Vishakhapatnam, Marma Goa, Paradip and Kolkata. At present the deposits are quite vast, but some calculations indicate that the exponential rise in consumption in coming years may make these reserves seem finite in the near future. Bauxite: India is one of the leading producers of bauxite in the world. The reserves account for 7.5 percent of the worlds total deposits; however the aluminium output is only 3 percent. This indicates the lack of infrastructure which dominates the Indian market. The state-owned NALCO is the largest company dealing with bauxite ores. The acquiring of INDAL by Hindalco Industries accounted for a steep rise in the aluminium production of the country in the last year.

The extensive deposits will take a long, long time to get replenished.

Indian Health Standard & WHO A country which has a huge number of people in the below poverty zone is not a country which can be called a powerhouse though it is the second most populous country in the world. India accounts for nearly 17% of the worlds population and when you know there are as nearly as 200 countries in the world the percentage does seem a good one. India has over a billion people and stands only next to China yet it is far behind in terms of many major aspects than countries which do not even have half its population strength. A basic reason that can be stated is the percentage of Indian population that resides in the rural areas. The percentage is a staggering one at nearly 70% based on CENSUS 2011 data. Indian health standard is a serious question that can be raised in popular pulpits. The country sees a vast number of deaths everyday owing to factors like diseases, malnutrition, poverty and addiction to life-threatening products, namely alcohol, cigarettes and drugs. Although life expectancy at birth is on the normal side, the numbers being 66.08 years for males and 68.33 years for females as per 2011 estimation yet we can commonly see how many premature and early deaths are reported in the news and newspapers. There are several such deaths that also go unnoticed. A startling statistic that is of major concern is the probability of death under 5 years of age. According to WHOs calculation, 66 children per 1000 live births die below the age of 5. It is a number that is bound to make someone sit up and take notice since the number means a lot. It means 6600 children below 5 die out of 100000 live births and 660000 children below 5 die out of 10000000 live births and India is a country of over a billion. This can mean about 66000000 children below 5 die out of a billion live births and this certainly is a matter of great concern. Not only does it highlights the condition of Indian health but also shows the lack of family planning in a country where the poorer section dominates the ratio of population. While this was just a take on the mortality rate of children below 5 there are other areas of health that also draw concern. 250 males and 169 females per 1000 population die between 15 and 60. Many may ask why the number of males is more than that of females. The basic answer to this question is the addiction to tobacco and illicit liquor .While tobacco severely affects the lungs and is a primary contributor to the lung cancer (taking nearly 30% of the population) illicit liquor (accounting for more than a fifth of hospital admissions) damages the body in more ways than one, one of the chief being kidney damage. While the government has taken steps to curb the practices people of India seem to turn a blind eye to it with people ignoring statutory warnings of cancer labeled on cigarette packets.

Communicable diseases account for nearly 38% of the disease burden. The percentage varies from state to state. Emergence of new diseases likes the H1N1 virus or other avian and swine influenzas or re-emergence of old diseases like malaria has greatly increased the communicable disease ratio. India is among the foremost in the department of AIDS (Acquired Immune Deficiency Syndrome) with nearly 1, 70,000 people of the population dying of HIV/AIDS as per statistics gathered in 2011. But the number does indicate a drop in the percentage indicating the awareness among people. Natural calamities often lead to outbreak of different endemics which result in deaths of many. Tuberculosis and non-communicable diseases also lead to the death of many in India. Cancer is a ruling disease among many followed closely by chronic respiratory diseases, cardiovascular diseases and diabetes. While there are many causes of cancer and one cannot blatantly blame a single cause for it, respiratory problems result mainly out of smoking and air pollution, cardiovascular diseases and diabetes result out of physical inactivity and obesity. Raised blood pressure trends , cholesterol and unhealthy daily life also amount for deaths. The number of developed cities in India is very less and most of the villages, districts or even zilas do not have proper health facilities. They lack modern hospitals, qualified doctors and proper hygienic and sanitary measures. Malnutrition is also prevalent throughout India and is leading to the deaths almost each day. Being a country so severely affected by health problems India stands in the red list of the World Health Organization (WHO) though it is not as critical as some of the underdeveloped African and Asian countries. WHO is targeting to strategically fight these concerns through satisfactory targeted technical collaboration and advocacy with the central and state governments, and also in partnership with its bilateral and multilateral partners, civil societies, and the stake holders.

MBA aspirants will get separate section on Gk or General Awareness in NMAT, XAT, IIFT, CMAT exams, hence you need to update

yourselves with latest topics. Today , you will red General Awareness topic : Ports of China One look at the atlas will tell what a huge and long coastline India has. India is one of the worlds biggest peninsulas and her coastline which is about 7516.6 kilometers long is a long one being home to some of the busiest ports of Asia. There are about 13 major ports and around 187 minor or small ports along the coastline of India. The peninsular India, most specifically the ports are Indian trades life and soul. Most of the countrys trade be it export or import are taken place through the waterways. Hence the ports in India are of vital significance and need to be known about. A vital question arises as to what importance is a seaport of other than sea journeys and housing ships. The obvious answer is trade. Sea is possibly the biggest trade option for India. Much of Indias international trade is dependent on these ports since sea route is the best trade route. It goes back to the days of the Portuguese spice trade with India when the trade route between Europe and India was established. Since then the French and the English and much later the other countries joined in and the sea route to India was established and the sea route became a more convenient and easier mode of trade. The major ports of India and the auxiliary ports are hence of vital importance for the countrys economy. The classification of the tags of major and minor ports that has been meted out to the various ports has administrative significance. According to the constitution of India the Central and the State Governments are to administer the concurrent list of transport and maritime transport falls under this category. While the Central Ministry in charge of shipping administers the major ports, the minor ports are administered by the State Governments. Some of the 187 minor ports have no role in the trade scenario but some of them are being improved and developed involving public-private relationship. The major ports of India are- 1. Kolkata Port Trust (Kolkata, West Bengal), 2. New Mangalore Port Trust (Mangalore, Karnataka), 3. Mormugao Port Trust (Mormugao, Goa), 4. Tuticorin Port Trust (Tuticorin, Tamil Nadu), 5. Chennai Port Trust (Chennai, Tamil India Industry incomparable to Singapore or

Nadu), 6. Paradip Port Trust (Paradip, Orissa), 7. Vishakapatnam Port Trust (Vishakapatnam, Andhra Pradesh), 8. Pipavav Port Trust (Pipavav, Gujarat), 9. Kandla Port Trust (Kandla, Gujarat), 10. Cochin Port Trust (Cochin, Kerala), 11. Mumbai Port Trust (Mumbai, Maharashtra), 12. Jawaharlal Nehru Port Trust (Navi Mumbai, Maharashtra) and 13. Ennore Port (Ennore, Coromandel, Tamil Nadu). The traffic handled at major ports in the financial year 2011-2012 is 560153000 tonnes according to data available from Indian Ports Association. This is a telling number that signifies how much of importance the major ports hold in the trading process. The minor ports are also of vital significance. Some of the more important minor ports of India are Mandvi and Mundra in Gujarat, Thane, Trombay and Malvan in Maharashtra, Kakinara and Krishnapatnam in Andhra Pradesh and so on. The minor ports handle a huge amount of traffic and together with the major ports manage a huge percentage of Indias international trade. Ports like Mundra or Thane manage a greater amount of traffic than even some major ports and so minor ports are also of much importance. But having said that India is not the worlds or Asias busiest container port. The tag, though previously belonged to Singapore now belongs to Shanghai. Chinas rapid economic growth helped them overtake Singapore which was till 2010 ruled the waves as the busiest maritime hub of Asia. Considering Singapores population which is nowhere close to either Indias or Chinas population the maritime industry has been a huge success story. It can primarily be attributed to Singapores rapid development in the economical sphere. The overall development of Singapore has made them an important trade option of Asia and the world. China with their population has always been on the forefront in international trade but the rapid economic growth they achieved in the last decade or so has made them Asias busiest and most important. Other Asia countries like Thailand and Sri Lanka are also coming up and making themselves count. They have announced their contention in the trade department that is at present being ruled by Singapore, China and India. Indias spice export, tea export, food grain export, leather goods export, etc and petroleum, automobile, machinery, IT (hardware),

