Current Affairs_16 April _01 May_10

8/8/2019 Current Affairs_16 April _01 May_10

1/16

Current Affairs: International Issues: 16 April - 01 May 2010

International Issues (Political/Social)

Content:

1. From the Cold War era: 50 years since the U-2 incident2. Belgium bans burqa

3. Mass protest in Nepal

4. Army to vacate Jaffna properties

5. Greece crisis

6. Greece vows deeper defence cuts

7. Chinese company conrms Pakistan reactor deal

8. U.S. oil leak more than feared

9. Australia puts carbon trading scheme on hold

10. Fred Halliday, scholar of international relations, dead11. Republicans block nancial bill

12. Developing countries get a bigger say in the World Bank

Brief Description:

From the Cold War era: 50 years since the U-2 incident

* Fifty years after his father was shot down by the Soviets in an incident that markeda turning point in the Cold War, Francis Gary Powers Jr. visited the wreckage of hisdads U-2 spy plane.

* Its a wonderful display, Mr. Powers Jr. said while standing in the hall of the CentralArmed Forces Museum in Moscow which holds the wrecked plane and other materialcommemorating the so-called U-2 incident of May 1, 1960.

* On that day, Francis Gary Powers, a U.S. pilot carrying out a secret mission for theCIA to photograph Soviet nuclear sites, was shot down near the Urals Mountains city ofSverdlovsk, now called Yekaterinburg.

* Powers parachuted out and was captured by the Soviets, who later convicted him ofespionage and threw him in prison. In 1962, Powers was released in a U.S.-Soviet spyswap at the border between East and West Germany, in exchange for Americas releaseof Soviet spy Rudolf Abel. Powers died in 1997.

* The incident was a major embarrassment for the United States, which had deniedcarrying out spy ights over the Soviet Union and it derailed efforts to make peace be-tween the two Cold War superpowers.

Belgium bans burqa

* Despite being in the grip of an acute political crisis that threatens its very existence

as a state, Belgium became the rst state in Europe to ban the burqa in public places.* The vote on the burqa became a major diversion from the countrys monumen-

tal woes and Belgiums Lower House of Parliament on Thursday banned it in public.However, the bill has to be passed by the Senate to become law and delays are being


2/16

foreseen.

* Belgium is currently without a government, Prime Minister Yves Leterme and hisCabinet having resigned over linguistic differences and the country is mired in a deepidentity crisis, with both French and Flemish speakers refusing to compromise on thestatus of the largely French-speaking capital which falls within a Flemish-dominatedarea. Early elections are likely to be held in the coming months.

Mass protest in Nepal

* To mount pressure on the Madhav Kumar Nepal-led regime to form a new consen-sus government under its leadership, the major opposition party the UCPN (Maoist) is holding a nationwide mass demonstration here on Saturday.

* The Maoists have said they would mobilise half a million people and the cadreshave already started descending on the capital. Though the party has said it would bea peaceful demonstration, various political parties, civil society members and foreigndiplomats have voiced concern as the party trained the cadres in the use of khukri andsticks. The police have conscated sacks of empty bottles and hundreds of litres of pet-rol, which they said might be used in making bombs.

Army to vacate Jaffna properties

* The Sri Lankan military has begun the process of gradual withdrawal from civilianproperties under its occupation in the Jaffna peninsula.

* Defence Secretary Gotabaya Rajapaksa, on a visit to the Northern Province, toldjournalists after unveiling a memorial at the Elephant Pass on Friday that the militarywould withdraw from the properties.

* The continued occupation by the military has been a matter of concern to the Tamilparties and the civilians. They have been demanding that the owners be given backtheir properties.

Greece crisis

* Greece has conrmed its expected request to the European Union and the Inter-national Monetary Fund (IMF) for a bailout of 45 billion as initial assistance in its eco-nomic crisis.

* Athens will have to pay out on bonds worth about 8.5bn which mature in May andalso has to pay 54bn this year as debt-servicing on 300bn.

* In addition, the countrys budget decit for 2009-10 was 13.6 per cent of GDP, orabout 300 billion; the eurozone rules allow member states only three per cent. As forthe bailout itself, the EU as a whole cannot provide such. Individual member states willcontribute 30 billion for three years at ve per cent, with Germany and France provid-ing half that sum; the IMF is due to contribute 15 billion.

* Conditions will most probably focus on public-sector cuts and substantial changesto the state-pension system. Early public reactions in Greece have been hostile, withdemonstrators particularly resentful of IMF involvement. Financial markets have re-

sponded selectively, despite Standard and Poors downgrading of Greeces debt ratingto junk.

