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WEEKLY CURRENT AFFAIRS BULLETIN

26TH AUGUST 2013 TO 01ST SEPTEMBER 2013

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CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS

NATIONAL
• GOI to launch zero landless programme in Kerala The zero landless programme, aimed at providing land to landless families in the state, will be officially kicked off on September 7 by handing over the title deeds to the first batch of families. The programme will be launched by Sonia Gandhi UPA in Thiruvananthapuram. In the first phase, land will be awarded to families in Thiruvananthapuram, Kollam, Pathanamthitta, Idukki, Kottayam, Ernakulam and Alappuzha. The selection of beneficiaries for awarding the land in the first phase will be undertaken at the respective district collectorates on August 29, 30 and 31. More than 3,000 destitute people and nearly 7,500 seriously ill and handicapped persons will be among the beneficiaries of the first phase of the Zero Landless programme of the State government. About 26,750 widows, 36,110 people from the Scheduled Castes, and 2,239 from the Scheduled Tribes would also get three cents of land each under the first phase of the programme. The objective of the programme is to provide land to all the landless (estimated to be 2.33 lakh) by 2015. The beneficiaries will be selected on basis of several criteria, with those who are jobless or unable to undertake any job for livelihood, those suffering from incurable diseases, those who are physically handicapped, widows and scheduled caste communities getting priority. The C-DIT has prepared a software for choosing the beneficiaries and they will be selected in the presence of MPs, MLAs, district panchayat presidents, municipal chairpersons and other people's representatives concerned. • Ground water management and regulation scheme extended for the XII Plan period The focus on development of ground water resources to fulfill irrigation and drinking water needs has often resulted in drawal of ground water beyond sustainable limits, resulting in water levels declining at a rate even up to fourmetres annually, in some parts of the country. Over-drawal of ground water is also causing deterioration in its quality. Though the overall stage of ground water exploitation in the country is 61 percent (as on 2009), there are States where the stage of exploitation has crossed 100 percent (Delhi, Haryana, Punjab and Rajasthan). Out of 5,842 assessment units (blocks/ mandals/taluks) in the country, 802 have been categorized as over-exploited. Ever increasing demands on limited water resources necessitates proper management of ground water to offset the problems of over-exploitation, contamination as also to balance its demand / supply for inter and intra sectoral uses. This requires a proper mapping of the ground water repositories aquifers and then developing a management plan. The XII Plan document envisages a paradigm shift to management and comprehensive mapping of India`s aquifers as a precursor to a sound groundwater management program. The National Water Policy (2012) has also laid emphasis on aquifer mapping. Thus the Cabinet Committee on Economic Affairs gave its approval for continuing the scheme of Ground Water Management and Regulation with new components of aquifer mapping and participatory ground water management by the Ministry of Water Resources (MoWR). The scheme involves an expenditure of Rs. 3,319crore during the XII Plan period. The scheme will be implemented in parts of 28 States and 7 Union Territories (including NCT of Delhi) of the country covering 8.89 lakh sq km during the XII Plan period. The remaining mapable area of 14.36 lakh sq km will be taken up in the XIII Plan period. Aquifer Management Plans will be formulated, quantifying water availability and water quality in various aquifers for facilitating sustainable management of ground water resources through the participatory management approach. Capacity
Weekly Current Affairs 26th August to 01st September, 2013

The total utilizable water potential of the country, as assessed by the Central Water Commission and CGWB, is 1,121 Billion Cubic Meters (BCM), of which ground water constitutes 431 BCM (38 percent of the potential), with balance 690 BCM (62 percent) being surface water. About 61 percent of irrigation water, 85 percent of rural and 45 percent of urban drinking water supply is from ground water resources.
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CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS

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building of functionaries of Panchayati Raj Institutions (PRIs), local community, grass root workers, Kisan Vikas Kendras (KVKs) will be undertaken to train them in basic data collection and interpretation. • SC ruled out Compromise in rape cases as illegal

So, in the interest of justice and to avoid unnecessary pressure/harassment to the victim, it would not be safe in considering the compromise arrived at between the parties in rape cases to be a ground for the court to exercise the discretionary power under the proviso of Section 376(2) of IPC. • GOI assures minimum support price to farmers under food security Bill

An apex court bench of Chief Justice P. Sathasivam, Justice Ranjana Prakash Desai and Justice Ranjan Gogoi ruled that such compromises, if entered into, are per se illegal and the provision for lesser punishment for heinous offences in exceptional cases cannot be treated in a casual or a cavalier manner by the trial court. The apex court expressed grave concern that in recent times, despite a spurt in rape cases, there has been an increasing tendency amongst trial courts to permit compromises of such offences on the ground that a settlement has been entered into between the rapist and the victim.

Government has assured farmers that they will continue to get minimum support price (MSP) even after implementation of the Food Security law. According to the government, in the wake of the increased requirement of foodgrains for implementation of the proposed Food Security Act, procurement operations will be further extended and more farmers will get the benefits of MSP operations. Foodgrain requirement for the implementation of the bill is estimated 614.3 lakh tonnes as against the existing requirement of 563.7 lakh tonnes for Targeted Public Distribution System. Government provides MSP on wheat, paddy and dozen other commodities. MSP is fixed by the Commission for Agriculture Costs and Prices (CACP). After implementation of the proposed Act, about 75 % persons in villages will get wheat at the rate of Rs. 2 and rice at the rate of Rs. 3 per kg. But farmers will get more for their produce i.e. Rs.12.85 per kg for wheat and Rs.12.50 per kg for paddy as minimum support price. Access to highly subsidized foodgrains to small farmers under proposed Food Security Act and assured MSP for their produce will ease the burden on their earnings and allow them the option to spend the money so saved on other necessities. Hence it will help to improve their quality of life. Therefore, contrary to dissuading farmers from producing more, the Act will in fact encourage them to produce more. Two-third of the population will become legally entitled to receive highly subsidized food grains after the enactment of the Food Security Bill. Each entitled person will receive 5 kg of food grains per month i.e. rice, wheat or coarse grains at Rs.3, Rs.2 and Re. 1 per kg respectively. The poorest of the poor will continue to get 35 kg food grains per household per month under AAY. The bill has special focus on nutritional needs of women and children. The eldest woman of the household above 18 years is considered the head of the household for the purpose of issue of ration cards as per provisions of the Bill. Pregnant women and lactating mothers will get maternity benefit of Rs. 6000 besides nutritious food. Children below 14 years of age will get food with
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Chief Justice Sathasivam, who authored the judgment stated: "Religion, race, caste, economic or social status of the accused or victim or the long pendency of the criminal trial or offer of the rapist to marry the victim or the victim is married and settled in life cannot be construed as special factors for reducing the sentence prescribed by the statute." The judges said the apex court in the past had noted that "few subordinate and high courts have reduced the sentence of the accused to the period already undergone to suffice as the punishment, by taking aid of the proviso to Section 376(2) IPC". The court described this trend insensitive and stated that the above trend exhibits stark insensitivity to the need for proportionate punishments to be imposed in such cases. The power under the proviso should not be used indiscriminately in a routine, casual and cavalier manner for the reason that an exception clause requires strict interpretation. The court further stated that a compromise entered into between the parties cannot be construed as a leading factor based on which lesser punishment can be awarded. Rape is a non-compoundable offence and it is an offence against the society and is not a matter to be left for the parties to compromise and settle. Since the court cannot always be assured that the consent given by the victim in compromising the case was genuine, the court said: "There is every chance that she might have been pressured by the convicts or the trauma undergone by her all the years might have compelled her to opt for a compromise.
Weekly Current Affairs 26th August to 01st September, 2013

CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS

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higher nutritional norms. On the issue of redressing grievances that may arise in implementation of such a massive programme, it has been planned to give an increased role for Panchayati Raj institutions and women’s self help groups in programme-monitoring and social auditing. There will be provision for internal grievance redressal mechanism including call centres and helplines; and District Grievance Redressal Officers and State Food Commission for expeditious and effective relief to the people. • IOA diluted IOC's chargesheet clause on tainted officials

The IOA will now have to wait for IOC's decision on the amendments before the elections proposed to be held on 29th September to pave the way for India's return to the Olympic fold. The GBM also constituted a three-member Election Commission for the 29th September polls. Retired Justices M R Kalra, S N Sapra and Lokeshwar Prasad will be the members. The first is the retired Chief Justice of Rajasthan high court while the other two were Delhi high court Justices. • Working women shouldbe given flexi working hours: Parliamentary Panel

Under the new clause only those who are held guilty by a court for a jail term of two or more years will not be able to contest elections.

