CURRENT AFFAIRS: JULY 2010
NATIONAL AFFAIRS
Business takeover code re-written
The Takeover Regulations Advisory Committee under the
chairmanship of C. Achuthan, in its 139-page report to the
Securities and Exchange Board of India (SEBI), has proposed
sweeping changes on critical issues, including the open offer
trigger, offer size, indirect acquisitions, exemptions from open
offer obligations, calculating the offer price and competing
offers. This comes nearly 16 years after the guidelines were
formally notified for the first time and after 23 amendments to
the last major review in 1997.
The takeover panel, formed by SEBI in September 2009, has
recommended an increase in the open offer trigger from 15 per
cent to 25 per cent. Further, the open offer has to be made for
all the shares of the target company, instead of the current
practice of an offer for acquiring an additional 20 per cent.
Analysts said the proposed rules would raise the financing
required for taking over a firm, but would encourage investors
taking strategic stakes in companies.
The panel, which also had Tata Steel Ltd Chief Financial
Officer (CFO) Koushik Chatterjee and Larsen & Toubro Ltd
CFO Y M. Deosthalee as members, concluded that since a
holding level of 25 per cent permits the exercise of de facto
control over a company, this could be fixed as the appropriate
open offer trigger threshold in the Indian context.
The committee has also noted that the 100 per cent open offer
requirement could result in an acquirer ending in holding
beyond the maximum permissible non-public shareholding,
which may require the acquirer to either de-list or bring down
his holding to meet the continuous listing requirements. The
panel has recommended that the acquirer may state upfront his
INTERNATIONAL AFFAIRS
Cluster ammunition treaty comes into force
A landmark UN-sponsored treaty banning cluster munitions came into force from August 1, 2010, but all major powers,
the US, China, Russia, Israel and India have shunned it. The new instrument is expected to be a major advance for global
disarmament and humanitarian agenda.
The convention has been signed by 107 States and entered into force six months after 37 countries ratified the treaty,
which was concluded in 2008.
Cluster bombs are both air dropped and used by artillery guns, and the shells open before impact and scatter hundreds of
shrapnel, causing widespread casualties over a wide area. Many of such ammunition fail to explode and lie dormant for
years killing or maiming hundreds of civilians, long after the conflicts have ended.
From Asia only five countries—Afghanistan, Indonesia, Japan, Laos and Philippines—are the signatories.
Global community commits to peace initiative in Afghanistan
An international conference on Afghanistan was held on July 20, 2010 in Kabul, Afghanistan. The international
community reiterated its commitment to continue to support peace and reintegration and said it looked forward to the
local peace  jirgas that included men and women at district and provincial level to discuss elements of an enduring peace.
The government of Afghanistan is to engage with the UN Security Council and the international community for de-
listing Taliban elements from the sanctions list in accordance with agreed procedures and common Afghan and
international responsibility.
The international community expressed its support for Karzai’s objective that the Afghan national security forces should
lead and conduct military operations in all the provinces by the end of 2014.
On the issue of security, the meeting recognised that civilian casualty and protection of civilians are of great concern and
noted that most civilian casualties are caused by insurgent attacks. They also reiterated that the international military
forces remain committed to the objective of a steady reduction in the rate of civilian casualties.
Kyrgyzstan vote for parliamentary democracy
In a development that could have far reaching political impact in the region, Kyrgyzstan is all set to become Central
Asia’s first parliamentary democracy, with an overwhelming 90.55 per cent voters backing a new constitution which
intention to de-list if his holding in the target company were to
cross the de-listing threshold, pursuant to the open offer.
In the absence of any such disclosure or when the response to
the open offer is below the de-listing threshold, the acquirer
would be required to either proportionately reduce both his
acquisitions under the agreement that triggered the open offer
and the acquisitions under the open offer or to bring down his
holding to comply with continuous listing requirements.
The committee has also recommended that a short public
announcement should be made by the acquirer on the date of
entering in to an agreement followed by a detailed public
statement within five business days thereafter. The overall
time-line for an open offer has been brought down from 97
days to 57 business days.
The committee, in its attempt to enable transparent
consolidation by persons already holding in excess of 25 per
cent, has recommended voluntary offers of a minimum size of
at least 10 per cent and a maximum size of such number of
shares that would not result in any kind of breach of the
maximum non-public shareholding permitted under the listing
agreement. Under the existing regulations, an offer for a
percentage lesser than minimum prescribed percentage can
only be by shareholders holding more than 55 per cent.
The panel has also recommended that creeping acquisition be
permitted only for acquirers who hold more than 25 per cent of
the voting capital, subject to aggregate post-acquisition
shareholding not exceeding the maximum permissible non-
public shareholding. It has, however, left the annual creeping
acquisition limit unchanged at five per cent.
In another recommendation that is expected to enhance the
corporate governance norms, the committee has made it
mandatory for the independent directors of the target company
to give their recommendation on the open offer. Also, no
strips the President’s wide ranging powers.
After publishing the official results of the June 27 referendum, the Kyrgyz Central Election Commission (CEC), on July
1, 2010, declared Roza Otunbayeva as the transitional President till December 31, 2011.
It also formally dissolved the Presidential parliament, which was in jeopardy in the wake of violent ouster of President
Kurmanbek Bakiyev’s regime in April 2010. 
In line with the new constitution, the 120-strong Kyrgyz Parliament, after October 2010 elections, will appoint the Prime
Minister and the government.
The referendum, the first step towards legitimacy of the present regime, took place in the midst of inter-ethnic violence
in the southern regions of Osh and Jalalabad and exodus of hundreds of thousand refugees to neighbouring Uzbekistan.
Fresh US sanctions on North Korea
US Secretary of State Hillary Clinton announced on july 21, 2010 that Washington would impose new sanctions on
communist North Korea in a bid to stem the regime's illicit atomic ambitions.
The UN Security Council has imposed stiff sanctions on North Korea in recent years to punish the regime for defying the
world body by testing nuclear weapons and long-range missiles, and illegally selling arms and weapons.
With few allies and diminishing sources of aid, the impoverished North Korea is believed to be turning to illicit ventures
to raise the much-needed cash. Pyongyang also walked away in 2009 from a disarmament-for-aid pact with five other
nations that had provided the country with fuel oil and other concessions.
Pakistan, China ink six pacts
Pakistan and China reiterated their resolve to further strengthen strategic relationship between the two countries, increase
the level of economic cooperation and take concrete measures to further bring their people closer, during the visit of
Pakistan’s President Asif Ali Zardari to China in July 2010. The two countries pledged to make joint efforts to fight
terrorism, and signed six deals of cooperation in the areas of agriculture, healthcare, justice, media, economy and
technology.
US slaps toughest sanctions on Iran
On July 1, 2010, even as he signed into law the toughest sanctions against ever passed by the US Congress at the White
House, US President Barack Obama said the doors of diplomacy are still open for the regime in Tehran.
The Iran Sanctions Act affects the gasoline, financial, insurance and shipping sectors, among others, as it seeks to impose
a heavy economic cost on Iran for continuing with its nuclear programme.
appointment of representatives of the acquirer to the board of
directors of the target company would be permitted unless the The sanctions bar foreign countries from exporting refined petroleum to Iran, as well as restrict access to US financial
acquirer places 100 per cent of the consideration under the open institutions for any entities that help Iran’s Revolutionary Guard Corps.
offer in cash in an escrow account.
Also, it prevents investment, transfer of technology and development of Iran’s energy sector, and makes it easier for
Major changes have also been proposed in the manner States and localities to divest from companies that do business with Iran.
minimum price payable is calculated. According to the
committee, the offer price would be the highest of (i) market
price to be based on 12 weeks volume weighted average of
market prices as against higher of weekly averages of market
prices for 26 weeks or 2 weeks; (ii) a qualitative improvement
and expansion in the look back provision; (iii) in the case of
indirect acquisitions, ascription of value to the target company
under certain circumstances.

Also, any kind of non-compete fee or control premium paid to

promoters will have to be factored in while calculating the open
offer price for the minority shareholders.

PM’s panel pegs exports at $216 billion

India's exports are projected to grow by about 22 per cent to
$216 billion in 2010-11, on the back of recovery in global
trade, according the Prime Minister's Economic Advisory
Council.

With contraction in global merchandise demand, India's exports

declined by 4.7 per cent to $176.6 billion in 2009-10. However,
in the first two months of 2010-11 exports grew by 35.7 per
cent.

The International Monetary Fund has projected that exports, at

constant price, from emerging and developing economies
would increase by 10.5 per cent in 2010. Exports from the
advanced economies are also expected to rise by 8.2 per cent.

India-Iran sign six pacts

In their first interaction after the UN imposed the fourth round
of sanctions on Tehran in June 2010 over its controversial
nuclear programme, India and Iran, on July 8, 2010, signed six
pacts, including one on cooperation in new and renewable
energy and another on increasing the number of flights between
the two countries. The MOUs were signed at the end of the
two-day meeting of the India-Iran joint commission.

The other four accords were: agreement on transfer of

sentenced prisoners; MOU on cooperation in small-scale
industry between the National Small Industries Corporation
(NSIC) and the Iranian Small Industries and Industrial Parks
Organisation (ISIPO); programme of cooperation on science
and technology; and MOU on cooperation between the Central
Pulp and Paper Research Institute (CPPRI) of India and the
Gorgan University of Agricultural Science and Natural
Resources (GUASNR).

The signing of the agreements clearly reflected New Delhi’s

intention that it would pursue an independent policy on Iran,
notwithstanding the American pressure on it not to enlarge the
area of its engagement with Tehran.

Although it is committed to abide by the UN sanctions on

Tehran, New Delhi maintains that the Iranian nuclear issue
must be resolved through negotiations since the sanctions
would only hurt the common Iranian people. While recognising
Iran’s right to develop nuclear energy for peaceful purposes, it
has also advised Iran to strictly abide by the IAEA guidelines
while pursuing its nuclear programme.

The two sides also discussed the situation in Afghanistan at

length with both of them expressing their common stakes in the
stability of the violence-torn country. New Delhi is believed to
have pressed for structured and regular consultations with
Tehran on defeating terrorists in Afghanistan and in the 

Visit of Myanmar’s military ruler

Ignoring worldwide concerns over human rights violations in
Myanmar, New Delhi rolled out a red carpet welcome for
Myanmar military ruler General Than Shwe on July 27, 2010.
Top Indian leaders held wide-ranging talks with him on a
plethora of issues, including bilateral ties as well as
international developments.

The increasing Chinese influence in the South East Asian

nation is apparently weighing heavily in the mind of the Indian
leadership as it seeks to increase its engagement with
Myanmar, particularly in the vital energy sector and in fighting
Indian insurgents operating along the India-Myanmar border.

The two countries signed five accords after talks between

Prime Minister Manmohan Singh and the 77-year-old leader of
the military ‘junta’. Simultaneously, the EXIM Bank of India
extended a line of credit of $60 million to the Myanmar
Foreign Trade Bank.

The treaty on mutual legal assistance in criminal matters is

expected to help the two countries combat transnational
organised crimes, terrorism, drug trafficking, money laundering
and smuggling of arms and explosives. The MoU on Indian
grant assistance for implementation of small development
projects is aimed at boosting Indian investments in energy,
transport and infrastructure sectors.

Strategic observers say the change in India’s policy towards

Myanmar was prompted by China wooing the military ‘junta’
to make deep inroads into virtually every sphere of Myanmar’s
economic activity. Though China has its own strategic interests
in engaging the ‘junta’ in Myanmar, the military rulers are
worried that their image outside the country is sullied because
of its poor record in protecting human rights.

The military ruler wants to correct this image by introducing

some kind of democracy. His visit to India was also aimed at
gaining global respectability.

Visit of British Prime Minister

British Prime Minister David Cameron came visiting India in
July 2010. Talking on terrorism affecting the region, he said
that Pakistan could not be allowed to harbour militants and
promote terror against India, Afghanistan and the rest of the
world. On his first visit to India after becoming Prime Minister
in May 2010, he laid out the basis for a new “enhanced
relationship” with India. Apart from Cameron’s own tough talk
on terrorism, his business minister Vince Cable announced the
UK was prepared to export civil nuclear technology to India,
bringing Britain in line with the stance taken by the United
States, Russia and France.
 
Travelling to Bangalore and then to Delhi, Cameron signed a
Rs 5,082 crore agreement for the Indian Air Force and Navy to
buy an additional 57 Hawk Advanced Jet Trainer aircraft from
British Aerospace Systems. India and the UK also made
announcements in the field of immigration, education and
signed an agreement on cultural cooperation.

Cameron welcomed India’s support to Afghanistan, Nepal and

Bhutan, its “intellectual leadership” at the G20, and said the
time was ripe for India to find a place in the UN Security
Council.

Unified Command to battle Naxals

In what is a first step at forming a common strategy for States
hit by Naxal violence, the Centre announced, on July 13, 2010,
setting up of a Unified Command in Chhattisgarh, Jharkhand,
Orissa and West Bengal. Realising that development and action
in Maoist areas should be together, the Centre also announced
that over Rs 1,750 crore would be spent on developmental
projects in the four States.

The Chief Secretary of each State will head the Unified

Command, which will have a retired Major-General as its
member. The CRPF will depute an IG-level officer for
‘operations’ while an equal rank officer from the State police
force will coordinate the entire effort.
The Home Minister said that there was need for a Unified
Command only in these four states and Andhra Pradesh,
Maharashtra and Bihar had been omitted for the time being. 

The Centre has also told the States that the Member-Secretary
of the Planning Commission will work to modify existing
norms and guidelines to ensure rapid development in the
targeted 34 districts: Rs 800 crore will be spent on
strengthening police stations and another Rs 950 crore on road
connectivity in these districts. The government will fund the
establishment and strengthening of 400 police stations in
affected districts at the rate of Rs 2 crore a police station on
80:20 basis over a period of two years.

The Planning Commission is also considering a special

development plan for the affected districts and States with
emphasis on road connectivity, primary education, primary
healthcare and drinking water.

Already in force in militancy-hit Jammu and Kashmir and

Assam, the Unified Command structure includes Army,
paramilitary and State police, who work in coordination. The
Army would not be involved in anti-naxal operations for now.
However, IAF helicopters would be used for supplies and
evacuation. 
CURRENT AFFAIRS: JUNE 2010
NATIONAL AFFAIRS
Compulsory public float rule issued
On June 5, 2010, the Union government made it mandatory for
all listed companies to have a minimum public float of 25 per
cent. Those below this level will have to get there by an annual
addition of at least 5 per cent to public holding.
The move is expected to result in equity dilution of about Rs
1,60,000 crore by 179 listed companies. These include Reliance
Power, Wipro, Indian Oil Corporation, DLF and Tata
Communications.
According to the notification, ‘public’ will not include the
promoter, promoter group, subsidiaries and associates of a
company. ‘Public shareholding’ will mean equity shares of the
company held by the public and not the shares held by the
custodian against depository receipts issued overseas.
A company can increase its public shareholding by less than 5
per cent in a year if such increase brings its public shareholding
to the level of 25 per cent in that year. If the public
shareholding in a listed company falls below 25 per cent at any
time, the company will have to bring the public shareholding to
25 per cent within 12 months from the date of such fall,
compared with the two years allowed at present.
Bhopal Gas Tragedy verdict
On June 7, 2010, nearly 26 years after the world's worst
industrial disaster left more than 15,000 dead in the Bhopal gas
tragedy, former Union Carbide India Chairman Keshub
Mahindra and seven others were convicted and sentenced to
two years imprisonment.
INTERNATIONAL AFFAIRS
Hatoyama resigns as Japan’s PM
Japanese Prime Minister Yukio Hatoyama, who ended five
decades of single-party rule when he swept to power in
August 2009, but stumbled when he confronted a long-time
ally, the United States, resigned on June 2, 2010. Hatoyama
quit at a meeting of leaders of the Democratic Party of Japan
in Tokyo, becoming the fourth straight Japanese leader to
leave after a year or less in office. 
“Since last year’s elections, I tried to change politics in which
the people of Japan would be the main characters,” he said
later at a nationally broadcast news conference. But he
conceded that his efforts weren’t understood. 
Hatoyama ran for the premiership on a campaign platform of
maintaining a more equal relationship with the United States,
which still enjoys enormous support among most Japanese.
His decision to challenge Washington over the details of a
massive military base relocation plan on the island of Okinawa
befuddled Japanese and American analysts and government
officials alike.
Hatoyama also called for Japan to become more of an “Asian
nation,” which sparked concern in Washington that he wanted
to move away from the country’s pro-US stance and closer to
China.
Finance Minister Naoto Kan succeeded Hatoyama as the new
Prime Minister.
Maoists force Nepal PM to resign
Nepal’s Prime Minister announced his resignation on June 31,
Chief Judicial Magistrate Mohan P. Tiwari held the 85-year-old
non-executive chairman of the Indian subsidiary of the US-
based company and gave them punishment under less stringent
provisions of the Indian Penal Code for causing death by
negligence.
The 89-year-old Warren Anderson, the then Chairman of Union
Carbide Corporation of USA, who lives in the United States,
appeares to have gone scot free for the present as he is still an
absconder and did not subject himself to trial. There was no
word about him in the judgement.
The US based company reacted to the judgement saying neither
it nor its officials were subject to the jurisdiction of the Indian
court since they were not involved in the operation of the plant,
which was owned and operated by Union Carbide India
Limited.
In his 93-page verdict, Tiwari said the accused were not
sentenced under section 304 IPC (culpable homicide not
amounting to murder that provides a maximum of life
imprisonment) since they were old age and were suffering from
serious ailments including heart disease.
All the convicts applied for bail immediately after the
sentencing and were granted relief on a surety of Rs 25,000
each.
Law Minister M. Veerappa Moily described the verdict as an
example of “justice buried” and said there was need for fast-
tracking such cases and ensuring proper investigation.  However, the Republicans say the Bill would hurt the
The BJP termed the order as “painful” and said the prosecution
should appeal against the lower punishment. It also utilised the
opportunity to reconsider the provisions of the nuclear liability
Bill.
ONGC, OIL get freedom to price natural gas
2010, bowing to pressure from opposition Maoists who had
been demanding his ouster in Parliament and on the streets.
Prime Minister Madhav Kumar Nepal said in a televised
speech that he decided to resign to end political deadlock and
shore up the peace process.
Mr Madhav Kumar had taken over the post in May 2009 after
the previous government led by the Maoists resigned
following differences with the President over the firing of the
army chief. He had the support of 22 political parties in
Parliament and more than half of the 601 members in the
Assembly. However, the Maoists, who have the largest
number of seats in the Assembly, refused to support his
government and instead staged protests to demand disbanding
the government.
In May 2010, the Maoists had shut down the nation for more
than a week, imposing a general strike. The protests also
delayed the writing of a new constitution, which was supposed
to be complete by May 2010. The deadline has now been
extended by one year.
Landmark US Financial Reform Bill
On July 1, 2010, the US House of Representatives approved a
landmark overhaul of financial regulations. The Bill would
impose tighter regulations on financial firms and reduce their
profits. It would boost consumer protections, force banks to
reduce risky trading and investing activities and set up a new
government process for liquidating troubled financial firms.
economy by burdening businesses with a thicket of new
regulations. They also point out that it ducks the question of
how to handle troubled mortgage finance giants Fannie Mae
and Freddie Mac, which Democrats plan to tackle in 2011.
Ethic Riots in Kyrgyzstan
Russia sent hundreds of paratroopers to Kyrgyzstan on June
In a significant development, the Union government has given
national oil companies, Oil and Natural Gas Corp (ONGC) and
Oil India Ltd (OIL), freedom to price any additional natural gas
produced from blocks given to them on nomination basis at
market rates. So far, all gas—current and future—produced
from blocks given to ONGC and OIL was priced at
government-controlled rates, called administered price
mechanism (APM).
Even the price of APM gas from June 1 has been more than
doubled to $4.2 per million British thermal units, on a par with
the rate at which Reliance Industries sells gas from its eastern
offshore KG-D6 fields.
The government has also made a significant departure from the
previous practice of pricing natural gas in rupees and has now
decided to price it in US dollars.
State-run ONGC and OIL produce 54.32 million cubic metres
of gas per day — about 40 per cent of the total amount
originating from the country — through fields given to them on
a nomination basis.
Petrol, Diesel prices freed from government control
On June 25, 2010, the Union government announced that prices
of petrol and diesel would become market-driven, in line with
the recommendations of a panel headed by former Planning
Commission member Kirit Parikh.  reduce the government debt-to-GDP ratio by 2016. At the
An empowered group of ministers led by Finance Minister
Pranab Mukherjee agreed to raise diesel prices by Rs 2 a litre
for now. The fuel will eventually be freed from State control.
Petrol has been freed fully.
The panel also increased prices of liquefied petroleum gas
(LPG) by Rs 35 a cylinder and of kerosene by Rs 3 a litre,
though both will remain under government control.
13, 2010 to protect its military facilities as ethnic clashes
spread in the Central Asian State, bringing the death toll from
days of fighting to 97. Ethnic Uzbeks in a besieged
neighbourhood of Kyrgyzstan’s second city Osh said gangs,
aided by the military, were carrying out genocide, burning
residents out of their homes and shooting them as they fled.
Witnesses saw bodies lying on the streets. 
The interim government in Kyrgyzstan, which took power in
April 2010, after a popular revolt toppled President
Kurmanbek Bakiyev, appealed for Russian help to quell the
riots in the south. 
Led by Roza Otunbayeva, the interim government sent a
volunteer force to the south and granted shoot-to-kill powers
to its security forces in response to the deadly riots, which
began in Osh, before spreading to Jalalabad. 
Renewed turmoil in Kyrgyzstan has fuelled concern in Russia,
the United States and neighbour China. Washington uses an
air base at Manas in the north of the country, about 300 km
from Osh, to supply its forces in Afghanistan. 
G-20 Summit meeting
A Summit meeting of Leaders from the Group of 20 economic
powers was held in Toronto, Canada on June 28, 2010. The
leaders have agreed to halve deficits by 2013 and stabilise or
same time, the bloc left it to individual countries to decide on
levying taxes on banks or adopting other means to fund future
bailouts. 
Along the way, the G-20 leaders who completed their fourth
meeting since the global financial crisis of 2008, also diluted
their position on a number of problems they had decided to fix
earlier. For instance, while reinforcing their desire to move to
a more stringent capital structure, the communiqué issued after
two days of discussions said countries would “aim” to put in
The decision will help to cut fuel subsidies and limit losses of
State-run refiners.
The market-driven mechanism would mean users would have
to pay more whenever international crude oil prices rise and
less when they fall.  will have more capital to deal with crises as the ratio of core
The move would bring down the government’s huge subsidy
bill and relieve State-owned oil marketing companies of some
of the burden they bear by selling fuels much below the market
prices. This burden, also called under-recovery, is estimated at
Rs 215 crore every day.
Jharkhand again under President’s rule
On June 1, 2001, Jharkhand came under Central rule with
President Pratibha Patil accepting a recommendation of the
Union Cabinet after the Congress and the BJP gave up efforts
to form an alternative government following resignation of
Chief Minister Shibu Soren.
The State Assembly will be kept in suspended animation during
the President’s rule, which has been imposed for a second time
in two years.
The Soren government was reduced to a minority on May 24
when the BJP, with 18 MLAs and the JD(U) with two,
withdrew support to it. The JMM, with 18 MLAs and having
the support of seven other legislators, was short of the required
42 in the 82-member House. The BJP took the decision after
Soren voted against the cut motions sponsored by the
opposition in Lok Sabha on April 27.
Jharkhand has seen seven CMs since its creation on November
15, 2000, came under President’s rule for the first time on
January 19, 2009.  countries such as India and Brazil.
India, Canada sign civil nuclear pact
On June 28, 2001, India and Canada signed a civil nuclear
place a new framework by the end of 2012, which was earlier
the target date. Members will also get flexibility in phasing the
new rules.
The good news is that once these rules are implemented banks
Tier-I capital of a bank to its risk-weighted assets is expected
to double from the present level of 2 per cent.
On trade, too, there was dilly dallying. The G-20 leaders, who
had earlier said that the Doha Round of trade liberalisation
talks should be concluded in 2010, have not mentioned any
deadline now. All that has been said is that they will now
deliberate on the ways to take forward the talks when they
meet in Seoul in November 2010.
G-20 members have also decided against erecting any new
trade and investment barriers.
The decision to increase the quotas for developing countries in
the International Monetary Fund by the Seoul summit was
touted as another gain. 
While many elements in the 19-page statement were a
reiteration of the earlier pledges, these were at least two new
elements. One of them was a proposal to set up a working
group on development. The other was the desire to focus on
issues related to corruption with members urging to ratify and
implement the United Nations Convention against Corruption.
However, the move by some developed countries to insert
another new element — a levy on bank transactions — did not
find a mention in the final text as the focus of the deliberations
remained on reducing fiscal deficit levels. A key demand of
European countries, was resisted by the US and developing
Along with deficit reduction, G-20 leaders also agreed on
ushering in structural reforms by emerging surplus economies,
cooperation agreement. The pact was signed during Prime
Minister Manmohan Singh’s visit to Canada.
The deal, the ninth signed by New Delhi, significantly alters
Canada’s stance towards India. The North American nation had
led the world in pushing for nuclear isolation after the 1974
tests in Pokhran.
The US, France, Russia, Mongolia, Kazakhstan, Argentina,
Namibia and Britain are the eight countries that have already
signed similar pacts with India.
Among other things, the India-Canada Agreement for
Cooperation in Peaceful Uses of Nuclear Energy provides for
tie-ups in design, construction, maintenance, supply of uranium
and waste management. The two countries can also promote
cooperation in the development and use of applications related
to health, industry, environment and agriculture.
Visit of South African President
On his maiden visit to an Asian country as the President of
South Africa, Jacob Zuma was given a rousing reception by the
Indian leadership on June 4, 2010, as the two countries signed
three key pacts, including one on air services, and agreed to
support each other’s candidature for the non-permanent seat at
the UN Security Council for the 2011-2012 term. 
A wide range of bilateral issues as well as global developments,
including reforms of the UN Security Council, closer
cooperation between the two countries at various international
fora, particularly on climate change, and increasing the volume
of bilateral trade, came for discussions during the talks.  The leaders also emphasized the need to reduce moral hazard
Apart from the pact on enhancing air connectivity, the two
countries signed an MoU on agriculture cooperation and
another for linkages between the Foreign Service Institute of
India and the Diplomatic Academy of South Africa.  on the basis of internationally agreed principles.
Both India and South Africa are keen to increase the two-way
such as China. These countries, which can tailor their reform
moves to strengthen social safety nets, should increase
infrastructure spending and enhance exchange rate flexibility
to reflect underlying economic fundamentals.
G-20 meeting of Finance Ministers
Finance Ministers and Central Bank Governors of G-20
countries met in Busan, South Korea on June 4, 2010.
At the top of the agenda was Europe’s debt crisis. The
Ministers also discussed medium-term growth framework and
how to solve economic imbalances which caused the global
financial crisis. Canada, the current G-20 President, hopes to
secure an agreement in Toronto on the broad suite of policies
needed to reduce these imbalances. Individual countries would
then commit themselves to specific policies at the next G-20
summit in Seoul.
Building on progress to date, the leaders affirmed their
commitment to intensify efforts and to accelerate financial
repair and reform. They also agreed that further progress on
financial repair is critical to global economic recovery and
requires greater transparency and further strengthening of
banks’ balance sheets and better corporate governance of
financial firms.
The leaders also committed to reach agreement expeditiously
on stronger capital and liquidity standards as the core of our
reform agenda and in that regard fully supported the work of
the Basel Committee on Banking Supervision.
associated with systemically important financial institutions
and reinforced their commitment to develop effective
resolution tools and frameworks for all financial institutions
 
The G-20 was established in 1999, in the wake of the 1997
trade, which currently stands at $7.5 billion annually. Zuma
said he wanted that to grow to $10 billion by 2012.  emerging economies to stabilize the global financial market.
Visit of Sri Lankan President
Sri Lankan President Mahinda Rajapaksa visited New Delhi on
June 9, 2010. During his talks with Prime Minister Manmohan
Singh, he sought to cool down tempers in India over the plight
of Tamils in his island nation by promising to quickly resettle
displaced Tamils and expedite a political solution to the ethnic
issue.
The two countries also signed seven agreements, including a
treaty on mutual legal assistance in criminal matters and an
MOU on sentenced prisoners, after wide-ranging talks.
The two countries announced a major initiative to undertake a
programme of construction of 50,000 houses for internally
displaced persons (IDPs) in Northern and Eastern provinces of
Sri Lanka with India’s assistance. India would also be taking up
several projects for the reconstruction of the North and the
East, including rebuilding of railway infrastructure,
rehabilitation of Kankesanthurai harbour and Palaly Airport,
construction of a cultural centre in Jaffna and several
vocational training centres, renovation of the Duraiappaj
stadium and rehabilitation of war widows.
The two countries also decided to resume the ferry services
between Colombo and Tuticoran and between Thalaimannar
and Rameswaram. India would also establish consulates
general in Jaffna and Hambantota. India would also assist the
island country in setting up a thermal power plant at
Trincomalee. 
At their one-on-one meeting which was followed by
delegation-level talks, the Indian PM and the Sri Lankan
President also discussed a wide range of bilateral issues,
including the proposed comprehensive economic partnership
agreement (CEPA), as well as international issues. Sri Lanka
Asian Financial Crisis, to bring together major advanced and
Since its inception, the G-20 has held annual Finance
Ministers and Central Bank Governors’ Meetings and
discussed measures to promote the financial stability of the
world and to achieve a sustainable economic growth and
development.
China announces plans to make its currency more flexible 
Equity markets across the world made handsome gains on
June 21, 2010, after China announced plans to make its
currency, the yuan, more flexible against the dollar. India’s
benchmark equity index, the Sensex, and the broad-based
Nifty today touched their highest levels in more than two
months.
Market analysts said China’s move would go a long way in
lifting the global economic sentiment that was under the
weather due to the Euro crisis. China’s decision would result
in a higher growth rate, especially for countries that have a
significant trade relation with the Asian behemoth, as currency
appreciation would make imports comparatively cheaper in
China. 
According to Barclays Commodities, there is a thinking that a
stronger yuan will “increase Chinese purchasing power”
leading to an increase in its “purchases of base metals”. “This
coincides with a strong set of Chinese trade data for May
2010, which showed that the country turned a net importer of
aluminium and lead, while copper and zinc imports remained
strong”.
UNSC slaps sanctions on Iran
On June 9, 2010, the UN Security Council slapped sanctions
on Iran over its controversial nuclear programme, targeting the
powerful Revolutionary Guard, ballistic missiles, and nuclear-
related investments, despite opposition from Brazil and
Turkey.
supported India’s case for inclusion in an expanded UN
Security Council, as well as its candidature for a non-
permanent seat for the 2011-2012 term.
The five other agreements, signed after the talks between the
two sides, were: renewal of MoU on SDP schemes, MoU on
setting up of a women’s trade facilitation centre and
community learning centre, renewal of cultural exchange
programme, MoU on interconnection of electricity grids and
MoU on Talaimannar-Madhu railway line.
Indo-US strategic dialogue
The Strategic Dialogue between India and US is another
“milestone” in bilateral relationship with the Obama
Administration. External Affairs Minister S.M. Krishna and US
Secretary of State Hillary Clinton co-chaired the first Cabinet-
level Indo-US Strategic Dialogue, which helped to set the pace
for the long-term strategic relationship between the two
countries.  peaceful civilian purposes.
In the 15-member Council, 12 countries, including the US and
Britain, voted in favour of the resolution, with Lebanon
abstaining and Brazil and Turkey voting against.
The new resolution, which is fourth against Iran to be adopted
by the UNSC, creates new categories of sanctions like banning
Iran's investment in nuclear activity abroad, banning all
ballistic missiles activities, blocking Iran's use of banks aboard
and asset freezes for members of the Islamic Revolutionary
Guard Corps.
The resolution blacklists entities that includes 15 enterprises
of the Islamic Revolutionary Guards Corps, three entities
owned by the Islamic Republic of Iran Shipping Lines and 23
industrial companies. The international community accuses
Iran of seeking to develop an atomic weapon. But, Tehran has
been maintaining that its uranium enrichment program is for
India has been maintaining that it is opposed to such kinds of
sanctions as it will affect the common people more than the
establishment. Russia and China, which have previously raised
objections against such sanctions, supported the resolution and
said they were happy with the text of the resolution as long as
it did not have any negative impact on the people.
Iran voiced defiance, saying it would not halt uranium
enrichment and suggesting it may reduce cooperation with the
UN nuclear agency. 
SAARC nations pledge coordinated action to tackle terror
Members of SAARC have pledged to step up coordinated
action against the common menace of terrorism, including
steps to apprehend or extradite persons connected with acts of
terrorism and facilitate real-time intelligence sharing. 
The meeting of the Interior Ministers of the South Asian
Association for Regional Cooperation, held on June 27, 2010
in Islamabad, Pakistan, also resolved to step up cooperation in
real time intelligence-sharing and to consider Pakistan’s
proposal for creation of SAARCPOL, an institution on the
lines of Interpol.

The ministerial statement on cooperation against terrorism

adopted at the meeting said the SAARC member States had
underscored their “commitment to apprehend and prosecute or
extradite persons connected, directly or indirectly, with the
commissions of acts of terrorism”. They also reiterated their
commitment to strengthen SAARC’s regime against terrorism.

The ministers resolved to ensure that “nationals and entities”

of SAARC States who commit, facilitate or participate in
commission of terror acts are “appropriately punished”.

The SAARC members—Afghanistan, Bhutan, Bangladesh,

India, Pakistan, Maldives, Nepal and Sri Lanka—also
acknowledged that linkages between terrorism, illegal
trafficking of drugs, human trafficking, smuggling of firearms
and threats to maritime security remained a “serious concern”
and said these problems would be addressed in a
comprehensive manner. 

US-Russia ties improve

On June 25, 2010, US President Barack Obama declared he
had succeeded in “resetting” the US-Russia relationship,
which he said had reached its lowest point since the Cold War
at the end of George W. Bush’s term in office. Obama was
speaking to reporters in the East Room of the White House
following meetings with Russian President Dmitry Medvedev.

Medvedev, meanwhile, agreed to allow a resumption of US

poultry exports to his country which Russia had banned earlier
in 201, claiming that a chemical used in the US violated its
food safety rules.
But despite the bonhomie between the two leaders, who have
met seven times since Obama took office, both Obama and
Medvedev acknowledged that they had differences over
certain issues, including Georgia. Relations between the two
countries deteriorated after the Russian invasion of Georgia in
2008.

The US and Russian Presidents said they had resolved a

majority of the obstacles in the path to Russia’s entry into the
WTO. They have instructed their negotiators to work as
quickly as possible to wrap up what Obama said were
“difficult issues” that will require “some significant work”, but
Medvedev described as “minor problems”.

The two sides released 11 joint statements at the end of their

meeting. These covered promotion and implementation of
open government; Kyrgyzstan; energy efficiency; strategic
stability; counter-terrorism cooperation; inter-country
adoption; Afghanistan; people-to-people connections; strategic
partnership in innovation; Russia’s accession to the WTO;
US-Russia Presidential Commission.

Canada government blamed for Kanishka crash

A long-awaited inquiry into the 1985 Air India Kanishka
bombing, which killed 329 persons, mostly of Indian origin,
has blamed the Canadian government for its failure to prevent
the tragedy and recommended the appointment of a powerful
security czar to resolve disputes between conflicting interests
among security agencies.

“The government needs to take responsibility to avoid further

failure and to prevent a return to a culture of complacency,”
Justice John Major, the head of the Kanishka bombing inquiry
commission, recommended on June 17, 2010, nearly 25 years
after Canada's worst terrorist attack.

In the much-awaited final report from the commission that

investigated the bombing of Air India Flight 182 on June 23,
1985, he observed that the national security continues to be
badly organised between the RCMP and Canada's spy agency.
He also recommended radical transformation in prosecution.
Meanwhile, Candian Prime Minister Stephen Harper assured
the family members of the victims of the 1984 Air India
Kanishka bombing that the government would respond
“positively” to the recommendations made by an inquiry
committee and said compensation would be offered to all.

Years of criminal investigation have yielded just one

conviction, for manslaughter, against a British Columbia
mechanic Inderjit Singh Reyat, who assembled bomb
components. 

G-8 leaders drop commitment to complete Doha round in

2010
On June 27, 2010, G-8 leaders met in Totonto, Canada for
their annual Summit meeting. The leaders decided to drop a
commitment to complete the troubled Doha trade round in
2010 and vowed to push forward on bilateral and regional
trade talks until a global deal could be done.

In 2009, a G-8 summit in Italy and a Pittsburgh meeting of the

Group of 20 both had committed to a 2010 end date that now
looks impossible to meet.

Canadian Prime Minister Stephen Harper, who chaired the G-

8 summit, said Doha was not dead. “I don't think we can
afford to say that. We’ve got to find a path over time to get to
a successful conclusion,” he told a closing news conference.