* Kenneth Rogoff, a former IMF chief economist, points out that national debt de-faults and restructurings usually follow banking crises.


3/16

* He concludes that Greece must do all it can now to maintain international nancialcredibility so as to avoid IMF-imposed restructuring in future. But the matter is morecomplex than this assessment suggests.

1. First, Greece is hardly alone; the U.S. budget decit for 2008-9 was 9.9 per centand the U.K.s was 10.9 per cent for 2009-10. Sweden has also survived a comparablecrisis.

2. Secondly, Ms. Merkels party, the Christian Democratic Union (CDU), faces a hardreelection battle in the province of North Rhine-Westphalia and needs to talk tough onGreece.

3. Thirdly, the preceding Greek government, a conservative one, hugely expandedpublic spending and the budget decit, by increasing public-service employment andfailing to tackle widespread tax fraud. Meanwhile, the EUs regulatory bodies did noth-ing about the countrys rising budget decit, and Greece colluded with an investmentbank to falsify the gures.

4. Finally, Prime Minister George Papandreou has announced measures to crack down

on tax evasion, to raise taxes, and to cut the budget decit by four percentage points inthe current nancial year. The EU is also likely to adopt tougher regulations, which willreduce the capacity of private players to attack member states through nancial mar-kets. The Greek crisis, though serious, gives the EU an opportunity to help a memberstate, curb predatory nanciers, and improve its own institutions and procedures.

Greece vows deeper defence cuts

* Greeces Defence Minister on Thursday promised colossal cuts in military operat-ing costs to help the debt-ridden country emerge from its nancial crisis and speed up

plans to modernise the armed forces.* Defence Minister Evangelos Venizelos Greece is aiming to slash operating costs by

up to 25 percent in 2010 from 2009, instead of the planned reduction of 12.6 per centlisted in this years budget.

Chinese company conrms Pakistan reactor deal

* Chinas biggest operator of nuclear power plants has conrmed that it will exporttwo 340 MW nuclear power reactors to Pakistan in a $2.375-billion agreement, in acontroversial deal that analysts say goes against internationally-mandated guidelines

governing the transfer of nuclear technology.

* The China National Nuclear Corporation, which has already set up two civilian nu-clear power reactors in Pakistan, has now signed construction contracts to build twomore.

* The two governments had in principle agreed on the deal during President Hu Jin-taos visit to Islamabad in 2006. But they are yet to publicly formalise the deal.

* The CNNC, however, has said in a statement, posted on its website last month, thatit had reached the agreement with the aim of developing an overseas nuclear powerelectricity market.

* The CNNC has already agreed to build two power reactors in Pakistan, the 325 MWChashma-1, which started operating in 2000, and Chashma-2, which will be completednext year. The statement said the two new reactors are 2x340 MW. Chashma-2 willbe a benchmark for C-3 and C-4 projects, said the statement. On February 12, the two


4/16

governments had signed a loan contract which went into effect in March, according tothe CNNC.

* But, Chinese ofcials on Thursday continued to deny a deal was in place. One of-cial said while the government had given its backing to the deal in principle, some naldetails still had to be ironed out .

U.S. oil leak more than feared

* A BP executive on Thursday agreed with a U.S. government estimate that the oilleak in the Gulf of Mexico could be pumping up to 5,000 barrels a day of crude into theocean, far more than previously thought.

* The U.S. governments National Oceanic and Atmospheric Administration (NOAA)earlier said that more than 200,000 gallons of oil a day were now thought to be spew-ing into the Gulf from the debris of the Deepwater Horizon rig, which sank last weekfollowing a deadly explosion.

Mehsud alive?

* Pakistan and U.S. intelligence wrongly reported the death of the head of the Pa-kistani Taliban in a CIA drone strike and he is now believed to be alive, said Pakistanispies on Thursday in an apparent propaganda coup for the insurgents.

* The reports that Hakimullah Mehsud survived the January missile attack in an areaclose to the Afghan border will raise questions about the quality of the intelligence be-ing gathered in the region.

* U.S. ofcials were not immediately available for comment. The Taliban had alwaysclaimed Mehsud was alive and dismissed the earlier reports of his death.

* The militant network said it was not going to offer any evidence such as a video re-cording because doing so could help security forces hunt Mehsud down. But until thereis proof he is alive, questions may linger about his fate, given the apparently patchynature of intelligence in the tribal regions.