If the amendments agreed to in a marathon Special General Body Meeting of the IOA, it will be a huge reprieve for the likes of Lalit Bhanot and V K Verma who were charge-sheeted in 2010 Commonwealth Games scam along with former IOA chief Suresh Kalmadi as they will be allowed to contest elections in that situation. The cases of those persons who are convicted for a jail term for less than two years will be referred to the Ethics Commission of the IOA and the IOA Executive Committee will take a final decision on the recommendations by Ethics Commission. However, all the other amendments proposed by the IOC in the revised draft constitution have been accepted by the GBM.

The IOA decided to continue with the earlier representation of the National Sports Federations and state Olympic bodies in the GBM and elections. The NSFs will have three votes while state units will have two. Union Territories which have Assemblies will have two votes while other UTs will have one vote. Regarding the age and tenure rules, rule that are applied to the IOC members will apply to IOA also. And the tenure rules proposed by the IOC but will apply to only to three office bearers namely president, secretary general and treasurer. The IOA also decided to prune down the number of Executive Council members from existing 39 to 29 while the president can nominate 10 Executive Committee members who will not have voting rights.
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CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS

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The Indian Olympic Association (IOA) has managed to dilute the contentious clause which would bar charge-sheeted officials from contesting elections while accepting all the other amendments proposed by the International Olympic Committee, clearing the decks for an early return to the Olympic fold.

“A Parliamentary panel has asked the Centre to make it mandatory for all of its departments to place single women employees at locations closest to their hometowns or places of their choice. According to the parliamentary panel there is lack of empathy and a suitable policy for accommodating the needs of women employees who are single mothers or single women. When such women are given postings, it should be mandatorily ensured that they are placed at stations closest to their home-towns or places of their choice. The Parliamentary Standing Committee also advised that the government should consider framing a policy to allow flexible working hours for women, especially those with small children, or extending them the work-from-home facility, noting that responsibility of family continues to be one of the major reasons for some of them to quit their jobs. If the government considers giving flexible working hours to women or young mothers, such policy will help them ensure a better balance between work and home.““This would also help retain experienced and skilled staff, preserving commitment and loyalty, minimising the need for training and capacity-building of fresh recruits, thereby ensuring improved productivity and profitability, it added. The committee, headed by Congress member in the Rajya Sabha Shantaram Naik, noted that many countries had adopted a policy of giving “staggered working hours” to women employees, allowing them to start and finish work early or late.In some countries, women employees are given longer maternity leaves, part-time leaves of up to two hours a day till the child is three years old, child-care leave which can be divided into periods for both parents to take care of the child alternately, and spouse maternity leave, among various other facilities. The Sixth Pay Commission too had recommended providing special facilities to women in terms of
Weekly Current Affairs 26th August to 01st September, 2013

introduction of “flexi-time and flexi-place” on a trial basis, and options for working half-time during the period when their children are young. The committee noted that most government departments did accommodate requests for grace time to attend to infants and young children on a case-to-case basis. • Revised Civic Action Plan in Naxal Areas

The Home Ministry has tweaked its Civic Action Programme (CAP), which allows central armed paramilitary forces (CAPFs) to carry out development programmes in the nine-Left Wing Extremism (LWE)-affected States. They have now been asked to be ‘individualoriented’ rather than ‘project-oriented’ as this approach will help in bridging the gap between locals and security personnel more efficiently.

Weekly Current Affairs 26th August to 01st September, 2013

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Under the project christened ‘Winning Hearts and Minds,’ the Central Reserve Police Force and the Border Security Force have till now been spending funds on small projects and development activities, which included building small bridges and roads, implementing drinking water and irrigation scheme. Under the revised guidelines, the security forces have been told to spend the money, which is Rs. 20 crore per annum, on welfare activities directed at individuals and families. The CAPFs would give them seeds and manure or livestock, donate household items or help with setting up hand-pumps so that they could live a comfortable and dignified life. Other new initiatives would include organising medical camps and funding vocational training programmes for children of villagers, and donating essential items for schools or health centres in backward and remote areas.

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CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS

INTERNATIONAL
• FAO urges Asia-Pacific to stem food losses United Nation’s Food and Agriculture Organization report released recently stated that around 35 per cent of food is lost between harvest and distribution across the Asia-Pacific region, depriving millions of nutrition. Poor production planning, a lack of storage, weak transport systems, crop disease and parasites also cause some 30 per cent of cereals and 42 per cent of fruit and vegetables to be lost before reaching consumers. Thus more effort is needed to raise global awareness of the critical issue of food losses and particularly post-harvest losses, as well as food waste, which is increasing. The FAO defines “loss” as food which does not make it from harvest to the market, while “waste” is food thrown away by consumers, restaurants and supermarkets — a trend that increases with greater urbanisation. The region, whose economies have boomed in recent years, wastes substantially less than more developed areas such as the United States and Europe. But the issue remains a cornerstone of development discussions because food waste is also a waste of natural resources like land and water. The FAO says that if just a quarter of the food wasted worldwide was saved, this would be enough to feed the 870 million people suffering from hunger, of whom 536 million live in the Asia-Pacific region. • United Nations will probe into alleged use of chemical weapons in Syria Civil War "serious response" if it is found that Syrian forces used chemical weapons on civilians. The Chemical agents were found in tunnels used by rebel fighters, and also that soldiers suffered suffocation" in fighting around the suburb of Jobar. However, the Syria government has denied the use of chemical weapons and in turn accused the rebels of using chemical arms. Whereas, Doctors without Borders claimed that about 355 people died last week of "neurotoxic" symptoms. A chemical weapon is any weapon that uses a manufactured chemical to kill people. The first chemical weapon used effectively in battle was chlorine gas, which burns and destroys lung tissue. Modern chemical weapons tend to focus on agents with much greater killing power, meaning that it takes a lot less of the chemical to kill the same number of people. Many of them use the sorts of chemicals found in insecticides. The Chemical Weapons Convention (CWC) is an arms control agreement which outlaws the production, stockpiling and use of chemical weapons. Its full name is the Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on their Destruction. The main obligation under the convention is the prohibition of use and production of chemical weapons, as well as the destruction of all chemical weapons. Polio outbreaks frustrate eradication drive

An agreement was concluded in Damascus between the Syrian government and the United Nations during the visit of the UN high representative for disarmament, Angela Kane, to allow the UN team lead by professor Aake Sellstroem to investigate allegations of chemical weapons use in Damascus province. The team is likely to begin work from 26th August. Syrian forces have killed more than 1300 people in several suburbs east and west of the capital during the chemical weapon attack. The use of any chemical weapons in Syria would amount to a “crime against humanity” thus US and UK have jointly warned Syria that it would face a
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CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS

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The global effort to eradicate polio, a disease that has been on the brink of extinction for years, is facing serious setbacks on two continents. The virus is surging in Somalia and the Horn of Africa, which had been largely free of cases for several years. And a new outbreak has begun in a part of Pakistan that a warlord declared off-limits to vaccinators 14 months ago. The African outbreak began in May with two cases of polio paralysis: one in Mogadishu, Somalia’s capital, and another in the huge Dadaab refugee camp in Kenya, where thousands of Somalis have fled fighting between Islamic militants, clan militias,
Weekly Current Affairs 26th August to 01st September, 2013

government troops and African peacekeepers. Now there are 121 cases in the region; last year, there were only 223 in the world. The new Pakistan outbreak is in North Waziristan, near the frontier with Afghanistan. It is in an area where a warlord banned polio vaccinations after it was disclosed that the CIA had staged a hepatitis vaccination campaign in its hunt for Osama bin Laden. The warlord, Hafiz Gul Bahadur, banned all efforts until U.S. drone strikes ended. Although only three North Waziristan children have suffered polio paralysis since then, even one case shows that the virus is in the area and could spread. The new outbreaks may delay a recently announced $5.5 billion plan to eradicate polio by 2018.