gold import constitute a very significant part of the Indian economy. Just as railways and rail stations are important for inland trade in India the ports can be called the heart and soul of external or foreign trade of India. Why Cant We Convert Sea Water To Drinking Water As In Gulf? Water is one of the most valuable resources on earth that is required for the very survival of mankind. But it is a very scarce resource and hence, needs to be utilized in a controlled and sensible manner so that not even a fraction of this scarce yet precious resource is wasted. But one must be thrilled to know that the earth consists of about 326 billion trillion gallons of water out of which less than 1% is worth drinking. This is the reason why water is considered as a limited natural resource although it is vastly available all across the globe. The main reason of this resource for being scarce is that most of the water available on earth is rooted in the seas and oceans. The water found in the sea is totally salty in nature and the water that has a high salt content can never satisfy thirst. But the water that is found in gulf does not contain salt and hence, this water can easily be purified and converted into drinking water. But with the rapid progress in science and technology, conversion of sea water into drinking water has become possible especially with the invention of advanced scientific devices. In fact, the conversion became feasible right from the days of the ancient Greeks. But it was a very costly method since enormous amount of heat was necessary to make the conversion possible if the process had to be undertaken on a large scale. But today, the cost of conversion has been minimized with the introduction of modern equipments because of which more and more people are encouraged to actually convert the salty water from the sea into safe drinking water. Yet another reason for which conversion of sea water into drinking water cannot easily be done is that the particles of salt damage the filters during the process of filtration once the filters have been used twice or thrice. Replacing such filters by new ones involves a huge cost which again creates ample obstruction in the process of conversion. But no such problem arises in the case of gulf water as it does not contain any salty particles which would put the filters out of order. So it is a lot easier and simpler to convert gulf water (than sea water) into drinking water. Electrolysis is also a very expensive process of converting sea water into drinking water. Moreover, sewage and factory wastes are periodically disposed into the sea, thereby polluting the whole water body. Now, during the process of filtration, all these impurities cannot be completely eradicated. A substantial amount of waste still happens to exist in the water even after the filtration process is over. Hence, sea water, even after conversion, does not become suitable for the purpose of drinking. But considering the matter of gulf

water, not much of a waste is dumped in gulfs and hence, gulf water, by the process of filtration, becomes absolutely safe for drinking. Further, it is not always possible to install desalination plants in each and every place on earth. In such places, converting sea water into drinking water becomes a very expensive process and so, importing drinking water is a much cheaper option particularly in those locations. But such plants are definitely not required for converting gulf water into drinking water since water from the gulf is totally free from salt. Another very important cause that makes conversion of sea water into drinking water a tuff job is that estimating the total cost of desalination is not simple at all. The cost, terms of dollar may differ from place to place depending on cost of labor and energy, prices of land, mutual agreements as well as degree of salt content in the water. The actual cost may range from $1 to slightly more than $2 to produce one cubic meter or 264 gallons of salt free water from the sea. But this is just an approximate figure which can vary with the change in prevailing circumstances. But this type of criticality does not arise in case of conversion of gulf water into drinking water. During this type of conversion where gulf water is involved, the cost of conversion more or less remains uniform. From the above mentioned differences, it becomes very clear why it is easier and simpler to convert gulf water (than sea water) into drinking water. But with the latest technological advancement, sea water can now be easily and conveniently purified at a very nominal cost for the purpose of drinking.

India Shines But without Power As the country rides upon its ambitious tagline of Shining India , it faces its worst blackout and power failure a few days back, lampooning the chatter and promises of the Government. India awaits a new landmark, when it will be crippled of power and its shortage will ruin the national happenings. Power still eludes many remote places largely due to over consumption in metros and dereliction on the part of the government. The frivolity of its importance misleads the government of the grave situation which is largely overlooked. Power still is a neglected ministry and its vitality is being totally underestimated. Statistical data states that as of June 2012, the total electricity production capacity of India is 205.34 GW, and the additional captive plants produce another 31.5 GW. But for a country with a population of 1.22 billion, this is clearly not enough. Power being an important commodity for consumption as well as for the economic growth of any country is largely ill-used here. Our power sector largely depends upon coal for its production, and the consumption of coal is much higher than wind, solar, hydel or nuclear

sources. In fact the electricity generated from coal is 56 percent of the total electric power generated in the country. But the deterioration of the standard of the coal along with the inability to extract the power from this result in an acute shortage of the minimum power required for running a nation. The coal belts across the eastern and the western region of the country are being illegally mined and used for other purposes, robbing it of its valuable usage. The Grid operations are not performed according to its potential and its production languishes low in the chart. India still suffers from drought due to shortage of rainfall. So the hydel power projects operate with a scarcity of rainwater and thus the power production decreases manifold. The shortage of supply against the whopping demand becomes unassailable to overcome and thus the nation strives for an uninterrupted supply of power. In India, as in December 2011, over 300 million people lived without electricity. One-third of Indias rural citizens dont have any access to the use of electric power. A similar situation is with 6 percent of the urban population. The major reason is though the country has enough grids to provide the entire nation with enough power, most of them do not function properly at the right time, and as a result the nation suffers. The Northern India receives the electricity from the grids installed at Agra. But the grid tripped off a few months back, making the whole of North India disappear into complete darkness and arresting the normalcy of lives there. Then the eastern grid compensated the power thus reducing its own reserve. Next day itself it resulted in a blackout in eastern India. With a vast nation like India where the population touches the 5lakh-crore mark every year, power transmission holds an important prospect of power production and subsequent usage. Proper transmission suffers from illegal hooking and natural phenomena. The rampant hooking and suction of power without any payment will deplete the power reserves as well as the economy of its revenues. Remote villages still are unable to receive their share of electricity because of the incomplete transmission. Another grim problem eludes with the longevity if the present equipments and gadgets which are largely outdated are not replaced in due time. To meet such an enormous demand of power, efficient equipments or modernization of existing ones helps in production boom. The government indulged in the blame game thus turning a blind eye towards the obvious failure of its power production. Only setting up of grids will not illuminate a nation but a proper maintenance of its operation will catapult the consistency of power production. The rapid shifting of the credibility among the ministers and the misuse of the allotted budget hits the power sector with its bull dozer effect. What is more sinister is the poor production

quality, the restriction of production sources and the plight of the existing units which handicap the power feeding. It has been reported that India as a country is the fourth largest energy consumer in the world, after USA, China and Russia. As of January 2012, a report places the per capital power consumption in India to be 778 kWh. The consumption can be reduced, no doubt. But when the country has the potential to provide the necessary power, then obvious steps are to be taken first instead of playing blame-games in the Cabinet.

Water Water Everywhere...Not enough Drops to Drink The Indian Scenario


Drinking water is something one cant live without. No doubt it is called LIFE. In the world, its scarcity is now one of the major issues that the people are fighting against. With the temperature of the Earth increasing day by day, more and more ice caps are melting. This has caused an alarming increase in the rise of sea level. This rise has led to the untimely flooding of lowland areas, especially of low-lying islands and coastal regions. Many islands in fact have already gone under water. Now coming back to the actual concern, the main reason behind this acute global water crisis is this global warming and its cause, the greenhouse effect. The primary thing is that the major rivers of the world are mainly dependent on the ice caps for the amount of water they carry and the melting of these ice caps in abnormal proportions is causing floods and droughts. Major parts of these rivers are getting dried up as a result of this, and this is the main reason behind the global water crisis. There are a lot of secondary reasons also. Significant among these is the rising population of the world. The huge population has put enormous pressure on the water resources to provide not only drinking water, but also clean and suitable water for irrigational and industrial purpose. In India the situation is no different. It currently has the second-largest population of the world, a staggering 1.6 billion, ranking right after China. And in the coming years it is predicted to be the most populated country in the world. That means that in the coming years, the pressure on Indias water resources will increase manifold. To put in figures, let us look at the actual numbers. India currently uses approximately 850 billion cubic metres of water every year. Due to the rising population, this demand is expected to become double the current value by 2050.