Australia puts carbon trading scheme on hold

* The Australian government has shelved an ambitious carbon trading scheme thatwas the cornerstone of plans to reduce the countrys greenhouse gas emissions by up

to a quarter by 2020.* Labour Prime Minister Kevin Rudd said the scheme would be delayed until 2013 be-

cause of parliamentary opposition and slow progress on a global climate change pact.

* Mr. Rudd said the government would wait until the rst phase of the Kyoto protocolexpires in 2012 before implementing one of the worlds most comprehensive carbon-cutting regimes.

Fred Halliday, scholar of international relations, dead

* Fred Halliday, who has died of cancer aged 64, was an Irish academic whose maininterest was West Asia and its place in international politics.

* His rst major book, Arabia Without Sultans, was published in 1974. The culmi-nation of adventurous eld research in the region, including Oman, it was a study ofArabian regimes, their support from the West and Iran, and the revolutionary forces


5/16

ghting against them.

Russia, Ukraine ratify base deal

* The Russian and Ukrainian Parliaments on Tuesday simultaneously ratied a land-mark agreement to extend the lease of a key Black Sea naval base in Sevastopol toRussia by 25 years.

* While in Russias State Duma the accord sailed through seamlessly, with 410 depu-

ties voting for and none against, in Ukraines Verhovna Rada the ratication processturned into a violent battle between supporters and opponents of the pact.

* In what looked like a street riot, opposition deputies staged stghts with pro-gov-ernment MPs, threw eggs at the Speaker and set off smoke bombs in a futile attemptto disrupt voting.

* Crouching behind two umbrellas held over him by aides, Speaker Volodymyr Litvyngave a start to electronic voting. When the winning tally 236-to-0 came on screen, itwas hardly visible in the heavy smoke that lled the hall.

Republicans block nancial bill

* Senate Republicans on Monday blocked Congress from further considering a ma-jor bill that proposed an overhaul of nancial regulation in the aftermath of the creditcrunch. The move comes even as investment bank Goldman Sachs faced a Congres-sional hearing that sought to understand the banks role in the recent nancial crisis.

* The regulation reform bill, called the Restoring American Financial Stability Act of2010 (RAFSA), is the creation of the Senate Banking Committee headed by DemocratChris Dodd. RAFSA is described by the Committee as a direct and comprehensiveresponse to the nancial crisis that nearly crippled the U.S. economy beginning in

2008.* Following the move by all 41 Senate Republicans and Ben Nelson, Democrat, to

block the bill from being taken forward to vote in the coming weeks, President Obamasaid, I am deeply disappointed that Senate Republicans voted in a block against allow-ing a public debate on Wall Street reform to begin. Democrats need 60 votes to pushthe bill through.

* The President charged the bills blockers with believing that such obstruction wasa good political strategy and seeing this delay as an opportunity to take this debatebehind closed doors, where nancial industry lobbyists can water down reform or killit altogether.However, he argued the American people cant afford that. A lack of

consumer protections and a lack of accountability on Wall Street nearly brought oureconomy to its knees, and helped cause the pain that has left millions of Americanswithout jobs and without homes. He urged the Senate to get back to work and put theinterests of the country ahead of party.

* Yet Republicans were quick to clarify the grounds on which they objected to thebill, to pre-empt accusations of obstructionism and siding with Wall Street over MainStreet.

* The main objection was to the Dodd proposal requiring large nancial companies tocontribute $50 billion over ve to 10 years to a fund held at the Treasury, which would

only be used by the Federal Deposit Insurance Corporation in the orderly liquidation ofa failing nancial company with the approval of the Treasury Secretary.


6/16

Castro warns of climate change

* Cuban leader Fidel Castro warned of the aftermath of uncontrollable climate changeand the side effects of scientic progress.

* Science created the ability to destroy ourselves and the planet several times in amatter of hours, said Mr. Castro in an editorial published by local media.

* The greatest contradiction in our age is the ability of our species to destroy itselfand its inability to govern itself at the same time. In the editorial entitled The madnessof our time, Mr. Castro listed the catastrophic effects of global warming and pointed tothreats posed by new weapons and military technologies of the United States.

* He criticised the United States for developing new high-tech military devices suchas the recent launch of an unmanned space plane from Cape Canaveral.

Cyber-racism summit in Australia

* CANBERRA

* Leaders from the anti-discrimination and Internet communities will join forces totackle online racism in Australia, the Australian Associated Press reported.

* The Australian Human Rights Commission said instances of cyber-racism, whichincluded racist websites, images, blogs, videos and comments on website forums, wereon the rise.

In a bid to solve the problem, the commission has teamed up with the Internet IndustryAssociation to co-host the summit on Tuesday.