Urban hospitals packed the vaccine on ice for families willing to smuggle it back to neighbours, but it was not enough. Before the Waziristan outbreak, Pakistan had seen only 24 cases this year, about as many as it had at the same point in 2012. Most were around Karachi and Peshawar, where last year’s killings of the vaccinators took place and where resistance to vaccines is highest. • U.K submitting resolution against Syria at U.N.

To prevent the disease from reaching Mecca during next month’s hajj , Saudi Arabia has tightened its rules. Pilgrims from any country with polio cases must be vaccinated at home and again on arrival. Last year, nearly 500,000 pilgrims were vaccinated on arrival. The Pakistan outbreak is particularly frustrating, because eradication had been going steadily forward despite the killings in December of nine vaccinators for which some blamed the Taliban.

Public health officials had counted themselves lucky that despite simultaneous vaccination bans in North and South Waziristan, no polio virus was known to be circulating in the 250,000 children in those areas. Vaccination posts were set up on nearby highways and on buses and trains.

Weekly Current Affairs 26th August to 01st September, 2013

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Prime Minister David Cameron has spelt out a series of measures to show that money has been spent judiciously on the Syria crisis. Mr. Cameron has been the most bellicose of the Western alliance leaders in calling for armed intervention in Syria in retaliation for the August 21 chemical weapons attack, allegedly unleashed by the Bashar Al-Assad government against unarmed civilians. The Cameron government does not want to wait till the United Nations forensic inspectors, currently in Damascas, submit their report. The U.K. is submitting a resolution to the Security Council of the United Nations to give it the opportunity to “live up to its responsibilities on Syria. US-UK both agreed they were in no doubt that the Assad regime was responsible. Regime forces were carrying out a military operation to regain that area from the opposition at the time; and there is no evidence that the opposition has the capability to deliver such a chemical weapons attack. There have been few voices in support of Mr. Cameron, although several against, including from his own party.

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CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS

ECONOMY
• GDP falls to 4.4% for June Quarter • India’s GDP growth for April-June quarter was 4.4 percent whereas India’s fiscal deficit during the same period was Rs. 3.41 trillion, or 62.8 percent of the full-year target. Manufacturing too fell an annual 1.2 percent during the quarter while mining fell by 2.8 percent, however, the Farm output rose 2.7 percent. Compared to the same period last year, the Q1 figure for agriculture, forestry and fishing have come down to 2.7 percent from 2.9 percent, mining and quarrying has come down to -2.8 percent from 0.4 percent; electricity, gas and water supply has come down to 3.7 percent from 6.2 percent. The Q1 figure for construction has come down to 2.8 percent from 7.0 percent; trade, hotels, transport & communication fell to 3.9 percent from 6.1 percent; financing, insurance, real estate and business services also took hit from 8.9 percent to 9.3 percent. Economic growth virtually halved in two years to 5 percent in the fiscal year that ended in March — the lowest level in a decade — and most economists surveyed by Reuters in the past week expect 2013/14 to be worse. The economy appears to be entering a tailspin as business confidence collapses under the weight of rapid rupee depreciation, rising energy costs, sharply tightening financial conditions and policy confusion. The withdrawal of funds from emerging markets as investors re-adjust portfolios in anticipation of higher US interest rates has caused tremors from Brasilia to Jakarta. But the weight of India’s current account and fiscal deficits has seen the rupee sink faster than most currencies. Net tax receipts for the first four months of the current fiscal year to March 2014 touched Rs. 1.45 trillion, while total expenditure was Rs. 5.21 trillion. The country’s fiscal deficit during the 2012/13 fiscal year ending March fell to 4.9 percent of the country’s gross domestic product, compared with 5.8 percent a year ago. In the annual budget presented in February, Finance Minister P. Chidambaram had set the fiscal deficit target at 4.8 percent of GDP for the current fiscal year.
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SEBI tightens 'conflict of interest' rules for market entities

To ensure fair and non- discriminatory treatment to all investors and companies, SEBI asked stock exchanges, rating agencies, brokers, depositories and other market entities to put in place a strong system to manage any conflict of interest. The credit rating agencies have been specifically asked to deploy adequate systems and policies to ensure that they address any conflict of interest during investment decisions of their own funds or by their top management and employees. The rating agencies, their employees and key executives have also been asked not to "take undue advantage of any price sensitive information that they may have about any company". The key executives, such as CEOs and Managing Directors, would need to take prior approval from the Compliance Officer for sale or purchase of securities of the companies with which the credit rating agency may have rating-related dealings. All such entities and associated persons would need to maintain "high standards of integrity" in conduct of their business. They have also been asked not to use any information received from the clients, under the normal business dealings, for any personal interest and to put in place "information barriers" to block flow of confidential information from one department to another. While separate 'conflict of interest' guidelines are already in place for different classes of entities, SEBI decided to put in place comprehensive general guidelines for all intermediaries as per the Principles set by the International Organisation of Securities Commissions (IOSCO), a grouping of securities regulators from across the world. Credit rating agencies would need to ensure compliance to the new guidelines by October 1, the others have been asked to review their existing polices and comply within six months. Market intermediaries, stock exchanges, clearing corporations and depositories have also been made responsible for educating their 'associated persons' for compliance of these guidelines.
Weekly Current Affairs 26th August to 01st September, 2013

CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS

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All these entities and associated persons would need to lay down, with active involvement of senior management, policies and internal procedures to identify and avoid or to deal or manage actual or potential conflict of interest. They would also need to develop an internal code of conduct governing operations and formulate standards of appropriate conduct in the performance of their activities, and ensure to communicate such policies, procedures and code to all concerned. • Task Force on Currency Swap Arrangements and Trade constituted •

Currency swap agreements involve exchange of one currency for another currency. A dollar swap arrangement would help India support the rupee. Swap agreements in US dollar is expected to provide confidence to the market and prevent excess volatility in financial and foreign exchange markets. Currency swap has emerged as an important derivative tool after the global financial crisis of 2008 to hedge the exchange rate risks. India has signed currency swap agreements with Japan (USD 15 billion) and Bhutan (USD 100 million). China has shown active interest in entering into such an agreement with India, but it is yet to be signed. Cabinet approves TUFS for XII Plan The Cabinet Committee on Economic Affairs has given its approval for implementation and continuation of Technology Upgradation Fund Scheme (TUFS) during the XII Plan period with a major focus on powerlooms with a total outlay of Rs.11,900 crore. The scheme is aimed at promoting indigenous manufacturing of textile machinery. Interest reimbursement (IR) on second hand imported shuttleless looms shall be reduced from 5 per cent to 2 per cent. On the other hand, for new shuttleless looms, capital subsidy would be raised from 10 per cent to 15 percent, IR from 5 per cent to 6 per cent, and margin money subsidy from 20 per cent to 30 per cent with an increase in subsidy cap from Rs. 1 crore to Rs. 1.5 crore. The capital subsidy for handloom and silk sectors would be increased from 25 per cent to 30 per cent. In addition to this, margin money subsidy cap would be increased from Rs.45 lakh to Rs. 75 lakh in respect of MSME and jute sectors. Sectoral cap of 26 per cent will be applicable only for the spinning segment and sectoral caps for all other segments have been removed to enable balanced growth across the value chain.

The Task Force will have the following Terms of Reference: 1. To examine various types of Currency Swap Agreements/Arrangements and their implication for India’s trade and financial system;

2. 3.

To study the pros and cons of Currency Swap Agreement/Arrangement for India’s trade; To explore the possibility of Currency Swap Arrangement/Agreement between India and identified countries and make recommendations accordingly.

The Task Force may submit its recommendations to the Department of Commerce in four weeks.

Weekly Current Affairs 26th August to 01st September, 2013

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The government has decided to set up a task force which will look at the possibility of having currency swap agreements with key trading partners, a move which would help in bridging current account deficit. The 11-member task force would include representatives from the the commerce ministry, department of economic affairs and financial services, RBI, SBI, CII, Ficci and exporters body FIEO.