The irregularity of the monsoon has now become the usual occurrence, every year. Most of the floods in India occur mainly because of untimely heavy rain and improper drainage system. Moreover when heavy rainfall occurs in the region of the confluence of two or three rivers, there is no outlet for the rising water levels as the rivers themselves get filled up to their brim and can no longer contain any extra water. Every year, the floods account for nearly 15percent of the

total losses in the country. Not only do they cause damage to standing crops and property, they also disrupt the functioning of society for a while and thus huge losses are incurred in the market. It is indeed a strange fact that in spite of the historic flooding that took place in the recent past, India is facing an imminent water crisis. Why is this so? The main reason is that most parts of the country are getting too little rain for most of the year. And if and when the rain is falling, it is in such an enormous amount that instead of helping the crops grows, it is actually destroying them. What the soil needs is enough water to sustain the microorganisms and the crops standing on it. Instead of that, it is receiving more than enough quantities of water which is the root cause of destruction. Questions have been arising as to the problem of drinking water crisis in India. With so many rivers crisscrossing across the entire nation, it is hard to imagine a country like India suffering from water crisis problems. But this is the actual fact. In India, the main sources of drinking water are the fresh water lakes, the rivers and the underground water which are pumped up using tube wells. A growing demand has almost depleted the underground water supply of India. And due to less and sporadic rainfall in most parts of the country over the past couple of years, the lakes and rivers have dried up in many parts. As it is, there are less than enough pumping stations throughout the country which are responsible for providing the entire nation with clean drinking water. Now to add to the problem, the sources of the water itself are getting depleted. In the international scenario, there was recent falling out between the two neighbouring countries of India and Bangladesh over the division of water from the Ganges River. Though the problem has now been dealt with, it has painted a very clear picture of the global water shortage. No doubt it has been rightly said that if there happens any third world war in the coming years, the reason for the war will be the division of water among the fighting nations.
Export Import Policies and Impact on Indian Economy None of the country of this world is endowed with all the resources to grow on its own and therefore every country in this world is engaged in foreign trade. Practically, whether a country is open or closed depends on its relative openness to foreign trade and not in absolute manner. Foreign trade affects the domestic trade and markets of a country and India is not an exception in this scenario. India is a part of the globalization and any effect, positive or negative, on the global trade is bound to affect the Indian markets. The global economic downturn and the recent Economic crisis are two examples to understand this fact. India has been hit by falling demand from its traditional export markets such as the United States, which is struggling to bring down unemployment and Europe, where a sovereign debt crisis tipped many economies back into recession.

The foreign trade affects almost every citizen of India either directly or indirectly. For instance, since India has to import three fourth of its crude oil requirements, international crude prices are likely to affect every citizen either directly or indirectly. Moreover, free trade in agriculture can flood the Indian markets with cheap food grain produced in foreign territory adversely effecting the Indian farming community. On the other hand, it can also result in outflow of food grains in case international food grain prices are higher. It may cause artificial famine in the country. Although, the aforesaid examples are of extreme scenario, nevertheless, they are sufficient to explain the impact of foreign trade on domestic economy. However, in general, while an export led growth enhances the income of the country, imports induce the consumer surplus. The concept t hat in foreign trade, a country can gain only at the cost of the other has long been discarded. Exim Policy or Foreign Trade Policy is a set of guidelines and instructions established by the DGFT in matters related to the import and export of goods in India. The Foreign Trade Policy of India is guided by the Export Import in known as in short EXIM Policy of the Indian Government and is regulated by the Foreign Trade Development and Regulation Act, 1992. DGFT (Directorate General of Foreign Trade) is the main governing body in matters related to Exim Policy. India's Export Import Policy also know as Foreign Trade Policy, in general, aims at developing export potential, improving export performance, encouraging foreign trade and creating favorable balance of payments position. The entry of the foreigners into the Indian markets was initially criticized but the scene is not the same anymore. The Indian Foreign Trade Policy of 2009-2014 has added 26 new markets to its aim of achieving the export target of US$ 200 billion and export growth target of 15 percent for the first two years. Other aims of the policy are to double Indias export of goods and services by 2014 and to double Indias share in global merchandise trade by 2020. The upcoming decade will play a significant role in fortifying the countrys trading capabilities. As of now (in 2012), UAE accounts for $36b of Indian exports followed by USA and China accounting for $34b and $18b respectively. On the import side, maximum imports are sourced from China followed by UAE and Switzerland. Commodity wise, Petroleum products account for $56b of export revenue followed by gems and jewellery accounting for $47b. On the import side, crude oil accounts for imports worth $155b followed by Gold and silver worth $62b.

According to Prime Minister's Economic Advisory Council, India's exports are unlikely to achieve the $ 360 billion target for this fiscal and will be about $ 334 billion and the imports would touch $ 515 billion, leaving a trade deficit of $ 181 billion or 9.7 per cent of expected GDP. In todays world, globalization is a reality. There is no element of doubt that threats from globalization exists which may harm the domestic industries but from the past experience, it can also be concluded that in the absence of competition, quality of production deteriorates and complacency hampers the economy. Thus in order to increase the efficiency of the nations economy and tom assure the increasing consumer surplus and producers income, one must endeavor to formulate the foreign trade policy in such a manner which raises the countrys productivity and not merely aimed at increasing exports and decreasing imports. Divide of rural and urban psyche in India: An unhealthy Trend Psyche refers to broad outlook or a kind of mindset that an individual possesses. Generally this mindset is peculiar and every individual has major or minor variations when it comes to comparing it with others. However similar psyche can exist among groups particularly those who belong to similar geographical location. Hence there is a psyche of persons residing in rural areas which is quite different from the persons residing in urban areas. There are vast differences that exist between the rural and urban areas of India as far as literacy rates are concerned. Huge variations are found in literacy rates among women in rural and urban areas. This is one of the major causes of the prevailing difference in rural and urban mindset. While 79.9 percent of population is literate in urban areas of the country, only 58.7 percent is literate in rural parts of India. Education causes awareness and helps in the development of personality and the lack of it limits ones psyche. Urban psyche is forward looking and broad. A person residing in urban area (city or town) will always look ahead. He or she will be literate and will be aware of the current scenario and happenings of the world. They look more groomed and take upon the challenge with utmost determination. Urban people are extravagant and extrovert. They use latest gadgets such as laptops, palmtops and mobile phones as part of their daily routine. Official data on wireless tele density reveals that 65 percent of people in urban India use mobile phones while this number is very less i.e. 34 percent in rural India. Rural psyche is traditional, conservative and mainly opposed to change. They like to live in their own world and hence dont like anyone disturbing the status quo. This situation creates a kind of vacuum where the rural people find themselves caught in a web. The rural psyche

prevents them to think ahead and be innovative while their traditional occupation (agriculture) does not fetch them much. In present times we see large number of suicides happening in rural belts and illiteracy plus limited rural psyche are the major causes. Farmers get exploited by the middle men and the money lenders which results in huge debt and hence suicide. According to a publication from the New York University School of Law, in 2009 alone (the most recent year for which official figures are available) 17,638 Indian farmers committed suicide thats one farmer every 30 minutes. The non-availability of sufficient means of livelihood forces them to migrate to urban areas which put lots of pressure on the already suffocated urban cities of the country. Statistics reveal that while 89 percent population resided in rural areas in 1901, the number got drastically reduced in 2001 which was 72 percent. In 2011 population census the numbers are expected to be around 70 percent. All the above data reveals that the rural psyche creates trouble for the rural people and they are caught in a vicious circle where they are not left with many options either they choose the difficult path i.e. migrating to a city or they select the path which they think is easy i.e. ending their life. Both the options however are not fruitful in the long run for the country. One important example of rural psyche is the existence of Khap Panchayats in the rural belts especially in the states like Haryana, Uttar Pradesh and Rajasthan. The Khap Panchayats possess rural psyche to its very roots and hate the forward looking and progressive mindset of the urban people. They think that they are the true saviors of traditional Indian culture and defy any opposition whatsoever which comes their way in this regard. The recent example where Khap panchayat of Baghpat in Uttar Pradesh levied various kinds of restrictions on freedom of movement of women and their independence shows that even in the 21st century there is lot of difference between the rural psyche and urban psyche and gap is not getting plugged. This mistrust leads to confusion and hinders the growth of a healthy opinion and consensus. Another aspect of this problem of rural urban division is that while we all understand that the divide exists, we find it difficult to accept it and find solutions to it. Solutions: The following steps can be taken so that this rural urban gap bridges: 1.By creating more and more employment opportunities in rural areas 2.By making agriculture cost-effective and profitable 3.By providing urban amenities in rural areas