Developing countries get a bigger say in the World Bank

* At the end of two days of the annual Spring Meetings of the International MonetaryFund and the World Bank, the member nations endorsed voice reform to increase thevoting power of developing and transition countries (DTC) in the World Bank by 3.13percentage points, bringing their proportional voice to 47.19 per cent.

* World Bank members including India also agreed to boost the selective capital ofthe institution by over $86 billion along with giving developing countries slightly over47.19 per cent of the total votes.

* The advanced economies share under the new arrangements would drop to under52.81 per cent.

World Bank voting reforms

* The World Bank member-countries reached an agreement on a 3.13 per cent shiftin voting power to give the emerging and developing nations greater inuence in theBank last week.

* The voting pattern shift will increase the number of votes of the developing worldto 47.19 per cent from 44.06 per cent. And Chinas stake at the bank, in terms of vot-ing power, rises from 2.78 to 4.42 per cent now, making it the third largest, next to the

U.S. (15.85 per cent) Japan (6.84 percent).* Post-reforms, India has moved to the seventh spot with 2.91 per cent voting

right.


7/16

Attempt on British envoys life in Yemen

* The British embassy in Yemen has been shut down after a suicide bomber at-tempted to assassinate its Ambassador while he was on his way to work on Mondaymorning.

* Yemeni ofcials were quoted as saying a suicide bomber blew himself up close tothe bullet proof vehicle, in which Ambassador Timothy Torlot was travelling. A British

embassy spokeswoman said the envoy was not injured.

Furore over Arizona immigration bill

* When Jan Brewer, Governor of Arizona, signed into law a new immigration bill lastFriday she could have had little doubt that she would be courting controversy.

* The Support Our Law Enforcement and Safe Neighborhoods Act, now better knownas SB 1070, would make the failure to carry immigration documents a punishable of-fence; it also gives police sweeping powers to detain anyone suspected of being in the

country illegally.

Aliens exist: Hawking

* Do aliens exist? They do, but humans should try to avoid any contact with them at least, thats what one of the worlds leading physicists, Stephen Hawking, claims.

* The suggestions, that the extraterrestrials are almost certain to exist, come in anew documentary series for the Discovery channel, in which Dr. Hawking will set out hislatest thinking on some of the universes greatest mysteries.

* Alien life, he will suggest, is almost certain to exist in many other parts of theuniverse not just in planets, but perhaps in the centre of stars or even oating ininterplanetary space, T he Sunday Times reported.

* His logic on aliens is unusually simple. The universe, he points out, has 100 billiongalaxies, each containing hundreds of millions of stars. In such a big place, Earth isunlikely to be the only planet where life has evolved.

* To my mathematical brain, the numbers alone make thinking about aliens per-fectly rational. The real challenge is to work out what aliens might actually be like, the68-year-old was quoted as saying.

HIV free: Zuma

* South African President Jacob Zuma on Sunday declared himself free of the deadlyHIV virus, as he launched a drive to combat the disease in the worlds worst-affectedcountry.

* My April results, like the three previous ones, registered a negative outcome forthe HIV virus, said Mr. Zuma

* Mr. Zuma (68) took the test to promote the campaign. He has three wives andcame under pressure after it emerged that he had fathered a child out of wedlock.

S. Korean warship retrieved from sea

* First inspections of the bow of a South Korean warship show it was hit by an out-


8/16

side impact of considerable force, a military ofcial said on Saturday, as suspicion in-creasingly falls on North Korea. The Cheonan sank and was split in half after a mysteryblast on March 26 close to the disputed border of the two Koreas, leaving 40 sailorsconrmed dead and six others still unaccounted for.

* Seoul has been careful not to point the nger directly at the North over the incidentin the Yellow Sea, which has stoked already tense ties, and Pyongyang has denied itwas to blame.

* However, the Souths Yonhap news agency on Thursday quoted a senior militarysource in Seoul as saying it was suspected that North Korean submarines attacked theship with a heavy torpedo. On salvage teams took their rst look at the bow sectionafter it was hauled to the surface a day earlier, nding another body and more evidencea strong external blast was to blame.

* Quoting an unidentied military ofcial, Yonhap said initial inspections conrmed alarge iron gate was off its hinges and a chimney was missing. This means there was astrong impact from the outside, the ofcial said.

* A Joint Chiefs of Staff spokesman told AFP that they expected to nd more bodies

in the bow, which was to be towed ashore later Saturday for detailed inspections to ndextra clues as to what tore the vessel apart.

* The stern was salvaged on April 15 but offered few ideas as to what had causedthe explosion, from which 58 sailors were rescued.