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CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS

INDIA AND THE WORLD
• India announces aid for Bhutan India has announced an aid of Rs 5,000 crore, including a special package of Rs 500 crore, for Bhutan as part of commitment to its continued socioeconomic development, a move that assumes significance against the backdrop of unease in the bilateral ties recently. The two sides agreed upon India's Assistance Package for Bhutan's 11th Five-Year Plan for the period 1st July, 2013 to 30thJune, 2018. India has been supporting the five-year plans of Bhutan for some time. New Delhi had pledged Rs 3,400 crore for the country’s 10th Five-Year Plan in 2008. India also reiterated its commitment to install additional 10,000 MW of power generating capacity in Bhutan as the two sides expressed satisfaction at the progress in three ongoing projects. As requested, by the Congress, the USITC will also perform a quantitative analysis of the effects of such measures. The USITC will survey a sample of US firms to measure perceptions of India's policies and the impact of those policies on firms' strategies toward India. The survey results will complement the quantitative analysis of the effects of these policies on trade, investment, and the US economy. The USITC will deliver the report to the Committees by November 30, 2014. BRICS agree on capital structure for development bank

India-Bhutan ties suffered some unease in July when the subsidies New Delhi provides on cooking gas and kerosene supplies to the neighbouring country were discontinued • US launches investigation against Indian trade practices

A US Federal agency has launched an investigation into Indian trade policies which allegedly discriminate against the American trade and investment.

The investigation, "Trade, Investment and Industrial Policies in India: Effects on the US Economy", was requested jointly by the Senate Committee on Finance and the House Committee on Ways and Means.““USITC will report on recent policies and measures in India that affect US exports and investment and evaluate the effects of such barriers on US firms and the economy. In its examination, the USITC will enumerate restrictive trade and investment policies that India maintains or has recently adopted, determine which sectors of the US economy are most affected by these policies, and describe the competitiveness of Indian firms in these sectors. The USITC will provide several case studies of US firms or industries that have been particularly affected by India's restrictions.
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CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS

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• •

The BRICS bloc of large emerging economies has agreed to set up the bank with a total capital of $50 billion (shared equally among them) that aims to reduce their reliance on Western financial institutions. The move would likely end disagreements over the funding and management of the bank. The bank would support the financing needs in emerging and developing nations for roads, modern-day port facilities, and reliable power and rail services. Previously the BRICS aimed to inject an initial $50 billion into the bank, but there was disagreement over whether each state should contribute $10 billion or if contributions should vary by the size of their economies.“China’s economy is about 20 times the size of South Africa’s and four times as big as Russia’s or India’s. Other key issues, such as proposals within the group to offer a stake to developed nations, needed further discussion. The group is considering offering a stake of 40-45% to non-BRICS nations. The five countries represent a fifth of global GDP but have struggled to find common ground that would convert their economic weight into joint political clout. India wants joint working group with Myanmar on border issue

Myanmar troops have attempted to construct a defence post and fencing along the border in
Weekly Current Affairs 26th August to 01st September, 2013

Manipur where there is no demarcation of boundary between the two countries prompting India to take up the issue. Following a request of Manipur Chief Minister O Ibobi Singh, the Centre took up the issue with Myanmar which halted all construction activities. Myanamar's move was objected by local village chiefs and district officials as they thought Manipur would lose its territory if the neighbouring country goes ahead with the construction. India has asked Myanmar to set up a Joint Border Working Group to address the issue of demarcation of the border between the two countries. After the recent incident, India has reiterated the need to set up the group. • The Social Security Agreement between India and Canada Approved

The Social Security Agreement will enhance cooperation on social security between the two countries. The Agreement will provide following benefits to Indian nationals working in Canada: a) For short term contract up to two years, no social contribution would need to be paid under the law by the detached workers provided they continue to make social security payment in India. b) The above benefits shall be available even when the Indian company sends its employees to Canada from a third country. c) Indian workers shall be entitled to the export of the social security benefit if they relocate to India after the completion of their service in Canada.

The Union Cabinet of India has approved the Social Security Agreement between India and Canada. The agreement will benefit 40 thousand Persons of Indian Origin in Quebec province. The Social Security totalization agreement between India and Canada was signed on 6 November 2012. The Social Security Agreement between Canada and India is expected to enter into force in 2014, once both nations have completed their legislative procedures.

Weekly Current Affairs 26th August to 01st September, 2013

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d) The self-employed Indians in Canada would also be entitled to export of social security benefit of their relocation to India. e) The period of contribution in one contracting state will be added to the period of contribution in the second contracting state for determining the eligibility of social security benefits. India has similar agreements with countries including Luxembourg, the Netherlands, Malaysia and Belgium.

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CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS

SCIENCE & TECHNOLOGY
• Defence satellite GSAT 7 launched India's first exclusive defencesatellite GSAT-7 was successfully launched by European space consortium Arianespace's Ariane 5 rocket from Kourou spaceport in French Guiana, giving a major push to the country's maritime security. GSAT-7 was the 17th ISRO spacecraft lofted by an Ariane-series vehicle, continuing a relationship that extends to the 1981 mission with the Apple experimental satellite. The satellite will allow Indian Navy to communicate with its fleet across the Indian Ocean through a top-secret encrypted system. Navy ships will be able to exchange data about the precise location of enemy ships and submarines. In the process, each ship in the fleet will have a comprehensive digital map of the position of friendly forces and enemy forces. The frequency bands of GSAT-7 will help space-based marine communications. It has coverage over India landmass as well as surrounding seas.““Earlier, satellite communication in ships was through Inmarsat, a major provider of global mobile satellite communications services. With the launch of the 2.5 tonne satellite India has joined a select club of countries including USA, Russian, France, Britain and China that have dedicated military communication satellites. New guidelines issued by GOI to protect sharks Conservation India supported HSI's initiative and also appealed to the Ministry to adopt a fins naturally attached policy. Thus to control the fishing, the ministry of environment and forests has issued a 'fins naturally attached' policy requiring fisheries to land sharks in coastal states with their fins intact. The policy is a strong tool in the fight to end shark finning, a cruel practice that occurs when fishermen catch sharks, cut off their fins and throw the still-living animals back into the water where they die slow and painful deaths. The fins attached policy will ensure better monitoring of shark fishing in India, and end the capture of endangered shark species in Indian waters. This will also provide sharks with a fair chance of survival, which in turns helps to maintain a balanced marine ecosystem. Sharks are apex predators vital to a wellfunctioning marine ecosystem. Shark populations cannot sustain current slaughter rates. Unlike other fish species, sharks produce few pups, and thus, many species are endangered and/or threatened due to the fin trade. India is one of the largest exporters of shark fins in the world. Tens of millions of sharks are killed every year to meet the demand for shark fin soup, an Asian delicacy and the primary cause of the decimation of shark populations worldwide. IIT-M’s satellite may predict earthquakes “An electric model, named IITMSAT, with a 15 kg satellite was designed by Indian Institute of Technology, Madras ( IIT-M) that will monitor the radiation belts on the earth’s surface and help in predicting earthquakes. This is the largest ever model developed in the history of the IITs and is almost ready. 20 undergraduate students and a few post graduate students laboured after their class hours and additionally during weekends to make this dream a reality. The IITMSAT nearly took 4 years for completion. “The data collected by the satellite over its mission life of one year will be given to scientists who will be able to verify any correlation with data gathered from seismic and weather monitoring stations,” Akshay added.““Equipped with sophisticated devices, the model of the project is
Weekly Current Affairs 26th August to 01st September, 2013

Recent studies cite India as the world's secondlargest shark catching nation. Indian fishermen target and catch sharks primarily for their meat; however, they do export fins from sharks they catch. Additionally, fishermen on foreign vessels in or just outside of Indian waters have been reported to engage in shark finning. ““Humane Society International/India first began dialogue with the ministry to highlight the need for shark conservation measures through a joint initiative with one of India's largest fishing communities, the Association of Deep Sea Going Artisanal Fishermen. Leading conservation groups CPR Environmental Education Centre, Wildlife Protection Society of India, Federation of Indian Animal Protection Organizations, World Society for Protection of Animals India and Researchers for Wildlife
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supposed to ready by the end of the year. To get the technicalities right, the project team has collaborated with ISRO (Bangalore), TIFR (Mumbai) and IGCAR (Kalpakkam). • ISRO constituted action plan for restoration of GSLV-D5 Mission