4.By starting centrally sponsored schemes in rural areas (such as Bharat Nirman, MGNREGA) and assuring their proper implementation. 5.By posting urban professionals such as doctors, engineers, advocates in rural areas so that rural population gets access to quality services at their doorstep 6.By providing cheap loans to farmers and protecting them from natural calamities by way of crop insurance 7.By respecting and not criticizing the psyche of each other This division of rural and urban psyche is not good for the development of the country. All the first world countries ensure that their urban and rural belts work together in complete co-ordination and harmony towards achieving the national goals. If India wants to compete with other countries and get back its lost glory then we have to move ahead hand in hand. We have to present a united face and take the challenge thrown upon us with full determination. This can only be achieved if both the rural and urban India has full faith and confidence in each others abilities and strengths PDS Ground reality and solutions Background: Public Distribution System (PDS) ensures availability of essential commodities like wheat, rice, sugar, edible oils and kerosene to the consumers, through a network of outlets or Fair Price Shops (FPS) which are distributed evenly in every nook and corner of the country. It was institutionalized in the country in 1960s to achieve multiple objectives including ensuring stability of prices, rationing of essential commodities in case of deficit in supplies, ensuring availability of basic commodities to the poor and needy and to check the practice of hoarding and black marketing. PDS is operated under the joint responsibility of the Central and State Governments. The Central Government bears the responsibility of procurement, storage, transportation and bulk allocation of food grains (rice and wheat) at subsidized prices, while the responsibility of distribution to consumers through Fair Price Shops rests with the State Governments. Under PDS scheme, each family below the poverty line is eligible for 35 kg of rice or wheat every month, while a household above the poverty line is entitled to 15 kg of food grain on a monthly basis. In its original form, the system was universal in nature and did not distinguish between different income-groups in the society. However after poor performance of the scheme, the system was revamped and re-launched as Targeted Public Distribution System (TPDS). Under this scheme, the Below Poverty Line (BPL) families would get basic commodities at a subsidized rate whereas the Above Poverty Line (APL) families would get them only at their

economic cost. This scheme was introduced with the intent to curb the rising food subsidy bill borne by the Government as well as to ensure a more pointed targeting of the poor and needy, something which the earlier scheme had failed to do. Basically TDPS was to ensure that the poorest of the poor people do get three time meals and that no one in the country sleeps hungry. However theres many a slip between the cup and the lip. While the aim was right , the implementation was wrong. Soon complaints started pouring in from all over the country relating to PDS. Ground reality: The present position is that PDS/TPDS is marred by various discrepancies and problems. At the distribution level the fair price shop owners indulge in corrupt practices and do not declare the quantity of subsidized ration received from the govt. to the card holders correctly. Then they siphon off the rationed and subsidized products for sale in the open market to earn profits. Moreover they also have bogus ration cards ready with them and they use it to increase their sanctioned quota from the govt. The quality of the products which are distributed in fair price shops are also sub-standard and sometimes unfit for human consumption. No card holder has the courage to ask for more as far as both the quantity and quality of the products being distributed are concerned. All this generally happens with the confluence of both the Fair Price Shop owner with the checking staff of the govt. and hence many complaints go unattended. Lacunae exist even at the time of purchasing the food grains meant for PDS. Proper attention is not given to the quality of the grain and this is despite of the fact that stringent norms exist for purchasing the food grains. Overall the situation is grim and PDS requires some tough decisions that should come from the highest level if this wonderful project of feeding millions of starving Indians is to be saved. Solutions: The first solution that can be easily done is to allot the fair price shops to the village community on the whole. A co-operative can be formed consisting of villages own people who run the fair price shop. This way whole village can keep a check on the rationed products and every subsidized product will be distributed efficiently. Another solution is to computerize the whole PDS system where the issuing authority puts online all the data relating to the quantity of grains sanctioned to a particular fair price shop in a village, tehsil and district. Furthermore FPS owners can also be asked to post the stock

register entries online which can be seen by anyone. This will help in curbing the malpractices of the FPS owners. There should be proper and systematic checking of the FPS by the teams that contain officials from all the departments. Vigilance teams headed by senior and upright officers should be constituted for this purpose that conduct raids at regular intervals and bring the guilty to the book. Giving cash subsidy to the targeted group (BPL) that is paid directly into their accounts can be another solution. By this they will be able to get the products directly from the open market without the need to visit any fair price shop. It is found that the profits of the FPS owners are very less and this forces them to resort to illegal means. This factor also needs to be looked into and the commissions of FPS owners can be increased to a decent level so that they remain satisfied and stop siphoning off the rationed products. It can be said that there is nothing more pious than feeding a hungry man. Every one whether rich or poor has the right to live and by proper implementation of the PDS this can be achieved easily. Need is to tackle the problems in the PDS one by one so that it can be effectively used to achieve the aims for which it was basically designed. Understanding Per Capita Income Per Capita Income (PCI) refers to the income per person in a population. Per capita income is often used to measure a country's standard of living. According to Central Statistical Organisation (CSO), the per capita income of India at current prices during 2011-12 is estimated to be Rs 60,972 compared to Rs 53,331 during 2010-11, showing a rise of 14.3 per cent. However, per capita income is not the correct indicator of development because it doesnt provides the correct picture of distribution of income. Per capita income has several weaknesses as a measurement of development: As it is a mean value, it does not reflect income distribution. If the distribution of income within a country is skewed, a small wealthy class can increase per capita income far above that of the majority of the population. In this respect Median income is a more useful measure of prosperity than per capita income, because it is less influenced by the outliers. Economic activity that does not result in monetary income, such as service provided within the family, or for barter, are usually not counted. The importance of these services varies widely among different economies.

Comparisons of per capita income over time need to take into account changes in prices. Without using measures of income adjusted for inflation, they will tend to overstate the effects of economic growth. International comparisons can be distorted by differences in the costs of living between countries that aren't reflected in exchange rates. Also, there is no significant relationship between growth of PCI and inequality. India has grabbed seven billionaires in the Forbes top 100 rich list 2011 which puts India in the league of the countries with the most riches. Unfortunately at the same time, nearly 28% of the total population of India, accounting for nearly 300 million people is under below poverty line. With increasing population in India, the inequality in India has also grown and the gap between the rich and poor has widened over the past decades. A comparison of the per capita incomes of Indian states to other economies reveals stark inequalities.The per capita GDP of Goa is highest which is Rs 1,35,129 while Bihar is the lowest which is just Rs 16177. Thus, the average PCI is distorted by the extreme value, like that of the income of the billionaires. Development of a country is represented by the level of welfare of its people and not just increase in the per capita income. If even after the increase in per capita income, starvation deaths are reported from the interiors of the country, it means that along with increasing the measures of growth, income distributional infrastructure should also be improved. Moreover, welfare includes not just income but health, education, better environment, recreation etc. All the income related indicators like per capita income, national income and their rate of growth are supposedly the means to ensure the welfare of the people of a country, and not an end itself. Therefore, all the efforts must be aimed at improving the welfare of the country. It is true, that PCI is necessary to usher development but it is not sufficient to do so. And therefore, state must endeavor to provide other things, essential for welfare also along with high PCI. If high growth rate of PCI is achieved at the cost of displacement of poor tribals, degradation of environment and is concentrated in fewer hands only, it is not likely to assure the sustainable growth and in long term, with the exhaustion of resources, it may come down. Distribution of national income of individuals should not be ignored. The welfare of a society depends on not just what is the size of cake, but also on how it is distributed over common masses in a country. India needs to look at the holistic view of the inequality existing across the states. Special assistance and focus is required on the eastern states on their poverty reduction and skills development. India needs to develop an integrated mechanism where eastern states can be benefited from the greater economic development of the western states by sharing different

economic activities. The current need is to balance economic growth with social development and more emphasis should be given on the wider reach of government schemes and equitable distribution of resources. Moreover, social cost of harmful effects in terms of variety of pollution may also be adjusted. Social entrepreneurship which focuses on developing innovative solutions to solve the social problems with sustained revenue growth can be the possible solution. The companies need to create shared value for all stakeholders rather than just investing in corporate social responsibility programmes which can help them to increase their future income and wealth. BASEL III in India and Impact With the implementation of RBI capital regulation norms on Basel-III from January 1, 2013, there is a pressure on banks to have more equity capital. According to Basel Committee on Banking Supervision "Basel III is a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector". Thus, we can say that Basel 3 is only a continuation of effort initiated by the Basel Committee on Banking Supervision to enhance the banking regulatory framework under Basel I and Basel II. banks' transparency. Basel III measures aim to: Improve the banking sector's ability to absorb shocks arising from financial and economic stress Improve risk management and governance Strengthen banks' transparency and disclosures. In gist, Basel III guidelines are aimed to improve the ability of banks to withstand economic and financial stress as the new guidelines are more stringent than the earlier requirements for capital and liquidity in the banking sector. Basel III has been designed to address the weaknesses that become too obvious during the 2008 financial crisis. The intent of the Basel Committee seems to prepare the banking industry for any future economic downturns. The framework enhances bank-specific measures and includes macro-prudential regulations to help create a more stable banking sector. With the introduction of Basel III in India, banks will have to Maintain a minimum 5.5% in common equity (as against the current 3.6%) by March 31, 2015. This latest Accord now seeks to improve the banking sector's ability to deal with financial and economic stress, improve risk management and strengthen the