* South Korean Defence Minister Kim Tae-Young said a mine or torpedo may havesunk the corvette, but his Ministry said it would keep an open mind until the investiga-tion is completed.

* Pyongyang has accused the Souths war maniacs of seeking to shift the blame forthe tragedy to the North.

* The disputed Yellow Sea border was the scene of deadly naval clashes between theNorth and South in 1999 and 2002 and of a re-ght last November that left a NorthKorean patrol boat in ames

New turn in French niqab ban row

* The controversy in France surrounding an imminent ban on the wearing of theburqa, the niqab or other full face coverings suddenly took a dramatic turn when ayoung woman revealed she had been ned 22 by the police for driving while wearinga niqab.

* The 31-year-old woman, a French national, said she had been wearing the niqab forthe past nine years and had never had either an accident or a problem with the police.She said she had committed no crime and planned to challenge the ne and sue thegovernment for harassment. Nothing in Frances trafc regulations prevents a personfrom driving whilst wearing a mask. The police imposed the ne claiming that her niqab

reduced her eld of vision.

Abhisit rejects compromise

* Thai Prime Minister Abhisit Vejjajiva on Saturday rejected a compromise offer fromanti-government Red Shirts, who had said they would end weeks of protests if pollswere called in 30 days.

* The international community has urged both sides on Thailands political divideto nd a negotiated solution to end weeks of protests that have been punctuated by


9/16

deadly clashes leaving 26 dead and hundreds injured

* The 30-day concession is just aimed at getting the attention of foreign media. Idont think it is the answer to the problems, Mr. Abhisit said. Tomorrow everything willbecome more clear when I and the army chief will jointly appear on my weekly televi-sion address.

* Negotiations must be aimed at nding a solution for the whole country, not justthe Red Shirts, they are just part of society, he added.

China removes Xinjiang party chief

* The Chinese government removed the powerful head of its western Muslim-major-ity Xinjiang region, in the rst indication yet that the central government was rethinkingits policies that many say have led to ethnic unrest.

* The decision comes amid a tightening of security in the regions capital Urumqi,where local ofcials and residents told The Hindu this week there were growing fears ofa recurrence of last Julys ethnic violence.

NATO invites Bosnia

* NATO leaders on Friday urged Bosnia to begin the MAP programme that is a cru-cial stepping stone for eventual membership, but warned that more needed to be doneto transfer military infrastructure to central authorities. U.S. Secretary of State HillaryRodham Clinton told reporters at a meeting of the alliances Foreign Ministers in Estoniathat she hoped that the membership action plan would help Bosnia, a deeply dividedcountry, to function more effectively as a state.

* Membership action plans, or MAPs, establish criteria and guidelines for candidate-

countries to become NATO members. Bosnia applied for an action plan last year.

Sri Lankan Cabinet sworn in

* Sri Lankan President Mahinda Rajapaksa on Friday administered the oath of ofceand secrecy to 76 Ministers, 37 of whom hold Cabinet rank.

* G.L. Peris, who held the portfolio of Export Promotion, has been designated as For-eign Minister. The former Prime Minister, Ratnasiri Wicremanayake, has been inductedinto the Ministry with the portfolio of State Management and Reforms.

Focus on role of monks in quake recovery

* Two years ago, the monks of Qinghai province were in the news in China for violentriots that tore through many of the ethnic Tibetan regions.

* But this week, millions of Chinese were exposed to a strikingly different picture newspapers and news broadcasts showed images of Tibetan monks, in their distinctred robes, heroically digging through debris and rescuing the survivors of last weeksdevastating quake.

* Monks, in the past often characterised as political trouble-makers by the State-run media, were, ironically, lling in for the State in a remote region beyond its reach.

* The role played by Tibetan monks in the quakes aftermath has become a subjectof focus for the media in China and abroad, given the uneasy relationship betweenmonasteries and the Chinese government, most evident during the riots of March 2008


10/16

in Tibet.

* On Friday, the government said it had advised monks to leave quake-hit areas toallow reconstruction work to continue.