Doha round has been dogged by differences among trade

powers who want more access to one another’s markets but
have struggled to lower their own trade barriers.
CURRENT AFFAIRS: MAY 2010
NATIONAL AFFAIRS
RBI measures to boost liquidity
The Reserve Bank of India (RBI) has announced special
measures to provide liquidity in the system, which may face a
cash crunch because of huge outgo on third generation (3G)
telecom spectrum licences and payment of advance tax by
companies.
On May 27, 2010, RBI allowed banks to avail of additional
support under the liquidity adjustment facility (LAF). Till July
2, banks have been permitted to avail of support of up to 0.5
per cent of their net demand and time liabilities, which will
provide an additional liquidity support of over Rs 20,000 crore.
In addition, RBI said that as an ad hoc measure, banks can seek
a waiver for any shortfall in maintenance of the prescribed 25
per cent statutory liquidity ratio (SLR) while availing the
temporary facility.  The LibDems play an extremely important role in the
Decks cleared for first Defence University
More than 40 years after it was mooted, the Union Cabinet, on
May 13, 2010, gave its approval to set up the nation’s first
defence university at Binola, around 20 km from Gurgaon. It
would aim at imparting education on strategic challenges to
armed forces officials, bureaucrats, academicians,
parliamentarians and trainees at military academies.
To be established at an estimated Rs 300 crore, the institute
would come up on an area of about 200 acres. A sum of Rs 100
crore has been earmarked for land acquisition. The existing
defence educational institutions like the National Defence
College, New Delhi, College of Defence Management,
Secunderabad, National Staff College, Wellington, and
National Defence Academy, Pune, would also be affiliated to
INTERNATIONAL AFFAIRS
Hung House in Britain after 36 years
On May 7, 2010, Britain woke up to a hung Parliament, an
election outcome that this country last experienced in 1974
when the then Prime Minister Edward Heath tried and failed
to persuade the Liberal Party to join him in a coalition.
The Conservatives under David Cameron emerged as the
single largest party with 306 seats in the 650-member House
of Commons, while Labour bagged 258 and Lib Dems 57.
Eight NRIs won elections, four each from the Labour Party
and the Conservatives. Likewise four Pakistani-origin MPs,
Sadik Khan, Khalid Mahmood, Anas Sarwar and a woman
lawyer Shabana Mahmood, were successful on behalf of the
Labour Party. 
formation of the next government, although they have not
been able to attract as many votes as they hoped for. They
were expecting to win more than 100 seats, but they had to be
satisfied with less than 60. However, despite the poor show,
they still hold the trump card and are destined to play the role
of king-makers. 
On May 11, Conservative leader David Cameron (43), who
favours a ‘new special relationship’ with India, took charge as
Britain’s youngest Prime Minister in nearly 200 years, heading
a coalition with the support of centrist LibDems, and vowed to
put aside party differences and provide a strong and decisive
government. He made Liberal Democrats leader Nick Clegg
Deputy Prime Minister.
EU steps to halt economic crisis
the INDU. At present, these institutions are attached to various
universities across the country.
The proposed university, which would be fully autonomous and
constituted under an Act of Parliament, would promote policy-
oriented research on all aspects of national security as part of
the strategic national policy-making. The university was first
mooted in 1967 and the matter was accorded all seriousness
after the 1999 Kargil conflict.  750 billion Euro ($962 billion), including International
The government had set up a Kargil Review Committee,
headed by strategic expert K. Subrahmanyam, which had
recommended establishment of such a university to exclusively
deal with defence and strategic matters. It will encourage
awareness of national security issues by reaching out to
scholars and an audience beyond the official machinery.
No law practice without clearing exam
From September 2010, law graduates will have to clear an
entry-level exam to be eligible for legal practice. In a widely
anticipated move, the Bar Council of India—the regulator for
the legal profession—has decided to implement its decision of
making aspiring lawyers walk the extra mile.  8.5 percent of gross domestic product in Portugal and 9.8
Till now, a law degree from a recognised university or a law
institute was the sole eligibility criterion for getting registered
as a lawyer.
Emissions up, but way lower than US, China
Driven by higher industrial growth, energy production and
transport, an environment ministry report says the annual GHG
(greenhouse gas) emission of India increased by around 58 per
cent from 1994 to 2007, but per capita emissions were still
much less than those of US or China. Greenhouse gas
emissions per unit of the GDP, however, declined by more than
30 per cent during 1994 and 2007, says the country’s updated
emission inventory “India: Greenhouse Gas Emissions 2007”. 
On May 10, 2010, European policy makers unveiled an
unprecedented loan package worth almost $1 trillion and a
program of bond purchases to stop a sovereign-debt crisis that
threatened to shatter confidence in the euro. Following the
announcement, stocks surged around the world, the Euro
strengthened and commodities rallied.
The 16 Euro nations agreed in a statement to offer as much as
Monetary Fund backing, to countries facing instability and the
European Central Bank said it will buy government and
private debt. The rescue package for Europe’s sovereign
debtors came little more than a year after the waning of the
last crisis, caused by the US mortgage-market collapse, which
wreaked $1.8 trillion of global credit losses and write-downs.
Under US and Asian pressure to stabilise markets, Europe’s
governments bet their show of force would prevent a
sovereign-debt collapse and muffled speculation the 11-year-
old Euro might break apart.
The new war chest would be used for countries like Portugal
or Spain in case their finances buckle. Deficits are set to reach
percent in Spain in 2010, above the Euro region’s 3 percent
limit. Both countries pledged “significant” additional budget
cuts in 2010 and 2011.
The vow to push budget shortfalls below the Euro's 3 percent
limit echoes promises that have been regularly broken ever
since governments in 1999 set a three-year deadline for
achieving balanced budgets. The Euro region’s overall deficit
is forecast at 6.6 percent of gross domestic product in 2010
and 6.1 percent in 2011.
Britain, the EU’s third-largest economy, won’t contribute to a
Euro rescue fund, though it backs efforts to restore stability.
Now Spain struggles
The country’s net GHG emissions in 2007 were 1.9 billion
tonnes compared to 1.2 billion tonnes in 1994. However against
1.5 tonnes of CO2 per capita in 1994, the per capita GHG
emission was estimated to be 1.7 tonnes of CO2 in 2007.
Even though India is ranked fifth in aggregate GHG emissions
after US, China, the European Union and Russia in its
contribution to global warming, emissions of US and China are
almost four times that of India.
China and the US are the world's top emitters of greenhouse
gases and disagreement between the two on slashing their
carbon dioxide output was a major cause of the failure of the
UN-sponsored climate change talks in 2009. At the
Copenhagen Summit, India announced its intent to further
reduce the emission intensity of the GDP by 20-25 per cent
between 2005 and 2020 even as it pursues the path of inclusive
growth.
No lie detector tests: SC
In a verdict expected to weaken cases against terrorists, other
dreaded criminals and high-profile offenders, the Supreme
Court has cited “mental privacy” to rule that police and other
prosecuting agencies cannot forcibly conduct lie detector tests
—narco-analysis, polygraph or brain electrical activation
profile (BEAP, popularly known as brain mapping)—on
accused, suspects or witnesses.
“Compulsory administration of any of these techniques is an
unjustified intrusion into the mental privacy of an individual. It
would also amount to cruel, inhuman or degrading treatment
with regard to the language of evolving international human
rights norms,” a Bench comprising Chief Justice K.G.
Balakrishnan, R.V. Raveendran and J.M. Panchal held.
Further, placing reliance on the results gathered from these
techniques would come into conflict with the right to fair trial.
“Invocations of a compelling public interest cannot justify the
Spain’s socialist government is seeing its political power
erode as it struggles to chart a path out of deep financial
trouble, failing so far to satisfy conflicting demands to cut its
budget and stimulate job creation. 
The coming months could bring far more problems as Prime
Minister Jose Luis Rodriguez Zapatero reforms the country’s
labour market, risking national strikes and the loss of support
from trade unions, a core source of his centre-left party’s
strength. 
Zapatero’s minority government is already running into
serious trouble, although there appears to be no immediate
threat of it falling. 
A package of austerity measures was passed by only one vote
in the Parliament’s lower chamber on May 27, 2010.
Opposition parties have called for new elections.
The austerity package aims to cut spending by Euro 15 billion
($18.4 billion) over two years by freezing pensions and cutting
civil servants’ wages. 
But investors and lenders such as the International Monetary
Fund are demanding that Spain reform its labour market,
overhauling hiring and firing rules and moving to find jobs for
the long-term unemployed and the young. 
Europe’s top job creator only two years ago, Spain now has
the highest unemployment rate—just over 20 per cent—of the
16 nations that share the Euro currency. 
The resulting austerity package, nicknamed the “scissors
action” by Spanish media, was welcomed by the European
Union and the IMF, which said Spain’s “ambitious fiscal
consolidation is under way to reach the three percent GDP
deficit target by 2013”.
dilution of constitutional rights such as the right against self-
incrimination” guaranteed under Article 20(3) of the
Constitution, the Bench said in the 251-page verdict.
The apex court also observed that the scientific validity of the
techniques “has been questioned and it is argued that their
results are not entirely reliable…empirical studies suggest that
the drug-induced revelations need not necessarily be true”.
The Bench said that before arriving at the conclusion it also
assessed the “tensions between the desirability of efficient
investigation and the preservation of individual liberties” and
the reasoning that these techniques “are a softer alternative to
the regrettable and allegedly widespread use of third degree
methods by investigators”.
At the end, the apex court made it clear that the eight-point
guidelines issued by the National Human Rights Commission
in 2000 for conducting narco-analysis tests should be strictly
adhered to. Among the guidelines were: No lie detector tests
should be administered except on the basis of consent of the
accused. If the accused volunteers for a lie detector test, he
should be given access to a lawyer and the physical, emotional
and legal implication of such a test should be explained to him
by the police and his lawyer. The consent should be recorded
before a judicial magistrate.  tentative support for sanctions on Iran.
OECD warns inflation will remain high
The Organisation for Economic Cooperation and Development
(OECD) has argued that the Reserve Bank of India’s (RBI’s)
process of raising policy interest rates is “still very low by
historical standards”.
In a global economic outlook report, the Paris-based grouping
warned: “With inflation remaining elevated and the recovery
appearing to have taken root, there is a risk that price increases
for inputs will flow through to second-round increases and that
inflationary expectations will become destabilised. To mitigate
US asks Pak, China to follow NSG rule
The US administration has said that civil nuclear cooperation
between Pakistan and China must be in compliance with rules
of the Nuclear Suppliers Group (NSG) if China proceeds with
plans to set up two new nuclear reactors in Pakistan. 
China’s decision to sell nuclear reactors to Pakistan, which has
not signed the nuclear Non-Proliferation Treaty, is proving to
be a litmus test for President Barack Obama, who has
championed the cause of curbing the spread of nuclear
technology.
China has helped Pakistan set up nuclear reactors since 1991
when China National Nuclear Corporation (CNNC) entered
into a contract with the Pakistan Atomic Energy Commission
(PAEC) to build Chashma-1, a 325 MW nuclear power
reactor. When it joined the NSG in 2004, China cited a Sino-
Pakistan framework agreement that committed it to set up a
second reactor, Chashma-2, for Pakistan. 
CNNC and PAEC have also worked out a deal to set up two
separate 650 MW reactors—Chashma-3 and Chashma-4.
Analysts say the Obama administration is reluctant to press
China on the matter in case Beijing responds by dropping its
NSG rules prohibit the sale of sensitive nuclear technology
and materials to nations that have not joined the Nuclear Non-
Proliferation Treaty (NPT) and do not allow international
monitoring of their nuclear activities. 
Daryl Kimball, executive director of the Arms Control
Association, says the agreement between China and Pakistan
is “deeply troubling because we have China engaging in civil
nuclear trade with a country that does not meet the
requirements of the NSG for such trade.” He said the Obama
administration should insist at the NSG that the Chashma -3
this risk, sizeable further monetary tightening will be required
through 2010 and into 2011.”  be permitted.
OECD projected the inflation rate to be 7.7 per cent in 2010
and 6.1 per cent in 2011. It expected the consumer price index
rise to be at 10.2 per cent in 2010 and still hovering at 6.3 per
cent in 2011. The trade deficit has been projected at $80 billion
(imports of $405 billion) in 2010 and going up to $101 billion
(imports of $478 billion up 13.1 per cent from 2010) in 2011
and real GDP growth in 2010 at 8.3 per cent and at 8.5 per cent
in 2011.
OECD Chief Economist Pier Carlo Padoan said: “The outlook
for inflation remains the main downside risk, especially if
monsoonal rainfall is again deficient. In that case, food
inflation would likely begin to risk anew. More generally, the
strong state of domestic demand could lead to persistently
higher inflation and an upward drift in inflationary
expectations.”
Adding the context of anticipated deficit reduction being
underpinned on “expected revenue growth, asset sales and
some more modest tax measures”, Padoan added “the expected
rebound in agricultural activity should help limit further
increase in food prices, which have been a major contributor to
high inflation. However, underlying inflationary pressures are
likely to persist given the strong outlook for demand. Timely
policy action to limit the scope for second-round price
increases is, therefore, required. Monetary policy normalisation
is also important in the light of relatively modest fiscal
consolidation”.
National Water Mission gets Cabinet nod
The Prime Minister's Council on Climate Change has approved
the National Water Mission, focusing on making water
conservation a peoples' movement in the country.
Prime Minister Manmohan Singh, who chaired the meeting of
and -4 projects be discussed and it be determined that they not
Iran ready for nuke fuel swap
It’s being regarded as a major diplomatic coup that could spell
the beginning of the end of the isolation of Iran from world
affairs. On the sidelines of the G-15 summit in May 2010, Iran
dramatically announced that it has arrived with Brazil and
Turkey a deal that could possibly break the nuclear stalemate,
stave off sanctions being contemplated by the UN and the US
against Iran and bring the contentious issue back to the
negotiating table. 
Under the agreement Tehran will ship 1,200 kg of low-
enriched uranium (LEU) to Turkey in exchange for fuel for a
research reactor. Turkey will keep Iran’s LEU and the IAEA
and Iran can monitor the fuel.
Iran is a signatory to the Nuclear Non-Proliferation Treaty
regime (NPT) which had enabled it to received nuclear
technology for civilian use from other NPT signatories,
including the US in return for committing that it would not be
diverted or misused for military purposes. In 2002, Iran was
discovered to have clandestinely set up a uranium enrichment
plant and a heavy water unit without informing the IAEA.
Since then major powers led by the US have got the UN to
impose severe sanctions and refuses to lift them till Tehran's
comes clean and puts an end to all clandestine use. 
Apart from curbs on banking and trade, heavy sanctions had
been imposed on some key public sector enterprises of Iran
and the Iranian Revolutionary Guard Council, the striking arm
of the current regime. 
Currently Iran is estimated to have 1,500 kg of 3.5 per cent
(low) enriched uranium. For running research reactors like the
Tehran facility for medical purposes, the uranium needs to be
medium enriched to 20 per cent. According to a deal, Iran
the Council, highlighted the need to create a general
consciousness of the need to use water in the most sustainable
manner in view of its scarcity and assess the impact of climate
change on water.
The Council felt that to make the Mission a peoples' movement
it was essential to make available all data on water in the public
domain, to be able to mobilise citizens, local bodies and State
governments for focused action on water conservation and
augmentation.
Members felt incentives should be provided for using water in a
sustainable manner and that the Research and Development
requirements of the mission should be focused upon.
Water Mission is one of the eight missions in the National
Action Plan on Climate Change launched by the Prime Minister
in 2009 to tackle the threats of global warming.  can be considered by the international community.
The government has already launched Energy Efficient and
Solar Mission while a draft of Green Mission has been prepared
for public consultation.
Economic growth better than expected
The Indian economy roared past estimates to post a whopping
growth rate of 8.6% in the January-March quarter of 2010. The
quarter's strong showing also helped India end the fiscal year
with 7.4% growth, beating the earlier estimate of 7.2%.
Manufacturing led the way, with a whopping 16.3% growth in
the quarter and 10.8% overall, while even agriculture, which
was expected to decline, ended with marginal growth of 0.2%
year-on-year after growing 0.7% in Q4.  their war-like rhetoric.
The GDP growth rate had slowed to 6.7% in 2008-09 following
the global economic crisis, after topping 9% in the previous
three years.
The first quarter growth in the gross domestic product (GDP) is
would swap 1,200 kg of its stockpile of low-enriched uranium
in exchange for 120 kg of medium-enriched uranium that is to
be supplied by the Vienna Group.
For making weapons grade material, uranium has to be
enriched to at least 90 per cent. At least 300 kg of this highly
enriched uranium is needed to develop an atom bomb. By
keeping Iran’s low enriched uranium stockpiles to around
3,000 kg, the world hopes that it would prevent it from
crossing the threshold of nuclear material needed to make a
bomb. 
Reacting to the Iran’s deal with Brazil and Turkey, the US
pointed out that Tehran’s decision to continue with some
enrichment of nuclear fuel is a direct violation of UN Security
Council and that the details of the agreement must be
conveyed to the International Atomic Energy Agency before it
UK responded by saying that Iran’s actions remain a serious
cause for concern. “There is a need for a continued effort to
impose sanctions.”
EU responded by saying that “this is a right direction but it
does not answer all the concerns raised over Iran’s nuclear
programme.
Tension between Koreas escalates
On May 24, 2010, South Korea announced steps to tighten the
vice on the North’s already stumbling economy in punishment
for sinking one of its navy ships, with both sides stepping up
 
The United States, which backs Seoul, warned that the
situation was “highly precarious”. China, the North’s only
major ally, urged calm. The mounting tension followed report
by international investigators accusing the North of torpedoing
the Cheonan corvette in March 2010, killing 46 sailors in one
better than expected. In February, the Central Statistical of the deadliest clashes between the two since the 1950-53
Organisation (CSO) had estimated that the Indian economy Korean War.
would grow at 7.2% in 2009-10, with growth of 7.7% in the
fourth quarter. But the unexpectedly strong performance in the The United States, which has 28,000 troops on the peninsula,
fourth quarter helped boost the final figure to 7.4%. threw its full support behind South Korea and said it was
working hard to stop the situation from escalating.
The fourth-quarter showing is particularly commendable in the
light of a sudden dip in the third quarter to 6.5% from 8.6% in Few analysts believe either Korea would dare go to war. The
the second quarter due to the impact of a drought-like situation North’s military is no match for the technically superior South
in the country. Korean and US forces. And for the South, conflict would put
investors to flight.
China is the only large economy with a higher growth rate at
11.9% in the January-March quarter. The rest of the world is
witnessing a fragile recovery, which is now under threat due to
the brewing Euro-zone crisis. The sixteen developed countries
in the Euro-zone expanded by just 0.2% in the quarter. At the
same time, the Organisation for Economic Cooperation and
Development (OECD)—a grouping of mostly developed
countries including Europe that account for over 60% of the
global economy—grew at only 0.7% in the quarter, against
0.9% in the previous quarter. US and Japan grew at 0.8% and
1.2%, respectively. 

The 7.4% growth in 2009-10 also showed that stimulus

provided by government yielded results.

Visit of President Patil to China

Indian President Pratibha Patil visited Beijing from May 27,
2010. She is the first Indian Head of State to visit China in a
decade. She had been invited by her Chinese counterpart Hu
Jintao and her trip coincided with the 60th anniversary of the
establishment of diplomatic relations between India and China.

During her visit, Patil inaugurated China’s first Indian-style

Buddhist temple in Luoyang city in Henan province.

Skirting contentious issues, she held discussions with the top

Chinese leadership. Controversial issues such as Chinese
border incursions, stapled visas for Kashmiris, Indian visas for
Chinese telecom companies and Sino-Pak ties did not figure in
the discussions. Patil sought Chinese support for New Delhi's
permanent membership of the UNSC during talks. The Chinese
leaders supported India's aspirations for UNSC permanent seat
and assured the Indian leader that Beijing would back India’s
bid in 2011’s election for a non-permanent membership of the
UNSC.

Rs 67,000 crore 3-G bonanza for government

The bidding frenzy for third generation (3-G) spectrum came to
an end on May 19, 2010, with leading operators Bharti Airtel,
Reliance Communications and Aircel winning licences for 13
circles each. This was the 34th day of the auction and it saw the
price of a pan-India, or nationwide, licence touching Rs 16,828
crore, nearly five times its base price. No single operator could
garner enough cash to win bids for all the 22 circles that went
under the hammer.

The government emerged as the biggest winner. The sale of

wireless airwaves would make it richer by at least Rs 67,719
crore, the double of what it had targeted in the Union Budget
2010 and about 1 per cent of the country’s gross domestic
product.

The proceeds from the sale of 3G and BWA spectrum will

together help the government plug its fiscal deficit, projected at
5.5 per cent of GDP in the Budget. The winning operators said
if the government allots them spectrum as promised, by
September 1, they will be able to roll out 3G services in four to
six months.

Seventy per cent of the revenue for spectrum comes from only
six circles, while locations such as West Bengal, Himachal
Pradesh, Assam and Jammu and Kashmir saw licences being
awarded at virtually the base price. The surprise package was
Bihar where the bids closed at Rs 203.46 crore, seven times its
base price.
Ajmal Kasab convicted of 26/11 attacks
On May 3, 2010, a Mumbai court found 22-year-old Pakistani
national, Mohammad Ajmal Kasab, guilty of mass murder and
waging war against India, while acquitting two other accused,
Fahim Ansari and Sabahuddin Ahmed for want of evidence, in
the November 26, 2008 attacks on the city. Kasab is the lone
surviving gunman from the attacks that killed 166 people. He
has been given the death sentence.

“It was not a simple act of murder. It was war,” judge M.L.
Tahiliyani said in a summary of the 1,522 page judgement.
“This type of preparation is not made by ordinary criminals.
This type of preparation is made by those waging war.”

The court also held 20 other accused, including Lashkar-e-

Tayiba founder Hafiz Saeed, its operations chief Zaki-ur-
Rehman Lakhvi and Abu Hamza, guilty of conspiracy.

Pakistan withdraws objection to J-K power projects

In a significant development, Pakistan, on May 30, 2010,
withdrew its objection to construction of Uri-II and Chutak
hydel power projects in Jammu and Kashmir. At the Indus
Water Commissioner-level talks in New Delhi, the Pakistani
side said it had no objection to the designs of the two power
projects after the Indian side provided details of these.

Pakistan had earlier raised objections over the 240 MW Uri-II

project being constructed on Jhelum river in Kashmir valley
and the 44 MW Chutak plant being built on Suru, a tributary of
Indus river in Kargil district of Jammu and Kashmir's Ladakh
province. Pakistan had claimed that the projects would deprive
it of its share of water.
CURRENT AFFAIRS: APRIL 2010
NATIONAL AFFAIRS
RBI hikes key rates to tame inflation
On April 20, 2010, the Reserve Bank of India announced a 25
basis points increase in repo and reverse repo rates as part of
monetary tightening measures to rein in inflation. The apex
bank also announced a 25 basis points increase in the Cash
Reserve Ratio (CRR) for banks. Following the hikes, the CRR
now stands at 6 per cent while the repo and reverse repo rates
stand at 5.25 per cent and 3.75 per cent, respectively.  Announcing that they would run the turbulent Central Asian
The RBI expected the hike in CRR to absorb Rs 12,500 crore
from the banking system. The apex bank said it was tightening
liquidity in a bid to rein in inflation which was hovering in
double digits. The RBI, however, expected inflation to remain
at 5.5 per cent during FY 11 with the GDP growing at 8 per
cent.
FDI on Tobacco banned
On April 8, 2010, the Union government notified the ban on
Foreign Direct Investment (FDI) in cigarette manufacturing.
Manufacturing of cigars, cheroots, cigarillos and cigarettes, of
tobacco or of tobacco substitutes have been put under the list of
sectors where FDI is prohibited.
The government took the decision to enhance public
accountability towards proliferation of the anti-smoking regime
in the country. The decision to ban FDI is the latest in the
government's long-standing drive against smoking. In 2008, the
government had banned smoking at public places and put a
curb on tobacco advertisements.
Earlier, 100 per cent FDI was permitted in cigarette
INTERNATIONAL AFFAIRS
Interim government formed by Opposition in Kyrgyzstan
Opposition alliance headed by former Foreign Minister Ms
Roza Otunbayeva formed an interim government in
Kyrgyzstan on April 8, 2010, dissolving Parliament and asked
the toppled President Kurmanbek Bakiyev to quit as they
shored up global diplomatic support for the new regime.
nation for six months, Ms Otunbayeva said the new alliance
proposed to hold new elections within this period. 
In her first action, Ms Otunbayeva, designated the head of the
interim government, said that a US airbase outside the capital
Bishkek, which is seen vital to the NATO campaign in nearby
Afghanistan would remain open despite the shift in power. 
Historic Bill to clip powers of Pakistan’s President
On April 19, 2010, President Zardari signed into law sweeping
constitutional reforms relinquishing key powers designed to
bolster parliamentary democracy weakened by military rule.
The 18th Amendment had earlier been cleared by Pakistan’s
Parliament and sent to him for his signature.
The amendment removes the head of State’s power to sack the
Prime Minister and dissolve Parliament. It also removes many
of the sweeping powers amassed by military dictators Pervez
Musharraf and Zia-ul-Haq. The Bill also abolishes a clause
barring the election of a Prime Minister for more than two
terms. This would allow the Nawaz Sharif, who was toppled
by Musharraf in 1999, to become Prime Minister again.
manufacturing, but an industrial licence was needed and the
proposals required to be approved by the Foreign Investment
Promotion Board (FIPB).
New foreign investment policy document
The Union government has launched a new policy document
consolidating the plethora of rules and norms governing foreign
investment in the country under one comprehensive document.
The move is aimed at making available all information on FDI
policy in one place.  President Mahinda Rajapaksa's UPFA impressively returned
It will lead to simplification of the policy; greater clarity of
understanding of foreign investment rules among foreign
investors and sector regulators, as also predictability of policy
direction.
The amendment effectively makes the President of Pakistan a
titular head of State who can only formally appoint heads of
the armed forces, dissolve the National Assembly and appoint
Provincial Governors on the advice of the Prime Minister. The
law also takes away the President’s power to appoint and
dismiss the heads of the Election Commission and the Public
Service Commission.
UPFA returns to power in Sri Lanka
to power on April 9, 2010, bagging 117 of 225 seats in the
first post-LTTE era Parliamentary polls in Sri Lanka, with its
closest rival UNF securing just 46 and detained ex-army chief
Sarath Fonseka's DNA failing to touch even a double digit
mark. 

Having a single policy platform that would subsume the 178 In Sri Lanka, the general elections directly decide 196 seats
press notes would also ease the regulatory burden for while the remaining 29 members are chosen based on the
government; it will be updated every six months. This percentage of votes secured by each party.
consolidated press note will be superseded by a press note to be
issued on September 30, 2010 to ensure that the framework The UPFA, which campaigned to get a two-third majority in
document on FDI policy is kept updated.  the House, fell short of just six members to get the magic
figure which is needed to bring about constitutional changes
Chinese hackers crack India’s top defence secrets that the President wants to put in place. These changes include
The computer systems of scores of Indian embassies, military the scaling down of the executive powers vested with the
establishments and corporate bodies, as well as the email President, as well as a change in the country’s proportional
account of the Dalai Lama, were hacked by a Chinese cyber representation (PR) system of elections.
spy ring between September 2009 and April 2010.  The main opposition United National Party (UNP) saw much
of its voter base eroded in the poll, the first since the defeat of
Hundreds of documents, including classified files, were stolen, the Tamil Tigers, winning only 60 seats, down from the 82 it
says a Canadian cyber-security team that monitored the ring— had won in the 2004 general election.
the Shadow Network—for eight months.
A third party led by detained former Army Commander Sarath
The Shadow Network focussed on India, especially its military. Fonseka won seven seats, including one for the retired general,
The Canadians, in effect, hacked the hackers and saw many while the majority of the seats in the north and east were won
documents themselves.  by the Tamil National Alliance.

The Chinese hackers stole foreign ministry reports on India’s Civil strife in Bangkok
policy in West Africa, Russia and West Asia. They got Thailand has been sliding to anarchy for the last few months
National Security Council secretariat assessments of security with the capital Bangkok turning out to be a virtual battlefield.
situations in Assam, Nagaland, Tripura and Manipur, as well as The current violence is the culmination of a political strife that
the Maoist problem.  has been brewing ever since Prime Minister Thaksin
Shinawatra was overthrown in a military coup in September
The penetration of India’s defence establishments was 2006.
remarkable. Three air force bases, two military colleges and an
array of military institutes like the Army Institute of The protests looked like they had ended when Democrat Party
Technology, Pune, were broken into.  leader Abhisit Vejjajiva became the Prime Minister in
December 2008. But in March, the pro-Thaksin group
The hackers seemed interested in any defence information they launched a new wave of protests to bring down the
could find: from sensitive issues like live fire exercises government. 
and Project Shakti—the army’s artillery command system—to
more innocuous material like personnel files. The tension has escalated in recent months as the protesters
laid siege to the capital Bangkok. As security forces launched
“This is a very serious, broad spectrum assault,” said strategic a crackdown, violence escalated, leaving many dead. 
technology expert Ajay Lele, whose own agency, the Institute
for Defence and Security Analysis (IDSA), was robbed of 180 Apart from the pro-Thaksin angle, the protests are also seen as
documents.  an initiative to bring in more participation for the common
people—read rural mass—in government formation.
The ring is believed to be based in Chengdu, in China’s
Sichuan province. The cyber-sleuths, based at the University of In the December 2007 elections, held 18 months after the
Toronto’s Munk School of Global Affairs, avoided saying this coup, Thaksin's vote bank remained loyal, though he was in
was government-approved but did say it was “possible”.  exile. His allies came to power but fell following sustained
protests by Yellow Shirts and unfavourable court rulings. In
The Indian security establishment has little doubt the Shadow March 2009, Thaksin's supporters in red shirts poured into the
Network is cast by Beijing. Says K. Santhanam, former IDSA streets of Bangkok, forming the United Front for Democracy
head: “These rings are normally consortia in which Chinese Against Dictatorship.
academia, intelligence and military work together.”
Though it was mostly made of the rural poor, students and
Education becomes a basic right pro-democracy activists joined them. Claiming that the
The Right of Children to Free and Compulsory Elementary judiciary was biased against Thaksin, they question the
Education Act came into force in the country from April 1, legitimacy and credibility of the current government. What
2010, amid an emotional appeal of collective effort by Prime began as innocuous sit-in protests outside government offices
Minister Manmohan Singh and loads of applauses for the quickly turned violent when they stormed the venue for
government from various parties, including those in the ASEAN summit, forcing its cancellation.
Opposition—the BJP and the Left.
The Yellow Shirts, called the Peoples' Alliance for
Prime Minister Manmohan Singh recalled the 100-year old Democracy, who are bitterly opposed to Thaksin, were behind
resolve of Gopal Krishna Gokhale, who urged the Imperial the street protests that led up to the military coup of September
Legislative Assembly to confer on the Indian people the Right 2006. They were also instrumental in forcing Thaksin's allies
to Education.  out of power in 2008. 

With the RTE Act coming into force, the fundamental right to
education as incorporated in the Constitution under Article 21
A also became operative.  They wear yellow because it is the Thai King's colour. Media-
Right to Education (RTE) Act has, however, come into force
amid a whopping shortage of 5.3 lakh school teachers. Add to
this, an additional seven lakh teachers that would be required
for proper implementation of the Act that gives a three-year
window period to States to make education a fundamental right
of children in 6-14 age group and mandates setting up of
neighbourhood schools with full infrastructure.
Uttar Pradesh tops the list, contributing 32 per cent of all
existing teachers’ vacancies in the country. Next is the Left
Front-ruled West Bengal, where 53,000 posts were lying
vacant, as per MHRD records. Bihar has 51,000 vacancies, the
figure for Chattisgarh and Orissa, the other educationally
backward States, is 37,000.
Single-teacher schools are another big challenge for the RTE
law. Currently, 9 per cent (about one lakh) of the total 12 lakh
schools at primary level have only one teacher, whereas the
RTE Act specifies that any school with enrollment of up to 60
students must have at least two teachers.  weapons were taking their disarmament obligations seriously.
If the Red Shirts are mostly rural poor, the Yellow Shirts
comprise royalists, businessmen and the urban middle-class.
baron Sondhi Limthongkul and General Chamlong Srimuang
are seen as the leaders of this outfit. In 2006, as the Yellow
Shirts shut down the capital, the army ousted Thaksin. 
US, Russia ink pact to cut N-arsenal
On April 8, 2010, the United States and Russia signed a
landmark strategic nuclear disarmament treaty. Presidents
Barack Obama and Dmitry Medvedev signed the pact at a
ceremony in the mediaeval Prague Castle after talks that
covered nuclear security, Iran's atomic programme and an
uprising in the Central Asian State of Kyrgyzstan, where both
major powers have military bases.
The treaty will cut strategic nuclear arsenals deployed by the
former Cold War foes by 30 per cent within seven years, but
leave each with enough to destroy the other.
Obama said the agreement had “ended the drift” in relations
between Moscow and Washington and sent a strong signal that
the two powers that together possess 90 per cent of all atomic

Union Budget passed after Rs 400 crore tax relief Icelandic Volcano causes air travel mess in Europe
On April 29, 2010, Finance Minister Pranab Mukherjee Europe saw air traffic chaos in April 2010 as a plume of ash
announced changes in tax proposals that will benefit coffee from the Icelandic volcano that erupted under the
growers, new hospitals and construction sector while making it Eyjafjallajokull glacier, made northern Europe a no-fly zone.
clear that service tax on domestic travellers would be Rs 100 An estimated 63,000 flights were cancelled, effecting more
per domestic journey and a maximum of Rs 500 for than five million passengers who were trying to get in and out
international travel.  of major cities of Europe. The eruption of the volcano caused
the greatest air travel chaos since the Second World War II.
Mukherjee announced these concessions that would cost the
exchequer Rs 300-400 crore a year but did not touch the
demand for rolling back the hike in petroleum and fertiliser
prices on which the entire opposition walked out before Lok
Sabha passed the Finance Bill, 2010.
Explaining the reasons for his inability to concede the
opposition's demand, he said the financial position was such
that oil marketing companies faced an under recovery of Rs
85,000 crore in 2010, apart from heavy outgo on account of
subsidies, interest and other payments.
Five years of National Rural Health Mission
As India celebrated completion of five years of National Rural
Health Mission on April 12, 2010, Assam won the best
performing State award among the north-eastern State category
for implementing the programme well. 
Rajasthan was adjudged the best performing State among the
high-focus areas, while Tamil Nadu claimed the award in the
category of non-focus States.  the CDO. It is said to have given an impression to the
Claiming credit for arresting the infant mortality rate (down to
53 in 2008 from 58 in 2005 when NRHM started) and maternal
mortality rate (down to 254 in 2004 as against 301 in 2003),
Health Minister Ghulam Nabi Azad said the government was in
the process of designing a comprehensive programme on
population stabilisation in consultation with the State
governments.
For the record, India has missed the goal of reaching 2.1 total
fertility rate by 2010, as envisaged in the National Population
Policy of 2000.  Within a year, 99 per cent of the assets within Abacus were
For the future, five challenges have been listed for NRHM—
transition from curative to preventive health care, human
resource management, setting of output and outcome targets,
convergence and inclusive growth and approaches to public
Goldman Sachs, another US financial behemoth in trouble
Goldman Sachs, the most profitable securities firm in Wall
Street history, released more than 70 pages of email and other
documents on April 25, 2010, ahead of a US Senate sub-
committee hearing on the firm’s actions throughout the
mortgage meltdown. The firm disputes the US Securities and
Exchange Commission’s (SEC’s) claim that Goldman Sachs
misled investors in a 2007 collateralised debt obligation
(CDO) about the role played by hedge fund Paulson & Co,
which bet the CDO would collapse. 
SEC has accused Goldman Sachs of “making materially
misleading statements and omissions” in connection with a
synthetic collateralised debt obligation (CDO)—Abacus—that
the firm structured and marketed to investors.
Goldman Sachs is said to have created marketing material
about Abacus and invited its clients—investment managers of
banks, insurance companies, pension funds, etc—to invest in
investors that the residential mortgage-backed securities that
made up the CDO were hand-picked by ACA Management—
then seen as a reputable fund manager, looking after dozens of
CDOs. Goldman clients invested in the CDO, believing these
loans were of good quality. 
SEC claims Goldman deliberately hid from its clients John
Paulson’s involvement, which was a huge conflict of interest.
Since Paulson was looking to short the sub-prime market, he
was most likely to have picked the worst possible bonds.
downgraded. Paulson, who was by this time betting against
Abacus by buying $15 million worth of credit default swaps
(CDS) on Abacus, earned around $1 billion from the trade.
Bonn climate talks
health that look at the different stages of health transition at
State and district levels so that appropriate strategies can be
adopted.  negotiations on curbing greenhouse gases before 2010’s
SC quashes expulsion of Amarinder Singh by Punjab
Assembly
In what is being viewed as a major political victory for former
Punjab Chief Minister and Congress leader Capt Amarinder
Singh, the Supreme Court has ruled that his expulsion from the
State Assembly on September 10, 2008 was “constitutionally
invalid” and ordered restoration of his membership.
If Amarinder had committed any irregularities in the allotment
of land to a private builder when he was Chief Minister during
the tenure of the 12th House of the Vidhan Sabha, the proper
course of action for the State government should have been to
move the criminal law machinery, a five-member Constitution
Bench headed by Chief Justice K.G. Balakrishnan held.
Further, the alleged improper exemption of land from the
Amritsar Improvement Scheme “was an executive act” in his
capacity as Chief Minister which “did not distort, obstruct or
threaten the integrity of legislative proceedings in any manner”,
the apex court ruled.
Also, the exemption had taken place during the 12th term of the
Vidhan Sabha, whereas the constitution of the Special
Committee to inquire into it took place during the 13th term. “It
was not proper for the Assembly to inquire into actions that
took place during its previous term, especially when there was
no relatable business that had lapsed from the previous term.”
The court clarified that its judgment would not act as a hurdle
against the investigation, if any, into the alleged role of
Amarinder Singh in the Amritsar Improvement Scheme
notified on January 13, 2006. 
Visit of Afghan President Karzai
Delegates to the first UN climate talks after Copenhagen met
in April 2010 in Bonn and agreed to intensify their
decisive ministerial conference in Cancun. As representatives
of the 192 countries that are party to the UN Framework
Convention on Climate Change (UNFCCC), they had a messy
task. In the end, the parties to the UNFCCC merely “noted”
the existence of the accord, as some were utterly opposed to it.
The aim of the negotiators was to pick up the broken pieces of
the Danish meeting and see what could be salvaged and turned
into a proper global agreement at the next UNFCCC
conference, in Cancun, Mexico in December 2010.
The United States seems to be the only country that still sees
the Copenhagen accord as having a life of its own. Almost all
the rest, including countries that have “associated” themselves
with the accord have insisted that the UNFCCC remains the
only agreed decision-making forum. Hence the discussions in
Bonn revolved around which bits of the accord could be
brought into the UNFCCC and how.
The Bonn talks were mainly about procedures—for example,
which texts to start with, how many meetings to hold before
Cancun, whether to mandate the chair to prepare draft text,
and so on—but there was also much informal stock-taking
about which pieces could be put together by Cancun.
While some countries continued to call for an all-or-nothing
approach, most feel that it is more realistic to aim for a
number of less ambitious, partial agreements on several
elements. These include ways to transfer climate-friendly
technologies and funds for adaptation to climate change from
rich to poorer countries, as well as a deal that would
compensate countries for keeping their forests intact.
This would mean delaying the more difficult decisions on
ambitious targets for countries to reduce their greenhouse gas
Afghan President Hamid Karzai, during his two-day trip to
New Delhi on April 26, 2010, sought to allay India’s concerns
over the proposed re-entry of the Taliban in the Afghanistan
government.  Over 110 nations back Copenhagen climate deal
Karzai indicated that his government would enter into a power-
sharing arrangement with those elements of Taliban who had
accepted the country’s constitution and were not part of the Al
Qaida.
His meeting with Prime Minister Manmohan Singh came in the
backdrop of moves being initiated by the Afghan government
to enter into a power-sharing arrangement with the so-called
“moderate” elements of the Taliban. New Delhi is worried that
such a development will lead to the increased influence of
Pakistan in Afghanistan.  nations, sets a goal of limiting global warming to below 2
In a statement issued after the meeting, Karzai said they had
discussed the upcoming Afghanistan peace consultative jirga
that, he explained, should “comprise people of Afghanistan,
those from all walks of life to advise on how to move forward
for reintegration and reconciliation of those elements of Taliban
and others who have accepted the Constitution and are not part
of the Al Qaida or any terrorist network.”  from China and the United States, the list also includes top
The Afghan President also requested Prime Minister Singh to
send representatives to the follow-up to the London conference
in Kabul so that “India can participate once again in
Afghanistan’s reconstruction”.
India was forced to backtrack on the Taliban issue after the US
and other European countries encouraged Karzai to do business
with the Taliban at the London conference held in early 2010.
While the US and NATO countries are looking for an exit route
from war-ravaged Afghanistan, India is worried that that this
will have an adverse impact on the security and stability of the
region.
Bangladesh lifts ban on Indian films
emissions, and an overall legally binding agreement to the
conference in South Africa at the end of 2011 or beyond.
More than 110 nations, including top greenhouse gas emitters
led by China and the United States, back the non-binding
Copenhagen Accord for combating climate change, according
to a first formal UN list.
The list, of countries from Albania to Zambia, helped to end
weeks of uncertainty about support for the deal, agreed at an
acrimonious summit in the Danish capital in December 2009.
The list was compiled by the UN Climate Change Secretariat.
The accord, falling short of a binding treaty sought by many
degrees Celsius. But, it does not spell out what each nation has
to do. 
It also promises almost $10 billion a year in aid for poor
nations from 2010-12, rising to at least $100 billion from
2020, to help them slow emissions growth and cope with
impacts such as floods, droughts and rising sea levels. Apart
emitters such as the European Union, Russia, India and Japan. 
The accord was merely “noted” by the 194-nation summit
after objections by a handful of developing nations, including
Venezuela, Nicaragua, Cuba and Sudan. The United Nations
then asked all countries to say if they wanted it to be listed.
Many big emerging economies were initially reluctant to sign
up after the deal failed to gain universal support, even though
the original text was worked out by President Barack Obama
with leaders of China, India, Brazil and South Africa.
Nations not on the list include many Organization of
Petroleum Exporting Countries nations such as Saudi Arabia,
which fear a loss of oil revenues if the world shifts to
On April 24, 2010, Bangladesh announced that it has lifted an
almost four-decade ban on Indian films in a bid to boost
attendances at cinemas. The move, however, drew loud
complaints from local actors and directors.  BASIC countries seek environment treaty by 2011
Films produced by Bollywood were banned from cinemas in
Bangladesh since the country’s independence in 1972 in a bid
to protect the local movie industry.  2011 as the “world could not wait indefinitely”.
The lifting of the ban comes amid warming relations between
India and Bangladesh after ties worsened between the
neighbours when an Islamist-allied government was in power
in Dhaka from 2001 to 2006.
But not everyone supports the move. “Indian films will
completely destroy our film industry and our culture. At least
25,000 people will be jobless,” said Masum Parvez Rubel, a
leading star and a co-coordinator of a front against Indian films.
India, China Prime Ministers to connect via hotline
On April 7, 2010, India and China signed an agreement to
establish a hotline between Prime Ministers of the two
countries, as External Affairs Minister S.M. Krishna and his
Chinese counterpart Yang Jiechi resolved to take the bilateral
relationship to new heights.
The agreement, under which dedicated phone lines will be set
up in the Prime Minister's office of the two countries, was
signed by Krishna and Yang after their talks in Beijing. This
would enable Prime Minister Manmohan Singh and his Chinese
counterpart Wen Jiabao to hold direct conversations whenever
they want.
This is the first time in recent years that India has established a
dedicated hotline facility with any country. The two countries
also decided to strengthen their cooperation in regional forums
and on addressing issues like global financial crisis and climate
change.
renewable energies, and some small island States which fear
rising sea levels.
India, China, Brazil and South Africa, jointly called BASIC
countries, have said that the legally binding climate treaty on
reduction of carbon emission should be finalised latest by
 