Create a capital conservation buffer (consisting of common equity) of 2.5% by March 31, 2018. Maintain a minimum overall capital adequacy of 11.5% (against the current 9%) b y March 31, 2018. Increase the loss absorption capacity of banks Additional Tier I capital and not to issue additional Tier I capital to retail investors. Risk-based capital ratios to be supplemented with a leverage ratio of 4.5% during parallel run. Banks allowed adding interim profits (subject to conditions) for computation of core capital adequacy. Deduct the entire amount of unamortised pension and gratuity liability from common equity Tier I capital for the purpose of capital adequacy ratios from January 1, 2013 Impact on Banks Incremental equity requirements appear achievable as long as banks can find investors for the riskier Additional Tier I capital. However, Indian banks would need as much as Rs.3.95 trillion capital over the next six years, out of which the requirements for common equity would be Rs.1.3-2.0 trillion, for Additional Tier I Rs. 1.9 trillion, and for Tier II Rs. 1 trillion. A sizeable part (around 80%) of the common equity requirement relates to Public Sector Banks (PSBs). Of the PSBs total equity requirement, the Government of Indias (GOIs) share would be Rs. 0.3 to 0.8 trillion (going by the Union Finance Ministrys current stance of maintaining 58% shareholding in PSBs). The incremental equity requirement appears manageable, considering past trends in capital mobilisation. Indian banks raised over Rs. 1 trillion in equity during the period 2007-08 to 2011-12, of which around 54% was mobilised by PSBs and 46% by private banks. However, if one were to exclude 2007-08, when some large banks took advantage of the buoyancy in the capital markets to raise around Rs. 0.5 trillion, the equity raised by Indian banks over the four years from 2008-09 to 2001-12 was around Rs. 0.5 trillion; of this, around 60% was infused by the Government of India (GOI) and Life Insurance Corporation. While the equity target may appear easy at first glance, it may not prove to be so eventually, given that the RBI has also introduced loss-absorption features in Additional Tier I capital instruments. These features could well limit investor appetite for these instruments as it would be difficult to assess the probability of their conversion into equity or of a principal write-down in a stress scenario (and the extent of the resultant loss). In case banks are unable to mobilise the required Additional Tier I and the gap is bridged by raising common equity, the incremental equity requirement may go up to as high as Rs. 3.24 trillion over the next six years where the GoIs share could be a staggering Rs. 1.2 -1.7 trillion.

Increase of 25-30 bps (basis points) in lending yields may help most banks protect their return on equity. As of December 31, 2011, around 15 PSBs have less than 8% core Tier I capital and of these eight have less than 7%. When banks with low core Tier I shore up their capital to around 9% (required 8% + 1% cushion), their return on equity (ROE) could drop by 1-4%, which they could seek to compensate by raising their lending yields (as long as competitive forces allow them to do so), increasing fee income, or rationalizing costs. In ICRAs view, since the largest bank would also need to shore up its capital and may therefore raise its lending yields to compensate for the ROE loss, the smaller banks may also have an opportunity to do the same. However, banks with relatively low core capital (less than 7%) would have to take a knock on their ROE. As for private banks, most of them being well capitalised already, the transition to Basel III may not impact their earnings significantly. In fact, their competitive position could improve when the PSBs raise their lending yields. However, at the same time, the upside potential for private banks could be limited by the higher minimum core capital requirement. Further, as the countercyclical buffer has to be set annually, when activated (in times of stress), the buffer requirement could introduce an element of variation in lending rates and/or the ROE of banks. So, it can be concluded that with the advent of Basel III, high risk- high return lending strategy without proper appraisal, may become tough. Moreover, Indian economy is likely to face some tough times ahead due to compilation of these norms which is spread over years. However, these norms are likely to build an additional cushion to make Indian financial structure less prone to the future financial crisis. Fiscal Deficit: Genesis and impact on Indian Economy Fiscal deficit is an economic phenomenon, where the Government's total expenditure surpasses the revenue generated. It is the difference between the government's total receipts (excluding borrowing) and total expenditure. Fiscal deficit gives the signal to the government about the total borrowing requirements from all sources. Indias fiscal deficit stands at 5.8percent of GDP in financial year 2011 -12, worst among major emerging economies. According to the controller general of accounts, the deficit stood at Rs 509,731 crore in 2011-12. The fiscal deficit for the current year (2012-12) is projected to be contained at 5.1percent but analysts have already begun doubting if this could indeed be achieved given the economic slowdown. Although India boasts of still-robust economic growth of 6.5% in 2011-12, second only to China and much better than advanced nations, its performance on the fiscal front is far from satisfactory when compared to major emerging nations. In April, IMF projected India's consolidated fiscal deficit at 8.7% of GDP during 2011, which is expected to remain over 8% in 2012 and 2013. Though IMF's calculations will not tally with India's consolidated deficit of centre and states, it paints a gloomy picture of the government finances.

Widening of fiscal deficit is direct consequence of faster increase in government expenditure than that of the revenues. With the slowdown in post sub-prime crisis years, increase in government revenues also slowed down. However, expenditure could not be reduced due to social, economic and political compulsions. Social compulsions include expenditure on health, education; political compulsions include increasing subsidy bills on petroleum, power etc and financing ailing public sector units becomes the part of economic compulsions. High fiscal deficits typically cause three problems a balance of payments crisis, high interest rates (because of crowding out) and high inflation (with currency depreciation being a key contributor). More that optimum level of fiscal deficit is going to affect the growth prospects of the country also. During 2004-08, high investment rates have been a crucial factor in India's growth rate rising to 9 percent. The biggest concern about the slow pace of fiscal consolidation is that it will erode the savings rate and, hence, the rate of investment. High investment rates have been a crucial factor in India's growth rate rising to 9% in 2004-08. In the period following 2008, the investment rate has averaged 35% despite declines in the savings rate. This is because a wider savings-investment gap has been bridged by foreign flows and shows up as a higher current account deficit. Whereas the current account deficit (CAD) was 0.4-1.3 percent of GDP in 2005-08, it rose to 2.8percent in 2009-10 and 2010-11. There is broad agreement that a CAD of 2.5-3 percent of GDP is manageable for India. Taking the lower end of the range, it would mean that the economy can tolerate a CAD that is 1.2-2.1 percent higher than in 2005-08. A decline in the domestic savings rate of this order, caused by a higher fiscal deficit, can be made good through foreign inflows. However, as of now, since foreign investments are on decline, it may impact the growth negatively. The Thirteenth Finance Commission target for the Centre's debt-to- GDP ratio of 45% by 2014-15 is expected to be met in 2012-13 itself. Secondly, high fiscal deficits can fuel inflation that dampens investor sentiment. Since fiscal consolidation will not happen as planned earlier, inflation is likely to remain above the Reserve Bank of India's (RBI) comfort zone of 5 percent. It needs to be grasped that a high rate of inflation per se is not a problem. It is variability in the rate of inflation that is the problem as economic agents are then faced with uncertainty. The worry when inflation rate touches double digits is that policymakers have lost control over it, so it can shoot up even further. However, if the RBI can demonstrate that it can contain inflation at 6-7 percent, growth need not be derailed.