Current Affairs: Economy Issues: 16 April - 01 May 2010

Economy Issues

Content:

1. ICICI Bank, HDFC Bank not Indian-owned: Centre

2. Nine Indians in Top 100

3. NTPC-NPCIL sign JV agreement

4. Public debate on FDI in crucial sectors proposed

5. Cabinet clears Rs. 15,000-cr capital infusion in public sector banks

6. Calculate eligible BPL families for Rs. 3 per kg foodgrains

7. Telcos dispute CAGs power to audit them

8. The status of regulating the petroleum sector

9. What are commodity currencies?

10. Yet another committee on small savings?

11. What is Indias interest in joining the FATF - Financial Action Task Force?12. What are MSS bonds?

13. Monetary policy review by RBI

14. CK Prahlad is no more

15. Quantitative restrictions on imports may be back

16. New national transport permit regime

17. Major Economies Forum (MEF)

Brief Description:

ICICI Bank, HDFC Bank not Indian-owned: Centre

* The Central Government said ICICI Bank and HDFC Bank could not be called In-dian-owned banks, setting at rest the debate generated over the nationality of the toptwo private sector lenders.

* At best, the two can be called Indian-controlled banks.

* ICICI Bank had maintained that it continued to be an Indian bank as its manage-ment and board was Indian.

* However, ICICI Bank and HDFC Bank have over 74 per cent foreign holding, includ-ing that of foreign banks and overseas institutional investors.


11/16

Nine Indians in Top 100

Rangarajan to head panel on public expenditure

* The Planning Commission announced the setting up of an 18-member expert com-mittee headed by Prime Ministers Economic Advisory Council Chairman C. Rangarajan

to recommend measures for efcient management of public expenditure.

* Among its terms of reference, the main brief of the high-level committee is to sug-gest an action plan for abolition of the present system of classifying public expenditureas Plan and non-Plan. This will include detailing of the changes in the mandate of thevarious organisational units in the government that deal with allocation of public re-sources and the management of public expenditure.

Ethical practices in IT sector outlined

* Ethical practices for contracts, clear accountability, compliance with legal issues,data security, privacy as well as thrust on customer satisfaction are the key recommen-dations, released by the Governance and Ethics Committee of the National Associationof Software and Service Companies (Nasscom) released to further strengthen the cor-porate governance practices in the IT-business process outsourcing industry.

* The report, released by the committee set up last year comprising industry expertsand chaired by Infosys mentor N. R. Narayana Murthy, enumerates a set of detailedvoluntary recommendations with an objective to establish highest standards of probityand corporate governance within the industry.

* The report is structured across the stakeholder ecosystem to build an effective andethical governance framework.

* The recommendations detail the role of the board of directors wherein it can movefrom traditional advisory to strategic oversight of company affairs.

* In terms of competitors the recommendations involve sharing of best practices, re-specting intellectual property and ethical hiring would enable a collaborative industry.

* On the issue of employees, the recommendations include condentiality of infor-mation, protecting company assets and adherence to company policies and processeswould enable the company and its employees to align to common goals.

NTPC-NPCIL sign JV agreement

* Nuclear Power Corporation of India Limited (NPCIL) and NTPC entered into a jointventure agreement (JVA) to set up nuclear power projects.

* The agreement was signed by S. K. Jain, Chairman and Managing Director, NPCIL,and R. S. Sharma, Chairman and Managing Director, NTPC, here.

Public debate on FDI in crucial sectors proposed

* The UPA Government, in a major shift from its oft repeated no discussion stand,


12/16

on Monday indicated its willingness to tread the forbidden path, stating that it wasready for public debate on the issue of allowing foreign direct investment (FDI) in thepolitically sensitive sectors such as agriculture, defence, pharmaceutical and multi-brand retail.

* The Department of Industrial Policy and Promotion (DIPP), the nodal agency forframing FDI policies, will come out with six discussion papers in mid-May on overseasinvestment norms. This is in contrast to the UPA I regime, when it had shelved plans

to throw open multi-brand retail owning to strong opposition by Left parties and smalland medium traders.

* Under the present FDI policy, India allows 51 per cent FDI in single brand retailand 100 per cent in the cash-and-carry (wholesale) sector. However, many countries including foreign chains have been pressurising the government to throw open themulti-brand retail sector to FDI investment which, they claim, would bring the muchneeded competition and quality for the consumers.

* Interestingly, while trans-national companies like WalMart and Carrefour and In-dian industry chambers are pitching for opening up of the multi-brand segment, a Par-liamentary Standing Committee has proposed a blanket ban on the entry of corporatesinto the unorganised sector employing millions of people.

Cabinet clears Rs. 15,000-cr capital infusion in public sector banks

* The Union Cabinet on Friday approved a capital infusion of Rs.15,000 crore in publicsector banks (PSBs) during the current scal to facilitate an increase in their lendingcapacity by about Rs.1.85 lakh crore.

* According to an ofcial statement on the cabinet decision taken at a meeting chaired

by Prime Minister Manmohan Singh, a sum of Rs.15,000 crore already provided for inthe budget for 2010-11 is to be infused in Tier I capital instruments of the PSBs.