The third meeting of BASIC ministers concluded in Cape
Town April 25, 2010. 
The statement also said that the developing countries strongly
support international legally-binding agreements, as the lack
of such agreements hurts developing countries more than
developed nations. 
The ministers said that negotiations should follow a two-
pronged approach. One track is on long-term cooperative
action to combat climate change. The other is for developed
countries to commit to what extent they will reduce their
greenhouse gas emissions after 2012, when the current
commitment period of the Kyoto Protocol runs out. 
The next BASIC ministerial meeting will be held at the end of
July 2010 in Brazil, followed by one hosted by China at the
end of October 2010.
International Conference on Nuclear Disarmament
Iran hosted an international conference on nuclear
disarmament on April 17, 2010. Delegates from more than 60
countries, including as many as 25 foreign ministers or deputy
foreign ministers, attended the conference, ignoring attempts
by the West to dissuade them from attending the meet.
The presence of so many countries came as a pleasant surprise
to Iran itself. Iranian Foreign Minister Manouchehr Mottaki
said the response to the conference was overwhelming. He

Summit meeting between India-Pak Prime Ministers
On April 29, 2010, Prime Minister Manmohan Singh and his
Pakistani counterpart Yousaf Raza Gilani held their first
bilateral meeting in nine months to end the diplomatic
stalemate in ties between their two nations since the 26/11
Mumbai terror attacks.
At their hour-long meeting, described as an “exercise in soul
searching” by Indian officials, the two leaders decided to
upgrade the bilateral dialogue to the political level, something
which Islamabad had been insisting upon for months. 
After the Pakistani premier assured Manmohan Singh that his
government would not allow the misuse of the Pakistani
territory for launching terror attacks in India, the two PMs
instructed their foreign ministers and foreign secretaries to meet
“as soon as possible” to work out the modalities to pave the
way for a “substantive dialogue” on all issues of mutual
concern to restore trust and confidence in the relationship.  governors.
Political analysts, however, pointed out that this was not the
first time that the Pakistani leadership has promised not to
allow the misuse of the country’s soil for anti-India activities.
This commitment has been given to India time and again by
Islamabad since January 2004 when Pervez Musharraf was at
the helm of affairs.
The two PMs did agree that there was lack of mutual trust that
was impeding the normalisation process and it was time to
think afresh on the way to move forward.
ISI mole in MEA held
Madhuri Gupta, a promotee officer of the Ministry of External
Affairs who was posted as Second Secretary at the Indian
mission for the last three years, was arrested by Delhi police on
April 25, 2010, on the charge of passing sensitive information
to her contacts in Pakistan’s ISI.  intercepted in a sting operation carried out by the Tbilisi
said the conference would go a long way in achieving the goal
of nuclear disarmament and presenting to the international
community the true nature of his country’s nuclear
programme.
Even as the US was making a strong pitch for further
sanctions against Iran, China and Russia, two permanent
members of the UN Security Council, attended the meet.
India, another key global player, was also present at the
conference, though it was only represented by the Joint
Secretary (Disarmament) in the External Affairs Ministry.
Iran showcased the two-day event to demonstrate that its
nuclear programme was aimed at meeting its growing energy
needs and that it has no military agenda.
Iran moots establishment of independent global group under
the UN to plan nuclear disarmament and suspension of
membership of the US and others which from the board of
India opposes sanctions against Iran and feels that Tehran
should enjoy all rights to develop N-energy for peaceful
purposes. 
Plot to sell Uranium foiled by Georgia
Georgian security forces have foiled a criminal plot to sell
weapons-grade uranium in the black market, the country’s
President told a gathering of world leaders on April 13, 2010. 
The revelation brought a sense of urgency to the Washington
summit on nuclear security, where Barack Obama called on
the rest of the world “not simply to talk, but to act” to destroy
vulnerable stockpiles of nuclear material, or to safeguard them
against theft by terrorists.
Georgian sources said the highly-enriched uranium HEU was

“We have reasons to believe that an official at the High
Commission of India in Islamabad had been passing
information to Pakistan intelligence agencies. The matter is
under investigation. The official is cooperating with our
investigations and inquiries,’’ MEA spokesman Vishnu
Prakash.
Fifty three-year-old Madhuri, who is a spinster, was summoned
to New Delhi on the pretext of discussions on the SAARC
Summit when she was taken into custody.
Medical Council Chief held for taking bribe
The Central Bureau of Investigation (CBI) has arrested Medical
Council of India (MCI) president Ketan Desai in Delhi on
charges of corruption.
Desai and an associate, J.P. Singh, were picked up for allegedly
demanding Rs 2 crore for granting recognition to a private
medical college in Punjab. It is the MCI’s responsibility to
maintain standards in medical education and in the profession.
Desai is also accused of granting recognition to several colleges
that didn’t meet required criteria. In 2001, he had stepped down
as MCI president after the Delhi High Court indicted him on
corruption charges.
Meghalaya gets its 9th CM in 12 years
Meghalaya Chief Minister D.D. Lapang submitted his
resignation to Governor R.S. Mooshahary on April 19, 2010,
paving the way for his deputy Mukul M. Sangma to take
charge.
Sangma, elected as leader of the Congress Legislature Party
(CLP), was sworn in as the 25th CM since Meghalaya acquired
Statehood in April 1970.
Political instability in Meghalaya has seen eight CMs coming
authorities in March 2010. They said the uranium was more
than 70 per cent enriched and appeared to have been pure
enough to use in a crude nuclear weapon.
The amount seized was small, but Georgian officials said the
gang was offering the HEU as a sample of a bigger quantity
available for purchase.
“The Georgian ministry of interior has foiled eight attempts of
illicit trafficking of enriched uranium during the last 10 years,
including several cases of weapons-grade enrichment.
Criminals associated with these attempts have been detained,”
the Georgian President said. 
Visit of Chinese President to USA
Chinese President Hu Jintao, during his visit to USA in April
2010, told US President Barack Obama that their two nations
should defuse economic strains through negotiations, but
neither leader touched on the yuan dispute. Hu also covered
the Iran nuclear dispute and China’s demands over Tibet and
Taiwan, two areas that recently flared as sore-spots in US-
China relations.
The potentially touchy issue of China’s currency, the yuan, did
not appear in either country’s public account of the chat.
Domestic US political pressure has been building on the
Obama administration to label China a “currency
manipulator”.
The relationship between Beijing and Washington has been
dragged down in recent months by disputes spanning China’s
currency and internet controls, US arms sales to the self-ruled
island of Taiwan, and Obama’s meeting with exiled Tibetan
spiritual leader the Dalai Lama.
Both leaders agreed to work hard to ensure positive results at a
second round of their Strategic and Economic Dialogue in
May.
and going in the past 12 years. Only two CMs have completed
five-year terms since the State was formed.
The Congress-led ruling alliance has a comfortable majority of
44 in the 60-member Assembly, though the Congress has 28
MLAs of its own. Its partners are the United Democratic Party
with 10 MLAs and six others, including three Independents.  SAARC Summit, 16th
Sangma, known to be a Lapang loyalist, is a four-time MLA
from Ampatigiri Assembly constituency. More importantly, he
is believed to be the counter of Congress to Nationalist
Congress Party veteran and former Lok Sabha Speaker Purno
A. Sangma in the Garo Hills half of Meghalaya. This Garo
tribe-inhabited half has a traditional ambivalent relationship
with the other half dominated by Khasi-Jaintia tribes.
Trouble began for Lapang after some Congress MLAs wanted
him to drop three Independents and the lone regional party
(KHNAM) MLA from the Cabinet. Lapang declined, saying he
could not betray “friends” who helped him form the Congress-
led Meghalaya United Alliance (MUA) government.  region, the SAARC leaders reiterated their commitment to
The Independents and some regional party MLAs had broken
away from the NCP-backed Meghalaya Progressive Alliance to
help Lapang cobble together the MUA government on March
19, 2008, after voters delivered a fractured verdict in the
Assembly elections that year.
Naxals kill 73 security personnel in the deadliest attack ever
In the biggest Naxal strikes in the country, the Left-wing
extremists killed 76 jawans of the Central Reserve Police Force
(CRPF) and critically wounded eight others in the restive
Dantewada district of Chhattisgarh on April 6, 2010.
The rebels had meticulously planned the entire operation;
inviting security personnel to walk into the trap laid on the
Chintalnaar-Tademetla road, about 100 km from the district
headquarters and some 540 km south of the State capital.
The United States welcomed Hu’s decision to attend the
nuclear security summit, saying it would allow them to
address a “shared interest in stopping nuclear proliferation and
protecting against nuclear terrorism”.
The 16th SAARC summit began at Thimpu, Bhutan, on April
28, 2010, with India’s Prime Minister Manmohan Singh and
leaders of seven other member nations pledging to combat
extremism and terrorism, launch joint initiatives to deal with
climate change and boost intra-regional trade. 
The Summit ended on April 29, 2010, with leaders adopting
the ‘Thimphu statement’ on climate change, signing an
agreement on trade in services and expressing their firm
resolve to stamp out terrorism from the region. The next
summit would be held in the Maldives in 2011.
Facing criticism for the slow pace of development in the
implement the South Asian Free Trade Agreement (SAFTA)
in letter and spirit to boost intra-regional economic
cooperation for the prosperity of their people. The closing
ceremony of the summit was attended by leaders from all the
eight SAARC countries—India, Pakistan, Bangladesh, Nepal,
Afghanistan, Bhutan, Sri Lanka and the Maldives.
Representatives of nine observer countries—Mauritius, South
Korea, China, Japan, Iran, the US, the EU, Australia and
Myanmar—were also present.
The seven-page ‘Thimphu Silver Jubilee Declaration-Towards
a Green and Happy South Asia’’ emphasised the importance
of reducing dependence on high-carbon technologies for
economic growth and hoped promotion of climate resilience
will promote both development and poverty eradication in a
sustainable manner.

The Naxalites, who were reportedly 1,000 in number, had
planted landmines and created temporary bunkers on the
hilltops to easily target the jawans. The kaccha road where the
incident took place had been surrounded by hilly terrains and
dense forests.  transparent and inclusive manner. They also underscored the
The CRPF jawans did not get much time to take position and
retaliate. The Naxalites opened indiscriminate fire from the
bunkers located at strategic points and detonated a series of
landmines.
A key reason for the CRPF’s dismal response to the Naxal
attack has been their lack of training. As CPO units poured into
Chhattisgarh for Operation Green Hunt, 5 battalions of the
Border Security Force (BSF), 5 battalions of the Indo-Tibet
Border Police (ITBP) and 2 battalions of the Sashastra Seema
Bal (SSB) were all put through jungle warfare orientation
courses at Chhattisgarh’s well-reputed Jungle Warfare College
in Kanker. The CRPF, inexplicably, refused to undergo this
training.  The 2nd India-Brazil-South Africa (IBSA) Summit was held
Training at the Jungle Warfare College, as every organisation
except the CRPF seems to have known, has underpinned anti-
Naxal operations in Chhattisgarh since 2005, when the college
was set up with the help of the Indian Army. Over the last five
years, Chhattisgarh has trained 12,700 policemen (including
3700 from other States) at this institution. The college’s credo:
Fight the guerrilla like a guerrilla. 
Instead of providing adequate training to each battalion that is
sent into counter-insurgency operations, the CRPF has relied
heavily for success on “elite” units, like its feared “Naga
Battalion” which was based in Bastar for several years before
being pulled out. In 2008, the Home Ministry authorised the
CRPF to raise 10 COBRA (Commando Battalions for Resolute
Action) units, for counter-Naxal operations. But the regular
battalions remain largely untrained, pushed at will from
In line with India’s position, the SAARC countries underlined
that global negotiations on climate change should be guided
by the principles of equity, and common but differentiated
responsibilities and respective capabilities as enshrined in the
UN framework convention and conducted in an open,
need to initiate the process to formulate a common SAARC
position for the Mexico conference on climate change in
December. 
The SAARC leaders agreed to establish an inter-governmental
expert group to develop clear policy directions for regional
cooperation as envisaged in the SAARC Plan of Action on
Climate Change. The leaders directed the SAARC Secretary-
General to commission a study aimed at accreditation of
SAARC with the Kyoto Protocol’s Adaptation Fund as a
regional entity for undertaking adaptation projects in South
Asia.
IBSA Summit
in Brasilia on April 15, 2010. Speaking at the Summit, Prime
Minister Manmohan Singh said the grouping of leading
developing economies must speak against the protectionist
policies, “which are only short-sighted and self-defeating in
the long run”. IBSA can contribute to the shaping of the global
agenda and highlighting the issues of concern to developing
countries, he added. 
Underlining that the world must ensure that “we do not repeat
the mistakes of the past”, the Prime Minister said for the
global economic recovery to be sustainable, it must be
anchored in the real economy.
He also underlined the need for the IBSA to coordinate its
positions in the G-20 and continue to pursue the early
conclusion of the Doha round of trade negotiations “because a
fair and rule-based multilateral trading system is in our
election duty, to counter-insurgency, to patrolling riot-affected
areas, to anti-Naxal operations. The Home Ministry’s approach
has always centred on getting the CRPF to the trouble-spot.
After that, it is left to the harried battalion or company
commander to deliver the goods.  Singh, attending the Nuclear Security Summit in Washington
The answer clearly lies in carefully training CPOs, especially
before they go into counter-insurgency operations.  terrorists from laying their hands on any of them.
New strategy to counter Naxals
The Union government is tweaking its strategy to deal with
Naxals. The list of changes includes: segregation within the
CRPF to have specialist anti-insurgency units, which will be
trained to “attack first”; introduction of unmanned aerial
vehicles (UAVs) for surveillance; more choppers; and re-
training of men on the pattern of Indian Army before
induction. 
“Operations will go on…rather they are still on,” said well-
placed sources, adding that 10 such battalions had been trained
specially for the “attack first” policy which is the dictum of the
Army and the BSF in dealing with adversaries.
The training will include ramping up of infrastructure with
firing ranges and also the use of the existing training facilities
of the Army in Jungle warfare. The Army’s jungle warfare
expertise is such that even the Chinese Army conducted a joint
exercise with India in 2009.
For effective use, the CRPF—comprising 2.30 lakh personnel
—will be segregated into two parts. One will help the State
governments in maintaining law and order duties, while the
other, comprising younger men, will deal with insurgents.
The CRPF has also made it clear that the State governments
have to start raising special operations groups of its local
policemen, like in Andhra Pradesh and J&K. The local boys
know the population and glean out good information from
interest”.
Nuclear Security Summit
World leaders, including Indian Prime Minister Dr Manmohan
D.C., on April 12, 2010, set a stiff four-year target to secure
all vulnerable nuclear material in the world to prevent
 
In a communiqué issued at the end of the summit, the leaders
emphatically stated: “Nuclear terrorism is one of the most
challenging threats to international security” and agreed that
“strong nuclear security measures are the most effective
means to prevent terrorists, criminals or other unauthorised
actors from acquiring nuclear material.” Another summit
would be held in 2012 in South Korea to review the progress.
At a press conference after the summit, US President Barack
Obama, under whose initiative the summit was convened,
acknowledged that the task was tough but had to be done.
Obama said: “This is an ambitious goal, and we are under no
illusions that it will be easy. But the urgency of the threat, and
the catastrophic consequences of even a single act of nuclear
terrorism, demand an effort that is at once bold and pragmatic.
And this is a goal that can be achieved.”
Indian Prime Minister Dr Manmohan Singh said he was
satisfied with the outcome of the summit and that it had
endorsed what India had been pressing for at various
international forms in the past several years. 
The summit also recognised that even as nations fulfil their
national responsibilities these could not addressed by countries
working in isolation. What was needed was a sustained,
effective programme of international cooperation. The leaders
agreed that at the international level the need was for
compliance with existing key conventions and initiatives.
villagers which comes handy.

CURRENT AFFAIRS: MARCH 2010

CURRENT NATIONAL AFFAIRS

BANKING & FINANCE

RBI raises repo, reverse repo
On March 19, 2010, the Reserve Bank of India (RBI) surprised banks and money market players by raising key
policy rates 25 basis points. The move, aimed at taming inflation and anchoring inflationary expectations, marked a
reversal in the easy monetary policy regime amid signs of strong economic revival.

The central bank said the repo rate, or the rate at which banks borrow from RBI, is being increased 25 basis points
to 5 per cent. Similarly, the reverse repo rate, or the rate at which surplus cash is parked with the central bank, was
increased to 3.5 per cent, from 3.25 per cent earlier.

This was the second action since January 2010, when RBI announced a 75-basis point rise in the cash reserve ratio
(CRR) to 5.75 per cent.

But, unlike CRR, which is used to manage liquidity in the system, an increase in the repo and reserve repo rates is
aimed at signalling an increase in interest rates.

RBI joined central banks in Australia and Malaysia, which raised rates in March, while Norway and Israel did so at
the end of 2009. The US Federal Reserve and the European Central Bank are among those waiting for evidence of a
more concrete recovery before they unwind record low borrowing costs.

DEFENCE
Delhi High Court orders for Permanent Commission for Women Officers
On March 12, 2010, in a path-breaking judgement, the Delhi High Court has directed the Centre to offer within two
months Permanent Commission (PC) to Short Service Commissioned (SSC) women officers of the Air Force and
the Army at par with male SSC officers with all consequential benefits, including promotion.

At present, the Indian Army offers permanent commission to women after 10 years of SSC. This is applicable to
those who were recruited after March 2009 and that too only in two streams — the Judge Adjutant General (JAG)
branch and the Education corps. Women are also recruited in Signals, Engineers, Ordnance and Air Defence but are
not eligible for PC. 

In the IAF, women are offered a permanent option in the Legal, Accounts and Education corps. Women chopper and
transport pilots, engineering corps, Logistics and Meteorological streams are not eligible for permanent commission.
At present, there are about 1,050 and 827 women officers in the Army and the IAF, respectively. Separately, the
Navy has 280 women. 

The benefit would be extended to women officers recruited prior to change of policy (March 2009) and the PC shall
be offered to them after completion of five years. However, these benefits would be available only to women
officers in service or who approached the HC but retired when the case was pending in the court, the Bench
clarified.

The court made significant remark on having women in combat roles saying “the claim of absorption in areas of
operation not open for recruitment of women officers cannot be sustained being a policy decision.”

LAW POINT
Live-in not an offence: SC
The Supreme Court has opined that a man and woman living together without marriage cannot be construed as an
offence. “Living together is not an offence. It cannot be an offence,” a three judge bench of Chief Justice K.G.
Balakrishnan, Deepak Verma and B.S. Chauhan observed.

The court said even Lord Krishna and Radha lived together according to mythology. The apex court made the
observation while reserving its judgement on a special leave petition filed by noted south Indian actress Khusboo
seeking to quash 22 criminal cases filed against her after she allegedly endorsed pre-marital sex in interviews to
various magazines in 2005.

The judges grilled the counsel for some of the complainants in the case and repeatedly stressed that the perceived
immoral activities cannot be branded as offence.

The apex court further said the views expressed by Khusboo were personal. “How does it concern you. We are not
bothered. At the most it is a personal view. How is it an offence? Under which provision of the law ?” the bench
asked the counsel.

Khusboo had approached the apex court after the Madras High Court in 2008 dismissed her plea for quashing the
criminal cases filed against her throughout Tamil Nadu.
Promotion fundamental right: SC
The Supreme Court has ruled that governments at the Centre and States should “act as model employers” and that
all eligible employees virtually had a “fundamental right” to promotion as guaranteed under Article 16 of the
Constitution.

A Bench comprising Justices R.V. Raveendran and Asok Kumar Ganguly made the clarification while directing the
Centre and the Union Public Service Commission to grant promotion with retrospective effect to members of the
Uttar Pradesh State Civil Service (SSC) who had been affected by a delay of more than two years in the cadre
review following the creation of Uttaranchal (now Uttarakhand) in 2000.

The Centre and the UPSC contended that the statutory mandate of a cadre review exercise every five years “is
qualified by the expression ordinarily” and as such it was not necessary to undertake it every five years. The Bench,
however, did not buy this argument. “We hold that the statutory duty which is cast on the State government and the
Central government to undertake the cadre review exercise every five years is ordinarily mandatory subject to
exceptions which may be justified in the facts of a given case. 

“Surely, lethargy, inaction, an absence of a sense of responsibility cannot fall within the category of just
exceptions,” the apex court ruled, obviously indicting the UP government for not responding to the Centre’s
reminders.

The court accepted the government’s arguments that Rule 4(2) did not have retrospective effect, but refused to
interfere with the Delhi HC order which had, by using its special power under Article 142 of the Constitution,
directed the Centre to “mitigate the hardship and denial of legitimate rights of the employees” in view of the “facts
and circumstances of the case.”

LEGISLATION
Foreign Education Bill
After several years of debate, the Union Cabinet, on March 15, 2010, unanimously approved a Bill that would allow
foreign education providers to set up campuses in India and offer degrees. A Bill to this effect was first introduced
in the Rajya Sabha in August 1995. The new one is expected to be introduced in Parliament and be voted into law
by the monsoon session of 2010. 

This is a milestone which will enhance choices, increase competition and benchmark quality. A larger revolution
than even in the telecom sector awaits us,” said Kapil Sibal, Union Minister for Human Resource Development
(MHRD).

The Foreign Educational Institutions (Regulation of Entry and Operations, Maintenance of Quality and Prevention
of Commercialisation) Bill will allow foreign universities to invest at least 51 per cent of the total capital
expenditure needed to establish the institute in India. Such institutes will be granted deemed university status under
Section 3 of the Universities Grants Commission (UGC) Act, 1956.

The Bill aims to regulate the entry, operation and maintenance of quality assurance and prevention of
commercialisation by foreign educational institutions, besides protecting the interest of the student community from
sub-standard and ‘fly by night’ operators.

The Bill is aimed at not only bringing in investment in the education sector, but also draw in foreign students,
besides helping check the flight of Indians to study (then work and settle) abroad. 

PLANNING & ECONOMY

India’s food security goals in danger
An alarming new report by the World Bank has shown that an increasing number of aquifers in India are reaching
unsustainable levels of exploitation, endangering long-term food security goals. If current trends continue, in 20
years about 60 per cent of all aquifers in the country will be in a critical condition, putting at risk over a quarter of
the harvest, concludes the report “Deep Wells and Prudence: Towards Pragmatic Action for Addressing
Groundwater Overexploitation in India”.

The report rings alarm bells for policy makers, warning them against status quo. A rainfall deficit in 1963-66 had
decreased India’s food production by 20 per cent, but a similar drought in 1987-88 had very small impact on food
production due to widespread prevalence of groundwater, which is now declining.

India is the largest groundwater user in the world, exploiting 230 cubic kilometres of groundwater every year—over
a quarter of the global total. Today, groundwater supports 60 per cent of irrigated agriculture and more than 80 per
cent of rural and urban water supplies. 

Even though there is a major dependence of many sectors on groundwater and it is being overexploited, there is little
investment in its management. This inaction has arisen mainly because the solutions often proposed for groundwater
management are very controversial, including “command-and-control” regulation of wells and curbing the supply of
free or cheap power for groundwater irrigation.

FOREIGN RELATIONS
India to sign extradition treaties with Iran, Sri Lanka, Brazil, France & Israel
After signing extradition treaties with Saudi Arabia and South Korea, India has finalised draft agreements with five
more nations—Iran, Sri Lanka, Brazil, France and Israel. The government is now working out the dates on which
the treaties can formally be signed.
The treaty with Saudi Arabia was signed in February, during Prime Minister Manmohan Singh’s visit to Riyadh.
Another such treaty was signed with South Korea when its President, Lee Myung-Bak, visited New Delhi in January
2010.

With bilateral cooperation in security and counter-terrorism measures assuming significance, India has stepped up
efforts to formalise agreements with other nations so suspects can be brought back to the country to be tried under
Indian laws. Indian government is giving extradition treaties the utmost importance as intelligence inputs suggest
that some nations could be used as safe heavens by terrorists and the underworld.

India has extradition treaties with several countries, including Nepal, Belgium, Netherlands, Canada, UK,
Switzerland, Bhutan, USA, UAE and the Russian Federation.

Loan agreement with Japan

India has signed an agreement for Rs 10,500 crore (Yen 215.611 billion) Official Development Assistance (ODA)
from Japan. This includes Rs 1,648.36 crore for the second phase of Delhi mass rapid transport system project
(DMRTS), Rs 4,422.83 crore for the dedicated rail freight corridor and Rs 2,933 crore for Chennai metro.

Six projects will be covered under the loan, including Sikkim Biodiversity Conservation and Forest Management
Project, Kolkata East-West Metro Project (II) and Rengali Irrigation Project (III). With this, the cumulative
commitment of ODA from Japan has reached Rs 15,5840 crore. 

Visit of Prime Minister Putin of Russia

Russian Prime Minister Vladmir Putin’s one-day visit New Delhi on March 13, 2010, has gone some distance in
adding a strong economic dimension to ties between the two nations. The visit helped in building a roadmap to
strengthen economic ties, including in the pharmaceutical sector, getting Russian investments in infrastructure
projects and accessing Russian markets for Indian services.

Demonstrating the solidity of their strategic relationship to the world, India and Russia sealed multi-billion dollars
deals in key areas like defence, nuclear energy, diamond, petroleum and aviation as Russian Prime Minister
Vladimir Putin reaffirmed Moscow’s support to Delhi in its fight against terrorism.

The visit is noted for the success in taking this vital strategic partnership forward, giving the much needed economic
impetus. A host of steps aimed at scaling up the current $7.5 billion bilateral trade to $20 billion by 2015 were set in
motion.

Besides agreement on nuclear reactors, an MoU for cooperation in Russia’s satellite navigation system was also
agreed upon during the visit.

Russia announced its readiness to build 16 nuclear reactors for power stations in India. An important agreement was
the umbrella pact between the National Power Corporation of India Limited (NPCIL) and the Atom Stroy for
Kudankulam III and Kudankulam IV nuclear reactors as part of the nuclear cooperation accord between the two
sides. The agreement on peaceful uses of nuclear energy is expected to open more avenues of nuclear cooperation
between the two countries. The two sides also signed a pact on serial construction of Russian designed nuclear
reactors.

The most significant accords between the two sides were on the Admiral Gorshkov  aircraft carrier that was
approved by the Union Cabinet for the purchase of the vessel at $ 2.33 billion and the supply of 29 MIG 29K—the
sea variant of the fighter used by the IAF—valued at $ 1.5 billion. 

India-USA agree on N-reprocessing

India and the United States have reached a deal on reprocessing American-origin spent nuclear fuel to be supplied to
India under the landmark civil nuclear agreement signed in September 2008.

The talks were wrapped up well before the August deadline. The US statement noted that these arrangements will
enable Indian reprocessing of US-obligated nuclear material under IAEA safeguards. Completion of these
arrangements will facilitate participation by US firms in India’s rapidly expanding civil nuclear energy sector.

The reprocessing arrangements were negotiated pursuant to Article 6 (iii) of the US-India civil nuclear cooperation
agreement, also called the 123 Agreement. Under the 123 Agreement, India will construct new facilities dedicated
for reprocessing the safeguarded nuclear material under IAEA safeguards.

The advanced consent agreement is only the third of its kind ever undertaken by the US. The US has such
agreements with the European consortium EURATOM and Japan. China, Brazil, Indonesia, South Korea, which
have 123 Agreements with the US, do not have such agreements.

RESERVATIONS
SC okays quota for Andhra Muslims
On March 25, 2010, the Supreme Court okayed religion-based reservation in government jobs and educational
institutes in Andhra Pradesh but referred the matter to a constitution bench to decide on its constitutional validity.

In an interim order, a bench headed by Chief Justice K.G. Balakrishnan extended the benefit of four per cent
reservation in jobs and education to 14 other backward classes of Muslims in the State. In the process, it stayed the
February order of the State High Court that had quashed the Andhra Pradesh Reservation for Socially and
Educationally Backward Classes of Muslims Act, 2007. 

But the apex court refused to grant quota benefit to a 15th category of Muslims mentioned in the Act as the social
groups were not specified. It also made it clear this was a temporary measure. The constitution bench is expected to
take up the case in August 2010.

According to Andhra government, the reason for giving four per cent quota to backward Muslims was because they
constitute 5-6 per cent of the State's population. The creamy layer—those who earn over Rs 4 lakh annually,
children of class-I officers working with the State/Central governments and those who hold constitutional posts—
are not entitled. 

All parties barring the BJP welcomed the decision. 

Rajya Sabha passes historic Women’s Reservation Bill

Fourteen years after it was envisaged, the Rajya Sabha, on March 10, 2010, passed the landmark Women’s
Reservation Bill that will pave the way for reserving 33 per cent seats for women in Parliament and State
Assemblies. But prior to that, the legislation has to be seen through in the Lok Sabha. 

Of the 186 members present in the Rajya Sabha, 185 voted in favour of the Bill. Barring the parties from the Hindi-
belt—Samajwadi Party, Rashtriya Janata Dal and BSP—all other parties that included the constituents of Congress-
led UPA and BJP-led NDA supported the Bill that was to carry out the 108th amendment to the Constitution for
enabling reservation. 

The Congress-led UPA, the BJP-led NDA and also the Left parties were on the same side as the Parliament authored
the “historic move”, which could upstage several well ensconced politicians but ensure proper representation of
women, which languishes at 11 per cent in Lok Sabha. 

SP and RJD MPs walked out even before the discussion began. BSP’s leader in Upper House Satish Chandra Misra
walked out after expressing his party’s point of view: “We support the cause of reservation, however, oppose the
Bill in its present form.” 

The proposed legislation to reserve 33.3 percent seats in Parliament and State Legislatures for women was drafted
first by the H D Deve Gowda-led United Front government. The Bill was introduced in the Lok Sabha on September
12, 1996. Though it has been introduced in Parliament several times since then, the Bill could not be passed because
of lack of political consensus.

Main points of the legislation

  Seeks to reserve one-third of seats for women in Lok Sabha and State Assemblies.
 Allocation of reserved seats shall be determined by the authority prescribed by the Parliament.
 One-third of the total seats reserved for SCs and STs shall be reserved for women from these groups in
LS and Assemblies.
 Reserved seats may be allotted by rotation to different constituencies in the State or Union Territory.
 Reservation of seats for women shall cease to exist 15 years after the commencement of the Act.

TERRORISM; LAW & ORDER

Union Cabinet okays tougher laws to deal with hijackers
With terror threats in the aviation sector looming large, the Union government has decided to make the Anti-
Hijacking Act of 1982 tougher by including death sentence as a punishment for hijacking a plane with intention of
creating a terror strike.

A cabinet meeting headed by Prime Minister Manmohan Singh approved the amendments to be incorporated in the
existing Act, which at present only provides for life imprisonment and fine. 

The anti-hijack policy that was revised and approved by the Cabinet Committee for Security in 2005 could not be
made a law primarily due to lack of consensus on the punishment for the hijacker, having intent of creating terror
strike and caught alive.

The policy also has provision for immobilisation of the plane and disallowing it to take off, if the hijack occurs on
the Indian soil. Notably, during the Kandahar hijack in December 1999, in which passengers and crew members
were exchanged for four dreaded terrorists, security forces had failed to immobilise the plane when it had landed at
the Amritsar airport. The CCS, in August 2005, had cleared the proposal to shoot down a commercial plane if it was
hijacked. It also strictly ruled out any negotiations with hijackers on meeting any of their demands. 

According to the policy, if a rogue aircraft paid no heed to ATC warnings and deviated from its specified path or
headed towards any strategic spot, a decision on shooting it down would come into play. In case of an emergency
situation, the shoot down orders could be given by the Prime Minister, the Defence Minister or the Home Minister,
whoever could be contacted first. 

CURRENT INTERNATIONAL AFFAIRS

USA
Law on healthcare passed
On March 23, 2010, US President Barack Obama signed into law the landmark Health Care Bill that introduces
sweeping reforms in the USA’s healthcare system, capping a historic legislative victory that had eluded several of
his predecessors. It will take four years to implement fully many of the reforms.

Obama said that henceforth insurance companies will no longer be able to drop people's coverage, when they get
sick or they won't be able to place lifetime limits or restrictive annual limits on the amount of care they can receive.

The President said once this reform is implemented, health insurance exchanges will be created, a competitive
marketplace, where uninsured people and small businesses will finally be able to purchase affordable quality
insurance.

Obama said this legislation will also lower costs for families and for businesses and for the federal government,
reducing deficit by over $1 trillion in the next two decades.

WORLD ECONOMY
IMF paints grim picture of fiscal tightening needs
Developed countries with big budget deficits must start now to prepare public opinion for the belt-tightening that
will be needed starting 2011, says John Lipsky, the International Monetary Fund’s first deputy managing director.
He added that the scale of the adjustment required was so vast that it would have to come through less-generous
health and pension benefits, spending cuts and increased tax revenues.

Policy-makers should already be making it clear to their citizens why a return to prudent policies is a necessary
condition for sustained economic health, Lipsky said.

The IMF estimates that, by raising real interest rates, maintaining public debt at its post-crisis levels could reduce
potential growth in advanced economies by as much as half a percentage point annually.

Second, fiscal institutions must be strengthened to withstand adjustment fatigue. Options include reinforcing fiscal
responsibility legislation and improving tax collection.

Third, entitlement reforms such as increases in the retirement age would have favourable long-term fiscal effects but
do little near-term damage to aggregate demand.

RBI to buy IMF notes worth $10 bn

The Reserve Bank of India (RBI) has signed an agreement with the International Monetary Fund (IMF) to purchase
notes worth up to $10 billion to improve the ability of the international lender to provide timely and effective
balance-of-payment assistance to member countries. IMF will issue the notes in the special drawing rights (SDR)-
denominated form. The pact is a temporary bilateral arrangement for one year, which might be extended to two
years.

The pact is part of the international effort to support IMF’s lending capacity following the decision of the Group of
20 nations at its London Summit (held in April 2009) to treble IMF’s resources to $750 billion. 

Generally, IMF will give a five-day notice to RBI about its intention to issues notes, including the amount. It will
restrict issuance to a principal amount not exceeding SDR 500 million in any calendar week.

At the beginning of each quarter, IMF will also provide estimates for the amount for which notes will be issued
during a three-month period.

Permanent increases in IMF’s resources are expected to take place through an increase in quotas and standing
borrowing arrangements currently under negotiation.

ENVIRONMENT
India and China Okay Copenhagen Pact
On March 9, 2010, India and China formally backed the Climate Change Accord hammered out in Copenhagen in
2009, calling for voluntary cut in greenhouse gas emissions. Both the countries submitted official letters to the UN
Climate Change Secretariat saying that they agreed to being listed in the preamble of the Accord, subject to certain
conditions.

India made it clear, however, that the accord is a political document and not a legally binding one.

INTERNATIONAL RELATIONS
Google leaves China
Late on March 23, 2010 night, the Internet giant Google shut its Chinese website and shifted its search engine
services to uncensored Hong Kong after two months of confrontation with Beijing over censorship and alleged
hacking attacks. But those re-routed to Hong Kong still couldn’t access sensitive websites as these were blocked by
Chinese filters. 

Google’s bold censure of the business environment in the world’s number three economy—and the biggest online
market of 384 million netizens— had left the fate of its future China operations in doubt. 

Soon after Google’s announcement, Beijing lashed out by calling the action “totally wrong” and saying it “violated
the written promise” it made four years ago, when it arrived, promising to self-censor online services as required by
Chinese law. 
Chinese Foreign Ministry spokesman Qin Gang said the exit would not affect Sino-US relations unless someone
politicised the issue.

China believes its citizens need strict censorship. It blocked YouTube after the Tibet riots in March 2008, fearing the
spread of mass unrest through the Internet. Facebook and Twitter  were blocked after the Xinjiang riots in July 2009.