The launch of GSLV-D5 (with Indian Cryogenic Stage), scheduled on August 19, 2013, had to be called off due to a leak observed in the UH25 Fuel system of the Liquid Second Stage, during the last lap of the countdown. At the time of calling off the Countdown, the GSLV Vehicle was loaded with 210 tons of liquid and cryogenic propellants. About 750 kg of UH25 Fuel had leaked out, leading to contamination of the area around the launch pad. It took 6 days of round-the-clock operations before the contamination could be reduced to the safe level to enable movement of the GSLV-D5 back to the Vehicle Assembly Building. ISRO has constituted a High Level Task Team chaired by Shri K. Narayana, (former Director of Satish Dhawan Space Centre) to identify the cause of the leak and to work out an action plan for quick restoration of the Mission, taking into account the safety, reliability and life of the Liquid Second Stage and the four Liquid Strap-on stages, which were wetted with liquid propellants. The leak is suspected to be in the lower portion of the propellant tank or the fluid lines between the tank and fuel filling system of the Second stage. Detailed investigation of the leak is underway. The following action plan is put in place: A new Liquid Second Stage (GS-2) is being assembled to replace the leaked-stage. All the four Liquid Strap-on Stages are being replaced with new ones. The First Stage (Solid) and core base shroud are being inspected and the elements that are affected will be replaced. The Satellite Assembly, Avionics Equipment Bay and the Cryogenic Stage will be preserved, following prescribed practices. Based on current availability of hardware and components, the GSLV Vehicle assembly and checkout is expected to be completed at the Vehicle Assembly Building by the first week of December 2013 and the launch could take place by December 2013. •

NASA detects water on moon surface Based on valuable data collected by India's Chandrayan mission, a NASA-funded lunar research has yielded evidence of water locked in mineral grains on the surface of the moon from an unknown source deep beneath the surface. Scientists using data from the Moon Mineralogy

Weekly Current Affairs 26th August to 01st September, 2013

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Mapper (M3) instrument aboard the Indian Space Research Organisation's Chandrayaan-1 spacecraft, remotely detected magmatic water, or water that originates from deep within the moon's interior, on the surface of the moon. Earlier studies had shown the existence of magmatic water in lunar samples returned during the Apollo programme. M3 imaged the lunar impact crater Bullialdus, which lies near the lunar equator. Scientists have found that the central portion of this crater contains a significant amount of hydroxyl - a molecule consisting of one oxygen atom and one hydrogen atom -- which is evidence that the rocks in this crater contain water that originated beneath the lunar surface. The detection of internal water from orbit means scientists can begin to test some of the findings from sample studies in a broader context, including in regions that are far from where the Apollo sites are clustered on the near side of the moon.For many years, researchers believed that the rocks from the moon were bone-dry and any water detected in the Apollo samples had to be contamination from Earth. This internal magmatic water also provides clues about the moon's volcanic processes and internal composition, which helps us address questions about how the moon formed, and how magmatic processes changed as it cooled. China to launch 3rd lunar mission this year China has begun the countdown for its third lunar mission scheduled for the end of the year, during which it plans to land an orbiter on the moon's surface.“Chang'e-3 has officially entered its launch implementation stage following its research and construction period.The mission will see an orbiter "soft-land"-a technique of landing by slowing speed-on a celestial body for the first time.Earlier, China had planned to land a rover on the moon in its third mission in 2013 and to retrieve it in 2017 after surveying the lunar surface. China launched the Chang'e-1orbiter in 2007 and Chang'e-2 in 2010.

The first probe retrieved a great deal of scientific data and a complete map of the moon, while the second created a full high-resolution map of the moon and a high-definition image of Sinus Iridium, a lunar landmark.““Change-2 is still travelling in space and flew to a distance of about 50 million km from Earth, marking a new height in Beijing's deep space exploration efforts.
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CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS

2 - MARKERS
• Encyclopedia of Hinduism unveiled in US The 'Encyclopedia of Hinduism' was unveiled in Columbia, USA by the India Heritage Research Foundation. The comprehensive encyclopedia has 11-volume work and it covers Hindu spiritual beliefs, practices and philosophy, and is the culmination of a 25-year academic effort. “The Mahathir Award for Global Peace is an peace award instituted by the Mahathir Global Peace Foundation, which was formed to contribute to worldwide peace efforts. Mahathir Mohamad was Malaysia's Prime Minister for 22 years before he stepped down. The Mahathir Award for Global Peace will be presented annually to recognise those who have made valiant efforts in promoting peace. Tata Medical Centre plans bio-bank

The encyclopedia is written in English and includes about 7,000 articles on Hinduism and its practices. The work also deals with Indian history, languages, art, music, dance, architecture, medicine, and women's issues. It contains more than 1,000 illustrations and photographs. The encyclopedia's volumes run from 600 to more than 700 pages. Some 3,000 copies are being printed in first edition. • Germany's 'Whistleblower Prize'

Former NSA contractor Edward Snowden, who exposed the most extensive US global surveillance operations, has been awarded this year's German 'Whistleblower Prize' worth USD 3,900 in absentia. Snowden, who faces espionage charges in the US, has fled his home in Hawaii to Hong Kong in May and subsequently to Moscow, where he has been staying since 22nd June. He was granted a temporary asylum by the Russian authorities at the beginning of August. The whistleblower prize was instituted in 1999 by the Association of German Scientists and the German chapter of the International Association of Lawyers Against Nuclear Arms (IALANA). • Mahathir Award

The inaugural Mahathir Award for Global Peace has been awarded to former South African President Nelson Mandela.

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Along with raising corporate donations for providing subsidised treatments to cancer patients Tata Medical Centre here is planning to come up with a bio-bank that will store tissues of cancer patients for furthering research in the discipline. The bio-bank will store cancer tissues for further research with the consent of the patients of course. Punjab to launch bed and breakfast scheme

To give a boost to tourism and provide homelike, affordable accommodation to visitors, the Punjab Government will start a high-end ‘bed and breakfast’ scheme. The initiative is to provide clean and comfortable places for overseas and domestic tourists along with an opportunity for them to stay with an Indian, particularly a Punjabi family. Joint Air Exercise Shaheen (Eagle)-2

The Chinese and Pakistani air forces will hold a joint exercise during September 2-22 in China's Xinjiang Uygur Autonomous Region bordering Pakistan-occupied Kashmir. The exercise, code-named Shaheen (Eagle)-2, is another cooperative project between the two air forces after the Shaheen-1 drill in Pakistan in March 2011.

Weekly Current Affairs 26th August to 01st September, 2013

EDITORIALS
• Telangana: More turbulence to come Telangana will be an upstream State, creating conditions for water dispute with Seemandhra. The Congress-led UPA Government is on a determined course to carve out the new State of Telangana. But the Congress Working Committee resolution left several issues ambiguous, which would become contentious when it comes to the brass tacks of bifurcation. Even if Congress manages to keep its flock together, the sentiment may just swing in favour of the YSR Congress party, which maintained somewhat consistent stand for a united Andhra PradeshState. Second, Rayalaseema districts in Telangana State will ensure continued dominance of identity politics in the Telangana political scene. The divisive and antagonistic political rhetoric during the past decade long Telangana agitation has widened the fault lines between the regions. This time, the backward Rayalaseema districts will most likely complain discrimination by Telangana dominated administration. Or at least, that will be a promising route for Rayalaseema leaders. UPSTREAM STATE There are other substantive reasons as well for avoiding such political calculations. Inclusion of Kurnool and Anantapur districts will turn Telangana State into fully an upstream State with respect to the Andhra State. All major rivers, Godavari, Krishna and Tungabhadra, will then be flowing into Andhra Pradesh from Telangana State. Irrespective of how well we define equitable allocation, politicisation of water disputes will provide a new and fertile ground for antagonistic politics to thrive. The trans-boundary politics of the two states will be similar to that we witness in the Cauvery dispute between Karnataka and Tamil Nadu, where water disputes are a way of pursuing politics. Andhra Pradesh enjoys advanced irrigation development and seeks to protect their rights of prior appropriation, just as in Tamil Nadu. Telangana and Andhra Pradesh will have similar histories of unevenness and inequities as Karnataka and Tamil Nadu. This asymmetry, combined with histories of prejudice and antagonistic politics, may lead to frequent recurrence of water disputes. It is unfortunate that these issues do not receive adequate attention. Even during the first States’ Reorganisation Commission, there were demands for a separate
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Three critical issues stand out: Hyderabad, employment and water resources. Hyderabad is a known Gordian knot. Employment is already on its course to become a source of rancour and friction between the two new States. The Telangana Rashtriya Samithi (TRS) chief K. Chandrasekhar Rao has recently asked the Seemandhra-born government staff to leave Telangana. The third, water resources sharing, is much more serious than what it appears to be.