The Budget's Medium-Term Fiscal Policy Framework envisages a fiscal deficit-to-GDP ratio of 3.9% by 2014-15. The Thirteenth Finance Commission (TFC) had wanted the ratio to come down to 3%, the target set by the FRBM Act. Since high fiscal deficit means increased government borrowings. Borrowings from the RBI fuels inflation and borrowings from the market crowd out private sector by increasing the interest rate. In order to relate high fiscal deficit to inflation, some economists believe that the portion of fiscal deficit, which is financed by obtaining funds from the Reserve Bank of India, directs to rise in the money stock and a higher money stock eventually heads towards inflation. Financial advisors recommend that the Government should not promote disinvestment to reduce fiscal deficits. Fiscal deficit can be reduced by bringing up revenues or by lowering expenditure. However, fiscal deficit reduction may have an impact over the agricultural sector and social sector. International investors and credit rating agencies also attach a significant weight to the fiscal deficit when deciding on investing in a country or giving a sovereign rating. If the fiscal situation of a country deteriorates, international investors give a low rating to the country. Thus not just for domestic reasons, but to increase the flow of foreign inflows also, fiscal deficit needed to be curbed. Interest rate manipulations and their impact on common man Historically, from 2000 until 2012, India Interest Rate averaged 6.4700 Percent reaching an all time high of 14.5000 Percent in August of 2000 and a record low of 4.2500 Percent in April of 2009. In India, interest rate decisions are taken by the Reserve Bank of India's Central Board of Directors. RBI manipulates the money supply or liquidity in the economy by changing the rate of interests to achieve the desired results like low rate inflation, better GDP growth rate, to control the slowdown etc. Major tools available with RBI to control inflation are Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), Repo rate and Reserve Repo rate, Bank rate etc. Cash Reserve Ratio (CRR) is that fraction of the total deposit with the commercial banks which they have to park with RBI. RBI uses CRR either to drain excess liquidity or to release funds needed for the growth of the economy from time to time. Increase in CRR means that banks have fewer funds available and money is sucked out of circulation. Thus it serves dual purpose . First it ensures that a portion of bank deposits is kept with RBI and is totally risk-free, secondly, enables RBI to control liquidity in the system, and thereby, inflation by tying the hands of the banks in lending money.

SLR is Statutory Liquidity Ratio. Its the percentage of Demand and Time Maturities that banks need to have in any or combination of cash, gold valued at a price not exceeding the current market price and approved securities (G Secs or Gilts come under this) valued at a price as specified by the RBI from time to time. The maximum limit of SLR is 40% and minimum limit of SLR is 24%. Its 24% now. This restriction is imposed by RBI on banks to make funds available to customers on demand as soon as possible. Gold and G Secs (or Gilts) are included along with cash because they are highly liquid and safe assets. Repo (Repurchase) rate is the rate at which the RBI lends shot-term money to the banks against securities. When the repo rate increases borrowing from RBI becomes more expensive. It means that when RBI wants to make funds more expensive for the banks to borrow, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate. Reverse Repo rate is the rate at which banks park their short-term excess liquidity with the RBI. The banks use this tool when they feel that they are stuck with excess funds and are not able to invest anywhere for reasonable returns. An increase in the reverse repo rate means that the RBI is ready to borrow money from the banks at a higher rate of interest. As a result, banks would prefer to keep more and more surplus funds with RBI. Thus, it can conclude that Repo Rate signifies the rate at which liquidity is injected in the banking system by RBI, whereas Reverse repo rate signifies the rate at which the central bank absorbs liquidity from the banks Bank rate is the rate at which RBI lends to the commercial banks for short term period. Bank rate along with SLR is most sparingly used by RBI. Effect of change in interest rates A change in repo rate has a direct impact in the interest rates offered to customers for loans by the same or by more magnitude. If saving rate is increased, person will get higher interest rate on his cash lying in the saving bank account, but it will affect the banks profitability. However, interest rates also affect the common man indirectly through linkages. For instance, an increase in interest rate sucks the liquidity from the market and thus has negative impact on inflation which directly affects the common man. On the other hand, an increase in interest rate decreases the investment rate and thus adversely affects the growth and employment in the economy.

Higher interest rates offer lenders in an economy a higher return relative to other countries. Therefore, higher interest rates attract foreign capital and cause the exchange rate to rise. The impact of higher interest rates is mitigated, however, if inflation in the country is much higher than in others, or if additional factors serve to drive the currency down. The opposite relationship exists for decreasing interest rates - that is, lower interest rates tend to decrease exchange rates. Over a longer term, high interest rate would have more sector specific impact. The sectors which are most impacted by high interest rate is the real estate, automobile and all the capital intensive industries. Banking sector is likely to benefit most due to high interest rates. The Net Interest Margins (It is the difference between the interest they earn on the money they lend and the interest they pay to the depositors) for banks is likely to increase leading to growth in profits & the stock prices. If interest rate continues to rise for a longer duration then it will have an all round negative impact on the economy, leading it into a recessionary mode. For a developing country like India, the right path would be maintaining a moderate inflation and interest rate over a period of time which keeps both the banks, business community and the consumers happy which is very crucial for the smooth running of the economy.

Growth & Pitfalls of the Indian Economy It is very obvious that the Indian economy was not as progressive and strong immediately after independence as it is after almost 65 years of overcoming the British domination. At the very grass-root level when the country had freed itself from the evil and suppressive clutches of the English, India had a reasonably good foreign exchange reserve which later accelerated the growth of the economy as a whole. It also enjoyed a fairly good industrial base which indicated a strong industrial prospect of India. A handful of domestic private entrepreneurs were also ready to break the ice with the first series of investment in independent India. But literacy rate was low as the people in the rural sector, which still occupies the major part of the economy, was poor and could not afford to receive education. But they were diligent and were ready to put in their honest efforts for the industrial development of the country. On the other hand, the well- educated members of the urban sector had funds as well the business ideas. So a combined approach comprising of knowledge, labor and finance was undertaken by the Indian Government to pave the path of economic improvement in the country. But this joint effort of the rich and educated class and the poor and illiterate group could not be achieved so easily. There was already a feeling of hatred and dissatisfaction existing between these two sections of the society before independence, mainly because of the status difference between the rich and the poor and the financial burden which the rich

moneylenders had maintained on the poor farmers for years. And the country produced the same picture even after independence. Moreover, the age- old oppression of the landlords continued even after independence which added fuel to the fire and enhanced the difference between the two communities. So, the cooperation between these two groups could not be achieved so easily. Communism at that time was a very popular ideology, particularly for its success in Russia. At the same time, capitalism promised success to a nation industrially when the entrepreneurs would be free to take their own business decisions without any outside intervention. But the then Prime Minister of the country, Pandit Jawaharlal Nehru, never really supported capitalism as he thought that the power of the country would again go into the hands of a foreign country if capitalism was followed in India. Again, communism alone might not ensure the success of India since regular interference of the government in every matter might hamper the smooth progress of the country as a whole. So, the Prime Minister decided to follow a mixed policy, i.e., a combination of communism and capitalism, whereby, the major industrial sectors of the country would be under government control while the small- scale industries would be run by private entrepreneurs. This kind of government attitude continued for a long time till globalization when every country started opening up and consequently, every economy became an open one. At that time, the Indian government realized that owing to its heavy interference in the industrial sector of the country, the foreign companies were reluctant to establish trade relationship with India due to complicated paper work and time- consuming legal procedure. This was the primary reason why the Indian automobile industry in the 1990s was characterized by only a few foreign giants like Honda, Yamaha and Maruti. It was then that the government followed a Deregulation Policy, thereby decreasing its constant intervention from the industrial sector of the country. As a result, today, a number of foreign companies like Daewoo, Mitsubishi, Opel, Mercedes, Hyundai and many more are entering the Indian automobile market. Significant progress was achieved in other industrial sectors as well as service sectors like banks. Before independence, the entire banking sector was under private ownership. But after independence, in the 1950s, the government decided to bring the entire sector under its control. But again, with the growing financial needs of the country, it has allowed the foreign banks like The Royal Bank of Scotland, The American Bank and others to operate in the banking sector of the country. Probably from 2002-03 onwards, privatization of the banking sector was also brought about whereby, a number of private banks came into being like the ICICI bank, Ing Vyasa etc. This has not only increased the competition in the banking sector but has also met the rising credit requirement of the general public. The food production also showed a significant rise, particularly after the Green Revolution. So, with the overall progress of the country in almost all the sectors, the GDP (Gross