US President Obama’s visit to Afghanistan

On March 28, 2010 US President Barak Obama sneaked into Afghanistan under the cover of darkness, to avoid
being targeted by militants. This was his first visit to the country since taking office. For security reasons, the trip
was cloaked in secrecy. 

Obama met Afghan President Karzai in the palace’s outdoor grounds and stood under a pavilion for a brief
welcoming ceremony. The President spent roughly six hours in the country.
During their meeting the Afghan leader was invited to the White House on May 12, 2010. Mr Obama also tackled
Mr Karzai on his failure to make any meaningful reforms since he narrowly won a second term in fraud-ridden polls
in 2009. 

Mr Karzai made grandiose promises in his inauguration speech but so far he has failed to deliver. At the time, US
officials said he had six months to reform or risk losing American support. 

Mr Obama also addressed 2,500 US troops at Bagram air force base, nine miles from Kabul. He praised them for
their courage, sacrifice and focus, and warned of tough days ahead.

US, Russia seal N-arms cut deal

US President Barack Obama and Russian President Dmitry Medvedev sealed a landmark arms-control treaty on
March 28, 2010 to slash their countries’ nuclear arsenals by a third. 

After months of deadlock and delay, a breakthrough deal on a replacement for the Cold War-era START pact
marked Obama’s most significant foreign policy achievement since taking office and also bolsters his effort to
“reset” ties with Moscow.

Russia made clear, however, that it reserved the right to suspend any strategic arms cuts if it felt threatened by future
US deployment of a proposed Europe-based missile defence system that Moscow bitterly opposes.

The agreement replaces a 1991 pact that expired in December 2009. Each side would have seven years after the
treaty takes effect to reduce stockpiles of their most dangerous weapons—those already deployed—to 1,550, from
the 2,200 now allowed, and also cut their numbers of launchers to half.
INTERNATIONAL TERRORISM
Chechen insurgency re-surfaces in Russia
During the six years since the last suicide bomb attack on the Moscow subway, Muscovites came to think of
themselves as insulated from the guerrilla warfare. Terror, however, returned to the heart of Russia on March 30,
2010, with two deadly suicide bombings on the Moscow subway at rush hour, including an attack at the station
beneath the headquarters of the secret police. At least 40 people were killed and more than 60 wounded in the blasts.

Russian police had killed several Islamic militant leaders in the North Caucasus recently, which raised fears of
retaliatory strikes and escalating bloodshed by the militants. The bombings showed that the beleaguered rebels are
still strong enough to inflict harm on an increasingly assertive Russia, and they followed a warning in February 2010
from Chechen rebel leader Doku Umarov that “the war is coming to their cities.”

Prime Minister Vladimir Putin, who built much of his political capital by directing a fierce war against Chechen
separatists a decade ago, promised to track down and kill the organizers of what he called a “disgusting” crime.

Headley pleads guilty to all 12 charges

In a volte-face, Pakistani-American LeT operative David Coleman Headley, accused of plotting the 26/11 Mumbai
terror attacks and conspiring to target a Danish newspaper, has pleaded guilty before a US court. Charged on 12
counts, he admitted guilty in all of them.

Headley (49), who was arrested by FBI's joint terrorism task force on October 3, 2009, told US District Judge Harry
Leinenweber that he wanted to change his plea to guilty, in an apparent bid to get a lighter sentence than the
maximum death penalty.

Headley, son of a Pakistani diplomat and a Philadelphia socialite, admitted to using his friend Tahawwur Rana's
immigration company as a cover for surveillance activities in India and Denmark on behalf of Pakistan-based
terrorist groups, including LeT.

Headley admitted guilty in all six counts of conspiracy involving bombing public places in India, murdering and
maiming persons in India and providing material support to foreign terrorist plots and LeT; and six counts of aiding
and abetting the murder of US citizens in India. 
CURRENT AFFAIRS: FEBRUARY 2010

CURRENT NATIONAL AFFAIRS

AGRICULTURE
Scientists slam study behind Bt Brinjal ban
A vital study cited by Environment Minister Jairam Ramesh to justify his decision to
disallow the commercial cultivation of Bt brinjal in India is flawed, claim top European
scientists. Mr Ramesh had referred to the findings of France-based Caen University
professor Gilles-Eric Séralini and his team, which had branded Bt brinjal—India’s first
genetically modified (GM) food crop—“unsafe”. 

Experts claim that Séralini was unduly influenced by the renowned international NGO
Greenpeace—with its aggressive green agenda—which sponsored the study, and never
carried out a peer-reviewed laboratory study on GM crops he called hazardous,
including Bt maize and Bt brinjal, its gene or seeds.

The European Food Safety Association, a risk assessment body, has trashed Séralini’s
findings on Monsanto’s MON 863, a variety of Bt maize.

On February 9, 2010, the Union government decided to freeze the introduction of Bt

Brinjal in India till independent scientific studies established health and environment
safety of the product to the satisfaction of both public and experts.

Bt Brinjal is a genetically modified vegetable that is infused with Cry1Ac gene from a
bacterium, bacillus thuringiensis, to make the plant resistant to fruit and shoot borers
and certain pests.

The Environment Ministry has appointed a Genetic Engineering Approval Committee

(GEAC) to regulate research, testing and commercial release of genetically modified
crops, foods and organisms. The GEAC had cleared Bt Brinjal for commercial release in
October 2009. According to GEAC Bt Brinjal would reduce farmers’ dependence on
pesticides and enable higher yields.
EDUCATION
Uniform Math and Science content for Class 11 and 12
From the 2011 academic session, students of Classes XI and XII across the country will
study a uniform science and math curriculum. Currently, course content of these
critical subjects varies with the State school board an institution is affiliated to.

The idea is to have for every student a level playing field for entry to professional
colleges. The government has also received the approval of all school boards—including
State boards—to work towards a single, national-level entrance exam for all engineering
and medical courses in India from 2013. Gradually, such an exam would be extended for
entry to colleges of other disciplines, such as law.

One test would mean the end of plenty like IIT-JEE, AIEEE and State exams for
engineering colleges and various State-level PMTs, beside national level PMT, which the
CBSE conducts. This, the Human Resource Development (HRD) Ministry believes, would
lessen the burden on students, who have to prepare for different exams, which bring
their own levels of stress.

ENVIRONMENT
India to launch mission to cut emissions
India will spare no efforts to contribute to the success of post-Copenhagen process,
Prime Minister Manmohan Singh declared on February 6, 2010, as he announced the
launch of a National Mission on Enhanced Energy Efficiency, aimed at cutting carbon
emissions by 99 million tonnes. Within the ambit of our National Action Plan on Climate
Change, India has already unveiled one of the world's most ambitious plans for
promoting solar energy, targeting an installed capacity of 20,000 MW by the year 2022.
The initiative is expected to lead to avoidance of capacity addition of nearly 20,000 MW
and reduce carbon dioxide emissions of almost 99 million tonnes.

LAW POINT
Courts do not need nod for CBI probe: SC
On February 17, 2010, the Supreme Court upheld the constitutional validity of courts’
powers to order CBI probe without the consent of State governments but with a rider:
the powers should be used cautiously and sparingly. The five-judge Constitution Bench,
headed by Chief Justice K.G. Balakrishnan, said that such powers have to be used
sparingly in exceptional and extraordinary circumstances in cases having national and
international ramifications. Otherwise, the CBI will be flooded with such directions in
routine cases. Such powers are vested with the apex court and High courts to ensure
protection of fundamental rights of citizens under Article 21 of the Constitution, it said.

LEGISLATION
Judicial Standards and Accountability Bill
The proposed Judicial Standards and Accountability Bill, which will replace the four
decade-old Judges Inquiry Act, has laid down 14 guidelines for judges. These guidelines
will be called judicial standards. 

Major highlights of the Bill are:

 No judge shall give an interview to the media in relation to any of his

judgement delivered, or order made, or direction issued, by him in any case
adjudicated by him.
 No judge shall enter into a public debate or express his views in public on
political matters, except views expressed by a judge in his individual capacity
on issues of public interest, other than as a judge during a private discussion or
at an academic forum.
 The Bill bars the judges from allowing any member of his family, who is a
practising lawyer, from using the residence in which the judge actually resides
or use of any other facilities provided to the judge, for professional work of any
family member.
 The proposed law expects judges not to delay delivering a judgement beyond
three months after conclusion of arguments and have bias in judicial work or
judgements on the basis of religion, race, caste, sex or place of birth.
 Any wilful breach of judicial standards could be treated as misbehaviour and
lead to a disciplinary panel initiating proceedings against the erring judge.
 A complaint alleging misbehaviour or corruption would be referred to a scrutiny
panel comprising three judges. If the panel finds merit in any complaint, it
would be forwarded to an Oversight Committee, which after investigating the
matter can refer it to the President for initiating action against the judge.

N-liabilities Bill
In an important step towards the implementation of the Indo-US civilian nuclear deal,
the Union government is to introduce a Bill to facilitate the entry of American
companies in the nuclear sector. The Civil Liability for Nuclear Damage Bill, 2009 is
commonly known as the nuclear liability Bill. 
The Bill aims at limiting the liability of a nuclear plant operator to Rs 300 crore in the
eventuality of an accident and provides for appointing a claims commissioner with
powers of a civil court to arbitrate such cases. It also provides for the penalty to be
paid by the operator and not the supplier companies, which would mainly be American
in this case.  

The operator would not be liable for any nuclear damages if the incident is caused by
“grave national disaster of exceptional character”, armed conflict or an act of
terrorism and is suffered by the person on account of his own negligence.

The Bill also provides for the establishment of the Nuclear Damage Claims Commission,
which will have one or more claims commissioners for a specified area. The claims
commissioner shall have all the powers of a civil court for the purpose of taking
evidence on oath, enforcing attendance of witnesses, compelling the discovery and
production of documents and other material objects. 

Environment activists have described the attempt to cap the level of compensation for
victims of a nuclear accident as a violation of fundamental rights. Currently, the Atomic
Energy Act, 1962, allows the government-owned Nuclear Power Corporation of India to
operate nuclear power plants in the country.

PLANNING & ECONOMY

Union Budget, 2010
On February 26, 2010, Finance Minister Pranab Mukherjee presented a Budget that
broadly focused on fiscal stabilization. The Union Budget was presented at a time when
the Indian economy was on the path of revival and almost all demand indicators had
turned significantly positive. Investment and consumption demand was also on a revival
mode. The buoyancy in the manufacturing sector and up-tick in import and export were
also working well for economic growth prospects. In the current economic scenario,
what was required from the Budget was a further push for consumption and investment.
The Budget announcements tried to do just that.

Highlights:

 Additional Rs 1,65,000 cr for bank re-capitalisation

 Rs 3000 cr for agricultural impetus
 Farm loan payments to be extended for six months
 Fertilizer subsidy to be reduced
 Rs 100 cr woman farmer fund scheme
 Coal regulatory authority to be set up
 Clean energy fund to be established
 Interest subvention of 2% to be extended for handicrafts and SMEs
 Rs 200 cr for Tamil Nadu textile sector
 Interest subvention for housing loans up to 1 lacs
 Allocation to defence raised to Rs 1.47 lakh cr
 Defence capex raised to Rs 60,000 cr
 Divestment target of Rs 25,000 cr
 Rs 1200 cr assistance for drought in Bundelkhand
 Rs 48000 cr for Bharat Nirman
 NREGA scheme allocation raised to Rs 41,000 cr
 Allocation to health Rs 22,300 cr
 Allocation for school education up from Rs 26,800 cr to Rs 31036 cr
 Allocation to power sector at Rs 5130 cr
 Rs 10,000 cr allocated for Indira Awaas Yojna
 Social Security Fund to have corpus of over Rs 1000 cr
 Rs 2400 cr for MSMEs
 Government to contribute Rs 1000 per month for pension security
 Rs 5400 cr allocated for urban development
 Rs 66100 cr allocated for rural development
 Rs 1900 cr allocated for UID project
 Gross tax receipts Rs 7.46 lakh cr
 Government to set up National Mission for delivery of justice
 15% rise in planned expenditure
 Fiscal deficit target of 5.5% in FY11
 Excise on all non smoking tobacco raised
 Televisions to be costlier
 Mobile phones to become cheaper
 Cement to be costlier
 Refrigerators to be costlier
 Jewellery to be more expensive
 Monorail granted project import status
 CDs to be cheaper
 Excise duty on CFL halved to 4%
  Bank farm loan target: Rs 3.75,lakh crore
 Nutrient based fertiliser subsidy scheme to come into force from April 1, 2010
 To build 20 km of highway every day
 Income tax on income upto Rs 1.6 lakh: Nil
 Income tax on income above Rs 1.6 lakh and upto Rs. 5 lakh: 10 per cent
 Income tax on income above Rs.5 lakh and upto Rs. 8 lakh: 20 per cent
 Income tax on income above Rs. 8 lakh: 30 per cent

Economic Survey 2010

 Economy likely to grow by up to 8.75 per cent in 2010-11.

 Full recovery; return to 9 per cent growth in 2011-12.
 Broad recovery gives scope for gradual stimulus roll back.
 High double-digit food inflation in 2009-10 major concern.
 Signs of food inflation spreading to other sectors.
 Farm & allied sector production falls 0.2% in 2009-10.
 Need serious policy initiatives for 4% agriculture growth.
 Moots direct food subsidy via food coupons to households.
 Favours making available food in open market.
 Favours monthly ration coupons usable anywhere for poor.
 Gross fiscal deficit pegged at 6.5 pc of GDP in 2009-10.
 India 10th largest gold holding nation at 557.7 tonnes.
 Exports in April-December 2009 down 20.3 per cent.
 Imports in April-December 2009 down 23.6 per cent.
 Trade gap narrowed to USD 76.24 bn in April-December.
 32.5% savings & 34.9% investment (of GDP in 2008-09) put India in league of
world's fastest growing nations.
 Government initiates steps to boost private investment in agriculture.
 Wants credit available at reasonable rates on time for private sector to invest
in agriculture.
 Slowdown in infrastructure that began in 2007, arrested.
 Domestic oil production to rise 11 per cent in 2009-10.
 Gas output up 52.8 per cent to 50.2 billion cubic meters with RIL starting
production.
 India world's 2nd largest wireless network with 525.1 million mobile users.
 Virtually every second Indian has access to phone.
 Auction for 3G spectrum to provide existing and foreign players to bring in new
 technology and innovations.

Railways Budget, 2010

Union Railways Minister Mamata Banerjee presented the Railways Budget, 2010, on
February 24. No change in passenger fares was announced—Planning Commission was
pitching for a hike—and the freight rates on select, but significant items such as
kerosene and food grains, were cut to keep prices down.

54 new trains, including 10 Durantos, were announced. The Minister also promised to
construct over 1,000 km of new rail lines over next one year. 

The operating ratio, proportion of expenses to earnings, which was a healthy 75 per

cent in 2007-08, was up to 94.7 per cent in 2009-10. The Railways hope to bring it down
to 92.3 per cent in 2010-11. Though the budget proposes to raise net surplus from Rs
951.03 crore in 2009-10 to Rs 3,173 crore in 2010-11, these figures were called
“peanuts” by experts when compared to the figures of some years ago.

Only Rs 373.09 crore was provided for new projects. Many projects come with riders:
they’re either proposed in the public-private partnership (PPP) mode or are “subject to
sanction by the Finance Ministry and Planning Commission”.

Highlights:

 No increase in passenger fares.

 Rs.100 reduction in freight per wagon for fertilisers and kerosene.
 Free travel for cancer patients in 3rd AC classes.
 Cost-sharing in public-private-partnership (PPP) mode in some gauge-conversion
projects.
 Further extension of Kolkata Metro on priority basis; stations to be named after
Bahadur Shah Zafar, Tagore family.
 Karmabhoomi trains to be introduced for migrant labour.
 New Janmabhoomi train between Ahmedabad and Udhampur.
 Special 'Bharat Teertha' train to be run around India to commemorate
Rabindranath Tagore's 150th birth anniversary. A special train to be run from
West Bengal to Bangladesh to commemorate the anniversary.
 Railway line to be extended from Bilaspur in Himachal Pradesh to Leh in Jammu
and Kashmir.
  Andaman and Nicobar Islands to get railway line from Port Blair to Diglipur.
 Sikkim capital Gangtok to be connected by rail from Rangpo.
 Impact of Sixth Pay Commission recommendations placed at Rs.55,000 crore.
 Gross earnings in 2009-10 estimated at Rs.88,281 crore.
 Working expenditure in 2009-10 estimated at Rs.83,440 crore.
 Expenses during 2010-11 estimated at Rs.87,100 crore.
 Thrust on expansion in 2010-11 with allocation of Rs.4,411 crore.
 Net profit of Rs.1,328 crore in 2009-10.
 Ten automobile ancillary hubs to be created.
 Policy decision to employ one member of family whose land is requisitioned for
railway projects.
 North-south, east-west dedicated freight corridors to be created.
 Centre for railway research to be established with Indian Institutes of
Technology and Defence Research and Development Organisation.
 Design, development and testing centre for railway wheels at Bangalore.
 Five sports academies to be set up; astroturf to be provided for development of
hockey; employment opportunities for sports persons.
 Railways to be lead partner for Commonwealth Games.

13th Finance Commission

The Union government has accepted most of the recommendations of the Thirteenth
Finance Commission headed by former Finance Secretary Vijay Kelkar. 

The Commission has told governments at the Centre and States to set their fiscal house
in order, even as it raised the share of taxes that the States would be entitled to
receive over the next five years by 1.5 percentage points.

In addition, the Commission, a Constitutional body that is appointed every five years to
recommend a tax-sharing formula between the Centre and States, has suggested a
roadmap for the introduction of a single-rate goods and services tax (GST), the key
indirect tax reform to create a common market in India.

Its stringent new roadmap for fiscal responsibility suggests, among other things, that
the overall debt of the Centre and States be capped at 68 per cent of gross domestic
product (GDP) from the current 82 per cent, and 75 per cent recommended by the
Twelfth Finance Commission.
The Finance Commission has recommended that the Centre reduce debt to 45 per cent
of GDP by March 2015, against 54.2 per cent at present. For States the reduction in
debt is recommended at 2 percentage points to 25 per cent. The relatively less
stringent condition for States comes with the rider that the Fiscal Responsibility and
Budget Management Act allows the Centre to borrow on behalf of the States to help
them counter macro-economic shocks. During the financial crisis, the Centre had
relaxed the cap on the fiscal deficit.

The Finance Commission has said the Centre should transfer 32 per cent of the taxes it
collects to States, against 30.5 per cent at present. The overall ceiling— including
transfers to local bodies—on transfers from the Centre’s gross revenue has been raised
from 38 to 39.5 per cent.

Among proposals that provide a thrust to fiscal federalism, the commission has
recommended that local bodies receive up to 2.5 per cent of the divisible tax pool. Of
this, up to 1 per cent can be incentive-linked.

While there is more reason for the States to cheer since the commission proposes an
increase in grants, much of it is tied to specific spending programmes such as those for
elementary education and environment. There is, however, a performance incentive of
Rs 1,500 crore for Assam, Sikkim and Uttarakhand and a grant of Rs 51,800 crore to
meet the deficits of Jammu & Kashmir, Himachal Pradesh and the north-eastern States
(excluding Assam).

Like its predecessor, the Thirteenth Finance Commission has recommended a debt
relief scheme for the States. The first element is to cap the interest rate on a part of
the loans from the National Small Savings Fund at 9 per cent from up to 10.5 per cent.
This will translate into a benefit of Rs 28,360 crore to the States. In addition, there is a
Rs 4,506 crore benefit with the government accepting the suggestion to write off
central loans that are not administered by the finance ministry but were outstanding at
the end of 2009-10.

Including the higher grants-in-aid, Madhya Pradesh, Uttar Pradesh and Maharashtra
would be the biggest beneficiaries in terms of share of transfers. Himachal Pradesh,
Uttarakhand and Jammu and Kashmir would be the top losers.

The Finance Commission has projected that tax receipts would see a compounded
annual growth rate of over 17 per cent between March 2010 and March 2015, while
nominal GDP growth is estimated at 13.2 per cent.

Prescribing a zero revenue deficit as the golden rule, the Commission has recommended
that the endeavour for all States should be to reach that level by 2014-15.

Union Cabinet raises Urea prices

On February 18, 2010, the Union government decided to raise urea prices by 10 per
cent. It also allowed the industry to fix retail prices of other subsidised fertilisers,
while limiting the government’s subsidy burden under a new policy that will determine
the subsidy on phosphorus and potash based on their nutrients.

The decision, to take effect from April 1, 2010, will help the government reduce its
fertiliser subsidy bill, estimated at Rs 50,000 crore for 2009-10. But, the move will hit
farmers, even as fertiliser companies will stand to gain. The latest decision does away
with the practice of government fixing a maximum retail price and aims at replacing
the current system of giving subsidy to the industry with direct assistance to farmers.

The switch to the nutrient-based fertiliser plan is significant as companies will now be
able to change retail prices of only nutrient-based fertilisers (nitrogen, phosphorus,
potash and sulphur), which will help the government cap the subsidy on these
fertilisers. The move is also expected to attract fresh investment in the fertiliser
industry.

The government’s annual subsidy bill on fertilisers in 2008-09 was estimated at Rs

75,849 crore, which was expected to be brought down to Rs 49,980 crore in 2009-10.
The bulk of the increase in the fertiliser subsidy is on account of the sale of
decontrolled fertiliser with concession to farmers. Urea accounts for about 30 per cent
of the total fertiliser subsidy burden. 

POLITICAL
Justice Srikrishna committee to look into formation of Telangana
The Union government has set-up a five-member committee headed by Justice B.N.
Srikrishna to look into the modalities of forming the separate State of Telangana. The
committee has been given time till December 31, 2010 to consult all sections of the
society and submit report. The terms of reference of the committee are:
  Examine the situation in Andhra Pradesh with reference to demand for separate
Telangana State, as well as the demand for maintaining the present status of a
united Andhra Pradesh.
 Review developments in the State since its formation and their impact on the
progress and development of different regions of the State.
 Examine the impact of recent developments in the State on different sections
of people such as women, children, students, minorities, OBCs, SC and STs.
 Consult all sections of people, especially political parties and elicit their views
on a range of solutions that would resolve the present difficult situation.
 Identify the key issues that must be addressed.
 Consult organisations of other civil societies such as industries, trade unions,
farmer organisations, women students.
 Make any other suggestion and recommendations that the committee may deem
appropriate.
 The protagonists of separate State, however, rejected the terms of reference
of the Justice Srikrishna committee and vowed to intensify their agitation. The
Telangana Rashtra Samithi (TRS), which has been spearheading the statehood
agitation, struck a belligerent note and announced that its MPs, MLAs and MLCs
would resign in protest.
 Rejecting the terms of reference and the ten-month time frame given for the
committee, the TRS chief said the Centre had once again cheated the people of
Telangana by backtracking on its December 9, 2009 statement announcing
initiation of the process for formation of separate State.

Taking serious objection to the inclusion of the demand for continuation of united
Andhra Pradesh among the terms of reference, he said: “what is the point in looking
into the demand for united Andhra Pradesh when it already exists now? There is only
one popular movement going on in the State and that is for separate Telangana State.”

However, the leaders from coastal Andhra and Rayalaseema regions found comfort in
the open-ended nature of the panel’s terms. “We welcome the terms of reference,
which are fairly balanced. It will give an opportunity for a thorough assessment of the
ground situation,” a ruling Congress MP from coastal Andhra region said.

FOREIGN RELATIONS
Asian group endorses seat to India in UN Council
India's candidacy for a non-permanent seat in the Security Council has been endorsed
by all 53 member States of the Asian group in the UN General Assembly. Nineteen
countries, including Nepal, Sri Lanka, Afghanistan and Bangladesh, spoke in favour of
giving India a slot on the Security Council table from January 2011. 

In January 2010, India's path to a non-permanent seat got cleared after its sole
competitor from Asia, Kazakhstan, backed out of the race. 

The Security Council is made up of 15 States—five permanent members who have the
veto power and 15 non-permanent members elected for a two-year term. To win, India
needs two-thirds of the General Assembly vote, which adds up to about 128 counties
saying yes to India's presence in the Council.

Running after more than a decade, India orchestrated a year-long campaign led by
India’s envoy to the UN Hardeep Singh Puri, who campaigned in New York and at
multilateral events at the United Nations. 

The last time India had a seat at the Council was in 1992. In 1996, Japan won with India
trailing behind with approximately 40 votes.

Visit of Nepalese President

President of Nepal Ram Baran Yadav visited New Delhi from February 15, 2010. In an
effort to make the visit a truly successful event, India offered a 250-million dollar soft
loan through EXIM Bank and signed four major accords with the Himalayan nation.

India also offered to supply 50,000 tonne of wheat, 20,000 tonne of rice and 10,000
tonne of yellow peas to its neighbour. An additional 2,000 tonne of wheat would be
provided to Nepal, if required.

The four accords signed by the two countries are: new air services agreement, MOU on
development of railway infrastructure at five border points, MOU on development of
India-Nepal friendship polytechnic at Hetavda in Makwanpur district of Nepal; and MOU
on establishment of India-Nepal friendship convention centre at Birgunj in Nepal. 

During the delegation-level talks, the Indian Prime Minister hoped that the peace
process and drafting of the constitution would be completed in Nepal as per the
schedule. Sixty-two-year-old India-educated Yadav expressed his gratitude to the Indian
leadership for assisting his country in its economic development.

The Presidential visit came on the eve of a new constitution the Nepal government has
pledged to promulgate in May 2010. Nepal's fragile peace process that began after a
decade of insurgency is expected to be consolidated by the new statute. However,
hiccups continue, with the Maoists now saying they will agree to the rehabilitation of
their guerrilla army, the People's Liberation Army (PLA), only after the new statute
came into effect.

Talks with Pakistan end without much headway

A breakthrough eluded India and Pakistan at the Foreign Secretary-level talks with New
Delhi rejecting Islamabad’s plea for the resumption of the composite dialogue process
(CDP) and handing over three fresh dossiers to the neighbouring country linking
elements in Pakistan, including JuD chief Hafiz Saeed, with terrorist activities on the
Indian soil.

At the first official dialogue between the two countries after a 14-month hiatus, on
February 25, 2010, India focused on terrorism emanating from the Pakistani territory,
while Pakistan raised the Kashmir, water and Baluchistan issues. 

The three-hour talks, seen by diplomatic observers more as an exercise in scoring

brownie points by the two sides, ended with Foreign Secretary Nirupama Rao and her
Pakistani counterpart Salman Bashir announcing at separate press briefings that they
would remain in touch and continue endeavours to restore trust in the relationship.
However, it was quite clear from the statements of the two top diplomats that they
would have to cover a lot of distance in putting the peace process between the two
neighbours back on track.

Prime Minister Manmohan Singh’s visit to Saudi Arabia

On February 26, 2010, Prime Minister Manmohan Singh became the first Indian Prime
Minister in 28 years to visit Saudi Arabia. During the visit, Saudi Arabia expressed
concerns over extremism in Pakistan as New Delhi and Riyadh firmed up a strategic
partnership.

Prime Minister Manmohan Singh unveiled a roadmap for comprehensive economic

partnership as he addressed captains of industry from both the countries. 
Foreign Minister Prince Saud al-Faisal, who had a discussion with Singh, later spoke of
the “dangerous trend” of extremism in Pakistan and made it clear that Riyadh had
nothing to do with the Taliban. Saudi Arabia and Pakistan were among the few
countries that had recognised the Taliban regime in Afghanistan.

The Saudi minister said, “Pakistan is a friendly country. Therefore, any time one does
see dangerous trends in a friendly country, one is not only sorry but worried. And it is
indeed the duty of all political leaders in Pakistan to unite to see that extremism does
not find a way to achieve its aim in the country and this can only happen with united
political leadership in Pakistan. This, we hope, Pakistan will possibly achieve.”

India sees Saudi Arabia as a strategic partner for promoting peace, stability and
economic development. Such a partnership will bring benefits not only to the two
countries but to the region. After discussions between Mr Singh and King Abduallah, the
two sides signed the Riyadh declaration.

The Delhi Declaration, signed during the historic visit of King Abdullah to India in 2006
as the chief guest on India's Republic Day, had charted out a new path of cooperation
between India and Saudi Arabia across a range of fields including security, bilateral
trade and investment, culture, science and technology. According to the new
declaration, keeping in view the development of relations between the two countries,
and the potential for their further growth, the two leaders decided to raise their
cooperation to a strategic partnership covering security, economic, defence and
political areas.

Visit of President of Turkey

The Turkish President, Abdullah Gul, visited India on February 9, 2010 and held wide-
ranging talks with Prime Minister Manmohan Singh on all issues of mutual interest,
including the international situation. Apart from the declaration on terrorism, the two
countries issued a document on cooperation in the field of science and technology.

Days after keeping New Delhi out of the Istanbul conference on Afghanistan at the
instance of Pakistan, Turkish President Abdullah Gul sought to placate India by strongly
endorsing its position on the issue of terrorism. 

Turkey is the first Organisation of Islamic Conference (OIC) member to support India’s
call for early conclusion of a comprehensive convention on international terrorism,
which finds a mention in the joint declaration on terrorism. Turkey’s position is being
seen as a major departure from that of OIC, which is not willing to exclude armed
forces from the purview of the convention.

On Afghanistan, the Turkish President praised the role being played by India in the
reconstruction plan in the embattled nation. 

India, UK ink N-pact

On February 11, 2010, India signed a civil-nuclear cooperation declaration with Britain,
making it the eighth country to sign such a pact with New Delhi after India secured
approval of the Nuclear Suppliers’ Group (NSG) to undertake nuclear commerce in
September, 2008. It is a general umbrella agreement on civil-nuclear cooperation
between the two countries.

India has already signed nuclear deals with France, the USA, Russia, Kazakhstan,
Namibia, Mongolia and Argentina. A nuclear agreement between India and Canada has
also been finalised. Germany and South Korea have also expressed their desire to
cooperate with India in the field of civil-nuclear energy.

The pact is expected to provide legal framework to British companies to export

components and products.

RESERVATIONS
Andhra HC quashes quota for Muslims
In a major setback to the Andhra Pradesh government’s Muslim reservation policy, the
High Court, on February 8, 2010, struck down a legislation providing four per cent quota
for the minority community in jobs and educational institutions.

A seven-member constitutional bench headed by Chief Justice A.R. Dave found fault
with the way the survey was conducted by the Backward Classes Commission, whose
recommendations had formed the basis for quota policy. 

The State Assembly had passed the legislation in July 2007 providing four per cent
reservation for socially and educationally backward Muslims by including them among
backward classes. The quota was made applicable to 15 Muslim groups identified by the
Andhra Pradesh Backward Classes Commission as socially and educationally backward.
These were categorised as BC-E Group for the purpose of providing reservation.
Acting on a bunch of writ petitions filed by several individuals and organisations
challenging the legislation, the court—in a majority verdict—termed the commission’s
survey as “irrational and unscientific” and held the legislation as “unsustainable”.

TERRORISM; LAW & ORDER

Maharashtra, West Bengal ‘poor performers’ in fight against naxalites
Maharashtra and West Bengal, which have been hit by terrorist and Maoist violence, are
among the seven States that have fared poorly in modernising their police force.
According to official documents, put together by the Home Ministry, Maharashtra and
West Bengal have been labelled as “poor performing States” as they failed to use the
funds sanctioned to them by the Centre for upgrading their police force and
intelligence apparatus. 

The Centre earmarked Rs 1,230 crore for 2009-10 for the scheme for modernisation of
the State police forces (MPF), which is meant primarily to equip State governments to
deal with emerging challenges to internal security like terrorism and naxal violence. 

The poor performing States have outdated and obsolete weapons and even the
extremist-prone police stations are often not supplied with modern weapons, and even
when it is supplied police personnel are not trained to use them. Their police
communication network does not function efficiently, they do not have enough vehicles
and their forensic laboratories lack proper infrastructure.

CURRENT INTERNATIONAL AFFAIRS

DISASTER
Chile hit by 8.8 magnitude earthquake
On February 27, 2010, more than two million people were affected in some way and
more than 300 people were killed as an 8.8-magnitude earthquake hit coastal Chile.
Santiago, capital of Chile, is 200 325 km northeast of the epicentre.

The quake was 700 to 800 times stronger, but at a greater depth—35 km—compared to
the shallow 14 km depth of the Haiti quake, which contributed towards much of the
damage there.

Coastal Chile has a history of deadly earthquakes, with 13 quakes of magnitude 7.0 or
higher since 1973. As a result, experts said that newer buildings are constructed to help
withstand the shocks. Still, the damage from Chile's earthquake was widespread. A 15-
story high rise near the southern city of Concepción collapsed; the country's major
north-south highway was severed at multiple points; and the capital city's airport was
closed after its terminal sustained major damage.

The epicentre was just a few kilometres north of the largest earthquake recorded in
the world: a magnitude 9.5 quake in May 1960 that killed 1,655 and unleashed a
tsunami that crossed the Pacific.

WORLD ECONOMY
US Fed signals end to emergency liquidity
On February 20, 2010, the US Federal Reserve Board sent its most explicit signal yet
that the emergency supply of liquidity to financial markets is done and the most
aggressive monetary policy easing in its 96-year history will eventually reverse.
Chairman Ben S Bernanke and his colleagues at the Board of Governors raised the rate
charged to banks for direct loans by a quarter-point to 0.75 per cent. It was the first
increase in the discount rate since June 2006.

The Fed portrayed the decision as a “normalization” of lending that would have no
impact on monetary policy. The assurances didn’t stop investors from increasing bets
that the Fed would tighten policy in the fourth quarter. The dollar rose and US stock
futures fell after the announcement.

US central bankers closed four emergency lending facilities in February 2010 and are
preparing to reverse or neutralize the more than $1 trillion in excess bank reserves they
have pumped into the banking system. The discount-rate increase will encourage banks
to borrow in private markets rather than from the Fed. In any case, financial
institutions have reduced their reliance on the Fed window. Banks had borrowed $14.1
billion as of February 17, 2010, representing less than 1 per cent of the central bank’s
$2.28 trillion in total assets. A year ago, borrowing stood at $65.1 billion.

Greek debt crisis tests euro zone

The euro, the single currency that 16 EU (European Union) countries share, is usually
highlighted as one of the main achievements of the European project; a rare example
of “success” in what has increasingly become a beleaguered tale of EU infighting and
lack of vision. But, a threatening debt crisis, with Greece as the main offender, has put
the euro-zone to test like never before in its 11-year-long history. February 2010 saw
the euro coming in for a pummelling, sending ripple across global markets. 

However, it is the political crisis that is posing a question mark before the very future
of the EU. The result is a monetary union that features a common currency without a
matching fiscal or political union. Thus, although the European Central Bank sets
interest rates for the euro-zone, it does so in a vacuum, with constituent governments
retaining control over fiscal and economic policy.

The large disparities between euro-zone nations have been thrown into sharp relief by
the global economic crisis. On the one hand, you have the unflatteringly named PIGS
(Portugal, Ireland, Greece and Spain), all of whom are finding accruing debt
increasingly expensive, leading to the spectre of State bankruptcy. The worst of the lot
is Greece. Its economy shrank by 1.2 per cent in 2009. Having been found out to be
cooking its books for years, Greece’s public debt is expected to break 120 per cent of
output.

The poor economic condition of the PIGS, in particular Greece, has thrown up a
conundrum for the large, surplus economies of the euro-zone like France, Germany and
the Netherlands.

There are three options on the table, none of which are finding immediate takers. The
first is to issue a common euro-zone bond, which would be placed at Greece’s disposal.
But countries with good credit, like Germany, are opposed to the idea because of the
higher interest rates that would result.

An alternative is giving bilateral financial aid with economically healthy countries in the
euro-zone taking out loans on the financial market at good rates and passing these on
to Greece.

The final option is an old-style IMF bailout, perhaps the most sensible of the choices.
But, for the IMF to come to Greece’s rescue would be a slap in the face of EU, implying
that it cannot take care of its own house and requires an institution that has always
been sceptical of the euro to act as saviour.

Basic Capabilities Index 2009

The Basic Capabilities Index (BCI), 2009, has found that South Asia will get 80 points on
the index by 2015, 10 points higher than the present value of 70. India received 68
points in the index, an increase of meagre four points since 2004. 

The global NGO Social Watch’s index of 130 countries says 100 points defines well-being
of the citizens based on children getting education till primary level, child mortality
rate and percentage of births attended by skilled labourers. The BCI does not use
income as an indicator.
 
According to the index, South Asia, a region with worst BCI in 2004, has been making
fast progress, but the situation is still “extremely critical”.  Since 2004, the report said,
one-third of the countries failed to raise their BCI value by more than one per cent and
only one out of six countries showed significant progress. 

The index also tells about the increasing gap in living standards of rich and poor in the
world. The highest BCI is 97 of Iran and lowest is 44 of Chad in Africa, followed by
Afghanistan, Ethopia, Bangladesh and Nepal.

Japan still world’s second largest economy

Retaining its position as the world's second largest economy, the Japanese economy
grew at a faster-than-expected pace of 1.1 per cent in the last three months of 2009. 

China, the fastest-growing large economy, clocked a growth of 10.7 per cent in the
December 2009 quarter, bringing it at a sniffing distance to surpass Japan as the second
largest economy in the world.

Japan’s economy, which is primarily exports-driven, rose 1.1 per cent in the fourth
quarter of 2009. On an annual basis, GDP expanded a much higher pace at 4.6 per cent.
For the whole of 2009, the Japanese economy shrank 5 per cent and is valued at 474.92
trillion yen (about $5.1 trillion). The better-than-expected Japanese growth in the
December 2009 quarter was mainly driven by better exports and effects of stimulus
measures. To bolster the recession-hit economy, Japan had unveiled stimulus measures
worth over $130 billion. 

NUCLEAR PROLIFERATION
Iranian President declares Iran a nuclear State
Iranian President Mahmoud Ahmadinejad declared on February 11, 2010, that Iran had
produced its first batch of 20 per cent enriched uranium, amidst a growing view in the
 West that Tehran is bluffing. 

“Iran was now a nuclear State,” Ahmadinejad told a huge rally of supporters on the
31st anniversary of the Islamic Revolution. Experts say that once Iran can enrich
uranium to 20 per cent it should move relatively quickly toward 90 per cent
purification, weapons-grade fuel.

Former U.S. officials and independent nuclear experts say continued technical problems
could delay—though probably not halt—Iran’s march towards achieving nuclear-weapons
capability, giving the US and its allies more time to press for a diplomatic solution. 

While Iran says its nuclear program is entirely peaceful, Western nations suspect that
the country is intent on developing an atomic bomb.

CURRENT AFFAIRS: DECEMBER 2009

CURRENT NATIONAL AFFAIRS

DEFENCE
Army doctrine being reviewed 
The Army’s military doctrine is being reviewed and it will now include an added thrust
in five key areas that will propel the doctrine. This includes wars in faraway lands,
besides strategy on how to face future challenges posed by China and Pakistan. 

The key areas include preparation for a two-pronged war with China and Pakistan. Both
countries will have to be looked at separately and also collectively. The nature of
conflict, if ever, with both countries will vary greatly in terms of terrain and use of
weapons and fire-power. 