The former two are in the nature of one-time settlement issues, but water sharing can be a recurring source of tension between the states. SEEDS OF DISCORD

The creation of Telangana State may be the sign of a new wave of federal politics in India. However, political parties and leaders need to step away from their immediate political interests and mull over these new politics with sagacity and statesmanship. But unfortunately, political opportunism seems to be the defining character of creating the two new states.

If the reports of including the Rayalaseema districts of Kurnool and Anantapur in Telangana are true, this is deeply shortsighted. The move is apparently for achieving two political objectives: to check the influence of the TRS in Telangana State and dent the alleged strength of the YSR Congress in the new Andhra Pradesh. Though the calculations look good on paper, they can be seriously fallacious and misleading. First, if the sentiment has transcended party lines and caste calculations in Telangana, the same sentiment for a united Andhra can seal the fate of the Congress in Andhra Pradesh.
Weekly Current Affairs 26th August to 01st September, 2013

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Telangana State. But the commission favoured keeping it united Andhra Pradesh for better management of water resources in the Godavari and the Krishna basins. WATER DISPUTES Redistribution of water resources and ensuring amicable political relations between the two states has to be central to the bifurcation process. The state of affairs with respect to inter-state water disputes resolution does not help much. It relies excessively on legal means, which did not help much in disputes like Cauvery. Litigation in courts or tribunals will only encourage a hide-and-seek behaviour by states and politicisation of disputes. Managing the inter-state relations for smooth transition and coordinating contentious matters such as river water sharing will be crucial.

Telangana and Andhra Pradesh politics will be characterised by antagonistic rhetoric against each other, at least for some time. Political opportunism of the Centre will only aggravate these politics further, leading to tenuous inter-state relations. It is time to think innovatively about the right kind of institutions for coordinating interstate relations and managing tensions between the two states, at least in the medium term.

There is little hope of constructive politics from either side. Political leaders are driven by insecurities and short term political gains. A major crisis of our times is the dearth of leaders with courage and fortitude to take positions in the larger interests. Let us hope institutions will rise to the challenge. Source: Business Line •

In Europe, Austerity Works

Although many European governments have announced expenditure cuts and tax hikes, their debt-to-GDP ratios continue to deteriorate. So, if the purpose of austerity was to reduce debt levels, its critics are right: fiscal belt-tightening has failed. But the goal of austerity was not just to stabilise debt ratios.““In fact, austerity has worked as advertised in some cases. Germany's fiscal deficit temporarily increased by about 2.5 percentage points of GDP during the global recession of 2009; subsequent rapid deficit reduction had no significant negative impact on growth. So it is possible to reduce deficits and keep the debt-to-GDP ratio in check provided that the economy does not start out with large imbalances, and that the financial system is working properly. Obviously, the countries on
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the euro zone's periphery do not meet these conditions.““Countries whose governments either have lost access to normal market financing (like Greece, Ireland and Portugal) or face very high risk premia (like Italy and Spain in 2011-2012) simply do not have a choice: they must reduce their expenditures or get financing from some official body like the International Monetary Fund (IMF) or the European Stability Mechanism. But foreign official financing will always be subject to lenders' conditions - and lenders see no reason to finance ongoing spending at levels that previously led a country into trouble.““So, in the euro zone periphery, austerity is not a question of fine-tuning demand, but of ensuring governments' solvency. Economists like to point out that solvency has little to do with the ratio of public debt to today's GDP, and much to do with debt relative to expected future tax revenues. A government's solvency, thus, depends much more on long-term growth prospects than on the current debt-to-GDP ratio.““A reduction in the deficit today might lead in the short run to a fall in GDP that is larger than the cut in the deficit (if the so-called multiplier is larger than one), which would cause the debt-to-GDP ratio to rise. But almost all economic models imply that a cut in expenditures today should lead to higher GDP in the long run, because it allows for lower taxes (and thus reduces economic distortions). Austerity should, thus, always be beneficial for solvency in the long run, even if the debt-to-GDP ratio deteriorates in the short run. For this reason, the current increase in debt-to-GDP ratios in southern Europeshould not be interpreted as proof that austerity does not work. Moreover, austerity has been accompanied by structural reforms, which should increase countries' long-term growth potential, while pension reforms are set to reduce considerably the fiscal cost of ageing populations. Such reforms promise to strengthen the solvency of all governments that adopt them, including those on the euro zone's periphery. More important, austerity has been very successful in restoring external balance to the periphery. The current accounts of all southern euro zone countries are improving rapidly and, with the possible exception of Greece, will soon swing into surplus. This fundamental change has contributed to the reduction in risk premia over the last year, despite the political upheaval that continues in many countries (particularly Italy, Portugal and Greece). The external aspect is crucial. If public debt is owed to domestic investors, it can be serviced with
Weekly Current Affairs 26th August to 01st September, 2013

the taxes levied on GDP. But debt owed to foreigners can be serviced only with goods and services sold abroad - that is, exports. Thus, the key variable for countries that had large current account deficits, and thus are burdened today with high foreign debt levels, is not the debt-to-GDP ratio, but the foreign debt-to-exports ratio (together with the growth prospects for exports). Here, developments are encouraging. During the boom years, when countries like Greece, Portugal and Spain were running ever-larger external deficits, their exports did not grow quickly, so their foreign debt-to-exports ratios deteriorated steadily, reaching levels that are usually regarded as a warning signal. For example, for Spain and Portugal, the sum of past deficits relative to annual exports reached 300 per cent and 400 per cent, respectively, in 2009, whereas a 250 per cent ratio is typically regarded as the threshold at which external-financing problems can arise.

With austerity, imports have crashed everywhere in the periphery, while exports - helped by falling labour costs - are increasing (except in Greece). As a result, these countries' current accounts are now moving into surplus, and their external solvency is improving rapidly. Indeed, according to the IMF, Spain should record growing current account surpluses over the next five years, as exports rise strongly, thus cutting the external debt-to-export ratio by half (to about 150 per cent in 2018), while Portugal's ratio should fall to about 250 per cent. Even Italy, whose external deficits have remained small, will soon record a current account surplus.

Austerity always involves huge social costs; but it is unavoidable when a country has lived beyond its means and lost its foreign creditors' confidence. The external fundamentals of the euro zone's periphery are now improving rapidly. In this sense, austerity has done exactly what it was intended to do. Source: Business Standard • This perverse rage against the poor

With the economic boom petering out, those who benefitted from it are angry with the government for the Food Security Bill because it is paying attention to the needs of the underprivileged for a change. This week’s received wisdom insists that the Indian economy has irretrievably collapsed because on Monday, the Lok Sabha passed the National Food Security Bill (NFSB). The Hindu Business
Weekly Current Affairs 26th August to 01st September, 2013

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What wrong signals?