Domestic Product) of India rose very sharply, with the service sector contributing 57.2 % of the total GDP and the industrial and agricultural sectors going at 28.6 % and 14.6% respectively of the total GDP. But according to the survey made in 2009-10, the contribution of the industrial sector dropped down to about 45 %. In 2008, India was rated as the fastest growing economy in the world but the growth rate declined to 6.4 %. However, the growth rate improved to 7.4 % in 2009-10, while the fiscal deficit increased from 5.9 % to 6.5 % during the same period. Today, the Indian economy is rising at a massive rate, though some sectors like agriculture are showing a slight fall in the growth rate and last quarter of this year has dipped. But this will not affect the overall growth of the economy. Today, the Indian economy is rising at a massive rate, though some sectors like agriculture are showing a slight fall in the growth rate and last quarter of this year has dipped. But this will not affect the overall growth of the economy. Criterion of Sugar prices in India India is the second largest producer of sugar in the world after Brazil accounting for 14.49 percent of global sugar production. According to International Sugar Organisation, in 201213 sugar production in India is estimated around 24.5 million tonnes while the domestic demand is pegged at 22 million tonnes. However, the higher supply than demand is unlikely to result in fall in prices as government has allowed export of sugar to the tune of 3 million tonnes in the current year. A Dual Pricing System is adopted in the Indian sugar industry, which includes sugar price in Public Distribution System (PDS) and the free market price. The Government of India fixes the sugar prices distributed through the PDS, based on the levy sugar prices and the subsidy to be provided through budgetary system while the free market price is determined by the demand and supply of sugar as well as cost of production of sugar. Cost of procuring sugar-cane, which is the basic raw material in production of sugar is estimated to account for 60-70percent of the total cost of sugar production. Price of sugar as well as the price of sugar-cane both are politically sensitive and therefore often witness the government intervention. Till 2008-09 season, the price of sugar was determined by Statutory Minimum Price (SMP). From the 2009-10 season, the Centre has decided to fix Fair and Remunerative Price (FRP) as the price to be paid by the sugar mills to the sugar-cane farmers instead of the Statutory Minimum Price (SMP) earlier. FRP is the minimum price that sugarcane farmers are legally guaranteed. However, the sugar mills are free to offer any price above the FRP. FRP is linked to a basic recovery rate of 9.5 per cent, subject to a premium of Rs 1.46 for every 0.1 percentage point increase in recovery above 9.5 per cent. Recovery rate refers to the

amount of sugar produced from the crushed cane. Sugar-cane season is from October to September and in 2011-12 season and FRP of sugarcane is fixed at Rs 145 per quintal for the 2011-12 season, starting October. The FRP is fixed after taking into consideration the margins for sugarcane farmers on account of risk as well as profit on the cost of production of sugarcane, including the cost of transportation. It includes a margin of nearly 45 per cent on account of profit and risk to the farmers on the all India adjusted average cost of production of sugarcane, including the cost of transportation to the mill gate. Moreover, individual states are allowed to declare State Advised Price (SAP) over and above FRP. However, after the introduction of FRP, farm organisations presented a well-documented case to prove that the cost of cultivation does not fall under Rs 2,200 per tonne of sugarcane. They have also shown that, given the present market situation for sugar, as also for the by-products, the sugar manufacturing mills should have no difficulty in paying the farmers an advance of Rs 2,200 per tonne as FRP and pay additional amounts commensurate with the evolution of the domestic and global market situation for sugar and other by-products in the ensuing year. On the other hand, the sugar industry representatives presented their case and challenged such demands. In this manner, consensus about sugar-cane prices between the mill owners and sugar-cane farmers is rare. India has ideal conditions for growing sugarcane at a low cost, such as tropical climate, easy availability and low cost of labour, and low cost of irrigation facilities etc. Sugar recovery rates in India are not significantly lower, as compared with the international standards. Nevertheless, the operating margins in the sugar industry are moderate. However, the net profit margins are low, due to the high debt levels. The debt-equity ratio of the sugar industry is high, due to the high borrowings required for funding sugar inventories. Inventory costs with domestic producers are high because sugar production is seasonal. In addition, sales of domestic producers are controlled by the government. As a result of the high debt-equity ratio, the interest coverage ratio of the sugar industry is low. All these factors result in unsatisfactory margin to mill owners as well as unsatisfactory remuneration to farmers. As of now, the sugar industry is gradually being decontrolled and in a decontrolled environment, the sugar producers will need to implement new strategies, in order to be successful. Sugar producers are expected to benefit with the discontinuation of the release mechanism, as producers will be able to control the sales volume, based on the prevailing demand-supply situation. In order to make the industry increasingly productive for farmers as well as the mill owners, more reforms are required in the industry. The Central government is examining a proposal to introduce a revenue-sharing price mechanism for sugarcane that allows farmers to not

only get a basic price for their produce, but also share the revenues of the sugar factories when their (factories) profits exceed certain level. But such moves must be preceded by more deregulation of the industry so that the production of sugar and sugar-cane remains sweet for mill owners as well as cane farmers. Understanding ISO" is part of our series on general awareness:

ISO (International Organization for Standardization) is the world's largest developer and publisher of International Standards. ISO is a network of the national standards institutes of 163 countries, one member per country, with a Central Secretariat in Geneva, Switzerland, that coordinates the system. ISO enables a consensus to be reached on solutions that meet both the requirements of business and the broader needs of society. Since "International Organization for Standardization" would have different acronyms in different languages (like "IOS" in English, "OIN" in French for Organization internationale de normalisation), its founders decided to give it also a short, all-purpose name and chose "ISO", derived from the Greek word isos, meaning "equal". Whatever the country, whatever the language, the short form of the organization's name is always ISO. Standards are meant to ensure desirable characteristics of products and services such as quality, environmental friendliness, safety, reliability, efficiency and interchangeability - and at an economical cost. ISO has developed over 19,000 International Standards on a variety of subjects and more than 1000 new ISO standards are published every year. They include ISO 9001 for quality management, ISO 14001 for environmental management system, ISO 27001 for information security system etc. The ISO 9000 family of standards represents an international consensus on good quality management practices. It consists of standards and guidelines relating to quality management systems and related supporting standards. ISO 9001 is the standard that provides a set of standardized requirements for a quality management system, regardless of what the user organization does, its size, or whether it is in the private, or public sector. The ISO 9001 standard provides a framework for taking a systematic approach to managing the organization's processes so that they consistently turn out the product that satisfies customers' expectations. Certification of ISO9001 standards requires two types of auditing to get registered to the standard - auditing by an external certification body (external audit) and audits by internal staff trained for this process (internal audits). The aim is a continual process of review and assessment to verify that the system is working as it is supposed to; to find out where it

can improve; and to correct or prevent problems identified. Companies seeking ISO certificate usually follow following steps Appoint someone as project manager as 'Getting ISO' is a project, so someone must have the responsibility and the authority to manage it internally. If required, they can hire a consultant to suggest the improvements required. Do a 'gap analysis' to establish where you are now, against where you need to be, and identify the tasks to be done. An organization may have some sort of quality system in place already, but other requirements of the Standard may be only partially done or not done at all. Use the gap analysis results helps in planning about what to do, who will do it and when to do. After planning work on the plan starts. Organization improves and develops its system by filling the gaps from the Gap Analysis, revising, adding or improving where it needs to be. This includes identifying processes, documenting its systems, and making all the improvements necessary to meet the requirements of the Standard. It will use the 'PDCA' (Plan Do Check Act) cycle or continuous improvement cycle to do this. This stage that takes the most time & effort. It needs to get people involved throughout, so that people help build it, and so they understand and use the system and have opportunities to participate and contribute. A system developed by one person and imposed on others is rarely a good one. Review and audit system internally. Choose a certifier, and schedule the external audit. Undergo the external audit. During this, the certifier (ex ternal auditor) audits the quality system against all of the specific requirements of ISO 9001. ISO certificate granted which makes company or organization enter the official world -ride register of certified organizations.

The widespread adoption of International Standards means that suppliers can develop and offer products and services meeting specifications that have wide international acceptance in their sectors. Therefore, businesses using International Standards can compete on many more markets around the world. It is widely acknowledged that proper quality management improves business, often having a positive effect on investment, market share, sales growth, sales margins, competitive advantage, and avoidance of litigation. Moreover, ISO 9000 guidelines provide a comprehensive model for quality management systems that can make any company competitive. Other benefits incurring through ISO standards includesMore efficient, effective operation Increases customer satisfaction and retention Improves employee motivation, awareness, and morale Promotes international trade

Reduces waste and increases productivity Makes employees process dependent rather than person dependent Though ISO 9001 lays down the requirements any quality system must meet, but does not dictate how they should be met in any particular organization. This leaves great scope and flexibility for implementation in different business sectors and business cultures, as well as in different national cultures. GDP - An indicator of development is part of our series on general awareness: World over, GDP, the Gross Domestic Product is the most common indicator of development. Progress of each country is calculated by the increase in its Gross Domestic Product. GDP is the monetary value of all the final goods and services produced in a country in an accounting year. It is calculated by three methods1.Product method 2.Income Method 3.Expenditure method Under Product method, national income is calculated by the summation of monetary value of all the final goods and services at market price in a year. Under Income method, income earned by various factors engaged in the production of goods and services is added to reach the national income. income at factor cost. Under Expenditure method, national income is the sum of expenditure incurred on the purchase of goods and services in a year. Apart from GDP, other measures of national income are also prevalent like NDP (Net Domestic Product), GNP (Gross National Income), NNP (Net National Product) etc. NDP can be calculated by deducting the depreciation from GDP i.e.NDP = GDP depreciation GNP is calculated by adding net factor incomes from abroad to the GDP i.e.GNP = GDP + Net factor incomes from abroad. Net factor income from abroad is calculated by adding the incomes from export of goods and services and subtracting the income going out of the country through import of goods and services. NNP is calculated by deducting the depreciation from the GNP i.e.NNP = GNP Depreciation This provides the National