The Army, which is involved in fighting insurgency in J&K and the North-East, is also
looking to optimise capabilities to fight asymmetric war waged by both State and non-
State actors, such as terror attacks and proxy wars. This will include cyber and
electronic warfare.

The doctrine will look at ways to enhance the strategic reach of the Army and joint
operations with the Navy and the Air Force. Countries like the USA already have
airborne division while China has capability of rapid induction of troops. The reviewed
doctrine will also touch upon space-based capability and methods to achieve
technological edge over the enemy. The doctrine is reviewed every five years by the
Army’s Shimla-based Training Command.

PLANNING & ECONOMY

13th Finance Commission Report 
The 13th Finance Commission, which makes recommendations on sharing of tax
revenues by the Centre and States, has suggested a new path for fiscal prudence in its
report submitted to President Pratibha Devi Singh Patil on December 30, 2009.
 
The Commission was headed by Vijay Kelkar. Other members of the Commission were
B.K. Chaturvedi, Indira Rajaraman, Atul Sarma and Sanjiv Misra.

The government had consigned the Fiscal Responsibility and Budget Management
(FRBM), the self-imposed fiscal prudence guidelines, to the back-burner in 2008 when it
stepped up official spending beyond its means in order to insulate the economy from
the global financial meltdown. The country’s fiscal deficit, a reflection of government
borrowings, is estimated to touch 6.8 per cent in 2009-10, up from 6.2 per cent in the
previous fiscal, mainly on account of the stimulus measures.
The recommendations of the 13th Finance Commission, Finance Minister Pranab
Mukherjee said “would get reflected in the 2010-11 Budget”.
The report, Kelkar said, dealt with the sharing of tax revenue between the Centre and
States, distribution of funds among States and support to local bodies. The Finance
Commission report assumes significance in view of the ongoing reforms in indirect and
direct taxes, which will have a bearing on the tax collections. 

Currently, the States and Union Territories get Rs 1.64 lakh crore in a year, or around
30 per cent of the shareable taxes collected by the Centre. The 12th Finance
Commission had recommended that 30.5 per cent of the shareable Central taxes should
be shared among the States and Union Territories. The shareable central taxes include
corporation tax, income tax, wealth tax, customs, excise duty and service tax.

Among other things, the Commission has suggested steps to deal with the growing off-
budget expenditure, especially, oil bonds. The report is based on the 2008-09 tax
collections and does not talk on post-GST scenario. However, implementation of the
new indirect tax regime in 2010 would not be a concern as suggestions are based on
revenue neutral rates.

China’s iron ore find can hit India’s exports 

China has found a one-billion tonne iron ore deposit, which is the biggest discovery of
the mineral since 1980’s. This is bound to cause some worries in India as iron ore
accounts for nearly half of Indian exports to China. 
   
The latest discovery is a 6-km long deposit with thickness ranging between 41.43 and
108.95 meters. It lies 100 to 600 meters deep underground in Luannan County in the
northern province of Hebei. 

It will be some time before the new deposit will begin to yield iron ore, but the
discovery will definitely enable China to make long-term plans on steel production and
strengthen its hands in price negotiations. The discovery gives a new boost to China’s
ongoing efforts to reduce its dependence on major world suppliers and avoid getting
caught in price fluctuations of the spot market. Indian suppliers mostly deal in the spot
market and refuse to enter into long-term supply contracts.  

EDUCATION
Scholarship scheme for minority students 
The Union government has launched the Maulana Abul Kalam Azad National Fellowship
Scheme for minority students and another one to computerise State Wakf Boards. 

Under the scheme, 756 fellowships (30 per cent to be reserved for women) will be
offered per year to minority students wishing to pursue higher studies. The objective is
to grant integrated five-year fellowships in form of financial assistance to students from
minority communities as notified by the Central government to pursue MPhil and PhD.

The scheme will cover all universities or institutions recognised by the UGC under
Section 2 (f) and Section 3 of the UGC Act and will be implemented by the Ministry of
Minority Affairs through UGC for students belonging to minorities.

The fellowships will be on the pattern of UGC fellowships awarded to research students
pursuing regular and full time MPhil and PhD courses. Holders of the new fellowship will
be called MoMA scholars. 

ELECTIONS
Soren forms government in Jharkhand 
Jharkhand Mukti Morcha chief Shibu Soren has been elected as the Chief Minister of
Jharkhand after successful conclusion of the 
Assembly pools in December 2009. The JMM, which won 18 seats, garnered the support
of the BJP-JD(U), the All Jharkhand Students Union and Jharkhand Janadhikar Manch
led by Bandhu Tirkey, taking up the tally to 44 MLAs in a house of 80. 

The BJP won 18 seats and the JD(U) 2 seats, All Jharkhand Students Union has 5 MLAs
and the Jharkhand Janadhikar Manch has one MLA. 

The decision by JMM to enter into a coalition with the BJP-JD(U) combine brought to a
close the hectic lobbying that marked the three days since the Jharkhand elections
threw up a hung Assembly. 
    
The Congress attacked the post-poll alliance between the BJP and the JMM as “the high
point of unprincipled and unethical politics”. “Till yesterday, Arun Jaitley and BJP were
crying hoarse about Shibu Soren’s criminal past but today they have no compunction
about aligning with a man who is being tried in three murder cases, including one which
is coming up for hearing as early as January 5, 2010,” party spokesman Manish Tewari
said.

This is the third time the Mr Soren has occupied the post of Jharkhand Chief Minister.
As per the ministry-sharing formula worked out among the alliance partners, JMM and
BJP will have five ministers each in the team while AJSU will have a quota of two. BJP,
which has also been allowed to have its own man as the Assembly Speaker, has decided
to part with one ministerial berth from its share for its alliance partner JD(U). 

Mr Soren, who was a Lok Sabha member before taking over as the Chief Minister, will
have to become an MLA within six months. Wiser from the humiliation suffered in
January 2009, when he had to quit the post after losing the by-election to the Tamar
seat, the JMM chief is likely to enter the fray from his family backyard Dumka. His son
Hemant, had won the constituency in the Assembly polls, is likely to vacate the seat in
favour of his father, and retain the Rajya Sabha membership. 
    
Jharkhand Assembly ‘Safe Haven’ For Criminals 
The politician-criminal nexus in India is alive and kicking. Proof of this was provided by
the profile of the newly elected MLAs in Jharkhand. As many as 31 of the 45 legislators
backing the JMM-BJP-AJSU coalition government have criminal cases pending against
them. 

Its not just the ruling coalition which is afflicted with this malaise. The Opposition
benches in the State too have several MLAs with criminal antecedents, making it clear
that the process of criminalisation of politics is proceeding unhindered. Chief Minister
Shibu Soren, who had to quit the Union Council of Ministers a few years ago after being
convicted in a murder case, leads the contingent. Besides him, 16 of the 18 JMM MLAs
have criminal cases against them. The only party MLA who starts with a clean slate is
Sita Soren, daughter-in-law of Mr Shibu Soren and widow of the late Durga Soren. 

BJP and AJSU have eight and four MLAs, respectively, with criminal cases against them.
One JD(U) legislator and the lone JJM legislator Bandhu Tirkey also has criminal cases
against him. Mr Tirkey, a former minister, in fact, is presently languishing in jail as he’s
one of the key accused in the great Jharkhand loot undertaken by the Madhu Koda
government. 

JMM’s Dumri MLA Jagannath Mahato has been booked in 14 criminal cases while Mr
Shibu Soren’s son Hemant has six cases against him. 
BJP’s Jharkhand unit president Raghubar Das also has criminal cases against him while
C.P. Singh, the fourth-term MLA from Ranchi, has nine cases against him. 
    
As many as 11 of the 14 Congress MLAs also have cases against them, while eight JVM
(P) and four RJD MLAs have cases lodged against them.

Gujarat Assembly passes mandatory voting Bill

The Gujarat Assembly has passed a landmark Bill which makes, for the first time in the
country, voting mandatory in local body polls. The Gujarat Local Authorities Laws
(Amendment) Bill, 2009, which also seeks to raise the reservation of seats for women in
local self governance bodies from 33 to 50 per cent, was passed by voice vote. Under
the Bill, if a voter fails to vote for the reasons other than prescribed in the rules, he
may be declared a “defaulter voter” and would face consequences for which rules will
be framed and placed before the Assembly for its approval later. 

LEGISLATION
Authors can now claim royalty 
Authors of musical, cinematographic and literary works may now be entitled to royalty
in case their works are used for commercial purposes, a benefit denied to them so far.
This can be possible because of certain amendments in the Copyright Act of 1957,
which has been approved by the Union Cabinet for introduction in Parliament.

The amendment is proposed to give independent rights to authors of literary and

musical works in cinematography of films, which were hitherto denied and wrongfully
exploited by producers and music companies.

Another amendment ensures that the authors of the works, particularly songs included
in the cinematography of films or sound recordings, receive royalty for commercial
exploitation of such work.

The News Broadcasters Association had been apprehensive about the amendments and
asked the government to ensure that nothing was done to hurt the “well-established
and understood rights of broadcasters to fair use of material, including broadcast
reproduction rights”. 

POLITICAL
Advani steps down as Leader of Opposition 
The curtain came down on L.K. Advani’s tenure as Leader of Opposition in Lok Sabha on
December 18, 2009. And while he made way for Sushma Swaraj, the 82-year-old
veteran BJP leader said he saw a new chapter opening in his political career. 
    
After a meeting of BJP parliamentary party amended its constitution, Advani was
elected chairman, a post that has been created for him. The assembled party MPs then
elected Swaraj as leader of the party in LS, the first woman to hold the post in BJP. 

The next act in the generational change was played out on December 19, when Rajnath
Singh stepped down as BJP President and Maharashtra unit chief Nitin Gadkari took
charge. The change of guard completed a process that had been in the works since the
party lost its bid for power in 2009 national elections. 
    
Sushma Swaraj, at 57, clearly marks a generational change as does 52-year-old Gadkari.
Advani is expected to play a role as mentor and the amended constitution says he will
appoint the two leaders of Opposition.

Nitin Gadkari is the youngest BJP president. His elevation marks the culmination of the
exercise to effect a generational shift at the top in the party hierarchy—both in its
organisational and parliamentary wings. 

Mr Gadkari assumes his new responsibility at a very crucial time. After tasting defeat in
a series of electoral battles, cadre morale is low. The party was also bogged down by a
debilitating infighting among the so-called second generation leaders. The BJP has also
failed to keep pace with the changing times, and lost the trust of the youth and the
burgeoning urban middle class in the process. 
    
Mr Gadkari, who hails from Nagpur and over the years cultivated the image of an
honest, hard-working leader who has toiled his way to the top, thus has task cut out. 

FOREIGN RELATIONS
India-Bangladesh pacts to tackle terrorism
On December 2, 2009, India expressed its gratitude to Bangladesh for taking speedy
action to foil a conspiracy by the LeT to attack the Indian mission in Dhaka recently as
the two countries finalised three key agreements to combat terrorism. The agreements
were signed during the visit of Bangladesh Prime Minister Sheikh Hasina to New Delhi.
The two sides arrived at an agreement on: Mutual legal assistance in criminal matters,
combating international terrorism, organised crime and illicit drug trafficking; and
agreement on transfer of sentenced persons. However, the two sides have not yet been
able to resolve differences over a bilateral extradition treaty. 

The finalisation of the three accords marks a major confidence-building measure (CBM)
to address the issue of Indian insurgents taking shelter in Bangladesh, which had marred
ties between the two nations in recent years. New Delhi, however, is quite happy over
the manner in which the Sheikh Hasina government has been cooperating with it in
checking the activities of these insurgents.

Visit of Bhutanese King

Increasing the pace of cooperation in the hydro-power sector, India and Bhutan have
signed four agreements to conduct technical surveys for hydro-power projects. The four
MoUs related to the hydro-power sector were part of 12 agreements that were signed
after discussions between Prime Minister Manmohan Singh and visiting Bhutanese King
Jigme Khesar Namgyel Wangchuck, who was on his first foreign visit in December 2009,
since his coronation in 2008. 
    
India and Bhutan have decided to prepare detailed project reports for the Kuri Gongri,
Chamkharchhu-1 and Kholongchhu hydro-power projects and Amochu reservoir project.
The Kuri Gongri project is proposed to generate 1,800-mw power, the Chamkharchhu-1
670 mw and the Kholongchhu 670 mw. Further, the two sides have also agreed to
conclude implementation agreements for Punatsangchhu-2 project 
    
Bhutan uses 400 mw and has an installed capacity of 1,500 mw of power. The entire
surplus comes to India which is helping Bhutan increase its capacity to 10,000 mw till
2020. 

Apart from the MoUs on the hydro-power projects, the two sides also signed eight other
agreements in areas ranging from agriculture to health to civil aviation. The two sides
also signed an agreement to set up the Bhutan Institute of Medical Sciences in Thimphu
and an agreement on an IT project, which plans to make nearly half of Bhutan’s
population e-literate. 

Visit of Japanese Prime Minister

Prime Minister Yokio Hatoyama of Japan visited New Delhi in end-December 2009.
During the high-level talks, Japan urged India to sign the Comprehensive Test Ban
Treaty (CTBT), but Prime Minister Manmohan Singh put the onus for its ratification on
China and the US. 

The issues of nuclear disarmament and non-proliferation were discussed with both sides
agreeing to the need for an early start to the Fissile Material Cut-off Treaty
negotiations. But on the issue of the non-proliferation treaty both sides agreed that
there was a difference of perception. Mr Singh reiterated that India is “deeply
interested in working with Japan and other like-minded countries to promote the cause
of universal, verifiable and non-discriminatory disarmament”. 
    
Even though Mr Singh highlighted India’s “impeccable record” in non-proliferation and
explained the country’s nuclear history, the Japanese Prime Minister remained non-
committal on civilian nuclear cooperation between India and Japan. Keeping the matter
pending, Mr Hatoyama said nuclear energy would be an item on the agenda for future
discussions. 
    
In the absence of an agreement on nuclear cooperation, the Japanese Prime Minister,
however, indicated that Japan is willing to relax restrictions on hi-tech trade and said
there was a “positive conclusion” on the issue of hi-tech trade. During talks, Mr Singh
assured his Japanese counterpart that Indian companies would not divert hi-tech
imports from Japan for weapon’s purposes or to a third country and sought
liberalisation in this area. 

The economic partnership, however, remained the “bedrock” of relationship, with both
sides discussing a range of economic issues, including Japanese investment and trade
agreement. The two Prime Ministers have decided to push their negotiators to expedite
negotiations into the comprehensive economic partnership agreement. 
Mr Hatoyama pointed out that bilateral trade between India and Japan is far less than
that between Japan and China. Mr Singh, however, said he had conveyed to the
Japanese Prime Minister that India welcomes Japanese investments into the country
and pointed out that India’s growing economy offers huge opportunities for Japan. 

The two sides also discussed the liberalisation of visa regime on both sides, with the
Japanese Prime Minister raising the issue saying that it was important as there were
several major projects being undertaken in India for the benefit of both countries.
The two leaders also vowed to push for an early conclusion of an economic partnership
agreement to scale up trade and investment and cooperate on a range of global issues,
including the UN reforms, climate change and nuclear disarmament

India, Japan sign agreements on Rs 360-kcr DMIC project: India and Japan signed two
agreements on December 28, 2009 for implementing the ambitious Rs 3,60,000-crore
Delhi-Mumbai Industrial Corridor (DMIC) project that seeks to create integrated
investment regions and industrial areas across six States. The agreements include
collaborating in the development of eco-cities, that is cities that are environmentally
and ecologically sustainable, along the corridor and setting up of a project
development fund to undertake activities like master planning and feasibility studies,
preparing project reports and obtaining approvals and bid process management for
projects. 

The Delhi-Mumbai Industrial Corridor Development Cooperation has signed the

memorandum of understanding with Jetro (in cooperation with Japan Bank for
International Cooperation) for facilitating collaboration between Japanese and Indian
companies from environment-related sectors and providing expertise in development
and promotion of DMIC projects. 
    
The DMIC project development fund will be set up with equal contribution from the
governments of India and Japan. India has approved a grant of Rs 330 crore
(approximately $75 million) as the country’s contribution. The Japanese component of
$75 million is being provided in the form of untied loan from JBIC. 

Visit of Prime Minister Manmohan Singh to Russia

On December 7, 2009, during the visit of Prime Minister Manmohan singh to Moscow,
relations between India and Russia experienced more than a thaw on a range of
interests encompassing N-trade, shared Af-Pak perceptions and a plan to boost
commerce to $20 billion by 2015.
 
The discussions between Prime Minister Manmohan Singh and Russian President Dmitri
Medvedev yielded a rich cache of agreements which included establishing a credit line
of $100 million and a nuclear agreement that allows India to reprocess fuel and
virtually guarantees unhindered supply of nuclear fuel. 
Prime Minister Manmohan Singh, after signing a crucial nuclear deal with Russia, said
there would be an addition to the two reactors being developed at Kudankulam in
Tamil Nadu, while a site was being considered at Haripur in West Bengal. 
    
Meanwhile, Russian President Medvedev stressed that Moscow did not support any
addition to the club of N-weapon States, which has implications on the country’s
position in Iran, and that N-weapons should not be "held hostage to terror", in a fairly
direct reference to Pakistan. 
    
Medvedev also made it clear that the G-8 statement at La Aquila did not impact on ENR
(enrichment and nuclear reprocessing) related agreements with India. 
    
The continuing global slowdown and a decline in oil prices have made Russia more open
to reaching out to an old friend while the change of guard in US has seen India reaffirm
ties, with Singh describing Russia as a “global world power”. The two nations also share
concerns over the rise of China. 

With the meeting with Medvedev having set the mood, Manmohan Singh’s interaction
with Prime Minister Putin, still very much the “real” power centre in Moscow, saw a
detailed exchange of assessments. 

The two sides signed a total of six agreements but the Russians were clearly pleased
with the civil nuclear cooperation pact. The reactors, which cost about $1.5 billion
each, will certainly be welcome for a Russian economy that is simply not doing too
well. 

India and Russia signed a path-breaking broad-based agreement in civil nuclear field
that will ensure transfer of technology and uninterrupted uranium fuel supplies to its
nuclear reactors and inked three pacts in the defence sector.

The Indo-Russian pact on atomic cooperation is a significant document and goes much
further than the 123 agreement between India and the US. The pact also has provisions
for transfer of enrichment and nuclear technology, which is denied in the 123
agreement with the US.

The two countries also reviewed their cooperation in the United Nations and in
multilateral fora and their role towards successful conclusion of the Copenhagen
Summit on climate change.

RESERVATIONS
Ranganath Commission report on Religious and Linguistic Minorities
Two years after it was submitted to the government, report of the National Commission
on Religious and Linguistic Minorities is ready to be tabled in the Parliament.

Constituted to assess the status of minorities and suggest ways of improving their lot,
the Commission, headed by Justice Ranganath Misra, has recommended 15 per cent
reservation in non-minority educational institutions and Central and State government
jobs for all religious and linguistic minorities.

Out of the 15 per cent earmarked seats in education institutions, Muslims should be
given 10 per cent reservation (commensurate with their 73 per cent share in the total
minority population in India) and the remaining 5 per cent to other minorities, states
the report.

It adds that if Muslim candidates are not available to fill 10 per cent seats, the
remaining vacancies should go to other minorities and in “no case to the majority
community.”On employment front, the report argues that since the minorities,
especially Muslims, are much under-represented in government jobs, “we recommend
they should be regarded as backward in this respect within the meaning of that term as
used in Article 16 (4) of the Constitution.”

Accordingly, the recommendation is to reserve 15 per cent of posts in all cadres and
grades under the Central and State governments for the religious and linguistic
minorities. Of this, 10 per cent quota is recommended for Muslims and the rest for
other minorities.

The report, co-authored by Tahir Mahmood, also recommends the inclusion of Muslim
and Christian Dalits in SC list, something the National Commission for Minorities has also
been supporting.

TERRORISM; LAW & ORDER

ULFA chief held in Bangladesh
In the most serious setback that has been suffered by the banned United Liberation
Front of Assam (ULFA) in recent times, its chairman Arabinda Rajkhowa was arrested by
Bangladeshi agencies somewhere near Dhaka in Bangladesh on December 2, 2009.

The arrest which came close on the heels of November 5 arrest of another two top
leaders of the outfit, Sashadhar Choudhury and Chitrabon Hazarika, in Dhaka indicated
that the outfit’s sanctuary in Bangladesh was in serious danger. 

With Rajkhowa’s arrest, only two major leaders of the outfit, self-styled commander-
in-chief Paresh Barua and deputy commander in chief Raju Baruah, are now at large.
Another top leader, general secretary Anup Chetia, alias Golap Barua, is lodged in a jail
in Bangladesh.

Arabinda Rajkhowa (53) whose real name is Rajib Rajkonwar, has been the chairman of
the ULFA since early 1980s and was one of the founder leaders of the ULFA. He studied
up to Class XII, and is the second of three sons of freedom fighter Umakanta Rajkonwar
who passed away three years ago at the age of 101 years. He hails from Lakwa in
Sivasagar district of Upper Assam.

Rajkhowa also has an Interpol red corner notice against him, issued on June 4, 1997 for
his involvement in several heinous crimes. Out of India since 1992, Rajkhowa is known
to keep travelling to Myanmar, Bhutan, Thailand, Bhutan, Pakistan and other countries
on fake identity and fake passports. 

He was trained under Kachin Independence Army in Myanmar and National Socialist
Council of Nagaland (NSCN). He can handle all types of arms. He is also the vice-
president of the Indo-Burma Revolutionary Front (IBRF).

CURRENT INTERNATIONAL AFFAIRS

PAKISTAN
Law catches up with leadership 
On December 16, 2009, the Supreme Court of Pakistan declared the National
Reconciliation Order (NRO) null and void. Lawyers termed the decision as a landmark
judgement and demanded that President Asif Ali Zardari step down from his post. The
Court ruled that the decree protecting Zardari and his allies against charges of
corruption was illegal and against the constitution.

The Supreme Court further ruled that all cases under investigation or pending enquiries
and which had either been withdrawn or where the investigations or enquiries had been
terminated on account of the NRO shall also stand revived and the relevant and
competent authorities shall proceed in the matter in accordance with law.

The NRO, issued by former President Pervez Musharraf, had scrapped all corruption
cases against politicians and bureaucrats filed between January 1986 and October 1999,
on the grounds that they may have been politically motivated. The ordinance had
allowed Benazir Bhutto and her husband Zardari to return to Pakistan. 

In the first fallout of the Supreme Court ruling arrest warrants were issued against
Pakistan Interior Minister Rehman Malik and Defence Minister Chaudhry Ahmed Mukhtar
on December 18, 2009. Both were also barred from going abroad on an official visit. 
    
The National Accountability Bureau, Pakistan’s main anti-corruption agency, also
banned 250 other officials from going abroad following the order. 
 
INTERNATIONAL ECONOMY
Japan unveils new $81 billion stimulus plan 
Japan’s government has unveiled $81 billion of new stimulus spending to keep the
world’s second-biggest economy from lurching back into recession. 

Despite shrinking tax revenue, Prime Minister Yukio Hatoyama and his Cabinet agreed
to 7.2 trillion yen ($80.6 billion) in new spending after days of negotiations with
coalition partners. 

The largesse underlines that the world’s biggest economies are still too fragile to get by
without government life support even as a recovery from the global recession takes
shape. In export-reliant Asia that’s partly because demand from Europe and the US is
improving only tepidly and efforts to reduce dependence on trade by boosting consumer
spending will take several years to fully bear fruit. 

Japan also faces falling prices while brand-name exporters like Toyota Motor and Sony
are losing record amounts of money as a galloping yen adds to their woes. 

ENVIRONMENT
A face-saver in Copenhagen
The Copenhagen Accord, the first global agreement of the 21st century to
comprehensively influence the flow and share of natural resources, was agreed upon by
26 most influential countries in the wee hours of December 19, 2009, in the capital of
Denmark. The US led the pack of architects with the BASIC four—China, India, Brazil
and South Africa (in that order)—working as sometimes reluctant and sometimes
willing, but always key partners in framing the agreement. 

The accord demands that increase in global temperatures be kept below 2 degrees on
the basis of equity. It requires global emissions as well as all national emissions to peak
at a certain time but is mindful of concerns of economic development. It asks
industrialized countries, except the US, to take emission cuts in future, but not
necessarily under the Kyoto Protocol. It lays out up to $30 billion of quick-start finance
and $100 billion starting 2020, using all the routes of transfer possible. It requires
mitigation actions from developing countries for the first time to be listed in an
international agreement. 

The rules of multilateral engagement got re-written as new alignments created a

coterie of the powerful that brokered deals in closed rooms: each working at the end to
preserve, if not improve its immediate economic status. 
    
The pact they forged did cause heartburn as less powerful economies felt left out.
Tuvalu and Sudan said it was too weak, while Venezuela and Bolivia were upset because
it had not been negotiated in the open by all the 192 countries attending the UN
Framework Convention on Climate Change (UNFCCC) conference. The low-ambition
deal was seen as a triumph of the US which defied estimates to influence the outcome.
But the negotiations also saw the Chinese leveraging their clout in the resource-rich
African continent, at a multilateral forum. 

For India though, the Accord came out of hard bargaining lasting almost 20 hours among
Heads of governments of some of the most influential countries in the world. At the
end of the day, when the battle was over, India appeared to have ceded ground on
some issues but blocked intrusion on other red lines.
 
With stakes too high and the rich countries making abjectly clear that they were not
playing to the rules, but to change the rules altogether, the four emerging economies
decided to instead scratch up a low-ambition deal—a pact that would lower the
pressure on them by lowering the demands off the rich countries in parallel. 
Finally the Copenhagen Accord take a morphed form of the US-backed schedules
approach of ‘pledge and review’. The Copenhagen Accord is not what the US or Europe
would have wanted it to be, but it still contains some elements India would have to, at
best, fight to defend again in coming years or those that could be titled a lost battle by
the end of the talks. 

India, along with the other three emerging countries, fought hard and won the battle to
retain the reference principle of common but differentiated responsibility which
creates the firewall between the commitments of the rich countries and the actions of
rest. India was also able to wrest the creation of a green climate fund as well as fight
back the attempt to force emission cuts through the back-door. 

But fighting a defensive battle, evidently wanting not to be labelled obstructionist by

the US, India, along with the other three partners loosened up its stance on some key
issues. This loosening of stance may not hit home immediately but it left the window
open for growing inequitable burden falling on India’s head to prevent climate change.

Major Highlights

 The final draft after the Copenhagen summit has agreed to cuts in emissions
and hold increase in global temp below 2°C.
 A proposal attached to the accord calls for a legally binding treaty by the end-
2010.
 Developed countries to provide adequate financial resources and technology to
support developing countries. A goal of mobilizing $100 billion a year by 2020 to
address the needs of developing countries has been set.
 Details of mitigation plans are included in separate annexure, one for
developed countries and one for voluntary pledges from developing countries.
These are not binding, and describe the current status of pledges—ranging from
‘under consideration’ for the United States to ‘adopted by legislation’ for the
European Union.
 Emerging economies have been asked to monitor their efforts and report the
results to the United Nations every two years, with some international checks
to meet transparency concerns of West but ‘ensure that national sovereignty is
respected’.
 The accord agrees to provide positive incentives to fund afforestation with
financial resources from developed world
  Carbon Markets are mentioned in the accord, but not in detail. The deal
promises to pursue various approaches, including opportunities to use markets
to enhance the cost-effectiveness and promote mitigations actions.

US takes giant leap on climate 

The US Environmental Protection Agency has cleared the way for regulation of
greenhouse gases without any new laws being passed by Congress, reflecting President
Barack Obama’s commitment to act on climate change. The agency can now begin to
make rules to regulate emissions from vehicle tailpipes, power utilities and heavy
industry under existing laws. 

The EPA ruling applies to six gases scientists say contribute to global warming, including
the main one, carbon dioxide.

The UN climate summit finally passed the Copenhagen accord Saturday after two days
of intense negotiations and back-room manoeuvres. The accord, proposed by India and
four other countries, is now “operational”, a relieved UN chief, Ban Ki-Moon, said. The
accord that is meant to be a first step towards fighting the climate change that is
affecting millions worldwide was still held up for hours by four countries.

INTERNATIONAL RELATIONS
Siberia pipeline to reach APAC markets 
Russian Prime Minister Vladimir Putin inaugurated the East-Siberia-Pacific Ocean oil
pipeline on December 28, 2009, which will enable Moscow to enter markets in Asia-
Pacific region and reduce dependency on European customers. 

The project is designed to pump up to 1.6 million barrels (220,000 tonnes) of crude per
day from Siberia to Russia’s far east and then on to China and the Asia-Pacific region.
The project’s first leg envisages the construction of a 2,757-kilometre section with
annual capacity of 220.5 million barrels of crude. It will link Taishet, in East Siberia’s
Irkutsk Region, to Skovorodino, in the Amur Region, in Russia’s far east. The second
stretch will run 2,100 kilometres from Skovorodino to the Pacific Ocean.

Currently the crude beyond Skovorodino goes by rail to China and the Pacific coast.

India moots trans-SAARC container train 

India has floated a concept paper among the SAARC countries to start a container train
on a pilot basis, running from Bangladesh to Pakistan via India and Nepal, in a bid to
give a big boost intra-regional trade. The possible corridor for running the train is from
Chittagong Port in Bangladesh to Katihar in India, Birgunj in Nepal and to Lahore in
Pakistan. 

The proposal being considered could unify the entire region and will lead to a seamless,
border-less trade. 

At present, India operates one passenger train each to Pakistan and Bangladesh for the
benefit of the citizens on the either side of the border. While the train to Pakistan
operates between Delhi and Lahore, the other to Bangladesh operates between Kolkata
and Dhaka. 

INTERNATIONAL TERRORISM
FBI indicts Headley for 26/11 
David Coleman Headley aka Daood Gilani, has been formally charged for conspiracy in
the 26/11 terror attacks in Mumbai in 2008. After an intensive probe, the FBI has said
that Headley delivered, placed, discharged and detonated explosives and other lethal
devices in, into, and against places of public use in India. 
    
The FBI has indicted Headley on six counts. Significantly, the FBI has also formally
charged a retired Major of the Pakistan army, Abdur Rehman Hashim Syed, for the plot
against a Danish newspaper that Headley wanted to attack for the publication of
cartoons of Prophet Mohammad. Indian officials said Rehman was closely linked to the
ISI. He has been arrested by Pakistan; if the charges are upheld during the trial, it
would be the first smoking gun that the ISI is involved in exporting terror. 

New Af-Pak policy of USA

US President Barack Obama, who unveiled his administration’s Af-Pak policy on
December 2, 2009, ordered a surge of 30,000 US troops in Afghanistan and a “transfer
of forces out” to begin in July, 2011.
 
The strategic and security communities are uneasy over the President’s withdrawal
plans. While The Washington Post called it a “surge, then leave” policy, security
experts are of the view that withdrawal decisions must be determined by the conditions
on the ground and not by arbitrary deadlines. “The Obama administration has no exit
strategy, it has only exit timeline,” said Republican opponents. 
As the speech clearly rejected the counter-insurgency principle of “clear, hold and
build,” there are fears that any setback would only invigorate the jihadist cause and
put untenable pressure on Pakistan and India. But President Obama appears to be keen
on winding down the war when he enters the political build up to the 2012 Presidential
election.
 
In his address, President Obama described Pak-Afghan border as the epicentre of the
violent extremism practised by Al-Qaeda. “It is from here that we were attacked on
9/11, and it is from here that new attacks are being plotted as I speak. “The people
and governments of both Afghanistan and Pakistan are endangered. And the stakes are
even higher within a nuclear-armed Pakistan, because we know that Al Qaeda and other
extremists seek nuclear weapons, and we have every reason to believe that they would
use them.” 
    
In his address, President Obama said the US will deny Al Qaeda a safe haven and will
reverse the Taliban’s momentum and crush its ability to overthrow the government.
“We’re in Afghanistan to prevent a cancer from once again spreading through that
country. But this same cancer has also taken root in the border region of Pakistan.
That’s why we need a strategy that works on both sides of the border,” he said
justifying inclusion of Pakistan in his Afghan policy.
 
Stating that this was an international effort, President Obama sought the same war
escalation measures from his allies. “Some have already provided additional troops, and
we are confident that there will be further contributions in the days and weeks ahead.
Our friends have fought and bled and died alongside us in Afghanistan. Now, we must
come together to end this war successfully. For what’s at stake is not simply a test of
NATO’s credibility; what’s at stake is the security of our allies, and the common
security of the world,” he said. 

Scare aboard Delta Airliner

On December 27, 2009, US Federal officials brought criminal charges  against a Nigerian
man suspected of trying to destroy a Northwest Airlines aircraft on December 25, 2009
as it approached the airport in Detroit, Michigan. 

The US Department of Justice said that Umar Farouk Abdulmutallab, 23, had boarded
the plane in Amsterdam, Netherlands, and tried near the end of the nine-hour-flight to
 set off an explosion using PETN, also known as pentaerythritol, a high explosive.

Fellow passengers rushed to subdue the terror suspect after they heard popping sounds
and saw smoke and fire coming from Abdulmutallab's seat.  

Even though the US authorities are yet to confirm the Yemen connection of the 23-
year-old Nigerian man's plot to blow up a Detroit-bound airliner on Christmas Day, they
see Umar Farouk Abdulmutallab's account that Al-Qaida had supplied explosive powder
to him in Yemen "highly plausible."
 
The suspect, reportedly, told US investigators that he had obtained explosive chemicals
and a syringe that were sewn into his underwear from a bomb expert in Yemen
associated with Al-Qaida, as part of a "mission to bring down a jet on US soil". 

London: Terror capital of the West? 

Britain has now emerged as the "terror capital of the West" as whenever a major
terrorist attack is attempted, suspicion swings on this country, according to a media
report. 

“It comes as no surprise to learn that the Nigerian accused of blowing up the US airliner
is said to have been living here. We have become the number one source of terrorism in
the Western world. We shelter foreign jihadis, and even grow our own… For years now,
Islamic extremists wanted on terror charges in their own country have taken sanctuary
in Britain… Our judges (not our politicians) say it would be cruel to send them back to
their own countries, in case they're tortured,” the 'News of the World' quoted the Editor
of Spectacle, Fraser Nelson, as saying.

Years ago, the CIA had a name for it: "Londonistan".

CURRENT AFFAIRS: NOVEMBER 2009

CURRENT NATIONAL AFFAIRS

BANKING & FINANCE

E-payments to be credited directly to merchants 
In what would make online commerce faster for customers, the Reserve Bank of India
(RBI) has mandated that all payments for such transactions be credited directly to
merchants, instead of getting cleared by intermediaries such as CC Avenue and Paypal. 
    
Currently, until a payment is authorised and processed by intermediaries, a transaction
is not completed. For instance, online retailers such as eBay do not ship goods
purchased online unless funds are credited to their account, after being routed through
an intermediary. CC Avenue, BillDesk, Direc-Pay, ICICI PaySeal and Paypal are among
major payment gateways in India. 

Under the new system, all payments to merchants shall be effected within a maximum
of three days from the date of transaction. From now on, no payment other than the
commissions at the pre-determined rates/frequency shall be payable to the
intermediaries. The existing system has some pitfalls. Often, there is a delay in
transferring money to the merchant; at times it is more than seven days. 

SEBI allows auction of shares in follow-on offer 

SEBI has allowed companies to go for pure auction of shares (offered at bid price) in a
follow on public offer for pricing of issues for institutional investors. However, the
companies will have to offer shares to retail investors, including employees, at the
floor price, fixed before start of the auction process and the existing system of public
offerings of shares at an uniform price in a band through book-build method will also
continue. 

To encourage small and medium firms to come out with public issues, SEBI has also
allowed existing stock exchanges to set up a separate trading platform and relax the
criteria like track record on profitability for listings. On the issue of trading hours, the
board has left it on exchanges to decide between 9 am and 5 pm. 
    
Giving more choices to listed companies in pricing shares via book-build route, SEBI
introduced an additional method, called Dutch auction, in which the companies making
public issues will fix only floor prices. Institutional bidders will have to submit bids
above the floor prices. The bidders will be allotted shares on the basis of their bid
prices. The highest bidder will be offered shares first, followed by the second-highest.
 
If the demand for the highest bidder is equal to the total issue size, second-highest
bidder will get nothing. However, if the issuer wants to put a cap on allotting shares to
a single bidder, it can do so.
    
Under the present system, known as French auction, companies fix a band of prices for
public offers. The maximum difference between floor and ceiling prices in the band is
10%. A bidder has to bid in the given band only. On the basis of demand at various price
points, the offer price is fixed and applied uniformly to all investors. The new
methodology of pricing is likely to be used by government while divesting its stake in
REC and NTPC. 

COMMISSION
Liberhan inquiry commission
It took 17 years and 48 extensions for the Liberhan Commission, probing the 1992
demolition of the Babri Masjid in Ayodhya, to submit its report to Prime Minister
Manmohan Singh in June 2009. One of the country’s longest running inquiry
commissions, it has cost the government nearly Rs 7 crore.

During the entire tenure, the one-judge probe was dogged by procedural delays, non-
cooperation from key witnesses and even constant transfers during the early days of the
commission’s functioning. The commission’s lawyer, Anupam Gupta, dissociated himself
from the one-man panel after eight years because of differences with Justice Liberhan.

The commission recorded statements of scores of politicians from the Bharatiya Janata
Party (BJP), including senior leaders Advani, Murli Manohar Joshi, then Chief Minister of
Uttar Pradesh Kalyan Singh and now Bharatiya Jan Shakti party chief Uma Bharati.
Several members of the Congress and the Rashtriya Swayamsevak Sangh (RSS) were also
questioned. 

Former Prime Minister Atal Behari Vajpayee, senior BJP leaders LK Advani, Murli
Manohar Joshi and ex-UP Chief Minister Kalyan Singh are among the 68 persons severely
indicted by Justice M.S. Liberhan Commission for their role in the Babri Masjid
demolition 17 years ago, which led the country to a “brink of communal discord.” 

The commission, surprisingly, is soft on Congressman and the then Prime Minister P.V.
Narsimha Rao for his perceived ‘inaction’ in deploying Central forces or imposing
President’s Rule in then BJP-ruled Uttar Pradesh to protect the 16th century structure,
purported to have been built during the reign of Mughal emperor Babar. The
commission refers to it as the Ram Janam Bhoomi-Babri Masjid structure (RJBM) and has
clarified that its role was not to study if the structure was a mosque or a temple or
even its history. 

In his 1,029-page report, Justice Liberhan, a former Chief Justice of Madras High Court,
indicts the perpetrators for having reduced “the oldest civilisation to stark intolerance
and barbarianism, all for petty political gains.” 

Coming down heavily on the troika of Advani, Vajpayee and Joshi, Justice Liberhan calls
them “pseudo-moderates" and refers to them as “icons” of the movement. The
commission also indicts Uma Bharti, RSS ideologue K. Govindacharya and Shankar Singh
Vaghela, along with Kalyan Singh, who are no more connected with the BJP or the RSS. 