Line headline (Aug.28, page 1) said it all: “Re, Sensex sink on fears Food Bill will feed deficit.” The subtext of the lament appears to be that the rupee decline was the market’s way of registering a pointed disapproval of the food security initiative. The Schadenfreude-wallahsare as happy as are the market-reformers that the United Progressive Alliance (UPA) leadership has been fixed so gloriously for venturing into a “populist” course of action. The bandwagon routine has acquired a momentum of its own; even Hindi and other vernacular newspapers have allowed themselves to be mesmerised by the crisis-mongering on television. This, though, is no time to panic. This is the time to strike a balance between short-term difficulty and long-term promises and commitments.

Once every few decades comes a moment in a Republic’s life when a few fundamental commitments have to be renewed — or rejected. This is one such week, a time to test our core beliefs. It is also the time to ask a fundamental question: since when in this country has a veto been ceded to the markets and its manipulators, at home and abroad, to decide the issues of equity, social justice and economic fairness? There is something inherently perverse in the suggestion that this muchneeded welfare measure would send out the “wrong” signals. Pray to whom? Those half-a-dozen professional financial manipulators in London? Indeed, economists can always be relied upon to argue that there is always a better way to do anything. Some are competing among themselves to declare that this food security initiative will neither work, nor fetch any votes for the ruling party. Let us make no mistake. Beyond all these sophisticated arguments is a certain class prejudice, resentful that so many resources are being “wasted” for the poor and other socially disadvantaged people, that in this age of “reforms,” political considerations and calculations are being allowed to determine the allocation of societal resources. This misses the very essence of the concept of political legitimacy in a democratic arrangement. A democracy survives and prospers only when every stakeholder gets an abiding sense of participation, partnership and entitlement. We often seem to keep forgetting that politics is all about who gets what at whose expense. During these last five years, at least for most of the time, the corporates and their policy preferences have been accorded unprecedented acceptance. The time is ripe to strike a new balance. And the NFSB does just that.
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Reform by Stealth If we are honest with ourselves, we will have no difficulty in acknowledging that for 20 years, economic reforms have been operationalised without a political mandate. Not until recently when the Congress party held a public meeting to rally opinion behind the Manmohan Singh government’s FDI policy, did any political party have the courage to proclaim openly and boldly its commitment to “economic reforms.” Yet, the “reforms” have been routinely and regularly proclaimed to be “irreversible,” irrespective of the political colour of the government in New Delhi. The process has well been summed up in that evocative phrase, “reform by stealth.” So now, when we are confronted with a veritable economic meltdown, we are ill-equipped to attend to the more serious and more debilitating crisis of our democratic project running out of its popular legitimacy. India’s democratic arrangements no longer appear to have the requisite social and political sanctions behind them. And we are unable to deal adequately with the systemic overload because our public discourse has been hijacked by a self-serving advocacy crowd and by a professionally disoriented media. For example, a year ago there was carping all around that the crony capitalists and the corrupt politicians were robbing the nation of its wealth, and we staged massive spectacles of resentment at Jantar Mantar; now, a year later, we are ranting and raving that we are not listening to or heeding those who rig the stock markets. If shouting and screaming every evening could produce solutions to difficult and complex problems, India would have been the most efficacious and working corner of planet Earth. Despite the obvious disapproval of the shouting class, the UPA leadership has gone ahead with the Food Security Bill. Hence, the exaggerated anger.

Rather than wait for the next round of the “Maoist” violence to jerk us back to harsh realities, what the Food law does is that at one stroke, it sends out a message that the Indian state has not turned its back on the poor, and that the have-nots continue to have a claim on the collective resources, and that they have not been left to their own devices or to the market’s curative potency. This message has to be understood and appreciated in the context of the growing preference in some quarters for authoritarian solutions — throw out the encumbering paraphernalia of social equity or fairness, and let the floodgates of enterprise and business acumen be thrown wide open. Resenting Interventionism A decade of economic prosperity has allowed millions and millions of middle-class families to realise their upwardly revised aspirations and life experiences; at the same time, the UPA saw to it that the welfare state kept expanding the “social agenda,” providing a safety net against the vagaries of the market. Now, the good days have seemingly come to an end, and there is anger that the state remains equally mindful of the welfare poor. We all thought that the poor have been disappeared from the policy drawing room; and suddenly, they are back with almost a veto. The narrative-controllers resent that. Just when they thought they had successfully defanged the Indian state of its interventionist impulses, here comes the Food Security Bill. The bill can be seen as the other side of the “stimulus” coin. The 2008-2009 stimulus was used by the super-rich to buy real estate in London and other European cities. At that time, no one seemed to find anything inherently wrong at this massive, disproportionate allocation of resources for so few. None of it was invested here to create jobs; instead, the super-rich petulantly proclaimed that the government was not sufficiently attentive to their “sentiment” and hence they would take their ball (Indian savings and taxpayers) and play in other economies. No one complained; instead, the government was blamed for the corporate sector’s misplaced priorities. If subsidised food can reduce the food spending of the poor, and place some surplus money in their hands, which would then be spent in India, that may end up stimulating domestic consumer demand. It would be a kind of stimulus lite, for the poor. A ruling party in India is called upon to fulfil its basic obligation to keep intact the democratic
Weekly Current Affairs 26th August to 01st September, 2013

As social philosopher Roberto Mangabeira Unger points out, a peaceful social order is in itself not enough; “ [S]ociety must be set up in a manner capable of justification in the yes of each of its members.” In political economy terms, each section of society, and every stakeholder gets to determine: what is in it for me? The Democratic Project is a social compact, an indefinable construct, but nonetheless one that hinges on a promise of a fair deal for all. The poor are asking this question with greater urgency — and in the Maoist-strongholds with arms and blood — as decades of “economic growth” have produced new inequities and disparities.
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credentials of the “system.” The food security legislation is a partial response to that obligation and must be applauded. Source: The Hindu • Companies Bill, 2012: Will auditors become a vanishing breed?

balance auditing? Further, this clause runs counter to the concept of limited liability partnership as it tends to create unlimited liability. There are various monetary penalties ranging, from Rs 25,000 to Rs 25,00,000, which have been introduced in the Bill for noncompliances related to filing, reporting, fulfilment of powers and duties, etc, by the auditors. Further, the Bill lays down provision for imprisonment, if an auditor is found to be guilty of fraud, which ranges from six months to 10 years. Referring to the current low-fee structure, the average fee per listed company is lower than Rs 10,00,000 now. If private companies are counted for the same, the average fee per company is even lower at around Rs 5,00,000. Considering the onerous liabilities cast on auditors vis-a-vis their fees, the audit firms will be prevented from taking up the audits. The Bill also stipulates the constitution of the National Financial Reporting Authority (NFRA) that will oversee the quality of service of professionals associated with compliance of accounting and auditing standards. Currently, the audit firms are subject to peer review by the Institute of Chartered Accountants of India (ICAI), review of audited financial statements by the Financial Reporting Review Board (established by ICAI) and review of audit firms under the aegis of Quality Review Board (established by government of India under Chartered Accountants Act, 1949). The constitution of NFRA will create an additional review burden on the firms. Again, the overdose of regulation will only deter firms from taking up auditing. The law that claims to usher in quality seems to be putting a high price on it. More importantly, any hope of enforcement of new provisions by the government will be illusory. In the early 1980s, total composition of CAs was 80% in practice and 20% employed. However, over the last decade, 90% of CAs are employed and just 10% are in practice. The provisions of the new Bill will further dissuade CAs from joining the practice and push them to scout for risk-free jobs. Now, the moot query is: who will audit the companies? The CAG? Source: Economic Times • Fears of Asian crisis overblown The "taper terror" returned to haunt Asian markets last week, spurring investors to dump regional shares and currencies on growing dread that the United States central bank may reduce its gigantic stimulus programme next month.
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Soon after the Rajya Sabha passed the new Companies Bill, corporate affairs minister Sachin Pilot hogged the limelight by asserting that the basic intent of the new law was lesser regulation, more compliance and to ignite the entrepreneurial spirit by offering "freedom" to entrepreneurs. What's ironical is that the government has conveniently forgotten the role of auditors, even when it tom-toms that the new Bill seeks to ensure better enforcement of accounting laws in the corporate world.