All the aforesaid measures of national income are calculated at either market price of factor cost. GDPFC = GDPMP Indirect taxes + subsidies. Since indirect taxes and subsidies alter the market price of the commodity, in order to know the share of factor of production in the price, indirect taxes are deducted and subsidies are added in the market price. Apart from factor cost and market price, national income is also calculated at current prices and constant prices. The GPD at current prices determines the GDP at the time of its calculation while GDP at constant prices is used mainly for comparison of GDP in different years. GDP at constant prices is calculated with the help of a base year. In this manner different measures of National Income are calculated as per the need of time. Though every country uses GDP to measure its progress but the concept is also criticized as it excludes many other indicators of development like welfare, health, education, inequalities, quality of environment. The basic idea behind the criticism is that the countries treat GDP growth as the objective of their economic development programme however the objective of development is to ensure better life to the citizens and GDP growth is just one means to achieve that objective. Suppose if the GDP of a country is growing by 8 percent per annum but the population of the country is growing by 2 per cent per annum then the per capita GDP of the country is increasing by only 4 per cent per annum. Moreover, if the prevailing inflation is 5 percent, then the real per capita GDP is in fact decreasing by 1 per cent. Thus even on purely economic basis, real GDP per capita is the better indicator of progress than just GDP growth. Even the real per capita GDP is blank about the distribution of GDP. Even if real per capita GDP is growing at more that 8 per cent per year but most of this increase is cornered by elite section leaving bulk of the society in the quagmire of poverty, then it cannot be called as development by any means. Therefore many intellectuals call for the replacement of GDP by other to indicators to measure the level of development. One such index is Physical Quality of Life Index (PQLI) developed by Morris de Morris by including non-economic factors like Infant Mortality rate, life expectancy at age one and literacy rate. Though GDP is not the sole representative of development but it is indeed one of the indicator of development and therefore exclusion of GDP from any development index is also prone to criticism as the as the development on the basis of GDP only. In order to correct this flaw, United Nations Development Programme (UNDP) came with Human Development Index (HDI) which includes both, economic as well as non economic

factors to measure the development. The index includes GDP per capita at Purchasing Power Parity (PPP), adult literacy rate as well as primary, secondary and tertiary enrollment ratio and Life expectancy at birth. GDP per capita takes care of economic well being, while Life expectancy and literacy rate details the health of the society as well as skill development in the society. In 2011, India was ranked at 134 out 187 countries in terms of HDI; indeed a poor show! Though HDI may have some share in criticism but it is most widely accepted indicator of development as it treats human development as the ultimate objective of development. Apart from HDI, UNDP releases other indices also like Gender Inequality Index, Multi Dimensional Poverty Index, Inequality adjusted HDI etc. The incompleteness of the GDP to delineate the development had given rise to the other measures of development. In the latter half of the 20th century, many countries witnessed high level of GDP growth but were still lacking the effective human development. This further caused disillusionment of GDP approach. But few economists feel that there is nothing wrong in the GDP approach. They feel that absence of development despite of high GDP growth is not because of concentration of planners on GDP growth but it is because the growth was not as high as it should be to develop. Moreover, it is also very hard to conceive for a country to develop without a rise in the GDP. How a country can increase its expenditure on health and education without an increase in its national income. So it can be concluded that though GDP is not a sole indicator of development but indeed it is a necessary input for development. In other words, GDP is necessary but not a sufficient to usher development.

RBI and Currency Management is part of our series on GK / General Awareness: Reserve bank of India is the sole authority of the country responsible for the management of currency circulation as well as its printing. The various monetary policy tools like Cash Reserve ratio, Statutory Liquidity Ratio, repo and Reverse Repo, Bank rate etc, along with the printing of fresh currency are the parts of its monetary management. Along with printing, Reserve Bank also co-ordinates with the Government in the designing of banknotes, including the security features. The Reserve Bank estimates the quantity of banknotes that are likely to be needed denomination-wise and accordingly, places indent with the various printing presses. Banknotes received from banks and currency chests are examined and those fit for circulation are reissued and the others (soiled and mutilated) are destroyed so as to maintain the quality of banknotes in circulation. The Reserve Bank decides the volume and value of banknotes to be printed each year. The quantum of banknotes that needs to be printed, broadly depends on the requirement for meeting the demand for banknotes due to inflation, GDP growth, replacement of soiled banknotes and reserve stock requirements.

However, the Government of India decides the quantity of coins to be minted on the basis of indents received from the Reserve Bank. The Reserve Bank presently manages the currency operations through its 18 Issue offices located at Ahmedabad, Bangalore, Belapur, Bhopal, Bhubaneswar, Chandigarh, Chennai, Guwahati, Hyderabad, Jaipur, Jammu, Kanpur, Kolkata, Mumbai, Nagpur, New Delhi, Patna, Thiruvananthapuram, one sub-office at Lucknow, a currency chest at Kochi and a wide net work of currency chests. These offices receive fresh banknotes from the banknote printing presses. The Issue Offices of RBI send fresh banknote remittances to the designated branches of commercial banks. The Reserve Bank offices located at Hyderabad, Kolkata, Mumbai and New Delhi (Mint linked Offices) initially receive the coins from the mints. These offices then send them to the other offices of the Reserve Bank. The banknotes and rupee coins are stocked at the currency chests and small coins at the small coin depots. The bank branches receive the banknotes and coins from the Currency Chests and Small Coin Depots for further distribution among the public. In order to facilitate the distribution of banknotes and rupee coins, the Reserve Bank has authorized select branches of scheduled banks to establish Currency Chests. These are actually storehouses where banknotes and rupee coins are stocked on behalf of the Reserve Bank. The Reserve Bank estimates the demand for banknotes on the basis of the growth rate of the economy, the replacement demand and reserve stock requirements by using statistical models/techniques. Apart from this, deficit financing by the government also constitutes printing of fresh currency. Since deficit financing is replaced by Monetized deficit in India since 1997, the monetized deficit constitutes increase in currency. Fresh currency issues through monetized deficit or deficit financing contains inflationary tendencies as it is not backed by the rise in GDP but is tool to finance the deficit in the government budget. RBI cannot print currency indiscriminately and distribute among the poor and thus make them rich. If unlimited currency is printed by the RBI which is not commensurate with the growth of GDP, the amount of currency in the hands of the people will be much more than the capacity of economy to produce goods and services. This excess currency will create excess demand for goods and services, reduce the value of currency itself and thus will create the demand pull inflation. The demand pull inflation is also defined as too much of money chasing small number of goods. In the Second World War, Germany financed its war expenditure by printing fresh currency as a result, the country was gripped by the hyperinflation, devaluing the German currency to junk. Thus the currency management is a sensitive issue with cumbersome intricacies with long term impact on the economy.

On 11 April 2012, 13th high-power meeting of the Standing Committee on Currency Management (SCCM) for was held in Patna to discuss issues relating to currency management, including implementation of clean note policy, customer services, availability and retail distribution of notes and coins, detection-impounding-reporting of fake Indian currency notes and movement of treasure. SCCM is the apex forum in the state set up to bring together commercial banks and other government agencies on a common platform to discuss and sort out issues/challenges in areas of currency management, keeping in view the broad policy framework and customer satisfaction. The currency printed by RBI is called as fiat currency because it is not pegged or fixed to a mass of precious metal like gold. Extrinsic value of such currencies is much higher than their intrinsic value i.e. the cost of printing a 100 Rupee note is much lesser than 100 Rupee. Today every country uses the fiat currency as a medium of exchange and in every country; there exist some preconditions in the form of reserves of foreign exchange or gold to print the currency. In India, Minimum Reserve system is followed which represents the minimum backing of Rs.200 crores by the Reserve bank of India. Out of which Rs.115 crores worth of gold and Rs.85 crores worth of foreign Securities are kept under RBI, the Monetary Authority of India.