Silent on punitive action against those indicted for the 1992 Babri Masjid demolition,
government’s Action Taken Report (ATR) on the much-delayed Liberhan Commission
findings agrees to enact the Prevention of Communal Violence Bill to punish those who
misuse religion for politics, and set up special tribunals to prosecute related offences. 

In the name of action against perpetrators of the demolition, all the ATR promises is
expediting the hearing of cases registered 17 years ago. These include the case at
Lucknow special court against lakhs of unknown karsewaks; case against eight accused
(politicians also named by Liberhan) in Rae Bareli special court and 47 other cases in
the Lucknow special court.

The ATR, however, is non-condescending to Liberhan’s major recommendation of a

statutory national commission of cultural experts to determine the historical legacy of
monuments, like those in question. The government plainly rejected this proposal
saying the ASI could handle the job. It also declined Liberhan’s idea to confer statutory
status on the National Integration Council, though it accepted in part his
recommendation that political leaders and holders of public offices should not
simultaneously hold positions in religions organisations.

ECONOMY
India climbs to tenth slot among top gold holders 
India is the world’s largest private gold consumer, but the government’s holding of gold
as an asset is modest. Even so, the latest purchase of 200 metric tonne from IMF puts it
at number ten among the list of top 10 gold-holders in the world.
For India, the purchase, apart from signalling that its economy has come full circle, is a
way of spreading its assets which are said to be currently over-weighted with foreign
currency, mainly in the form of sovereign US Treasury bonds. In other words, it is a
hedge against a falling dollar. 

Of India’s current foreign exchange reserves of nearly $285 billion, foreign currency
assets account for more than 90% ($268.3 billion), followed by gold ($10.3 billion),
IMF’s Special Drawing Rights ($5.2 billion) and a reserve position in the IMF of $1.59
billion. 
    
While India’s current gold holdings are said to be historically low, buying 200 tons in
addition to the 358 tons it already holds is expected to bump up the gold reserves to
more than 6%. 

India’s gold trauma occurred in the summer of 1991, when faced with dwindling foreign
exchange reserves and a possibility of a default on payments, the government
mortgaged 47 tons of gold to the Bank of England and 20 tons of gold to the Union Bank
of Switzerland to raise $ 600 million. The move helped tide over the balance of
payment crisis, and also kick-started the reforms process.

Food prices biting buyers 

Even as the overall inflation rate remains at around 1.5%, prices of food articles have
gone up 13.4% in the last one year. That statistic  is bad news for the common man, but
details of specific commodities like potatoes, onions and pulses are even more
disconcerting. 
    
According to the latest data, prices of potatoes have doubled over the last 12 months;
onions are 50% more expensive and the prices of pulses have gone up by over 23% on
average. It’s another matter that the price of some specific pulses
likearhar and moong have risen to all-time highs of around Rs 90 per kg.
 
Contributing to the spike in food prices has been a weak monsoon in 2009, which is
expected to lead to foodgrain production falling by around 21 million tonnes in the
current kharif season compared to kharif 2008. Rice production is estimated to fall by
over 15 million tonnes and the output of coarse cereals by 5.5 million tonnes. 
    
All-weather roads jack up rural income by 100% 
All-weather roads in the villages of the country has doubled the income of rural
households, raised literacy rate by 10%, and appreciated land prices by up to 80%, says
the World Bank. “In 2000, about 40% of India’s 825,000 villages lacked all-weather
roads ... With access to roads, incomes have soared. Household incomes rose by 50% to
100% on average.” 

World Bank has been supporting India’s rural connectivity programme—Pradhan Mantri
Gram Sadak Yojana (PMGSY). It aids projects in several places like Himachal Pradesh,
Rajasthan, Jharkhand and Uttar Pradesh. Over the years, World Bank’s concessionary
lending arm International Development Association (IDA) has supported many rural
roads projects, both standalone and components of larger projects. The year-round
connectivity has narrowed gender gap with access to education for girls and raised job
opportunities, IDA said adding every Rs 10 lakh spent on rural roads has helped lift 163
people out of poverty. 

The World Bank has said "a second project of $1 billion is under preparation". It would
aim to improve maintenance, weak capacity, governance and accountability, and would
introduce several efficiency measures. Meanwhile, for two-laning of 6,372-km of the
total of 19,702 km single lane highways in the country, the finance ministry has
requested the World Bank for a loan of $3 billion. 

India’s GDP beats all forecasts

India's economy gave yet another indication of its rapidly improving health, prompting
greater ambition from policy-makers still chary of withdrawing the stimulus medicine
responsible for the recovery. Gross Domestic Product (GDP) expanded by a surprisingly
strong 7.9% during the July-September second quarter, its fastest pace in a year and a
half. The growth was driven largely by a pick-up in manufacturing, increased
government expenditure, robust investments and modest growth in farm output despite
the drought. 

The growth in the first half of the year is now a respectable 7% as against 7.8% during
the same period a year ago. In the fiscal year ended March 2009, the economy grew by
6.7%, its weakest in six years and way below rates of 9% or more in the previous three
years. 

The strong growth may put pressure on RBI to hike policy rates sooner than March 2010
as worries about inflation grow. Bond yields firmed up to 7.25%, six basis points up, as
traders see a 25-basis-point hike in key policy rates by January 2010. 
    
There will also be pressure on the government to cut expenditure and roll back stimulus
measures such as the cut in indirect rates. The fiscal deficit between April and October
2009 was 61% of the target for the year, but slower-than-expected tax collections
suggest the government could overshoot the target of 6.8% of the GDP for the year.
 
ENVIRONMENT
Tougher air quality norms unveiled
India has revised its National Ambient Air Quality Standards (NAAQS), discontinuing the
old practice of different air quality standards for different land-use classes like
residential and industrial areas. The country will now have uniform health-based NAAQS
with uniform standards for all areas, whether residential or industrial.

Revised after a gap of 15 years, new air quality standards also provide legal framework
for controlling air pollution and protecting public health, meaning that any citizen can
now approach the court demanding better air quality. The revised standards include
initiatives that had been developed in consonance with globally best practices and in
keeping with latest advancements in technology and research.

The big question, however, is of enforcement, which could prove to be a difficult task. 

The standards have brought two new deadly pollutants, PM 2.5 and ozone, within the
ambit of regulation. The standard for nitrogen oxide has been made more stringent,
from the existing 60 micro-gm per cubic metre, it has been tightened down to 40
micro-gm per cubic metre. Suspended particulate matter (SPM) as parameter has been
replaced by fine particulate matter (PM 2.5), which is more relevant for public health.

HEALTH
India's children stunted, undernourished, wasted: UN
India has the largest number of stunted children below the age of five in the world,
according to the latest United Nations Children's Fund report. 

Approximately 200 million children, under the age of five, suffer from stunted growth
in the developing world. The report 'Tracking Progress on Child and Maternal Nutrition'
found that stunting is primarily caused due to childhood under-nutrition, which
contributes to more than a third of all deaths in children under five.
 
India also has one of the highest numbers of underweight children, below the age of
five, and one third of 'wasted children'—those facing a greater chance of death—in the
world. 

Out of a total of 19 million new-borns per year in the developing world that are born
with low birth-weight, India has 7.4 million low birth-weight babies per year—the
highest in the world. The report finds that 80 per cent of the developing world's stunted
children live in 24 countries. 

India, however, does not have the highest prevalence of stunted children as the high
numbers was due to its large population. In terms of prevalence, Afghanistan was first
while India was 12th. In 17 countries, underweight prevalence among children under 5
years old is greater than 30 per cent. The rates were highest in Bangladesh, India,
Timor-Leste and Yemen,` with more than 40 per cent of children being underweight. 

The study also found that 13 per cent of children, under 5 years old, in the developing
world were wasted, and 5 per cent were severely wasted (an estimated 26 million
children). 

A number of African and Asian countries have wasting rates that exceed 15 per cent,
including India (20 per cent) Bangladesh (17 per cent), and Sudan (16 per cent). The
country with the highest prevalence of wasting in the world is Timor-Leste, where 25
per cent of children under 5 years old are wasted.
 
In Asia, the prevalence of stunting dropped from approximately 44 per cent in 1990 to
an estimated 30 per cent in 2008, while in Africa it fell from approximately 38 per cent
in 1990 to an estimated 34 per cent in 2008. Unless attention is paid to addressing the
causes of child and maternal under-nutrition today, the costs will be considerably
higher tomorrow.

JUDICIARY
Finally, SC judges declare assets 
In a move that will enhance the image of the judiciary, 21 out of the 22 Supreme Court
judges—including Chief Justice K.G. Balakrishnan—have declared their assets and of
their wives by posting the details on the court’s website—supremecourtofindia.nic.in.
The step is expected to end months of controversy over the apex court's refusal to
place in public domain such details, maintaining that it was not bound to part with
these under the Right to Information Act (RTI).

The details, provided under the heading “Assets of Judges,” however, did not have the
total assets of each judge and his wife. Also, the value of a number of properties owned
by them is not given. Most of the judges had provided such details to the CJI at the
time of their elevation to the apex court, but these were not placed in public domain. 

FOREIGN RELATIONS
Visit of Australian PM to India
Australian Prime Minister Kevin Rudd visited India in November 2009 with a message to
India that Australia remained a safe destination for Indian students. Mr Rudd said his
government was committed to using the “full force” of law to protect Indian students. 

During his visit, in an attempt to upgrade bilateral ties, both countries agreed to
elevate the relationship to a strategic partnership. Discussions between Mr Rudd and Mr
Singh covered all aspects of the bilateral relationship—from trade to climate change.
On climate change, Mr Rudd said: “Indian Prime Minister and I discussed the great
challenge of climate change. We must have a good ambition for Copenhagen.” The two
sides agreed that it is an issue of concern for both countries, with the Indian side
reiterating its position on climate change. 
    
The two sides have also decided to expedite the feasibility study to look into the
impact of an FTA between the two countries. In fact, the Australian side has made no
secret of its interest in an FTA, with Mr Rudd saying that he expects the study to
recommend an FTA.

Iran seeks help to combat terror 

Notwithstanding the US pressure, India has unequivocally conveyed to Iran its
commitment to participating in the 7.4 billion dollar Iran-Pakistan-India (IPI) gas
pipeline project. This reassurance was given by both Prime Minister Manmohan Singh
and External Affairs Minister S.M. Krishna at separate meetings with visiting Iranian
Foreign Minister Manouchehr Mottaki in New Delhi.
 
At the delegation-level talks between the two foreign ministers, Iran sought greater
cooperation with New Delhi in fighting terrorism emanating from Pakistan. Like India,
Iran has also been affected by terrorism sponsored from the Pakistani soil. A horrific
suicide attack in south-east Iran in October 2009 targeted the country's Revolutionary
Guards and was blamed on Pakistan-based Jundallah, a Sunni extremist outfit. 

This was the first high-level contact between the two countries since the UPA
government returned to power in New Delhi and Mahmoud Ahmedinejad was re-elected
as the President of Iran in June 2009. 

Mottaki renewed an invitation to Manmohan Singh to visit Iran. The invitation was
accepted and dates of the visit would be finalised in consultations through diplomatic
channels.

The two sides also agreed to convene an early meeting of the joint working group
(JWG) on energy cooperation between them to resolve issues connected with the
pipeline project. An Iranian team would be visiting India soon for the purpose. As Iran
and India share common interests in Afghanistan, they also discussed joint
infrastructure projects like the deep sea port of Chabahar and a rail link to provide
better connectivity for Afghanistan to Central Asia.

Visit of Prime Minister Manmohan Singh to USA

Prime Minister Manmohan Singh’s deliberations with US President Barack Obama in end-
November 2009, as his first State guest, did not result in any dramatic announcements
but New Delhi was satisfied that it was able to persuade Washington to acknowledge
that India was being inflicted by terrorism from neighbouring Pakistan.

Washington went a step further by calling for the defeat of terrorist “safe havens” in
Pakistan and Afghanistan and agreed to enhance collaboration in this effort.

The joint statement was prefaced with a commitment by both leaders to expand and
deepen their relations. President Obama described India as a “rising and responsible
global power” to assure India that it was very much on the US radar and that any
impression to the contrary was incorrect.

The two countries signed a new memorandum of understanding on counter-terrorism

cooperation to help each other in information and intelligence sharing related to
terrorism, which institutionalised an arrangement which has been in place since the
26/11 Mumbai terror attacks.

President Obama’s commitment on the implementation of the Indo-US civil nuclear

agreement during his press conference also found mention in the joint statement,
which also acknowledges India as a responsible nuclear power. Taking note of the
Obama administration’s sensitivities on non-proliferation, India was quick to reaffirm
its unilateral and voluntary moratorium on nuclear testing and agreed with US to start
early negotiations on a multilateral, non-discriminatory and internationally verifiable
Fissile Material Cut-off Treaty. On its part, the US committed to ratify the
Comprehensive Test Ban Treaty (CTBT) at an early date. There are fears that such a
development would encourage the US to pressurise India to sign the CTBT, which has
not been accepted by New Delhi.

President Barack Obama assured Prime Minister Manmohan Singh that the US-China
joint statement issued on his visit to Beijing earlier in November was not an
endorsement of Chinese mediation in the India-Pakistan dispute. Mr Singh said Obama
told him that the intention of that statement was not to support any “third-party
intervention in issues in South Asia.” He said he was “very satisfied” with Obama’s
assurance on an issue that caused much heart-burn in New Delhi. India opposes third-
party mediation in the dispute with Pakistan over Kashmir.

On Afghanistan, Prime Minister Singh said Obama told him that the US “highly values”
India's role in reconstruction and development of the war-ravaged country. Manmohan,
who met several Republican Democratic as well as Republican lawmakers while in
Washington, said there was bipartisan support for India’s role in Afghanistan. This role
is viewed with suspicion by Pakistan.

Visit of Canadian PM to India

India and Canada have entered into an agreement for enhancing energy security. Yet
another deal has been inked between the two nations to kick off negotiations between
the two with respect to free trade area. This happened during the meeting of Prime
Minister Manmohan Singh with visiting Canadian Prime Minister Stephen Harper, in
November 2009, on a range of bilateral issues, including trade and investment, civil
nuclear cooperation, the global financial crisis, terrorism and climate change. 
 
The energy security pact will enable better cooperation between the nations in areas of
renewable energy and energy efficiency, oil and natural gas, power generation,
transmission, distribution and end-use, energy research and development. 
 
The FTA deal will enable the formation of a joint study group for exploring the chances
for developing a Comprehensive Economic Partnership Agreement, with the first
meeting slated to be held in December.
 
The two nations have also decided to cooperate for tackling global terrorism.

India reaches nuke agreement with Canada

On November 28, 2009, India reached a civil nuclear agreement with Canada. The
agreement was firmed up during a meeting between Prime Minister Manmohan Singh
and his counterpart Stephen Harper on the sidelines of the Commonwealth Summit.

Canada has become the eighth country with which India has reached civil nuclear
agreement since the NSG lifted a 34-year-old ban on India to join global nuclear trade
in September last year. The other countries with which India has already signed the
civil nuclear deal are the US, France, Russia, Mongolia, Kazakhstan, Argentina and
Namibia.

China protests against Dalai Lama’s Tawang visit

The Chinese rhetoric against India for the Dalai Lama’s visit to Arunachal Pradesh in
November 2009 picked up again with a State-run newspaper running a report that said
the Tibetan spiritual leader undertook the Arunachal visit under pressure from New
Delhi. India rubbished the assessment and took the opportunity to remind China that
the Dalai Lama was free to travel anywhere in the country. 

Though the Chinese government has refrained from directly attacking India since the
meeting between Prime Minister Manmohan Singh and Chinese Premier Wen Jiabao, it is
significant that China’s state-run media ran a report attacking India over the visit of the
Dalai Lama. 

“India may make use of the Dalai Lama to solve the decades-long territorial conflict by
encouraging his visit to southern Tibet (Arunachal Pradesh),” Hu Shisheng, a researcher
of southern Asian studies at the China Institutes of Contemporary International
Relations, was quoted as saying. China calls Arunachal Pradesh southern Tibet. 

“The Dalai Lama went to southern Tibet at this critical moment probably because of
pressure from India... By doing so, he can please the country that has hosted him for
years,” Mr Hu said. He added: “India may have forgotten the lesson of 1962, when its
repeated provocation resulted in military clashes. India is on this wrong track
again...When the conflict gets sharper and sharper, the Chinese government will have
to face it and solve it in a way India has designed,” Mr Hu said.
 
China had protested against the visit of the Dalai Lama to Tawang monastery in
Arunachal Pradesh, but India had dismissed the protests by pointing out that the Dalai
Lama continues to be a guest in India. 

Responding to that attack, the Dalai Lama dismissed China’s claim that his visit was
anti-China and had said that Arunachal was an integral part of India. 

Genisis of the dispute: In 1913-14, China, Tibet and Britain tried to hammer out the
Shimla Accord—a deal defining borders between Inner and Outer Tibet, and between
Outer Tibet and British India. Henry McMahon, a British administrator, drew up 550
miles of the boundary demarcating British India and Outer Tibet. China walked out of
the talks, rejecting the line between Inner and Outer Tibet, but the Accord nonetheless
ceded Tawang and other Tibetan areas to the British Empire. Since then, China has
declared the line invalid, citing the absence of its signature on the Shimla Accord. After
the collapse of Chinese power in Tibet, the McMahon line was, de facto, accepted as
official, and Britain established administrations in the area. However, Tibet and later
the People’s Republic of China claimed Tawang district after India's independence.
With China all set to take over Tibet, India declared the McMahon line the official
boundary in 1950. 
    
The North East Frontier Agency was created in 1954. The Tibetan uprising was
suppressed by China and its self-ruling government abolished in 1959. The Dalai Lama
fled to Dharamsala, and maps published by the Tibetan government-in-exile now show
McMahon Line as the southern border of Tibet. 
    
During the 1962 war, China acquired large parts of NEFA but voluntarily withdrew to
the McMahon line. It was only in 1985 that China declared its ownership claims on the
eastern tract roughly corresponding to Arunachal Pradesh. Until then, it was prepared
to cede this land to India if it was given the cold western desert of Aksai Chin in
Ladakh, of strategic importance to China. India rejects China’s claims over both, and
post-1985 China has insisted that Arunachal Pradesh is theirs.
India, EU ink atomic energy pact
On November 6, 2009, India and the European Union (EU) signed a major accord for
cooperation in the civil atomic energy field and pledged to conclude an ambitious free
trade agreement (FTA) between them within a year. The atomic energy agreement is
aimed at facilitating India’s participation in the international thermonuclear
experimental reactor (ITER) project for fusion research. 

Prime Minister Manmohan Singh led the Indian side at the 10th India-EU summit while
the EU was represented by Swedish Prime Minister Fredrik Reinfeldt, in his capacity as
chairman of the EU Council and EU President Jose Manuel Barroso.

The ITER project on fusion energy is said to be the costliest experiment of its kind that
will cost some 10 billion euros. The first fusion reactor is expected to be operational in
Cadarche in southern France by 2016.

India and the EU have been negotiating an FTA since 2007 but have not been able to
firm up the accord due to differences over EU’s attempts to link trade with climate and
other extraneous issues. Both sides are of the view that a political push was need for
the agreement to be wrapped up by 2010. 

In a joint statement the two sides shared the understanding that the development of
nuclear energy for peaceful purposes should take place in conformity with the highest
standards of safety, security and non-proliferation. The joint statement further said
India and the EU welcomed the renewed momentum in global disarmament talks while
reaffirming their shared interest in working together for disarmament and for
countering the proliferation of weapons of mass destruction and their delivery systems.
In this context, they stressed the importance of strengthening national export control
laws.

On terrorism, the EU condemned the terrorist attacks in Mumbai in November 2008 and
reiterated the need for intensifying global cooperation in combating international
terrorism. Without any reference to Pakistan, the two sides emphasised the utmost
importance of bringing the perpetrators of the crime to justice. 

On international financial crisis and global economy, the two sides reiterated their
commitment to continue to sustain a strong policy response until the recovery was
secured, to prepare internationally coordinated and cooperative exit strategies to be
implemented once the recovery has taken hold, to strengthen and reform financial
regulatory and supervisory systems to ensure global financial stability and prevent
further crises, and to ensure that the international financial institutions reflect
contemporary economic realities.

French Parliament ratifies N-deal with India 

Even as India and the United States iron out their differences over the reprocessing of
the spent nuclear fuel under the 123 agreement, the French Parliament has ratified the
India-France nuclear accord, paving the way for French nuclear giants to build nuclear
plants in India. 

The French National Assembly adopted a law authorising the ratification of the
agreement signed between the two countries on September 30, 2008, during Prime
Minister Manmohan Singh’s visit to Paris. This is subsequent to the adoption of the same
law by the Senate on October 15, 2009. 

It will enable the early entry into force of the agreement. It now paves the way for
strengthening relations between French and Indian partners and for more concrete
developments in the industrial field.
 
France was the first country to sign a civil nuclear cooperation agreement with New
Delhi days after India secured a waiver from the nuclear suppliers’ group (NSG) to
undertake nuclear commerce in 2008. Since then, India has signed nuclear deals with
the US, Russia, Namibia, Kazakhstan, Mongolia and Argentina. 

French nuclear supplier Areva has been allocated the nuclear project site at Jaitapur in
Maharashtra to initially build two power plants.
 
The Indo-French nuclear agreement allows reprocessing of the spent nuclear fuel from
French nuclear reactors under safeguards, and gives an assurance of lifetime supply of
nuclear fuel for these reactors. It does not bar the transfer of enrichment and
reprocessing technologies. With the ratification of the agreement by the French
Parliament, France becomes the second country after Russia to give unconditional
rights to reprocess spent nuclear fuel to India. 

The agreement makes it mandatory that reprocessing be done under the safeguards of
the International Atomic Energy Agency. 

SCANDALS
CBI pegs Satyam fraud at Rs 14,000 cr 
Seven months after its first charge sheet in the Satyam scam, CBI on November 24,
2009, filed a supplementary charge sheet against disgraced Satyam founder B.
Ramalinga Raju and nine others, pegging the Satyam fraud at Rs 14,000 crore instead of
the Rs 7800 crore that Raju had owned up to in January 2009. 

The additional charge-sheet, however, fails to nail Raju and aides on siphoning of funds
from Satyam Computer, instead saying that the investigating agency was planning to
file a separate chargesheet on the allegations of funds diversion and income-tax frauds
within the next few days. 

The 200-page charge-sheet filed in the CBI court charged the accused of forging board
resolutions and unauthorisedly obtaining loans worth Rs 1220 crore from banks as well
as inflating Satyam revenues to the tune of Rs 430 crore by creating fake customers and
generating fake invoices. 
    
The charge-sheet also identifies 1065 properties with a documented value of Rs 350
crore that were acquired by the Rajus with the spoils of the fraud. These include 6,000
acres of land, 40,000 sq yd of housing plots and 90,000 sq ft of built-up property. 

CBI has also slapped charges of criminal breach of trust and falsifying accounts by
inflating the acquisition price of Nipuna Services Ltd, the ITeS arm of Satyam. It also
slapped a criminal breach of trust on them in the declaration and disbursal of dividends
of Satyam Computers.
 
Meanwhile, the Rs 1,220 crore unauthorized loans detailed by CBI in the charge-sheet
are not reflected in the company's books and are over and above the Rs 1,230 crore
that Raju confessed to Satyam having received from various Raju family owned
companies including Maytas Infra and Maytas Properties. 

Madhu Koda arrested for mining and money laundering 

The Jharkhand Vigilance Bureau has arrested former Chief Minister Madhu Koda in the
multi-crore mining and money laundering case. A joint team of Jharkhand Police and
State vigilance bureau arrested Mr Koda after he repeatedly refused to respond to
summons from the Enforcement Directorate for questioning. Mr Koda described his
arrest as part of Congress’ conspiracy to keep him away from election campaigning.

Mr Koda is alleged to have laundered thousands of crores during his stint as the Chief
Minister between 2006 and 2008. ED’s probe into the money laundering operation,
which is spread from Singapore to Thailand and from Dubai to Liberia, is set to balloon
into one of the biggest bribery and corruption scandals in the country. 
    
NAGALAND
Assembly hails rebel groups 
The Nagaland State Legislative Assembly has extended ‘recognition’ to the Naga
undergrounds for having “selflessly worked, fought and sacrificed” for the aspirations
and rights of the Naga people. This ‘recognition’ as a resolution was adopted in the
State Assembly on November 29, 2009, even as talks between the government of India
and the NSCN(IM) have yet to reach a conclusive stage. The resolution was passed
unanimously with members cutting across party lines to support it. 

The State Assembly also reiterated its earlier stand on integration of all Naga-inhabited
areas in the region, an issue that also figures prominently on the NSCN agenda. 

The Nagaland Assembly has so far passed four resolutions in favour of integration of
Naga areas—first on December 12, 1964, followed by August 28, 1970, September 16,
1994 and December 18, 2003. The 60-member House in the resolution also appealed the
negotiating parties of the Naga political dialogue to expedite the political process and
bring about an early resolution through a negotiated settlement which was honourable
and acceptable to the Naga people.

The State Assembly, through its resolution, also appreciated the government of India,
particularly Prime Minister Manmohan Singh and Union Home Minister P. Chidambaram
for their “renewed sincerity” towards finding a permanent solution to the decades-old
“Indo-Naga” political problem. 

The resolution also appreciated the civil society, churches, NGOs and the Forum for
Naga Reconciliation (FNR) for their all out efforts towards reconciliation, understanding
and oneness of all sections of Naga society. The resolution also hailed the sincerity of
the underground groups, especially their commitment towards peace and understanding
by signing the “Covenant of Reconciliation” earlier at Chiangmai in Thailand on
September 23, 2009.
 
The resolution further decided to constitute a Joint Parliamentary Committee on the
Naga political issue comprising members from all political parties. This committee
would carry the voice of the House to all concerned sections including the Centre and
the Naga rebel groups.

TERRORISM; LAW & ORDER

Centre ready with anti-Naxal plan
Home Minister P. Chidambaram announced on November 1, 2009 that the Union
government is a ready to launch the much-awaited full-fledged anti-Naxal operations in
three different areas, considered tri-junctions of Maoist violence. 

The tri-junctions, which have been identified for the offensive against the ‘Red
Rebels’, are: Andhra Pradesh-Maharashtra-Chhattisgarh; Orissa-Jharkhand-Chhattisgarh
and West Bengal-Jharkhand-Orissa.

Around 40,000 paramilitary personnel would assist the respective State police forces
during the operations. Almost 7,000 specially trained troops in jungle warfare are also
part of the total strength of the Central forces to be deployed for the task.

The anti-Naxal plan also includes Rs 7,300 crore package for unleashing developmental
works in areas cleared off the Left-wing extremists. Officials feel that the Naxal
menace, which has now spread to 40,000 sq km area across the country, can be wiped
out in a period of 12 to 30 months.

Around 25 lakh people live in areas where Maoists are now having a free run. The
Naxalites have killed more than 2,600 people, including civilians, in 5,800 incidents in
last three years.

CURRENT INTERNATIONAL AFFAIRS

AFGHANISTAN
Karzai elected President 
On November 1, 2009, Afghanistan's Presidential challenger announced he would not
participate in the run-off election because his demands for measures to prevent fraud
were rejected. He stopped short of calling on his supporters to boycott the balloting.
Abdullah made no mention of agreeing to take part in any future unity government with
President Hamid Karzai, which the US and its international partners believe is the best
hope for curbing the Taliban insurgency.

In an emotional speech, Abdullah said he did not believe a free and fair election was
possible without changes in the leadership of the electoral commission, which ran the
fraud-marred first-round ballot on August 20, 2009. Abdullah said the Afghan people
should not accept results of a ballot run by the current group. 

A run-off was ordered after the UN auditors threw out nearly a third of Karzai's votes in
the first round ballot, dropping him below the 50 per cent threshold for victory in the
36-candidate field.

Afghanistan's election commission declared Hamid Karzai elected as President on

November 2, 2009 after it called off a run-off following the withdrawal of his only rival,
Abdullah Abdullah. With this move the political uncertainty in Kabul came to an end. 

US officials hope to help restore legitimacy to Karzai's government by encouraging him

to build a reform-minded government that is ethnically representative and includes
Abdullah's followers. US Secretary of State Hillary Rodham Clinton released a statement
that hinted at Abdullah's group having some voice in the government. She praised
Abdullah for running a "dignified and constructive campaign that drew the support of
Afghan people across the nation. We hope that he will continue to stay engaged in the
national dialogue and work on behalf of the security and prosperity of the people of
Afghanistan."

Hamid Karzai was sworn in for a second term as Afghan President on November 19,
2009. The 51-year-old has pledged to fight corruption and take control of his country's
security before his five-year term ends.

His inauguration came against the backdrop of an ever more deadly Taliban insurgency,
doubts over his legitimacy after the tainted election, and demands from Western
donors that he address rampant corruption and mismanagement.

BANGLADESH
Hindu property confiscated during 1965 war to be returned
On November 2, 2009, the Bangladesh cabinet approved a proposed law to return Hindu
property, which were confiscated during the 1965 Indo-Pak war, when the country was
eastern wing of Pakistan, ending a major violation of the rights of minorities in the
country.

The proposed law is meant to redress the long-disputed law of the Pakistani era, which
was widely criticised as a major violation of the minority rights. During the Pakistan
period, the law was called as the Enemy Property Act.

The then Pakistani regime enacted the law to confiscate the property of the Hindu
families who fled the country when the India-Pakistan war broke out in 1965 while the
post-independent Bangladesh government renamed it as the Vested Property Act 1974.

Officials familiar with the process said under the amended proposal, the government
would publish lists of “returnable and non-returnable vested property” within a certain
period of times while the claimants could also seek review about “non-returnable”
property. Under the law, government committees at district and upzila or sub-district
levels would settle disputes regarding the disputed property.

The Awami League had enacted the law to return the minority property at the fag end
of its previous 1996-2001 tenure setting a two-year implementation deadline but the
subsequent Bangladesh Nationalist Party (BNP) sat on it exposing it to a natural death.
The 2001 law stipulated that land that was seized be returned to its original owners,
provided that the original owners or their heirs remained resident citizens.

Mujib’s murderers convicted after 34 years

On November 19, 2009, Bangladesh's Supreme Court rejected the appeals of five former
army officers and confirmed death sentence on seven others, who are living abroad, for
killing the country's founding father Sheikh Mujibur Rahman and his family members 34
years ago.

A five-judge bench of the apex court delivered the judgement amid tight security on
the court premises and key establishments across the country, bringing to an end a long
court battle on an emotive issue.

Sheikh Mujib, officially referred to with the honorific Bangabandhu, who was then the
country's President, was killed in a coup on the morning of August 15, 1975, less than
four years after he led a movement that culminated in the emergence of Bangladesh
after its violent separation from Pakistan.

In its judgement, the apex court ruled that the incidents of August 15, 1975, were “a
simple murder and it was not a result of mutiny”. Also gunned down or bludgeoned in
three separate attacks were most of Mujib's family members, close relatives, political
associates, Mujib's security chief and personal staff.

Referred to as “killer majors”, since most of them were junior officers, the condemned
men had later openly claimed to have carried out the killings in what they described as
national interest.

Prime Minister Sheikh Hasina, Mujib's elder daughter and one of the two survivors,
revived the court trial after she returned to power in January 2009. Sheikh Rehana, the
other surviving daughter of Sheikh Mujibur Rahman, in her reaction, said it was
important that the verdict had been upheld by the Supreme Court. 

EUROPEAN UNION
Belgian PM chosen first President
On November 19, 2009, European Union leaders have named Belgian Prime Minister
Herman Van Rompuy as the bloc’s first President and appointed Briton Catherine Ashton
as its foreign affairs chief.
 
A consensus was reached at a summit in Brussels after Britain dropped its insistence
that former British Prime Minister Tony Blair should become President, ending weeks of
deadlock and opening the way to agreement on Van Rompuy.
 
The appointments are intended to bolster the EU’s standing and help it match the rise
of emerging powers such as China following the global economic crisis.
 
Van Rompuy, 62, and Ashton, 53, are low-profile compromise candidates little known
outside the EU and at least initially will not have the clout in foreign capitals that an
established statesmen such as Blair would have had. 
    
PAKISTAN
Zardari hands over ‘nuke button’ to Gilani 
Pakistan's embattled President Asif Ali Zardari has transferred control of the country’s
nuclear arsenal to Premier Yousuf Raza Gilani and said he intended to strip the
Presidency of more powers soon. 
    
The President gave up his control over the nuclear arsenal by re-promulgating the
National Command Authority Ordinance and amending it, a move described as a “giant
leap forward to empower the elected Parliament and the Prime Minister.” 

Zardari also said in an interview with a TV news channel that the 17th Constitutional
amendment which gives President sweeping powers to dismiss the Premier and dissolve
Parliament will also be done away with soon. 

Meanwhile, a controversial law which scrapped graft cases against Asif Ali Zardari and
his key allies expired on November 28, 2009, but the Pakistan President felt it will not
affect him as the Constitution provides “indemnity” to the person holding the top post
in the country.
 
PHILIPPINES
Emergency imposed after massacre 
On November 24, 2009, Philippines President Gloria Macapagal Arroyo placed two
southern provinces and a city under emergency rule after 24 people were killed in the
worst-ever election related violence in the country. 

The orders were issued as troops, using shovels and bare hands, dug up hastily covered
graves on a grassy hillside in Maguindanao to recover the victims of the massacre. Some
of the dead men had their hands tied behind their back and one of the women was
pregnant. Eight of those found dead were local journalists. They were part of a group
of 40 people abducted by gunmen when on their way to file a candidate's nomination to
contest the governorship in elections May 2010.
 
Elections in the Philippines are usually marred by violence, especially in the south,
where security forces are battling communist rebels, Islamic radicals and clan rivalries. 

SWITZERLAND
Voters approve ban on minarets 
Swiss voters approved a ban on construction of new minarets on November 29, 2009, a
surprise result that is certain to embarrass Switzerland’s neutral government and could
also damage its economic ties with Muslim States. 
About 57.5% of voters and all but four of the 26 cantons approved the proposal in the
nationwide referendum, which was backed by the right-wing Swiss People’s Party (SVP).
The government said it would respect the people’s decision and declared construction
of new minarets would no longer be permitted. “Muslims in Switzerland are able to
practise their religion alone or in community with others and live according to their
beliefs just as before,” it said in a statement. Justice Minister Eveline Widmer-
Schlumpf said the outcome of the vote reflected a fear of Islamic fundamentalism, but
the ban was “not a feasible means of countering extremist tendencies”. 

Both the government and Parliament had rejected the initiative as violating the Swiss
constitution, freedom of religion and the nation’s cherished tradition of tolerance. The
UN human rights watchdog had also voiced concerns. 

The SVP, Switzerland’s biggest party, and Federal Democratic Union gathered enough
signatures to force the vote on the initiative opposing the “Islamisation of
Switzerland”. The move has stirred fears of violent reactions in Muslim countries and an
economically disastrous boycott by wealthy Muslims who bank and vacation in
Switzerland. 

The right-wing campaign to outlaw minarets on mosques has received an unlikely boost
from radical feminists arguing that the tower-like structures are “male power symbols”
and reminders of Islam’s oppression of women. Julia Onken, a prominent feminist,
warned that failure to ban minarets would be “a signal of the State’s acceptance of the
oppression of women”.

WORLD ECONOMY
G-20 launches framework to boost global economy 
The finance ministers of G-20 nations have agreed on a timetable for the new
framework for balanced and sustainable growth of the global economy, but made a
little progress on financing efforts to reduce global warming. 

The world’s leading developed and emerging economies committed to have peer review
and “more specific policy recommendations” in place by  November 2010. The Finance
Ministers, during the two-day meeting at St Andrews in Scotland, on November 8, 2009,
hoped that if all countries put political weight behind the negotiations over the next
year, the world can recover without developing the huge trade and financial
imbalances of the past decade. 
    
But there was no agreement on a specific set of common objectives, nor a mechanism
to resolve disputes. On the climate change issue, the Finance Ministers agreed only to
keep working for an ambitious outcome at meeting in Copenhagen but could not agree
on the amount of money developed countries will offer to poorer countries to help
them reduce their carbon dioxide emissions. 

The meeting was also overshadowed by a dispute about the possibility of a global tax on
financial transactions. Addressing the meeting, British Prime Minister Gordon Brown
floated the idea of such a tax would help banks to pay for the insurance they receive
from taxpayers. Within hours of the suggestion, the idea appeared still-born when US
Treasury Secretary Tim Geithner said: “A day-to-day financial transaction tax is not
something we are prepared to support.” But some of the other measures mentioned by
Brown—an insurance fee to reflect the risk of some banks, a pre-funded pool of money
to support orderly bank bankruptcies and contingent capital arrangements-have more
international support. The US is supportive of efforts to ensure banks cannot rely on
taxpayers to bail them out in future.
 
Eurozone pulls out of recession
Europe's deepest recession since the second world war has officially ended after the
world's biggest single trading bloc joined Japan and the United States in returning to
growth. Both the 16-nation eurozone, and the 27-nation European Union as a
whole, expanded their economies in the third quarter, with a 0.4 per cent increase in
the single currency area and a 0.2 per cent rise across the bloc as a whole.

But despite exiting five quarters running of economic retreat, analysts said that the
improvement is unlikely to be robust enough to allow governments to end State support
measures, particularly with unemployment continuing to rise.

The eurozone economy had shrunk by 0.2 per cent between April and June after a
record collapse of 2.5 per cent in the first three months of 2009. But growth of 0.7 per
cent in Germany, Europe's most powerful economy, and 0.3 per cent in France, in the
third quarter lay behind the improvement.

Britain, with a 0.4 per cent contraction and Spain, with a 0.3 per cent decline,
contributed to the lower figure for the EU as a whole. 
The European figures compare with a 0.9 per cent improvement in third-quarter
economic output in the United States, with Japan having already exited from recession
in the second quarter with 0.6 per cent growth.

Hoarwd Archer, the chief economist at IHS Global Insight, poured some cold water on
the news when he said the the emergence into daylight  came "at a trot rather than a
canter". Cautioning that "consumer spending likely saw little or no growth," Archer
warned that the recovery "could well lose momentum for a time in 2010 before growth
starts to gradually pick up again".

But he forecast overall eurozone growth of one per cent in 2010. Clemente De Lucia of
BNP-Paribas, a French bank, said the rebound was due mainly to the industrial sector
and warned that the recovery "might fade in 2010" once the impact of schemes, such as
help for boosting new car sales, was fully withdrawn. He also pointed to high
unemployment, running at more than 22 million at the last count across the EU, acting
as a brake on expansion for some time yet.

OECD doubles 2010 forecast

The Organisation for Economic Cooperation and Development has doubled its growth
forecast for the leading developed economies in 2010 and predicted a further
acceleration in 2011 as China powers a global recovery. 