* The exact amount, the mode of capitalisation and other terms and conditions wouldbe decided in consultation with the banks at the time of the infusion, it said. For thenext scal (2011-12), additional capital requirements, if any, is to be worked out inconsultation with the PSBs based on their third quarter results for 2010-11 to ensurethat they maintain a minimum 8 per cent Tier I capital to meet the credit requirementsof the economy and accelerate growth.

* Explaining the need for additional funding of PSBs, the statement said: The in-fusion of Rs.15,000 crore in Tier I capital instruments of PSBs would enable them toexpand their credit growth by about Rs.1.85 lakh crore.

Calculate eligible BPL families for Rs. 3 per kg foodgrains

* The Empowered Group of Ministers (EGoM) on Friday urged the Planning Commis-sion to work out the number of Below Poverty Line (BPL) households and the house-holds size that would be eligible for Rs. 3 per kg discounted foodgrains under the pro-posed National Food Security Bill.

* The Tendulkar Committee report had placed the BPL percentage at 37.2 which,at 2005 population and household size, works out to about 7.14 crore households asagainst 6.52 crore households at present.

* Statements made by Planning Commission Deputy Chairman Montek Singh Ahlu-


13/16

walia have indicated that the Commission had accepted the Tendulkar panel ndingsand that 35 kg of subsidised foodgrains would be given to each BPL household. How-ever, the government is yet to declare its ofcial position on this.

* For the second time, the EGoM headed by Finance Minister Pranab Mukherjee, tookno decision on a proposal of the Food Ministry to enhance the quantum of foodgrainsallocation for the Above Poverty Line (APL) population from the present 10 kilogram to15 kg per family per month.

Telcos dispute CAGs power to audit them

* The countrys leading mobile operators, including Bharti Airtel, Vodafone Essar,BSNL and Tatas, have questioned the governments move to direct the Comptroller andAuditor General of India (CAG) to audit their books. The CAG is a constitutional author-ity that conducts independent audits of all government accounts.

* CAG ofcials, however, reportedly said that a 2002 notication authorises it to au-

dit the accounts of telecom companies, as they share a part of their revenues with thegovernment. So far, the CAG never exercised this power.

* In April 2009, the government had ordered a special audit of the account books oftop private cellphone companies, including Reliance Communications (RCOM), BhartiAirtel, Vodafone Essar, Tata Teleservices and Idea Cellular, to ensure that they have cor-rectly reported and shared revenue with it. The audits aimed to establish if there wereany discrepancies in the revenues reported by these companies. The special audit re-ports for Reliance Communications, Bharti Airtel, Vodafone Essar and Idea Cellular havealready been submitted to the department of telecom (DoT) while Tata Teleservices isexpected to be completed soon.

The status of regulating the petroleum sector

* The PNG (Petroleum and Natual Gas) sector consists of four sub-sectors: explora-tion and production of PNG, oil rening and marketing, natural gas transportation andmarketing, and crude oil and petroleum products pipelines. Of these four, the rst,referred to as upstream, is supposed to be regulated by the directorate general of hy-drocarbons (DGH) while the remaining three downstream sectors fall under the domainof the Petroleum and Natural Gas Regulatory Board of India (PNGRB).

* As per the MoPNG order, the DGH has been mandated to regulate only one areathe preservation, upkeep and storage of data and samples pertaining to petroleumexploration, drilling, production of reservoirs etc and to cause the preparation of datapackages for acreages on offer to companies. In all other areas relating to various as-pects of exploration and production, it is only supposed to advise the MoPNG. In reality,therefore, it is the ministry that regulates the upstream sector, with the DGH virtuallyfunctioning as an advisory wing of the ministry.

* Before March 28, 2002, the marketing and pricing of petroleum products includingtransportation fuels, namely, motor spirit (MS) and high-speed diesel (HSD), were con-trolled by the government under a mechanism known as administered price mechanism(APM). The APM was dismantled by a notication dated March 28, 2002, under Section3 of the Essential Commodities Act, 1955. Then, in 2006, the PNGRB came into exist-ence. As a result of these two events, the theoretical position obtaining since October1, 2006, is that all entities are free to price their products and the PNGRB is to regulate


14/16

anti-competitive behaviour like predatory pricing. However, strangely, the government(read: MoPNG) still xes the prices of MS and HSD and the PNGRB appears to be eitherpowerless or disinterested in doing anything about it.

What are commodity currencies?

* These are currencies which essentially derive their strength from commodity ex-ports from their respective markets.