Aglance at various provisions of the new legislation makes it clear that the days of the auditing firms are numbered and soon the auditors will be an extinct breed. Clause 140 confers the right to the proposed National Company Law Tribunal to order a change of auditors in case it finds the auditors have acted fraudulently or abetted or colluded in any fraud by the company or in relation to the company. Additionally, the clause specifies the responsible audit firm will be banned from fresh appointment as auditors for any company for a period of five years from the date of order given by the tribunal. Clause 245 introduces the concept of class action that gives the right to members and depositors of a company to claim damages or compensation from the company, its directors, auditors and experts.

Such damages can be claimed from auditors for any improper or misleading statement of particulars made in the report or for any fraudulent, unlawful or wrongful act or conduct. The unlimited liability under class action will be on the firm and the partners involved.

If we take a cue from the multimillion-dollar class-action settlements across the globe, the collateral costs and compensation could be so exorbitant that it could easily make the audit firm and its partners bankrupt. If this provision is implemented, a majority of audit firms will have to shutter down their practice. This will, in turn, hugely polarise auditing in favour of large firms that have the money power to shoulder such a burden. But considering the limit on the number of audits per partner, the question remains: who will do the
Weekly Current Affairs 26th August to 01st September, 2013

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They fear that a pullback of US quantitative easing (QE) will mean less liquidity going into Asian assets while also raising US interest rates and the greenback - an outcome that will make Asia less attractive as an investment destination. But a few observers are entertaining an even scarier vision: the spectre of a repeat of the Asian financial crisis.“They see eerie echoes of the 1990s. Across Asia, economies have been borrowing heavily to fuel spending, sparking a run-up in asset prices, inflation and credit intensity - the amount of debt needed to generate each unit of economic expansion. And just as it did in 1997, the party may now be coming to an abrupt end.“Growth in Asia's tradedependent economies has slowed and once-surging capital inflows are reversing direction, depressing currency values in the region and making it difficult for nations to balance their external accounts. Interest rates, which were slashed to near zero in developed countries to spur growth, are also rising again, which means firms and households rolling over their debt will do so at higher cost.

The economic outlook is also dimming. Sluggish exports have led Malaysia, Thailand and India to cut growth forecasts for this year, with Thailand slipping into recession in the second quarter. Indonesia is also fighting rising inflation, which led it to raise interest rates this month.“Meanwhile, debt levels have been rising. Malaysia's households already owe 177 per cent of their income, the highest in Asia, according to a Standard Chartered report last month. In Thailand, it is the speed of the rise in debt that is worrying: Its recent run-up in credit has been one of the fastest in the region.“The situation is tricky for policymakers. If they cut interest rates to stimulate growth, they risk more capital outflows as investors seek higher returns elsewhere, making it even more difficult for them to address their current account gaps. Malaysia and Indonesia are especially vulnerable, given their reliance on foreign investors. More than 30 per cent of their government bonds are held by foreigners, noted OCBC Bank economist Selena Ling.“But if the authorities tighten monetary policy to stabilise currencies or reduce inflation, that risks sapping economic vitality. The worry is that policymakers, stressed by the recent capital flight, will make a wrong step. They need nuanced policies to shore up their currencies and restore investor confidence without doing so at the expense of growth. "The speedier rise in US real rates and dollar has now pushed Asia to lift its real rates at a time when its GDP (gross domestic product) growth has already been slowing," said Morgan Stanley economists last week.“"This pro-cyclical tightening is only increasing the headwinds" to Asia's growth, they added.“Still, most economists are not losing sleep over the situation. "Calling it a currency and economic crisis at this juncture is missing the point somewhat, even though risks persist," said Ling. "Asian economies have been on a steamroller boom for the last three years, and the fact is that many Asian economies are fundamentally on a much firmer economic footing this time round."“Deutsche Bank economist Taimur Baig agrees that while the currencies of India, Indonesia and Malaysia are particularly stressed, they do not "appear to be in danger of falling into an outright currency crisis".“"Reserves cover, despite recent declines, is still ample. Even when one adds up the entire stock of short-term liabilities and the projected current account needs for this year, all three economies have reserves to finance them comfortably," he said.
Weekly Current Affairs 26th August to 01st September, 2013

Some economists portend the tapering of QE will be the trigger that exposes deeper economic weaknesses, by removing cheap foreign funding from Asia just when it is most reliant on it.“This could mean the region is headed for more serious and lasting trouble than a one-off panic in the markets, they warn. Quaking over QE

Investors have made it clear which Asian economies they are most concerned about.“India's rupee has fallen almost 20 per cent against the greenback this year and hit new all-time lows, although it regained some ground late last week.

Indonesia's rupiah has lost about 12 per cent, while the Malaysian ringgit is down about 8 per cent and the Thai baht has shed 5 per cent. All reached their lowest levels against the US dollar since 2009 or 2010 last week. These four countries are in the line of fire as a slowdown in China and lower commodity prices weigh on their exports. This has led to deteriorating current account positions and weaker growth.

India, Indonesia and Thailand have been running record or near-record current account deficits, which means they are not exporting enough to pay for their imports and must borrow from other countries or run down their reserves. Malaysia is still in surplus, although not by much.
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CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS

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It's different this time The picture also looks brighter in most other Asian economies, although none was spared the selloff last week. Those with current account surpluses, large foreign currency reserves to counter exchange rate volatility and solid banks and growth policies are well-placed to weather the storm. Singapore, for one, has several factors in its favour. Its trade account is constantly in the black, it has robust reserves and does not rely on debt to fund government spending, and it received relatively fewer capital inflows from QE. Singapore's Deputy Prime Minister Tharman Shanmugaratnam said last Friday that QE tapering in itself is "not a bad thing" for Asian economies.

though QE tapering will be a short-term destabilising factor in Asia, the economic fundamentals of the region have strengthened due to the prudent economic policies implemented since the 1997 Asian Financial Crisis," he said. Foreign reserves and current account levels are generally strong, and most countries now have flexible exchange rate policies, making a 1990s-style currency crisis and contagion more unlikely. Asian policymakers are also more proactive about managing credit cycles, said Koh. Companies and banks are also financially healthier. While there will be some inevitable pain as borrowing costs rise and asset markets adjust, a domestic banking crisis is less likely, added Ling. Another upbeat sign often lost in the market muddle is that QE will be tapered only once the Federal Reserve is convinced that the US economic recovery is self-sustaining. All signs so far - from manufacturing to consumer spending - are pointing to a firmer rebound, not just in the US but also in other recently stagnant developed economies like Europe and Japan. This is likely to give a bigger boost to global growth and Asia's exports, although lingering shakiness means the benefits may not be felt until next year at least.“Meanwhile China, while down, is not out. A surprise turnaround in its factory activity this month hints at a stabilisation that bodes well for its neighbours, as does its move to a more sustainable growth trajectory.“So while Asia may be in for a rocky ride as the US eases out of QE, most economies are in a good position to manage the adjustment without giving in to fears of a new crisis. As former US president Franklin Roosevelt, who saw the US economy out of its last massive recession, once said: "The only thing we have to fear is fear itself." Asia's fundamentals are still strong - there is little reason to let investor panic be stronger. Source: The Statesman

"It is not in anyone's interest, including the emerging economies, for very low global interest rates to continue indefinitely," he said. "Low or negative real interest rates have inevitably led to a search for yield, and a build-up of financial imbalances in Asia."

Other Asian economies that have strong current account positions, which means they export much more than they import - such as the Philippines, South Korea and Taiwan - are also unlikely to be dragged down. Credit Suisse economist Christiaan Tuntono noted that South Korea and Taiwan are running comfortable current account surpluses of 5 per cent and 11 per cent of GDP respectively.

The Philippines is also on a better economic footing than other Asean neighbours due to its persistent current account surplus and lower reliance on commodity exports, said Credit Suisse economist Michael Wan.“As a whole, economists such as Jimmy Koh, United Overseas Bank's head of research and investor relations, are fairly sanguine about history not repeating itself in Asia. "We believe that

Weekly Current Affairs 26th August to 01st September, 2013

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CHRONICLE IAS ACADEMY GS MAINS UPGRADATION PROGRAMME — A SOLUTION TO 1250 MARKS