The economy of the group’s 30 member countries will expand 1.9% in 2010 and 2.5% in
2011, the Paris-based organisation said in a report. Output will contract 3.5% in 2009.
The OECD, which advises members on economic policy, forecast 2010 growth of 0.7% in
June.
 
But the recovery will be marred by high unemployment and huge government debt
across the industrialised countries, the OECD said. Central banks and governments in
major Western economies should prepare for a gradual upwards shift in ultra-low
interest rates and for fiscal consolidation once recovery is stronger, but they will only
need to move in late 2010 at the earliest given that inflation is so low.

Output in the OECD economies will only return to the level achieved in the first three
months of 2008 in the third quarter of 2011, underlining the damage done by the
banking crisis. 
The OECD gave 2011 growth forecasts for the first time. The US will grow 2.8%, the
euro area 1.7% and Japan 2%. The Chinese economy will expand 9.3%, it said. The
global growth forecast includes emerging giants China, Brazil, India and Russia with the
mostly industrialized economies of its own 30-country membership and in all covers
some 80% of world output. 

The OECD said it expected world trade to grow 6.0% in 2010 and 7.7% in 2011 after a
plunge of 12.5% in 2009. China and India are poised to accelerate due to strong stimulus
measures, the OECD projected. 

The Paris-based group hiked its growth forecast for China to 9.3% in 2009 and 10.2% in
2010. In March, it projected China's growth at 6-7% in 2009. For India, the OECD
boosted its growth forecast to 6.1% in 2009 and 7.3% in 2010, rising to 7.6% the
following year. The OECD, in March, projected 4.3% expansion for India in 2009. India's
recovery appeared to be only “modestly hampered” by the driest monsoon in nearly
four decades and economic data suggested the growth “momentum is strengthening,”
the OECD said. But a resurgence of inflationary pressures pose a “key challenge” to
Indian policymakers in deciding when to withdraw stimulus in order to tackle the large
public deficit, it said. 

Dubai rattles global scrips with its woes 

Global markets from Sydney to Sao Paulo trembled on November 26, 2009, on fears that
Dubai’s attempts to reschedule loans might trigger a fresh round of financial troubles in
a world just emerging from the worst economic crisis since the 1930s and which may be
amplified in India as thousands of expats stare at job losses and reduced trade.
 
India, which gets nearly a quarter of its remittances from the United Arab Emirates and
has lakhs of labourers working in the region, may be worse off than most other nations
if the crisis escalates into a full-blown one like the Russian or Argentinian crises of the
past.
 
Indian shares and the rupee fell in sync with the rest of the global markets where
investors are fleeing for safety after Dubai World, the government investment company
with $59 billion of liabilities, sought to delay repayment on much of its debt. Investors
believe that there could be more trouble spots in emerging markets after Vietnam
devalued its currency and raised rates. The Bombay Stock Exchange’s Sensex fell 2% to
16,854.95, and the rupee fell 24 paisa to 46.55 against the dollar. The MSCI Emerging
Markets Index lost 1.4%. 

Dubai, which borrowed $80 billion in a four-year construction boom to transform its
economy into a regional tourism and financial hub, suffered the world’s steepest
property slump in the global recession. Home prices fell 50 percent from their 2008
peak, according to Deutsche Bank AG. Banks around the world have written off more
than $1.7 trillion as the credit crisis trashed the value of their assets. 
    
Dubai World’s lenders include Credit Suisse Group AG, HSBC Holdings, Barclays, Lloyds
Banking Group and Royal Bank of Scotland Group. 

ENVIRONMENT
China announces ambitious emission caps
Green NGOs were elated after China announced ambitious cuts in the carbon intensity
of its economy by 2020 in a major boost to the global effort to tackle climate change.
China announced a 40-45 percent reduction in the carbon intensity from the business-
as-usual scenario by 2020. Carbon intensity measures the amount of carbon dioxide—the
main greenhouse gas that is causing global warming—emitted per unit of industrial
output. India's carbon intensity is one of the lowest among emerging economies. 

International NGO Greenpeace also welcomed China's announcement but said it was not
enough. "Given the urgency and magnitude of the climate change crisis, China needs
stronger measures to tackle climate change," said Ailun Yang of Greenpeace China.
"This is a significant announcement at a very important point in time. But China could
do more." 

Since 2007, China is the world's largest emitter of greenhouse gases, though almost all
the carbon dioxide in the atmosphere now has been put there by developed countries
since the start of the Industrial Age. 

Yang noted that the announcement by China is yet another commitment for the climate
coming from a major developing country ahead of the UN Copenhagen Climate Summit.
"This is another challenge to the industrialised world, particularly the US, which has
just announced an inadequate emissions reduction target of only 4-5 percent by 2020." 

The Intergovernmental Panel on Climate Change—a grouping of over 2,500 scientists

from around the world—has said the developed world should cut emissions by at least
25-40 percent below 1990 levels by 2020 and reduce 80-95 percent by 2050. 

For China, a low carbon path is a national priority and a sure way to keep up its
economic tempo. China can ill-afford to let ‘invisible’ carbon denominated process and
production methods (PPMs) standards shackle its export offensive. 

More than India, it is China that should be worried about the current efforts to re-
interpret Article XX (e) of GATT to keep out ‘goods based on carbon intensive
processes’. In reality, China has been under greater pressure to stave off the ‘climate
related threat’ from the WTO window. By sending a ‘concrete’ signal of commitment to
emission intensity reduction, the People’s Republic is doing its best to keep the trade
dragon from getting into the FCCC fold. 

There could be an interpretation that the Chinese concession is an implicit acceptance

of NAMA. Given the fact that China is still coal dependent and looks towards safe and
cost-effective carbon capture and storage (CCS) technologies, it does not make sense
for it to accept NAMA commitments without quid pro commitments on the technology
transfer front. It is important that India and China have a concerted position on this
issue. 
    
Earlier in the month of November, Brazil had offered to reduce its emissions if it was
provided international funding to control deforestation of the Amazonian forests. The
move was interpreted by some as a sell-out to industrialised countries. And, now India
faces the challenge of how to escape being seen as a global hurdle.

The Chinese move came a day after the US administration, that held out for long,
announced that it would offer a target of reducing its greenhouse gas emissions "in the
range of" 17% by 2020 as compared to 2005 levels. When converted to benchmarks set
under Kyoto Protocol, this works out to 4% reduction below 1990 levels—almost seven
times less than what the EU has offered and less than 1/10th of what the UN IPCC
requires industrialised countries to do to check catastrophic climate change. 

One senior official said: "China’s offer are not absolute reductions, please note, and
they are purely voluntary, China has not offered them as a commitment towards
international compact. This is along lines that China had informed us of. But they leave
a positive impression internationally." In fact, the Chinese are aiming to earn goodwill
without doing much. The industrialized countries are obliged under the existing UN
treaty to reduce their emissions by absolute levels below a fixed benchmarked year.
China, in comparison has offered a purely voluntary reduction in its carbon intensity.
The carbon intensity target also provides enough leverage for ‘creative accounting’ in
measuring success of targets. 
    
NUCLEAR PROLIFERATION
Chinese N-shopping mall helped Pakistan 
China supplied Pakistan with enough weapons-grade uranium for two atomic bombs in
1982 and continued to help Islamabad out with its nuclear programme, according to a
report in The Washington Post. 

Outing China as a nuclear proliferator, the report, which sourced the narrative from
accounts written by disgraced Pakistani nuclear scientist A.Q. Khan, said that a
Pakistani military C-130 left the western Chinese city of Urumqi with the “highly
unusual cargo" in 1982.
 
That China supplied Pakistan with nuclear know-how has always been suspected, but
this is the first time that a detailed account of how it took place has come out and that
too straight from the accounts of A.Q. Khan. The uranium transfer was reportedly part
of a secret nuclear deal approved years earlier by Mao Zedong and Prime Minister
Zulfiqar Ali Bhutto in the 1976, four years after India tested its first nuclear weapon. 
    
But it was realised only during the time of Zia ul-Haq, who after taking power and
hanging Bhutto was struggling under rumours of a pre-emptive strike by India. So Khan
and a Pakistani general were sent to Beijing "to borrow enough bomb-grade uranium for
a few weapons." Chinese leader Deng Xiaoping gave the approval and Khan and his team
flew aboard a Pakistani C-130 to Urumqi where Khan says they enjoyed barbecued lamb
while waiting for the Chinese military to pack the small uranium bricks into lead-lined
boxes to be flown to Islamabad.
 
“Upon my personal request, the Chinese Minister . . . had gifted us 50 kg [kilograms] of
weapon-grade enriched uranium, enough for two weapons,” Khan wrote in an 11-page
narrative of the Pakistani bomb programme that he prepared after his January 2004
detention. “The Chinese gave us drawings of the nuclear weapon, gave us 50 kg
enriched uranium,” he said in a separate account sent to his wife several months
earlier. China in effect supplied a "virtual do-it-yourself kit that significantly speeded
Pakistan’s bomb effort."
 
Even before that, China sent Pakistan 15 tons of uranium hexafluoride (UF6), a
feedstock for Pakistan’s centrifuges, whose designs Khan has stolen. But it was also a
give and take with Khan sharing Europe’s best centrifuge technology in the 1980s with
the Chinese in an effort to help China’s uranium-enrichment programme. 

India votes against Iran on IAEA resolution

On November 27, 2009, India joined 24 other countries at the Vienna-based
International Atomic Energy Agency (IAEA) to vote against Iran on its nuclear
programme. India’s censure was based on IAEA director-general Mohammed El Baradei’s
report on Implementation of the NPT safeguards agreement in Iran which said all
efforts to negotiate with Iran to address the international community’s concern over its
‘clandestine enrichment programme’ has reached a “dead-end.”

This was the third time that India has voted against Iran’s alleged clandestine nuclear
weapons programme at the IAEA, the last two occasions being in September 2005 and
February 2006. This decision had kicked off a massive political storm in the country.
The Left parties, which were offering critical outside support to the UPA government at
that time, had come down heavily on the ruling combine and accused it of being arm-
twisted by the US into voting against Iran. 

The vote had also raised serious concerns within the ruling Congress, which feared that
this vote would erode its minority support base. Explaining New Delhi’s third vote on
the governing body resolution Vienna, External Affairs Ministry spokesperson said: “Our
support for the resolution was based on the key points contained in the Report of the
Director General.”

The IAEA has come to the conclusion that Iran was not transparent about its nuclear
programmes and concluded that it was pursuing clandestine nuclear weapons
programme. In September, Iran confirmed the doubts about its weapons programme
when it disclosed the existence of a second uranium enrichment plant in Fordo, not
very far from Tehran.

India, on its part, has been doing a tightrope walk on the sensitive issue. It has
consistently opposed Tehran on this issue in multi-lateral forums but continued to
engage with Tehran bilaterally. The reasons for this were explained by Prime Minister
Manmohan Singh when he pointed to the ancient civilization links between the two
countries, New Delhi’s dependence on Iran for energy and the presence of five million
Indians living in Iran.
 
Continuing with its balancing act, India was quick to strike a conciliatory note after its
censure of Iran at Vienna. It pointed out that this resolution should not be used to
renew punitive action or new sanctions against Iran. 

The latest resolution was backed by all five permanent members of the UN Security
Council. The three countries that opposed the anti-Iran IAEA resolution were Cuba,
Venezuela and Malaysia, while Pakistan, Afghanistan, Egypt, Turkey, South Africa and
Brazil abstained from voting.

Iran to build 10 new enrichment plants

On November 29, 2009, Iran announced plans to build 10 new uranium enrichment
plants in a major expansion of its nuclear programme—a clear show of defiance after
the UN nuclear watchdog rebuked Tehran over secret such work. The decision by
hardline President Mahmoud Ahmadinejad's government will further aggravate tensions
between the Islamic Republic and major powers seeking a diplomatic solution to a long-
running dispute over Iranian nuclear activities.

It may speed up discussions in the West about possible new sanctions on Iran over its
repeated refusal to halt uranium enrichment, which the US and its allies suspect is part
of a covert bid to develop nuclear bombs. Iran denies this.

The new enrichment facilities would be the same size as Iran's main enrichment
complex at Natanz.

INTERNATIONAL RELATIONS
Visit of US President to China
On November 17, 2009, in a delicate balancing act during his visit to China, US
President Barack Obama supported early resumption of talks between China and the
Dalai Lama’s representatives while describing Tibet as part of this country. Taking note
of the sensitivities of China and the exiled Tibetan leader, Obama, during his maiden
visit to China as President, said: “We did note that while we recognise that Tibet is part
of the People’s Republic of China, the US supports the early resumption of dialogue”
between the Dalai Lama’s representatives and Beijing.
Obama’s remarks came after his meeting with his Chinese counterpart Hu Jintao during
which the two sides discussed a host of issues including India-Pakistan relations, Iran’s
controversial nuclear programme, Afghanistan, terrorism and climate change.

The US and China agreed to work together to bring about stable and peaceful relations
in all of South Asia, Obama said during his joint briefing with Chinese president Hu
Jintao in Beijing. Hu, who spoke first, didn’t mention Pakistan or South Asia. This was a
rare occasion when a US president acknowledged that Beijing has a role to play in the
India-Pakistan relationship. The move, if serious, runs counter to predictions of US
foreign policy experts that the US would not acquiesce in a future Chinese hegemony in
the region.
 
While the joint statement was met with silence by New Delhi, it infuriated officials in
the foreign office because it brought back nasty memories of another US-China joint
statement by Bill Clinton and Jiang Zemin on June 29, 1998. Then too, it was Clinton
and Jiang, in what India considered “offensive” language, scolding India and Pakistan
for their nuclear tests. India had reacted sharply then, buffetted by general
international condemnation after the tests. 

But latest statement cut at the heart of an Indian effort to build a relationship with the
US without China complicating the issue. The reality is perhaps that the joint statement
was drafted by Obama’s China officials who don’t read India’s sensitivities. But that it
was allowed to go through signals to many Indian strategists that Obama may be more
than pliant to China, giving it a role in a region where it’s bound to come into conflict
with a country Obama says is a strategic US partner, India. 

SUMMITS
CHOGM
Commonwealth Heads of Government Meeting (CHOGM) was hosted in the city of Port
of Spain in the Republic of Trinidad and Tobago on November 27-29, 2009. The Opening
Ceremony of the Meeting included an address by Her Majesty Queen Elizabeth II, Head
of the Commonwealth. 

The CHOGM is the supreme body of the Commonwealth. It is convened every two years
to review global, political and economic developments and to conduct a strategic
overview of the Commonwealth’s work in support of the interests of member countries.
The objective of this Summit was to engage leaders of the Commonwealth in discussing
global and Commonwealth issues and to agree upon collective policies and initiatives.

The leaders agreed to admit Republic of Rwanda as the 54th member of

Commonwealth.

Climate change was a major topic of discussion at 2009 CHOGM, due to the proximity of
the meeting to the Copenhagen climate change summit, but also because many
Commonwealth States are particularly vulnerable to the effects of global warming.

The 53 member States of the Commonwealth called for an “internationally legally

binding agreement” on climate change to be agreed at the Copenhagen conference in
December 2009. Leaders also pledged support for a fund to help poorer countries tackle
climate change.

Heads of government endorsed the Report of the Commonwealth Ministerial Action

Group (CMAG), covering the Group's deliberations in the period since last meeting in
Kampala in November 2007. They commended CMAG's work, which has contributed
significantly to the protection and promotion of the Commonwealth's fundamental
political values in member countries. 

Heads of government also welcomed the reinstatement of Pakistan in the Councils of

the Commonwealth following the conduct of credible elections in the country in
February 2008 and the assumption of office by an elected, civilian government in April
2008. However, they expressed deep concern at the further deterioration of the
situation in Fiji Islands with regard to its adherence to fundamental Commonwealth
values, including the abrogation of the Constitution in April 2009, ongoing restrictions
on human rights, including freedom of speech and assembly, and the Interim
government’s decision to further delay elections until 2014. They noted that these
actions had led to the full suspension of Fiji from the Commonwealth on September 1,
2009. 

Heads of government once again acknowledged the threats posed by weapons of mass
destruction, especially nuclear weapons, and reaffirmed their commitment towards
ridding the world of these weapons. Recognising that the ultimate objective is general
and complete disarmament under strict and effective international control, Heads
reaffirmed their commitment to the non-proliferation of weapons of mass destruction,
which should be achieved in accordance with the United Nations Charter. Heads
reaffirmed the rights of States to nuclear energy for peaceful uses in conformity with
their international obligations. They also noted the ongoing efforts towards the
negotiation of a comprehensive Arms Trade Treaty (ATT) in respect of conventional
weapons, and the proposed ATT conference to be held in 2012. They called for the
finalisation of a robust and comprehensive ATT based on consensus. 

CHOGM reaffirmed unequivocal condemnation of terrorism in all its forms and

manifestations, committed by whomever, wherever and for whatever purposes, as
criminal and unjustifiable. They reiterated that acts of terrorism cannot be justified or
legitimised by any cause or grievance whatsoever. 

Continuing need for comprehensive efforts at all national and international levels to
counter terrorism, including efforts to build respect and understanding among peoples
was stressed. The Heads also emphasised the need to conclude negotiations on a
Comprehensive Convention on International Terrorism on a priority basis, preferably
during the Sixty-Fourth Session of the UN General Assembly and called upon all member
States to accede to the UN Counter-Terrorism Conventions and Protocols, and to
effectively implement these as well as the UN Global Counter-Terrorism Strategy and
relevant Security Council Resolutions, and to prevent the use of their territories for the
support, incitement or commission of terrorist acts in other States. 

Recognising that corruption in its various forms undermines good governance, public
security, respect for human rights and economic development, CHOGM urged member
States which had not already done so to consider becoming parties to the UN
Convention against Corruption (UNCAC), and to implement its provisions, including
those addressing asset recovery, to help them combat systemic corruption at both
national and international levels. 

Heads expressed their support for the commitment to avoid protectionism, and to
strengthen financial supervision and regulation. They emphasised the importance of
renewing the contract between financial institutions and the society they serve, and
the need to ensure the sector bears the full cost of the risk associated with their
activities. They encouraged the IMF to consider the full range of options in their review
and welcomed the steps taken by many countries to mitigate the impact of the
economic crisis, and the fragile signs of growth in the global economy. They expressed
concern, however, that the social and economic impact of the crisis would continue to
affect a vast majority of the developing countries, particularly the smallest and most
economically vulnerable members of the Commonwealth, including LDCs and SIDS. 

Australia will host the 2011 CHOGM. Sri Lanka and Mauritius will host the 2013 and 2015
CHOGMs, respectively.

INTERNATIONAL TERRORISM
Italy arrests two for aiding 26/11 attacks on Mumbai
Tracing new links to the Mumbai carnage, a Pakistani father-son duo were arrested
from Italy for allegedly managing money transfer to finance phone communications of
the attackers following leads from Indian and US investigators.

The two men, who ran a money transfer agency, were arrested in an early morning raid
from the northern Italian city of Brescia, police said. The duo have been identified by
the police as Mohammad Yaqub Janjua, 60, and Aamer Yaqub Janjua, 31. They have
been accused of aiding and abetting international terrorism as well as illegal financial
activity.

On November 25, 2008, a day before the attacks, they transferred $ 229 to activate an
internet phone account that was used by the attackers and their accomplices, said
Stefano Fonzi, the head of anti-terror police in Brescia.

The funds that enabled the terrorists to be in touch with their handlers in Pakistan
were transferred under the identity of another Pakistani man who had never been to
Italy and was not involved in the attacks, reports from Italy said. The two managed a
money transfer agency where it is reported to be a common practice to transfer funds
using false identities. The Italian police arrested the two men in an early morning raid
in Brescia, the police said in a statement.

Italian police started their investigation the following month after being alerted by
Indian authorities and the FBI that funds had been transferred from Italy.

Pak court names Zaki-ur-Rehman Lakhvi as 26/11 mastermind

In what is being seen as a clever move by Islamabad to bury LeT founder and Jamaat-
ud-Dawa chief Hafiz Saeed’s role as the prime strategist behind the 26/11 attacks, a
Pakistani trial court, while framing charges against seven accused on its soil, has
instead named Zaki-ur-Rehman Lakhvi as the mastermind. 
    
Exactly a year after the Mumbai assault, on November 25, 2009, the special anti-terror
court set up in Adiala jail in Rawalpindi framed charges against all the seven accused in
Pakistan’s custody, reportedly confirming Lakhvi as the mastermind and Zarar Shah,
Abu al-Qama, Hamad Amin Sadiq, Shahid Jamil Riaz, Jamil Ahmed and Younas Anjum as
handlers/facilitators. All seven had pleaded not guilty. They have been reportedly
charged under the anti-terrorism act and the Pakistani penal law. The charges include
providing training, financial support, accommodation, equipment and communication
gear to the 10 terrorists who had attacked Mumbai, including the lone survivor Ajmal
Amir Kasab, who is now in India’s custody. 

Interestingly, the dossier submitted by India on the 26/11 investigations to Pakistani

names JuD chief Hafiz Saeed as the mastermind behind the Mumbai plot. Zaki-ur-
Rehman, Zarar Shah, Abu Qama and others, now facing trial in Pakistan for their
involvement in the 26/11 attacks, were only acting under the instructions of Saeed.
Saeed is alleged to have personally overseen the preparations and events leading up to
the major assault on India’s financial capital. Senior officials of the security
establishment are obviously disappointed over the absence of any reference by the
Pakistani court to Saeed’s role in the 26/11 conspiracy. The assessment in India is that
the Pakistani court’s move, timed to coincide with the eve of the 26/11 anniversary,
was essentially to exhibit to the world its “commitment” to punish the attacks’
perpetrators on its soil while ensuring a complete cover-up of Hafiz Saeed’s role as the
key conspirator. 
    
INTERNATIONAL TREATY
Arms Trade and Transfer Treaty 
On November 1, 2009, even as the crucial global Arms Trade and Transfers (ATT)
treaty, which seeks to regulate the $55 billion arms trade and promote democracy,
found overwhelming support from 153 member countries at the UN. India was among
the 19 who abstained from the meet. These 153 countries—including top arms suppliers
like US, Britain, Germany and France—supported a UN disarmament committee
resolution which will lead into negotiations for the treaty starting 2010. 

While India may still take part in negotiations, the treaty in its present form was not in
India’s interest. Certain binding clauses on social issues like violation of human rights
and restrictions on arms sale expanding into controls on export of advanced
 technologies could work against India. 
    
The US under George Bush in 2006 had opposed the treaty but it came round to
supporting it under Barack Obama. The fate of the UN sponsored treaty still hangs in
the balance as the list of 19 who abstained includes China and Russia, as also Pakistan. 

The proposed treaty calls upon States involved in arms trade to not violate human
rights, promote democracy and refrain from getting into any armed conflict. It also
calls for ban on sale of arms to countries which promote terrorism.
 
The fact that India is still dependent on conventional weapons and imports a large
number of these is another major concern. The proposed treaty will seek to set up
export controls on transfers of advanced weapons, thereby extending the present
Western-inspired controls on export of advanced technologies. This could impinge on
the interests of India. 

CURRENT AFFAIRS: OCTOBER 2009

CURRENT NATIONAL AFFAIRS

BANKING & FINANCE

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

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

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

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

Highlights  

 Repo rate retained at 4.75 pc

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

PLANNING & ECONOMY

RBI survey
The Reserve Bank of India has acknowledged the resurgence of the feel good factor in
the Indian economy but has said that growth and inflation continue to be a concern. 
    
Maintaining a hawkish stance on inflation, the central bank has highlighted its concern
over slowdown in credit off-take and surplus liquidity in the system, giving no clear
indication on its rate stance. In its report on Macro and Monetary Developments in Q2
of 2009-10, the Reserve Bank has noted that "The combination of a weak recovery and
elevated CPI (consumer price index) inflation has already magnified the complexity of
policy challenges, notwithstanding the subdued nature of headline WPI inflation so
far." 
    
While premature reversal of the monetary policy stance entails the risk of stifling
recovery, persistence of accommodative stance could adversely impact inflation
expectations. 
    
However, the results of its survey, based on “assessment for July- September 2009” and
“expectations for October-December 2009”, point to a strong momentum in industrial
recovery. Both the indices remained above 100 for the second consecutive quarter (100
is the threshold that separates contraction from expansion). According to the RBI
analysis, this suggests that the industrial recovery already seen up to August 2009 in
terms of trends in IIP growth could gain further momentum. 
    
The outlook for employment is also improving and firms are expected to increase their
workforce on the back of expected increase in demand. 
    
Among the positive pointers to the economic recovery include improved financial
conditions as reflected in return of capital flows, significant recovery in the stock
markets, and better transmission from low policy rates to declining lending rates. The
RBI has also said that there should not be any concerns about private credit getting
crowded out since over 80.4% of the government borrowing programme has been
completed so far as there is adequate liquidity in the system. 
    
But RBI is concerned about the deceleration in private consumption and investment
demand that it says needs to be reversed from the low levels seen in the first quarter
of 2009-10 for ensuring a sustainable recovery. 

Indian economy seen cruising at 6.5% in 2010 

A key economic think-tank has made the most optimistic official projection yet for
growth in the fiscal to March 2010, flagged rising food prices as a major concern, and
suggested that tighter monetary and fiscal policies are unlikely in the coming months. 
The Prime Minister’s Economic Advisory Council, headed by former RBI governor C.
Rangarajan, said it sees the gross domestic product (GDP) expanding by 6.5% in 2009-
10. 

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

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

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

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

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

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

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

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

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

Congress survived a scare in Haryana and retained power in the State with the help of
independents as well as five Haryana Janhit Congress MLAs, who decided to join the
Congress. Congress sailed back in style in Maharashtra and Arunachal Pradesh. All three
CMs—Ashok Chavan in Maharashtra, B.S. Hooda in Haryana and Dorjee Khandu in
Arunachal—have been renominated by the party leadership.
 
If the Lok Sabha polls settled the Number One slot for Congress party, the altest verdict
confirmed that the gap between Sonia Gandhi’s outfit and BJP is growing. In fact, some
political pundits feel Congress could well be on the way to regaining its pre-1996 status
when, as the key player in most States, it could be fought only by a united opposition.
 
Some riders are, however, in order. The win in Maharashtra has been facilitated by Raj
Thackeray playing spoiler again—on a bigger scale. In Haryana, the party failed to get a
majority despite a three-way split of anti-Congress votes. The resurrection of Chautala
shows the resilience of old-fashioned politics and should be sobering for those who feel
traditional political tools—caste/community—have lost salience. 
    
Haryana: In Haryana, the Congress vote share fell by a huge 7.4%, from 42.5% to 35.1%.
Normally such a big swing away results in the decimation of a party. But Hooda has
managed to keep his head above the water, thanks largely to a fractured opposition. 

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

Maharashtra: In the the lead-up to the Maharashtra polls, many had wondered whether
Raj Thackeray would help Congress-NCP in as big a way as he did in the LS polls by
eating into the Sena votebank yet again. Indeed, Congress-NCP cruised back to power
as Shiv Sena citadels in Mumbai and Thane crumbled under Raj’s assault. In a result,
the loser’s story is almost as important as the winner’s. If the ruling combine beat the
incumbency blues, the 144-90 scoreline was the clap of doom for the Sena-BJP camp.
To add to Sena’s woes, BJP crept ahead with 46 seats to its 44.
 
The revenge drama saw Raj Thackeray’s Maharashtra Navnirman Sena demolish Sena’s
prospects by not only splitting the “Marathi” vote but emerging as the second largest
party in Mumbai with six seats and a staggering 23.35% of the city vote.
 
MNS polled 5.7% of the State’s vote, eating into Sena and possibly NCP bases. While
Sena was the worst hit, losing 3.7% of its support since May 2009, the Raj effect may
have dented others, particularly NCP, which lost 2.4% of its vote.

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

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

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

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

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

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

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

EC announces five-phase polls in Jharkhand from Nov 27 

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

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

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

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

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

Since then, two former ministers of the State have been arrested and sent to jail in
disproportionate assets cases, while the Enforcement Directorate has instituted an
adverse preliminary report against Koda and two other former ministers in the State for
alleged violation of foreign exchange rules and hawala transactions. 
As many as seven MLAs in the 81-member House were disqualified in August under the
Anti-Defection Act while three members chose to quit the House, which had been kept
under suspended animation.

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

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

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

ENVIRONMENT
Ganga clean-up
Twenty two years and Rs 960 crore later, the government plans to spend another Rs
15,000 crore over the next 10 years to make the Ganga river pollution free. This
decision was taken at the meeting of the first National Ganga River Basin Authority,
chaired by Prime Minister Manmohan Singh, on October 5, 2009. 

It has been decided to take up the cleaning of the Ganga river on a mission mode.
Mission Clean Ganga will ensure that by 2020 no untreated municipal sewage and
industrial effluents flows into Ganga. At present, the sewage treatment capacity is
about 1,000 mld, against 3,000 mld sewage being generated in the towns along Ganga.
Nearly 75% of the pollution in the Ganga is on account of municipal waste. 
The costs will be borne by both the Centre and the States. There were disagreements
over the sharing, with States asking for 100% central funding. An alternate funding
pattern of 70% by the Centre and 30% by the States has been suggested. A final decision
on the sharing ratio will be worked out by the Planning Commission, in consultation
with the States and Central government. 

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

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

"The Executive and the Legislature must take initiative in recommending the best
possible talent for selection to the judiciary," Law Minister V. Moily said in the 32-page
document presented to Chief Justice K.G. Balakrishnan. The "government should also
be given the power to suggest outstanding lawyers and jurists as Judges," the Minister
said in the statement, which was discussed threadbare at a conference aimed at
"strengthening the judiciary towards reducing pendency and delays."
 
Moily's proposals have come in the wake of the crisis-like situation that has arisen
following allegations of judicial misconduct against a number of Judges—Karnataka High
Court Chief Justice P.D. Dinakaran and Judges Soumitra Sen of Calcutta High Court and
Nirmal Yadav of Punjab and Haryana High Court. The custodial death of Ashutosh
Asthana, the prime accused in the Uttar Pradesh PF scam, which reportedly involves
several Judges, has cast a further shadow on the judiciary.

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

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

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

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

NUCLEAR ENERGY
India notifies N-separation plan 
India has notified its separation plan in the IAEA, which formally separates India’s
civilian and military nuclear establishments. The plan, which was announced in March
2006, has passed muster at IAEA and India’s safeguards agreement is now officially
operational.
 
This is likely to help in the negotiations for the reprocessing agreement that is currently
under way between India and US. But more than that, this will silence many non-
proliferation critics in the new Obama-led US administration who had been looking at
the delay in notifying the safeguards agreement as an example of Indian dithering.
 
FOREIGN RELATIONS
India slams OIC over J&K envoy
Pakistan has succeeded in its efforts to compel the Organisation of Islamic Conference
(OIC) to appoint a special envoy for Jammu and Kashmir. At its meeting in New York
earlier in first week of October 2009, the OIC also stated that it supported people of
Jammu and Kashmir in realisation of their legitimate right to self-determination in
accordance with relevant UN resolutions and aspirations of the Kashmiri people.

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

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

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

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

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

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

India, Argentina sign N-accord 

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

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

A joint statement issued by India and Argentina after the visiting dignitary concluded
her talks with Indian leaders said the two sides shared the view that civil nuclear
energy could play an important role as a safe, sustainable and non-polluting source of
energy in meeting rising global demands for energy.
The other nine accords signed between the two sides include: exchange of letters for
business visa providing for five years multiple entry gratis visa for a single stay of 90
days; programme of cooperation in science and technology for 2009-11; MOU between
ONGC Videsh Limited and ENARSA; MOU on sports cooperation; MoU on cooperation in
the field of trade promotion and technology transfer in international trade; and
agreement on outer space.

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

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

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

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

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

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

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

India, China ink pact on climate change

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

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

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

The agreement also reaffirms the principle of common but differentiated

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

Egypt offers special industrial zone to India

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

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

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

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

Olive branch to Pak with rider 

In a speech delivered at the inauguration of the Anantnag-Qazigund rail link in
Anantnag, Prime Minister Manmohan Singh focused largely on ties with Pakistan and the
earlier success of cross-LoC initiatives. Targeting domestic audience and also sending
out a message to Pakistan, Mr Singh prefixed his offer of peace with the rider that
Islamabad must bring perpetrators of terror attacks to justice and destroy terror
camps. "For a productive dialogue it is essential that terrorism must be brought under
control," he said. 

Mr Singh said India would put pressure on Pakistan to curb the activities of the
elements engaged in terrorism against India. "If they are non-State actors, it is the
solemn duty of the government of Pakistan to bring them to book, to destroy their
camps and to eliminate their infrastructure. The perpetrators of the acts of terror must
pay the heaviest penalty for their barbaric crimes against humanity," he said. 

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

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

President Pratibha Patil’s visit to UK and Cyprus 

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

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

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

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

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

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

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

bearing his signatures along with those of Sarojini Naidu, Gandhi’s disciple Meerabai,
secretary Pyare Lal and some other blurred signs are part of the package bought by the
NRI duo that was handed over to the President.
Gandhi’s letters written in Urdu to his disciple Maulana Abdul Bari and a lesser known
Urdu poet of those times, Hamidullah Afsar, are a study in contrast. These letters bring
out the difference between those who were close Gandhi’s freedom movement and
those who tried to intrude upon his privacy. 

The President visited Cyprus on an invitation of the then President of Cyprus

Papadopoulus who visited India in April 2006. The last time an Indian President visited
Cyprus was 21 years ago, again R. Venkataraman, whereas all former Cyprian Presidents
have visited India during their term of office.

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

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

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

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

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

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

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

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

His former colleagues who have also been booked under PMLA include Bhanu Pratap
Shahi, Bandhu Tirkey and Kamlesh Singh. Though they did not prosper as much as Koda,
the trio, according to ED, made personal fortunes ranging from Rs 20 crore to Rs 50
crore. 

Koda and his associates milked their success in 2005 Jharkhand polls. The election
threw up a hung House, enabling them to play kingmaker with remorseless agility. Shibu
Soren, who was sworn in as Chief Minister of Jharkhand when he lacked majority
support, had to resign when the group refused to rescue his aspirations. They helped
Arjun Munda of BJP become the Chief Minister and were rewarded with 'plum' portfolios
as part of deal. The arrangement, however, did not last long. The group ditched BJP
after UPA agreed to propel Koda to Chief Ministership. Others in the group, naturally,
held on to their portfolios. 

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

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

TERRORISM; LAW & ORDER

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

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

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

The strategy for acting on intelligence tip-offs and hitting at naxal bases deep in Red
"liberated" zones was put to trial in September 2009 in Chhattisgarh’s Dantewada. The
Maoists were routed but the hazardous forests and complete lack of infrastructure
underlined how difficult it would be for a force to operate "behind the lines". It is felt
that the surge in Central and State forces after the Assembly elections in Haryana,
Arunachal Pradesh and Maharashtra can be sustained if the local population is
convinced that Maoists can be defeated and that the forces will not leave in a hurry.
This would strengthen intelligence collection and provide the administration with
valuable allies as even fence sitters opt for the winning side. 

The Centre plans to deploy 70,000 paramilitary personnel—drawn from CRPF, ITBP, BSF,
SSB, CoBRA and Nagaland Armed Police—in States like Jharkhand, Chhattisgarh, Orissa,
Bengal, Bihar, Maharashtra and Andhra.

Maoists step up the gore, behead police officer 

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

CURRENT INTERNATIONAL AFFAIRS

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

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

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

take effect until all 27 member States ratify it. 

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

Irish opinion is thought to have swung behind the "Yes" vote this time because of the
severity of the economic downturn, as well as the legal "guarantees" on Irish
sovereignty that the EU pledged after the first referendum. 
The legally binding "guarantees" state that Lisbon Treaty will not affect key areas of
Irish sovereignty, such as taxation, military neutrality and family matters such as
abortion-significant issues in 2008's campaign in Ireland. But they have not yet been
attached to the treaty. 

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

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

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

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

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

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

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

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

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

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

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

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

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

The third quarter growth was primarily due to rising personal consumption expenditures
(PCE), higher federal government spending and exports.

One of the main factors for the upturn in economic activities in the third quarter is the
government's 'Cash for Clunkers' programme for the auto industry, which resulted in
increased car sales. The initiative which ended in August had offered rebate of about
$4,500 for consumers to purchase new cars and sell their old models.

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

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

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

Lawmakers join hands to fast-track carbon cut 

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

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

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

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

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

They include standardized action on building and appliance standards; renewable

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

India joins rich nations to protect forests 

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

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

The FIP Trust Fund Sub-Committee met in Washington for the first time on October 29,
2009, to begin implementation of the Program, including consideration of criteria for
how to select pilot countries and regions. 
The FIP governance structure is among the first in a new generation of partnerships
among developing and developed countries and other stakeholders which takes account
of the need for a level playing field in addressing climate action.

INTERNATIONAL RELATIONS
RIC meeting in New Delhi
Global terrorism with special focus on Afghanistan dominated the ninth trilateral
meeting of the foreign ministers of Russia, India and China (RIC) that concluded in
Bangalore on October 27, 2009. 
    
The ministers emphasised the need for the three countries to assist Afghanistan in
fighting terrorism, ensuring security, restoring peace and stability and building a
democratic and pluralistic Afghanistan.

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

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

Obama signs into law Pak Aid Bill 

US President Barack Obama has signed into law legislation that will provide $7.5 billion
in US aid to Pakistan over the next five years.  
"This law is the tangible manifestation of broad support for Pakistan in the US, as
evidenced by its bipartisan, bicameral, unanimous passage in Congress," the White
House said in a statement.
Obama signed the legislation after hectic jockeying by Pakistan's Foreign Minister Shah
Mahmood Qureshi to secure assurances from Congress that the Bill does not trample on
Pakistan's sovereignty.

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

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

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

Visit of Chinese PM to N-Korea

North Korea’s leader Kim Jong-il made a rare appearance to personally greet visiting
Chinese premier Wen Jiabao at the start of a trip to North Korea in the month of
October 2009. 
    
Kim Jong-il’s unusual outing followed by Wen’s talks with the premier was a show of
how serious North Korea is about shoring up ties with Beijing, which gives its poor
neighbour crucial economic help and diplomatic backing. 

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

North Korea told Jiabao that it was open to bilateral and multilateral talks on its
nuclear programmes. The comments appeared to be the latest indication of
Pyongyang’s apparent willingness to return to six-nation disarmament talks that it
broke off in early 2009. 
    
China termed Wen’s visit a "goodwill" trip to mark the 60th anniversary of diplomatic
relations, but nuclear issues figured to be high on the agenda.

Hillary Clinton's visit to Pakistan 

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

During her maiden visit to Pakistan after assuming office, Clinton  met President Asif Ali
Zardari, Prime Minister Yousuf Raza Gilani and Army Chief Gen Ashfaq Parvez Kayani.

She refused to be drawn into the debate on whether there are "good Taliban" and made
no reference to contentious issues like differences between the US and Pakistan on
conditions attached to economic aid. 