* Also, in these countries, commodity exports are major source of foreign exchangeinows. Traditionally lesser developed economies in Africa and Latin America have comeunder this category.

* Despite the weaker correlation between commodity exports and currency strength,the Canadian, Australian, the New Zealand dollar and the South African Rand are stillconsidered commodity currencies. In recent times, they have emerged as global cur-rency traders favourite as there has been a general surge in commodity prices glo-

bally.

Yet another committee on small savings?

* Faced with another tough decision on deregulating interest rates on small savingsinstruments, the government is reportedly toying with the idea of appointing a com-mittee.

* But already three committees have gone into this aspect and have submitted moreor less similar reports. They were headed by R V Gupta back in the 1990s, Y V Reddy

and Rakesh Mohan later. All three had come to much the same conclusion: scrap thepresent anachronistic system of administered interest rates and link interest rates tosome market-determined rate. But their reports have all been moth-balled. So, whyone more committee?

What is Indias interest in joining the FATF - Financial Action Task Force?

* India is preparing to join FATF, an inter-government body founded by the G-7countries in 1989 for developing and promoting national and international policies tocombat money laundering and terrorist nancing. FATF is currently evaluating Indiaspreparedness for its membership, which will allow the country to gain access to real-time exchange of information on money laundering and terror nancing.

What are MSS bonds?

* When the central bank purchases dollars, it injects fresh liquidity into the sys-tem. To prevent such a ood of rupees created as a result of dollar purchases frompushing up the money supply above the desired level, the RBI then absorbs the rupeesby selling government bonds.

* The bonds used for this purpose are the so-called Market Stabilisation Scheme(MSS) bonds. Right now, their supply with the RBI has dwindled to some Rs 2,700crore.


15/16

Monetary policy review by RBI

* The RBI raised the two key policy ratesreverse repo and repoby 25 basis pointseach, and left banks with Rs 12,500 crore less to lend with a 25 bps increase in thecash reserve ratio (CRR).

* This rate hike is seen as moderate by any standard in the current circumstances.

Therefore, most bankers think RBI will have to raise rates as well as increase the CRRin small doses during the year.

* Banks borrow from RBI at the repo rate while parking (or lending) surplus funds atthe reverse repo rate. After Tuesdays rate action, the repo and reverse repo rates are5.25% and 3.75%, respectively. The CRR, which is like a tax on lenders, is the slice ofcustomer deposit that banks have to set aside as cash with RBI. After the 25 bps CRRhike, from 5.75% to 6%, banks will have Rs 12,500 crore less to lend from the fortnightbeginning April 24.

* RBI began tightening in January when it raised the CRR by 50 bps in two stages.This was followed by the 25 bps increase in repo and reverse repo in March. While RBI

has been slower than its counterparts in Australia and Israel in raising rates, it has beenquicker in reversing the cycle than the Chinese central bank and monetary authoritiesin many advanced economies.

CK Prahlad is no more

* Management Guru is no more and that he died of an illness of the lungs in theUS.

* He was 68.

Quantitative restrictions on imports may be back

* India had to remove QRs on over 700 items in 2001 after it lost a case in WTOagainst the US which had challenged these restrictions on import of large number ofindustrial and agricultural items.

* Under the QR mechanism, a country can impose a restriction on imports up to alimit on items which are sensitive to its domestic industries. For availing this facility, thecountry is required to have an enabling domestic law.

* Now, the country proposes to make good this lacuna by bringing changes in thedomestic law enabling it to protect its industries against import surges. The StandingCommittee of Parliament has more or less approved a provision in a bill to amend theForeign Trade (Development and Regulation) Act.

New national transport permit regime

* To be effective from May 1, the salient features of this regime are:

* Replaces the existing permit regime which requires goods carriers to compulsorilypay Rs 20,000 annually per truck. Now they will have to pay Rs. 15,000 for plying theirvehicles in the home state and three neighbouring states.


16/16

* For each additional state, the transporter has to pay Rs 5,000

* No relief for customers as permit fee contributes less than 2% of the total cost

* The total revenue contribution from state permits to goods carriers is estimated tobe around Rs 932 crore annually

Major Economies Forum (MEF)

* The MEF was set up by US President Barack Obama last year and it is focusedon working towards seeking an outcome on contentious issues relating to climatechange.

* Technology is one area that the MEF has sought to address. In this context, it islooking for a review of the renewables and efciency deployment initiative (ClimateRedi), which was launched at the Copenhagen conference.

Current Affairs_16 April _01 May_10

Documents

Transcript of Current Affairs_16 April _01 May_10