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Current Affairs: September 2009

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

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

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

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

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

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

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

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

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

More than 5000 Gram Nyayalayas are expected to be set up under the Act for which the Central government would provide about Rs.1400 crores by way of assistance to the concerned States/Union Territories.

The setting up of Gram Nyayalayas will be an important measure to reduce arrears.  The Gram Nyayalayas are likely to reduce around 50 % of the pendency of cases in subordinate courts and also to take care of the new litigations which will be disposed within six months.  This measure will usher in great revolution in disposal of cases and also to take justice to the doorsteps of the common man. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Gifts received from local authorities, trusts or entities registered as charitable institutions would not attract the provisions of the new tax norms.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ISI knew of 26/11 plan, say LeT men
Ten months after the attacks on Mumbai, Lashkar-e-Taiba remains largely intact, may have 1.5 lakh members and is determined to strike India again, according to current and former members of the group, and intelligence officials. Despite pledges from Pakistan to dismantle militant groups operating on its soil, and the arrest of a handful of operatives, Lashkar has persisted, even flourished, since the Mumbai carnage in November 2008.

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

The high-level EU and G-20 meetings came in the countdown to a critical United Nations summit in Copenhagen, which is intended to seal a new global deal on fighting climate change.  EU leaders were at pains to point out the urgency of finding a deal in December. “The climate is changing much faster than expected. ... This underlines the urgent need to reach a global, ambitious and comprehensive agreement in Copenhagen,” the joint statement said.

UN backs India’s stand on emissions
For the first time, a UN agency has endorsed India and developing countries on the climate change front. In its World Economic and Social Survey Report 2009, the UN said rich countries had consumed more than fair share of their carbon space and needed to take deep emission cuts if the new climate agreement was to be equitable. The survey said investments in energy infrastructure would have to be doubled from the existing $500 billion per year to $1 trillion and there was a need to spend approximately $20 trillion by 2030 to move the world to a low carbon growth path.

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

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

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

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

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

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

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

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

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

According to a 2005 report by the commission on the Intelligence Capabilities of the United States regarding weapons of mass destruction, Al-Qaida “had established contact with Pakistani scientists who discussed development of nuclear devices that would require hard-to-obtain materials like uranium to create a nuclear explosion.” Tenet explains that these scientists were affiliated with a different organisation than the Khan network. Congressional Research Service, a bipartisan independent research wing of the US Congress, prepares reports for lawmakers.

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

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

Broadly, the resolution supports:
  • A revitalized commitment to work toward a world without nuclear weapons, and calls for further progress on nuclear arms reductions, urging all States to work towards the establishment of effective measures of nuclear arms reduction and disarmament.
  •  A strengthened Nuclear Non-proliferation Treaty (NPT) and a Review Conference in 2010 that achieves realistic and achievable goals in all three pillars: nuclear disarmament, non-proliferation and peaceful uses of nuclear energy.
  •  “Universality” of the NPT, calling on all Sstates to adhere to its terms—an oblique reference to hold-outs such as India and Pakistan—and makes clear the Council’s intent to immediately address any notice of intent to withdraw from the Treaty.
The resolution also calls for better security for nuclear weapons materials to prevent terrorists from acquiring them, including through the convening of a Nuclear Security Summit in 2010, locking down vulnerable nuclear weapons materials in four years, minimizing the civil use of highly enriched uranium to the extent feasible, and encouraging the sharing of best practices as a practical way to strengthen nuclear security.

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

But, aside from presenting a time-table of agenda-packed conferences, the US President did not present any specific numbers, metrics, or dates on the road to eliminating nuclear weapons. He said the US will move forward with the ratification of the Comprehensive Test Ban Treaty, and open the door to deeper cuts in its own arsenal.

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

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

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

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

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

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

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

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

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

On reform of compensation the Summit statement said: “Excessive compensation in the financial sector has both reflected and encouraged excessive risk taking. Reforming compensation policies and practices is an essential part of our effort to increase financial stability. We fully endorse the implementation standards of the FSB aimed at aligning compensation with long-term value creation, not excessive risk-taking, including by (i) avoiding multi-year guaranteed bonuses; (ii) requiring a significant portion of variable compensation to be deferred, tied to performance and subject to appropriate claw back and to be vested in the form of stock or stock-like instruments, as long as these create incentives aligned with long-term value creation and the time horizon of risk; (iii) ensuring that compensation for senior executives and other employees having a material impact on the firm’s risk exposure align with performance and risk; (iv) making firms’ compensation policies and structures transparent through disclosure requirements; (v) limiting variable compensation as a percentage of total net revenues when it is inconsistent with the maintenance of a sound capital base; and (vi) ensuring that compensation committees overseeing compensation policies are able to act independently.”

The G-20 has large ambitions on energy security and climate change and its Pittsburgh communiqué binds members to phase out subsidies on fossil fuels over the medium term. It also recognises that the poor might need subsidies to consume at least a minimal amount of energy and calls for cash transfers to target beneficiaries, while abandoning the policy of subsidising fuels in general. This would bring pressure on India to abandon its present policy of subsidising kerosene and cooking gas and even diesel and petrol when their prices rise above what the government thinks is above the level of political tolerance.

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

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

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

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

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

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

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

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

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

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

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

Lauding India’s initiative to revive the stalled WTO negotiations, US Trade Representative Ron Kirk said: “The US Administration is committed to the completion of the Doha Talks by 2010.” However, Brazil said the developing countries had already made enough concessions and new demands should not be made on them.

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

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

Marathi film ‘Harishchandrachi Factory’ by theatre-veteran Paresh Mokashi has been selected as India’s official entry to 2009 Oscars.

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

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

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

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

Sakshar Bharat Mission, launched by Prime Minister Manmohan Singh on September 8, 2009, on the occasion was International Literacy Day, sets itself the goal of educating 70 million learners, 60 million of them women, by 2012 through an investment of $1billion; it replaces the old adult literacy mission that began in 1988. The final goal is to take national literacy levels from 64 per cent currently to 80 per cent by 2017, and reduce the gender gap from 21 per cent at present to 10 per cent, eventually.

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

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

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

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

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

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


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13.1 Introduction

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13.7 Key Concepts

13.8 References and Further Reading

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1.1 Introduction

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