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

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

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

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

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

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

East Asia Summit

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

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

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

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

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

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

Describing the case against Saeed as arising out of a 'mala fide intention' by the Punjab
provincial government, the court quashed the cases, which were registered at police
stations in Faisalabad for allegedly inciting people to wage 'jihad' (holy war) against
'infidels'. 
    
The first FIR was based on his preaching session at Royalton Hotel in Faisalabad’s Canal
Road on August 27, 2009, in which Saeed urged people to retaliate against those who’ve
suppressed their rights. He explained away the problems of the American economy as
God’s way of retaliation.
 
The second FIR was lodged over his speech at an Iftar dinner at Peoples Colony,
Jaranwala Road Faisalabad on August 26. In this tirade, Saeed accused India of stage-
managing the 26/11 attacks and conspiring against Pakistan—a clear attempt to invoke
anti-India sentiments.
 
Car Bomb Targets India’s Kabul Mission 
In yet another reminder of the desperation of terror groups and their sponsors to get
India out of Afghanistan, Taliban terrorists executed a suicide car bomb attack on the
Indian embassy in Kabul on October 8, 2009, killing 12 people and injuring more than 80
others. The attack came 15 months after the deadly strike near the embassy in 2008,
which left more than 60 dead, including an IFS officer and the Indian defence attache. 
    
The damage could have been much more but for the security arrangements put in place
after 2008’s attack that was traced to ISI-affiliate Sirajuddin Haqqani. 

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

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

Top military brass among 50 killed in Iran suicide blast 

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

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

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

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

the head of the shadowy Sunni rebel group, Jundallah (Soldiers of God) had "accepted
the responsibility" for the attack.
The Iranian president hit out at Pakistan over the bombing, accusing it of sheltering
Jundallah militants.
The Revolutionary Guards accused the United States of involvement. "Surely foreign
elements, particularly those linked to the global arrogance, were involved in this
attack," a Guards statement quoted by television said. Iran often uses the term "global
arrogance" to refer to the United States, its old foe.

FBI foils LeT plan to attack India 

Pakistan-based terror group Lashkar-e-Taiba (LeT), blamed for the 26/11 Mumbai
terrorist attack, was planning to use an American national to carry out another major
terrorist attack in India, according to the Federal Bureau of Investigation (FBI) of USA.
 
The man, identified as David Coleman Headley, was arrested in early October 2009, by
FBI Joint Terrorism Task Force at O’Hare International Airport.

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

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

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

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

Jihad Islami (HUJI), a Pakistani-based terrorist organisation with links to Al-Qaida. 

WORLD TRADE
SAARC Ministers promise to free services sector 
Trade Ministers from SAARC countries have decided to fast-track negotiations on
liberalising the services market within the region, a move that will enable freer
movement of people within the region and give a boost to investments in areas like
tourism, financial services and telecom. 

Services could be incorporated into the South Asia Free Trade Agreement (SAFTA)
soon. 
 SAARC Ministers, who met in Kathmandu in October 2009, also decided to work on
reducing the negative list of items that are not covered under SAFTA to make the free
trade agreement more "meaningful". SAFTA is an agreement for elimination of tariffs on
goods traded within the SAARC region, and was signed in January 2004. 

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

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

CURRENT AFFAIRS: SEPTEMBER 2009

CURRENT NATIONAL AFFAIRS

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

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

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

HEALTH
By 2020, India will have 10m dementia patients 
This can come as a shocker for India, which is yet to put in place a health programme
for the country’s greying population. The global burden of dementia—disorders of the
brain that affect memory and language among the elderly—has been seriously under
estimated. The World Alzheimer’s Report 2009, prepared by King’s College, London
says that there would be 35 million people worldwide with dementia by 2010. That
number is set to almost double every 20 years to 65.7 million in 2030 and 115.4 million
in 2050.
 
What’s worse, almost 60% of people with dementia in 2010 will be from low and middle
income countries like India, rising to 70.5% by 2050. This is a 10% increase over the
earlier estimate made in 2005—meaning that the estimates made earlier for India will
also increase.
 
Worldwide, the economic cost of dementia has been estimated at $315 billion annually.
The total annual costs per person with dementia have been estimated as $1,521 in a
low income country, rising to $4,588 in middle income countries and $17,964 in high
income countries.
 
The report recommended that the WHO declare dementia a health priority, and that
countries, including India, develop a plan for dealing with the greater numbers of
dementia patients. 

JUDICIARY
Gram Nyayalayas Act
The Central government has decided that the provisions of the Gram Nyayalayas Act
shall come into force in the areas to which this Act extends on October 2.  The Gram
Nyayalayas Act, 2008 has been enacted to provide for the establishment of the Gram
Nyayalayas at the grass roots level for the purpose of providing access to justice to the
citizens at their door steps.
 The salient features of the Gram Nyayalayas Act are as follows:

 Gram Nyayalayas are aimed at providing inexpensive justice to people in rural

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

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

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

The setting up of Gram Nyayalayas will be an important measure to reduce arrears. 

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

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

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

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

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

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

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

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

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

PLANNING & ECONOMY

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

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

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

A decision has also been taken to release Interest Subvention to Public Sector Banks
(PSBs), Cooperative Banks (Short Term Cooperative Credit Structure-STCCS) and
Regional Rural Banks (RRBs) and to NABARD for refinance to RRBs and Cooperative
Banks. This has been done to operationalise the announcement made in the Union
Budget for ensuring that the farmer receives short term crop loan at seven per cent per
annum (six per cent for prompt payers) with an upper limit of Rs.three lakh on the
principal amount. 
The interest subvention is available to Public Sector Banks, Regional Rural Banks (RRBs)
and Cooperative Credit Institutions (CCIs) on disbursements out of their own funds and
to NABARD for concessional refinance to RRBs and CCIs. For the year 2009-10, the
target for flow of credit to agriculture sector has been revised from Rs.2,80,000 crore
in 2008-09 to Rs.3,25,000 crore, of which the total short term crop loan disbursements
by all banks is likely to be around Rs.2,00,000 crore.

NREGS gets e-transparent

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

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

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

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

Property as gift to be taxed now

The Income Tax Act has been amended with effect from October 1, 2009, to provide
that any gift-in-kind—being an immovable property or any other property—the value of
which exceeds Rs 50,000, will become taxable in the hands of the donee. The tax would
have to paid by the recipient by including the amount in his taxable income.
Gifts received from local authorities, trusts or entities registered as charitable
institutions would not attract the provisions of the new tax norms.

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

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

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

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

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

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

India, Mongolia ink nuke pact

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

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

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

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

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

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

SCANDALS
Bofors buried as govt drops case
The Bofors case that led to Congress’s defeat in the 1989 Lok Sabha polls has been
given an official burial. With the government declaring its intention to drop proceedings
against the key accused, Ottavio Quattrocchi, and all other accused either dead or
acquitted, the case has reached a dead end. The decision not to pursue Quattrocchi, an
Italian businessman accused of taking bribes to facilitate the sale of Bofors howitzers to
India in 1986, was announced in the Supreme Court.
 
The decision to give a burial to the Bofors case, in which the FIR was filed during the
V.P. Singh regime in 1990 and the charge-sheet during NDA government’s reign in 1999,
was taken by the UPA government on the basis of a fresh opinion given by attorney-
general G.E. Vahanvati.
 
A closure of the case had looked imminent since UPA-I allowed Quattrocchi to take out
his money—allegedly his share of the Bofors kickbacks—from accounts with a bank in
London. It followed that up by not pressing hard for his extradition from Argentina and
by, subsequently, telling Interpol that he was no longer wanted in India.

TERRORISM; LAW & ORDER

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

Black Widow ultras surrender arms 

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

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

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

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

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

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

ISI knew of 26/11 plan, say LeT men 

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

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

Indeed, Lashkar’s broader network endures, and can be mobilized quickly for elaborate
attacks with relatively few resources, according to a dozen current and former Lashkar
militants and intelligence officials from the US, Europe, India and Pakistan. In
interviews with New York Times, they presented a troubling portrait of Lashkar’s
capabilities, its popularity in Pakistan and the support it received from former officials
of Pakistan’s military and intelligence establishment.
 
One highly placed Lashkar militant said the Mumbai attackers were part of groups
trained by former Pakistani military and intelligence officials. Others had direct
knowledge that retired army and ISI officials trained LeT recruits as late as 2008. 

Naga rebels reject peace package 

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

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

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

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

CURRENT INTERNATIONAL AFFAIRS

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

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

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

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

measured by gross domestic product, in the United States and the 16-country Euro
zone, led by its two largest economies, Germany and France. The forecasts showed an
annualised expansion of 1.6% in the United States in the third quarter, 0.3% in the Euro
zone and 1.1% in Japan.
 
The pickup that started with a “quite dramatic turnaround” in China and other Asian
emerging market economies in the second quarter remained heavily dependent on
government stimulus and ultra-low interest rates across the world, Elmeskov said. 

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

The OECD is still predicting GDP contractions for 2009 as a whole across the G-7 group,
primarily because of a particularly bad first half, despite the improvement now in the
pipeline. But it sees annualised GDP rises of 1.2 and 1.4% in the third and fourth
quarters for the G-7 as a whole, also signalling an exit from recession at that level.
 
World requires a new currency: UN report 
The dollars role in international trade should be reduced by establishing a new currency
to protect emerging markets from the confidence game of financial speculation, the
United Nations said. UN countries should agree on the creation of a global reserve bank
to issue the currency and to monitor the national exchange rates of its members, UN
Conference on Trade and Development said in a report. 
China, India, Brazil and Russia, in 2009, called for a replacement to the dollar as the
main reserve currency after the financial crisis sparked by the collapse of the US
mortgage market led to the worst global recession since World War II. China, the
world's largest holder of dollar reserves, said a supranational currency such as IMF's
special drawing rights, or SDRs, may add stability. 
There's a much better chance of achieving a stable pattern of exchange rates in
multilaterally-agreed framework for exchange-rate management, Heiner Flassbeck, co-
author of the report said. An initiative equivalent to Bretton Woods or the European
Monetary System is needed. 

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

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

Switzerland out of ‘grey’ list of tax havens 

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

ENVIRONMENT
EU summit targets India, China on G-20 climate financing 
The European Union (EU) has challenged rising powers India and China to brake their
soaring greenhouse gas emissions in return for Western financial support. “We need to
make a credible financial commitment to the developing world. The equation is
straightforward: no money, no deal, but if there are no actions, no money,” European
Commission President Jose Manuel Barroso said.
 
According to estimates from the Commission, the EU’s executive, it will cost around
100 billion euros ($147 billion) per year by 2020 to fight climate change in developing
countries. But in a clear challenge to rising powers such as Brazil, China, India, Mexico
and South Africa, EU leaders stated that “this estimate pre-supposes appropriate
mitigating actions by developing countries, especially those that are economically more
advanced”.
 
The high-level EU and G-20 meetings came in the countdown to a critical United
Nations summit in Copenhagen, which is intended to seal a new global deal on fighting
climate change.  EU leaders were at pains to point out the urgency of finding a deal in
December. “The climate is changing much faster than expected. ... This underlines the
urgent need to reach a global, ambitious and comprehensive agreement in
Copenhagen,” the joint statement said. 

UN backs India’s stand on emissions

For the first time, a UN agency has endorsed India and developing countries on the
climate change front. In its World Economic and Social Survey Report 2009, the UN said
rich countries had consumed more than fair share of their carbon space and needed to
take deep emission cuts if the new climate agreement was to be equitable. The survey
said investments in energy infrastructure would have to be doubled from the existing
$500 billion per year to $1 trillion and there was a need to spend approximately $20
trillion by 2030 to move the world to a low carbon growth path.
 
The report has warned that industrialized countries had already emitted 209 giga-
tonnes of carbon. If the rise in global temperatures was to be kept below 2 degree
centigrade, industrialised countries would have to reduce their emissions by more than
100% below 1990 levels by 2050. At present, industrialized countries have not agreed to
reduce their emissions by even 40% below 1990 levels by 2030 and 80% by 2050.
 
The UN survey pointed out that in a fair deal, industrialized countries should only
occupy 21% of the global carbon budget. But it recorded that even under the most
ambitious proposal from the rich nations, they would end up consuming 48% of the
budget, at the cost of the poorer nations. 

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

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

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

Pak ups number and capability of nukes 

Pakistan’s rapidly ramped up nuclear arsenal is now 70-90 strong with increasingly
sophisticated bomb designs and smart delivery systems aimed primarily at India, two US
researchers have said, even as Islamabad is running from pillar to post seeking
international aid.
 
In a paper written for the Bulletin for Atomic Scientists, Robert Norris of the Natural
Resources Defence Council and Hans Kristensen of the Federation of American Scientists
say Pakistan is ‘‘busily enhancing its capabilities across the board,’’ with new nuclear-
capable ballistic missiles being readied for deployment, and two nuclear capable cruise
missiles under development. Two new plutonium production reactors and a second
chemical separation facility are also under construction, they said. 

Al-Qaida seeking nuclear secrets from Pakistan

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

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

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

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

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

UN united on nuke-free world

In the years and decades to come, he may well be celebrated as Barack “No Bomb”
Obama. In a historic moment in time, the UN Security Council unanimously approved a
US-drafted, Obama-authored resolution in New York on September 24, 2009,
committing to work towards a world without nuclear weapons.
 
The new measure, formally titled UNSC Resolution 1887, expresses the Council’s grave
concern about the threat of nuclear proliferation and the need for international action
to prevent it. It reaffirms that the proliferation of weapons of mass destruction and
their means of delivery are threats to international peace and security and agrees on a
broad range of actions to address nuclear proliferation and disarmament and the threat
of nuclear terrorism.

Broadly, the resolution supports:

  A revitalized commitment to work toward a world without nuclear weapons,
and calls for further progress on nuclear arms reductions, urging all States to
work towards the establishment of effective measures of nuclear arms
reduction and disarmament.
  A strengthened Nuclear Non-proliferation Treaty (NPT) and a Review
Conference in 2010 that achieves realistic and achievable goals in all three
pillars: nuclear disarmament, non-proliferation and peaceful uses of nuclear
energy.
  “Universality” of the NPT, calling on all Sstates to adhere to its terms—an
oblique reference to hold-outs such as India and Pakistan—and makes clear the
Council’s intent to immediately address any notice of intent to withdraw from
the Treaty.

The resolution also calls for better security for nuclear weapons materials to prevent
terrorists from acquiring them, including through the convening of a Nuclear Security
Summit in 2010, locking down vulnerable nuclear weapons materials in four years,
minimizing the civil use of highly enriched uranium to the extent feasible, and
encouraging the sharing of best practices as a practical way to strengthen nuclear
security.
 
The Obama resolution was backed by Russia and China among other countries in what is
only the fifth meeting of the Security Council involving heads of government of its
member States, and the first time the US President has chaired such as meeting.
 
But, aside from presenting a time-table of agenda-packed conferences, the US
President did not present any specific numbers, metrics, or dates on the road to
eliminating nuclear weapons. He said the US will move forward with the ratification of
the Comprehensive Test Ban Treaty, and open the door to deeper cuts in its own
arsenal.

The pressure on India to sign the Nuclear Non Proliferation Treaty (NPT) is all set to
increase sharply with US President Barack Obama rsday leading the UN Security Council
to insist that all countries must sign the treaty that New Delhi has called
discriminatory. India made its resolve not to fall in line plain. The position was
conveyed by H.S. Puri, India’s permanent representative to the UN, to his US
counterpart as well as the Security Council. The US is the current UNSC head.
 
Stressing that India cannot accept obligations arising out of a treaty which it hasn’t
signed, the letter said nuclear weapons were vital for the country’s security. ‘‘This
position is consistent with the fundamental principles of international law and the Law
of Treaties. India cannot accept calls for universalisation of the NPT. As India’s Prime
Minister stated in Parliament on July 29, 2009, there is no question of India joining the
NPT as a non-nuclear weapon State. Nuclear weapons are an integral part of India’s
national security and will remain so, pending non-discriminatory and global nuclear
disarmament,’’ stated the letter.
 
INTERNATIONAL RELATIONS
US aid to Pak comes with ‘accountability’ rider
A new US Legislation triples US aid to Pakistan authorises military assistance to help the
country in its fight against Al-Qaida and other terrorists, but it also includes new and
painstakingly negotiated accountability measures to ensure that this aid is not misused.
India had expressed concern that Pakistan would divert US military aid toward
bolstering its defences against a perceived threat from India.

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

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

The new version states that the President has to certify that Pakistan is “making
significant efforts towards combating terrorist groups ... including taking into account
the extent to which the government of Pakistan has made progress on matters” related
to counter-terrorism. The new version also doesn’t specify a dollar amount for military
aid, only saying “such sums as are necessary.”
Senator John Kerry, who along with Senator Richard Lugar co-sponsored the Bill in the
Senate, said: “The clear, tough-minded accountability standards and metrics contained
in the original Bill are carried through in this version.”

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

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

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

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

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

Studies have shown that 40% of subsidised kerosene gets diverted for adulteration of
diesel. This not only foils the goal of offering subsidy on the fuel but also reduces
engine life across our transport fleets and adds to pollution and diesel consumption
through reduced fuel efficiency.
 
The Group of 20 (G-20), which includes developing nations like India, Brazil, and South
Africa, will replace the Group of 7 (G-7), the mostly-western club of rich industrial
nations, as a global forum for economic policy, it was announced during the Summit.
“Dramatic changes in the world economy have not always been reflected in the global
architecture for economic cooperation. This all started to change today,” the White
House said of the makeover, “The G-20 leaders reached a historic agreement to put the
G-20 at the centre of their efforts to work together to build a durable recovery while
avoiding the financial fragilities that led to the crisis.”
 
For India, this means a regular, perhaps annual or twice-yearly pow-wows beyond the
bi-laterals and clubby tri-laterals (IBSA—India, Brazil, South Africa) and quadri-laterals
(BRIC—Brazil, Russia, India, China) that it was fostering.

Collectively, the G-20 economies account for 85% of global gross national product, 80%
of world trade, and two-thirds of world population. 
The new G20 will not have a permanent secretariat, and its chairmanship will be
rotated annually, with South Korea running the body next year and France in 2011 A
final agreement on a revamped representation structure will be completed in
negotiations at the International Monetary Fund (IMF), set to conclude by January 2011.
Under the proposal, the G-20 leaders will annually outline objectives for growth and
then ask the IMF to carry out a form of assessment or peer review to ensure member
states are following the plan’s objectives
 
Prime Minister Manmohan Singh returned from the G-20 Summit at Pittsburgh with some
major gains at hand that are making the rich nations now look at the developing world
in a new light. It was evident from the final communiqué issued by the G-20 leaders at
the end of the summit that it reflected a lot of what Manmohan Singh had been
pointing out prior to the summit.

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

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

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

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

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

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

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

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

CURRENT AFFAIRS: AUGUST 2009

CURRENT NATIONAL AFFAIRS

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

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

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

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

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

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

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

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

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

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

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

SC judges to disclose assets 

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

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

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

PLANNING & ECONOMY

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

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

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

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

New Direct tax code

Making the process of paying taxes simpler for the common man has always been on top
of the UPA’s agenda. This was amply demonstrated today with the government
initiating radical tax reforms by releasing the direct tax draft code that aims to
moderate tax rates and at the same time tries to make it easier for a layman to
understand and calculate his tax liability.

The reform of the tax regime introduced in 1961 is based on the objective of having a
tax system that is simpler, fairer, and easy to administer. The specific objectives of the
measures are to improve the responsiveness of the tax system, that is, to enhance the
automaticity in the increase in tax revenues with increases in economic activity;
improve tax administration by simplifying the tax system; and, lastly, promote tax
compliance objective as to reduce the scope for disputes and minimize litigation.

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

Key gains from the new tax code will be:  (a)Deduction (the popular section 80C)
increased to Rs 3 lakh from present Rs 1 lakh. Thus, a person with taxable income of Rs
10,00,000 is likely to save approx Rs 1,20,000 annually. (b) Corporate tax rates,
including for foreign companies, reduced to 25% from 34%. (c) Net wealth tax
exemption limit increased to Rs 50 crores from Rs 30 lakhs. (d) Wealth tax rate cut to
0.25% from 1%. (e) Indefinite carry forward of tax losses. (f)Deduction for donation
towards scientific research @ 125%. (g) Agriculture income stays outside tax
net. (h) Deductions for Royalty income of authors who are individual residents up to Rs
three lakhs and deduction for Royalty income on patents for individual residents up to
Rs three lakhs. (i) STT to be abolished. (j) Cost inflation adjustment to be available for
transfers anytime after one year from end of year in which asset is acquired (earlier 3
yrs, except for shares). (k) Base date for capital gains tax shifted from April 1, 1981 to
April 1, 2000—capital appreciation up to 2000 not taxable. (l) Maximum penalty down to
two times tax amount (from three times tax)
 
Key pains will be: (a) Branch profit tax to be introduced @ 15%. (b) Reintroduction of
capital gains tax on listed shares & MF units. (c) Tax saving schemes like PPF and
retirement benefit schemes to be taxed on withdrawal time on “Exempt, Exempt, Tax”
(EET) methodology of taxation, for savings done after introduction of the new
code. (d) Deduction for rent paid restricted to Rs 2,000 per month. (e) Profit-linked
incentives dropped. (f) Period consumed in recovering all capital and revenue
expenditure same as tax holiday. (g) Area based exemptions given earlier to
continue. (h) Definition of income to include all accruals and receipts of revenue and
capital nature unless otherwise specified. (i)Receipt of LIC policy taxable except for
pure life insurance policy. (j) Distinction between short term and long term assets done
away with. (k)Cost of acquisition/improvement nil if not determinable. (l) Roll over
benefits for capital gains tax exemption trimmed to only one residential
house. (m) Profits on sale of business capital assets/undertaking no longer treated as
capital gains, but as business income. (n) Loss on sale of business capital assets not
allowable, to be only depreciable. (o) Presumptive rent to be calculated at 6% p.a. of
rateable value when higher than contractual rent to compute income from house
property. (p) For self occupied property, no deduction for interest and principal loan
repayment. (q) Income from letting of machinery, plant, furniture included if letting of
building is inseparable from the same. (r) Rent free accommodation to govt employees
made taxable. (s) MAT linked to gross assets rather than book profit @ 0.25% for
banking companies and 2% for others. (t) No carry forward credit for MAT in later
years. (u) In case of conflict between double tax treaty and code, the one that is later
in point of time shall prevail.

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

New Foreign Trade Policy

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

Extension of income tax holiday for export units for one more year and continuance of
duty refund scheme till December 2010 and enhanced assistance for the scheme for
development of markets are among the measures in the FTP. The aim of the policy,
which would be reviewed after two years, would be to "arrest and reverse declining
trend of exports”.
Exports have been on a decline for the past 10 months. Exports in FY'09 amounted to
$168 billion and the country hopes to maintain the same level in 2009-10.
The government would encourage exports through a “mix of measures including fiscal
incentives, institutional changes, procedural rationalisation and efforts for enhance
market access across the world and diversification of export markets”.
The policy would provide a special thrust to the employment-oriented sectors which
have witnessed job losses in the wake of recession, especially in the fields of textiles,
leather and handicrafts.

Highlights 

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

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

POLITICAL
Government to scrap Darjeeling Gorkha Hill Council
The Centre, West Bengal government and the Gorkha Janmukti Morcha (GJM) have
agreed to scrap the Darjeeling Gorkha Hill Council (DGHC) and bring in its place an
alternative administrative framework for the hill district to be finalised through mutual
consultation and agreement. At a tripartite meeting of representatives of the Centre,
led by Union home secretary G.K. Pillai, of West Bengal government led by chief
secretary A.K. Chakrabarty and of GJM led by Anmole Prasad, it was decided that the
DGHC Act, 1988 would be repealed and the proposal for establishment of a hill council
under the Sixth Schedule of the Constitution be dropped.

The press statement, however, makes no reference to the GJM’s central demand for a
separate Gorkhaland: a pointer to such a drastic concession being almost ruled out. The
alternative administrative framework to be worked out by the yet-to-be-named
interlocutor for the Gorkha talks will have due constitutional status and will be
supported by a full-fledged Act. It is also likely to be given more powers than DGHC.
However, working out its terms is likely to be a long-drawn affair, and, in all
probability, the new framework may come well after installation of the new
government in West Bengal.
 
During the tripartite talks, the Centre extracted an assurance from the GJM that it
would help maintain a peaceful and conducive atmosphere during the negotiations. GJM
has agreed to work along with the other parties “in a spirit of constructive cooperation
to carry the talks forward”.
 
The Centre also decided to push administrative works in the hill district by sending a
team of its officials to Darjeeling to review development works. Both the Union and the
West Bengal government suggested that elections to thepanchayat samities, gram
panchayats and municipalities be held in the hill district “as an interim measure and to
restore the democratic process”. The GJM team offered to consult its brass on the
proposal and revert to the state government.
 
With nearly Rs 70 crore worth of special central assistance and even portions of the
Calamity Relief Fund lying un-utilised, it was agreed at the tripartite meeting that the
West Bengal government would send across a team to Darjeeling to discuss fund
utilisation. 

FOREIGN RELATIONS
India, ASEAN ink free trade deal 
In a major success in its ‘Look East' policy, India, on August 13, 2009, signed a Free
Trade Agreement (FTA) with the 10-member Association of South East Asian Nation
(ASEAN) bloc that would eventually eliminate duty on 80% of the goods traded at
present by 2016. The two sides have set an ambitious target of achieving an increase of
$10 billion worth of trade in the first year after the agreement comes into force from
January 2010. India's current bilateral trade with the ASEAN bloc is worth $40 billion.
 
The agreement was signed by Commerce and Industry Minister Anand Sharma and
Economic Ministers of ASEAN in Bangkok. Considered as a major breakthrough, the pact
comes after six years of intense negotiations. The FTA would bring down tariffs on
electronics, chemicals, machinery and textile goods.
 
However, talks on software and information technology services have been postponed
for December 2009. This is one area where Indian exporters of services could have
brought in good business and also offset setbacks received in the European and US
markets during the downturn. Of the total $936 billion worth of ASEANn imports,
services import account for $180 billion which is the primary focus of Indian industry.
 
ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand and Vietnam. 

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

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

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

Visit of Nepalese Prime Minister

Amid an uncertain political situation back home, Prime Minister of Nepal, Mr Madhav
Nepal arrived in New Delhi on August 7, 2009 on a five-day visit to India—his first to the
country since he assumed office nearly three months ago. 
Several important bilateral issues, including the proposed revision of the friendship and
trade treaties and the finalisation of a revised extradition treaty figured prominently in
the discussions between the two sides. 
Besides meeting Prime Minister Manmohan Singh, the Nepalese Prime Minister also meet
President Pratibha Patil, UPA chief Sonia Gandhi, External Affairs Minister S.M. Krishna,
Finance Minister Pranab Mukherjee and Home Minister P. Chidambaram. 

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

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

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

Political events in Nepal since May this year had shaken the confidence of Indian
entrepreneurs after attacks by militant trade unions on a few firms, including a well-
known fast moving consumer goods firm. With India-Nepal trade expected to touch Rs
15,000 crore ($3 billion) in 2009-10, the commerce ministers of the two countries
discussed the proposed revised treaty to widen the scope of bilateral trade.

Nepal Prime Minister Madhav Kumar Nepal assured Indian investors that his office would
coordinate to ensure that investments coming from India get priority. Regarding the
ongoing violence and unrest in the country, the Prime Minister said the general law and
order condition in the Himalayan Kingdom was returning to normalcy. He said his
government would shortly unveil its security plans in consultation with all Nepalese
political parties, which would offer security to investments and ensure manufacturing
without interruption. The new security plan will address the issue regarding strikes and
disruptions, so that industrial production is maintained at steady pace and investors’
interests are adequately protected.
In a bid to support Nepal’s beleaguered peace process and check China’s growing
influence, India has decided to pump in crores of rupees into the neighbouring nation’s
infrastructure. The Indian government has taken a decision to fund three large
infrastructure projects, which will increase border connectivity and increase trade
between the two countries. The government has quickly pushed through funding for the
projects to show that India is serious in its efforts to help Nepal through the transitional
period.
 
With the development mantra in mind, the government will put in around Rs 200 crore
to set up the first two state-of-the-art integrated Customs point along the border at
Raxaul-Birganj and Jogbani-Biratnagar. The idea is to set up the ICPs so that trade
between the two countries becomes smoother, cutting down on current procedural
delays at the border. After the first two sites are set up, the two countries will then
look at setting up ICPs at Sunauli-Bhairahawa and Nepalgunj-Nepalgunj points.
 
The Indian government will also fund the first phase of the Terai road project at a cost
of around Rs 700 crore and set up two rail links worth Rs 700 crore. The Terai road
project looks at upgrading around 1,500 km of roads in the Terai region, with the first
phase covering 657 km. Additionally, India will also fund a Nepal Police Academy worth
Rs 300 crore in what is a capacity-building exercise. These infrastructure projects were
at the conceptual stage for the last couple of years but have not gotten off the ground
for one reason or another. By funding road and rail projects, India hopes to start a new
era of cooperation and send a strong message of support to Nepal and its government,
which has been struggling to push forward the peace process in the face of Maoist
opposition. 

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

India, Singapore ink pact on tourism 

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

India, South Korea ink free-trade pact 

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

This is the second CEPA signed by India, the other being with Singapore. This is also
India’s first bilateral trade agreement with an OECD country.
 
As per the agreement, South Korea will eliminate duties on 93% of its industrial and
agricultural products and India will do the same on 85% of its goods. India has excluded
sensitive items such as farm products, textile items and built-up automobiles from
tariff elimination commitments. Duties will be phased out on most products in the next
eight years.
 
TERRORISM
Death sentence for 2003 Mumbai blasts
On August 7, 2009, a special POTA (Prevention of Terrorist Activities Act) court in
Mumbai awarded death sentence to the three accused held guilty last week for the
2003 blasts that killed over 50 people. Six years after two blasts at the iconic Gateway
of India and Zaveri Bazaar, three Lashkar-e-Toiba members—Mohammed Hanif Sayeed
(46), his wife Fahmida (43) and Ashrat Ansari (32)—were sentenced to death. This is for
the first time that a couple has been convicted by a POTA court for carrying out blasts.
 
The special court judge observed it had been proved beyond reasonable doubt that they
had committed heinous acts resulting in numerous deaths. The court agreed with
special public prosecutor that this was a rarest of the rare case where capital
punishment was justified.
 
The trio was held guilty of planting two bombs in taxis that exploded at the Gateway of
India and Zaveri Bazaar on August 25, 2003, claiming 52 lives and injuring 244. They had
also planted a bomb on July 28, 2003, in a municipal bus in suburban Ghatkopar which
killed two persons. The three were given death penalty under section 3(2) of POTA, and
IPC sections 302 (murder), 307 (attempt to murder) and 120(b) (conspiracy).
 
Fahmida had played a major role in these bomb blasts. She had planted a bomb in a bus
on July 28, 2003, along with her husband’s friend Ashrat and on August 25, 2003, she
and her husband Hanif planted bombs in taxis at the Gateway of India.
 
Along with the couple Hanif and Fahmida, their 16-year-old daughter was also arrested
for her alleged involvement in the blasts. However, she was discharged since the
prosecution chose not to investigate the charges against her as she was a minor. Two
other accused, Mohammed Ansari Ladoowala and Mohammed Hasan Batterywala, were
also discharged from the case by the POTA court after the Supreme Court upheld a
POTA review committee report that said there was no case against the duo.

CURRENT INTERNATIONAL AFFAIRS

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

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

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

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

Karzai’s closest rival in the elections was Abdullah Abdullah, a confidant of Northern
Alliance leader Ahmad Shah Masood.
    
India played safe and distant in these elections. There is a clear recognition that
despite India’s huge stakes in Afghanistan, there are no gains to playing sides in these
elections. No matter who wins, India will have a substantive playing field, except of
course if the Taliban return.
 
Karzai has been close to India, and even when the US was trying to dislodge him, India
stood by him. Abdullah is an old India hand, having lived in India with his family during
the Taliban years, with full support of the then Indian government. 

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

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

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

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

The ruling party loss ended a three-way partnership between the LDP, big business and
bureaucrats that turned Japan into an economic powerhouse after the country’s defeat
in World War II. That strategy foundered when Japan’s “bubble” economy burst in the
late 1980s and growth has stagnated since. The Democrats will have to move fast to
keep support among voters worried about a record jobless rate and a rapidly ageing
society that is inflating social security costs.
The Democrats have pledged to refocus spending on households with child allowances
and aid for farmers while taking control of policy from bureaucrats. The Democrats also
want to forge a diplomatic stance more independent of the United States, raising
concerns about possible friction in the alliance. 

MYANMAR
Suu Kyi convicted as global outrage grows 
Myanmar democracy icon Aung San Suu Kyi and her US co-defendant are to appeal
against their convictions as the ruling junta faced a global wave of anger over her
extended detention. US president Barack Obama led worldwide outrage at the military
regime’s decision on August 12, 2009, to give Suu Kyi another 18 months of house
arrest, a verdict that shuts the Nobel peace laureate out of elections in 2010.
 
A prison court sentenced her to three years of hard labour after finding her guilty of
breaching the terms of her incarceration, but junta strongman Than Shwe commuted
the punishment to a year and a half under house arrest.    

In Washington, Obama called for Suu Kyi’s “immediate, unconditional release” and for
the freeing of more than 2,000 other political prisoners held in Myanmar. The US
president said the “unjust” sentence against Suu Kyi would never be able to stamp out
the people of Myanmar’s desire for freedom, accusing the regime of “continued
disregard” for UN Security Council statements. 
    
NEPAL
Gurung is army chief 
Lt Gen Chhatraman Singh Gurung, who received training at the Indian Military Academy,
Dehradun, was appointed to head the Nepal Army on August 9, 2009, after his
controversial predecessor General Rukmangad Katawal went on a month-long leave
ahead of his retirement in September. Gurung is the first from the rank of commoners
to head the army, which has been led by the country’s elite and the aristocracy. The
change of guard at the helm of 95,000-strong Nepal Army came amid a continued
blockade of Parliament by the Maoists demanding Katawal’s removal. The Maoists,
whose eight-month-old government fell in May 2009 after the reinstatement of
Katawal, had sought his dismissal and a debate in Parliament on the issue of “civilian
supremacy” in the country.
PAKISTAN
Politics allowed in Taliban land 
On August 14, 2009, Pakistani President Asif Zardari lifted a ban on political activity in
the ethnic Pashtun tribal belt on the Afghan border, in an apparent move to loosen the
grip of militants on the lawless area. Pakistan’s seven tribal regions, known as the
Federally Administered Tribal Areas (FATA), are semi-autonomous and have never been
fully integrated into the country’s administrative and political system. 

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

The FATA is governed under a system inherited from British colonialists with a
government-appointed political agent ruling through the tribes, which observe their
centuries-old codes, not Pakistani laws. Political parties have not been allowed to
operate in the FATA which analysts say helped to create a vacuum for hard-line Muslim
clerics to exploit. 

ECONOMY
World financial crisis costs $11.9 tn
The world has earmarked a staggering $11.9 trillion to wriggle out of the financial
crisis, the sum which is enough to finance a $1,779 handout for every person living on
the planet, according to the International Monetary Fund. 
Most of the cash has been handed over by developed countries, for whom the bill has
been $10.2 trillion, while developing countries have spent only $1.7 trillion the
majority of which is in central bank liquidity support for their stuttering financial
sectors.

The whopping total cost of crisis is equivalent to around a fifth of the entire globe's
annual economic output and includes capital injections pumped into banks in order to
prevent them from collapse, the cost of soaking up so-called toxic assets, guarantees
over debt and liquidity support from central banks.
 
Japan comes out of recession in Q2 
Japan's economy climbed out of year-long recession in the second quarter, the
government said on August 16, 2009, expanding 3.7% at an annual pace and joining
Germany, France and other regions that appear to be emerging from the global
financial crisis. But economists and politicians sounded cautious, noting that the main
driver of growth was exports and that domestic consumer spending remained fragile
amid plunging incomes and rising unemployment.
 
The recovery in the April-June quarter was driven by robust demand for cars, video
recorders and other electronics goods, according to government data. Shipments to
China and other emerging markets were particularly strong, although exports to the US
and Europe also showed modest recoveries. Exports grew 6.3% from the previous
quarter, the highest rate in seven years.
 
Government stimulus measures have also helped, such as cash handouts and incentives
to buy ecological products. But economists said, the nascent recovery could quickly run
out of steam because domestic demand remains weak. Salaries are falling and the
unemployment rate has risen to a six-year high of 5.4% as companies such as Toyota
Motor Corp and Sony Corp have cut thousands of jobs.

The rebound in the world's second largest economy came after a steep, year-long
contraction in gross domestic product, including a worst-ever drop in the final quarter
of 2008, when the economy shrank at a 13.1% pace. The news from Japan comes amid
signs that the global economy may be recovering from its slump. Earlier, France and
Germany, Europe's two biggest economies, said they resumed growing in the second-
quarter, while Hong Kong also said it expanded after a year-long recession. 
    
Economic recovery has begun: IMF 
The global economic recovery has begun but sustaining it will require refocusing the
United States toward exports and Asia toward imports, according to the International
Monetary Fund’s chief economist, Olivier Blanchard. 

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

ENVIRONMENT
India, China unite to take on West 
India and China have agreed to jointly fight any attempt by Western nations to link
trade with climate change and impose trade-related penalties on developing countries
that fail to meet environmental standards. 
    
India and China have agreed to coordinate their views on different aspects of climate
change before every major international meeting on the subject. These are expected to
be spelt out in form of an agreement. Both countries want to negotiate with West for
higher levels of financial assistance and technology transfer in return for promises to do
their best to tackle environmental problems. But they would not agree to any legal
binding on reducing emission norms because it would come in the way of their
development goals. India and China will also not agree to the creation of any trade
barriers on the excuse of climate change. India has also suggested China to consider
reducing carbon dioxide levels in power plants supplied by it to India. This would be
part of the mitigation activities that the two countries expect to carry out jointly.
 
INTERNATIONAL RELATIONS
Pak has modified Harpoon, India under threat: US
The US has accused Pakistan of illegally modifying the Harpoon anti-ship missile, sold to
it as a defensive tool by the Reagan Administration, to expand its capabilities to strike
land targets, a potential threat to India. The Obama Administration, reported 'The New
York Times' in a front page story, lodged its protest with Pakistan Prime Minister Yusuf
Raza Gilani in June, adding to the tension between the two countries.

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

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

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

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

TERRORISM
Pak Taliban chief Mehsud killed
Chief of Tehrike Taliban Pakistan (TTP) Baitullah Mehsud, who led a deadly campaign
of suicide bombs and assassinations in Pakistani cities, has been killed in a US drone
attack in first week of August 2009. 

Intelligence officials said Mehsud was killed in a missile attack from an American drone
while he was having dialysis. Mehsud’s death means a spectacular development in the
campaign by Pakistan and the US against the Taliban and Al-Qaida fighters along the
border on Afghanistan. He was declared enemy No. 1 by Pakistani authorities for his
terrible suicide attacks that played havoc in Pakistan. 

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