Current affairs 2012

March 2012
Visit of Prime Minister Manmohan Singh to South Korea Seeking to expand their strategic ties, India and South Korea agreed to step up political and security cooperation, during the four-day visit of Prime Minister Manmohan Singh to Seoul, starting March 25, 2012. They also vowed to double the bilateral trade to an ambitious $40 billion by 2015. In a joint statement released after the talks, Prime Minister Manmohan Singh and President Lee Myung-bak expressed grave concern about the continued threat of terrorism and piracy, emanating from various quarters. The two leaders expressed the hope that the Comprehensive Convention on International Terrorism, which was under consideration at the UN, would be adopted soon. India-China agree to hold first-ever maritime talks Taking a giant step towards normalisation of relations, India and China, on March 1, 2012, decided to begin a dialogue on maritime issues while resolving to maintain peace and tranquillity along the Line of Actual Control (LAC). The suggestion for the first-ever maritime dialogue between the two countries was made by Chinese Foreign Minister Yang Jiechi during talks with External Affairs Minister S.M. Krishna in New Delhi. The proposed dialogue is being considered a major confidence building measure (CBM) between the two countries, given the fact that it comes in the wake of the Chinese navy increasingly trying to assert itself in the Strait of Malacca and the Indian Ocean region. New Delhi has sought to counter the Chinese dominance by strengthening maritime ties with countries in the South China Sea like Vietnam and Japan. The decision to include maritime issues in bilateral talks is expected to help reduce tension between the two countries ahead of Chinese President Hu Jintaos visit to India for the BRICS (Brazil, Russia, India, China, South Africa) Summit in March-end. India-China to celebrate 2012 as Friendship Year On March 29, 2012, Prime Minister Manmohan Singh and Chinese President Hu Jintao agreed that the current Special Representative (SR) mechanism between the two countries to resolve the border dispute should continue to work and peace and tranquillity be maintained along the Line of Actual Control (LAC). At a meeting here on the margins of the BRICS Summit, the two leaders emphasised the need to enhance bilateral trade to $ 100 billion by 2015. The Chinese leader also u promised to address Indias concerns over the huge trade imbalance in favour of China. They also signed a document to celebrate 2012 as The Year of India-China Friendship by organising commemorative programmes. India, Brazil sign six pacts On March 30, 2012, India and Brazil signed six accords in diverse fields and agreed to take steps to exploit the full potential of their cooperation in defence, nuclear energy and other vital areas. The agreements were signed after the meeting between Prime minister manmohan Singh and visiting Brazilian President Dilma Rousseff. Economic Survey, 2012 Highlights The Economy Survey 2011-12 was tabled by the Finance Minister Pranab Mukherjee in the Parliament on March 15, 2012. Following are the highlights of Survey, a report card of the Indian economic scenario for current fiscal: The country's economic growth estimated at 6.9 per cent in the current fiscal; growth momentum to pick up in next two fiscals to 7.6 per cent 2012-13 and 8.6 per cent in 2013-14. RBI expected to lower policy interest rates, as inflationary pressures expected to ease in coming months; A low interest rate regime to encourage investment activity and push forward economic growth. Steps required for deepening of domestic financial markets, especially corporate bond market and attracting longer-term inflows from abroad; Efforts at attracting dedicated infrastructure funds have begun. The growth rate of investment in the economy is estimated to have declined significantly; borrowing costs up due to a sharp increase in interest rates. High borrowing costs and increase in other costs affecting profitability and internal accruals. Slowdown in Indian economy largely due to global factors, as also because of domestic factors like tightening of monetary policy, high inflation and slower investment and industrial activities. Inflation high, but showing clear signs of slowdown by the year-end; Whole-sale food inflation down to 1.6 per cent in January 2012 from 20.2 per cent in February 2010. India remains one of the fastest growing economies of the world; Country's sovereign credit rating rose by a substantial 2.98 per cent 2007-12.

Exports grew by 40.5 per cent in the first half of this fiscal and imports grew by 30.4 per cent; Foreign trade performance to remain key driver of growth. Forex reserves expanded further, covering almost the entire external debt stock to the country. Foodgrains production likely to cross 250.42 million tonnes; largely on back of increase in rice production. Agriculture and Services sectors expected to perform well; Industrial growth pegged at 4-5 per cent and expected to improve further as economic recovery resumes. Global economy remains fragile and concerted efforts needed to restore stability and renewed growth; Steps needed for sovereign debt crisis, financial regulation, growth and job creation efforts and energy security, globally. India much more closely integrated with world economy' share of trade to GDP of goods and services has tripled in 19902010. A progressive deregulation of interest rates on savings accounts to help raise financial savings and improve transmission of monetary policy. Sustainable development and climate change becoming central areas of global concern and India too is equally concerned and engaged constructively in global negotiations. FDI in multi-brand retail can come into effect in a phased manner, beginning from metropolitan cities. The survey said that allowing foreign direct investment in multi-brand retail is one of the major issues in the services sector, but the move would address problems relating to food inflation. Notwithstanding lower growth of domestic steel consumption during the first three quarters of the current fiscal, the overall performance of the sector is optimistic. The survey points out a list of bottlenecks responsible for lower steel consumption, including high inflationary pressure within, deteriorating global economy, multiple hikes in interest rates by the Reserve Bank of India. Rate of growth estimated to be 6.9% in FY 12. Real GDP growth expected at 7.6% in FY 13. GDP pegged at 8.6% in FY 14. Agriculture grows at 2.5 % growth in FY 12. Services grow at 9.4 %, in FY 12, share in GDP at 59%. Industrial growth pegged at 4-5 % in FY 13. WPI food inflation dropped from 20.2% in February 2010 to 1.6% in January 2012. Indias sovereign credit rating rose by 2.98 percent in 2007-12. Central spending on social services up at 18.5% in FY 12 Vs 13.4% FY 07. Gross capital formation in Q3 of FY 12 as a ratio of GDP at 30%, down from 32% in FY 11. Balance of Payments widens to USD 32.8 bn in H1 of FY 12 Vs USD 29.6 bn FY 11. Forex reserves up from USD 279 bn in March 10 to US USD 305 bn in March 11. Indias share of trade to GDP of goods and services in world tripled in 1990-2010. FDI in multi-brand retail recommended. Agriculture, allied activities account for 13.9 % of GDP in FY 12. Foodgrains stocks at 55.2 million tonnes. Production of foodgrains in FY 12 estimated at 250.42 million tones. Industrial growth pegged at 4-5% in FY 12. Employment in Industry increase from 16.2% in 1999-2000 to 21.9% in 2009-10 largely due to construction sector. Services grow by 9.4% despite slowing GDP growth. Share of services in GDP at increased from 55.1% in FY 11 to 56.3% in FY 12. Indias exports grew at 23.5% to reach USD 242.8 bn in April 2011 - Jan 2012. Imports up 29.4% during April - Jan 2011-12 at USD 391.5 bn. Key import areas: petroleum, oil and lubricant, gold and silver. UAE Indias largest trading partner, followed by China. Total FDI inflows into major infrastructure sectors during April-December 2011 registered growth of 23.6%. Rupee falls by 12.4 % against USD. Rupees high volatility impairs investor confidence. Public sector banks show 19 % growth in priority sector lending. Credit Disbursement to agriculture sector exceeded target by 19 %. 98 % public sector bank branches fully computerised. Number of out-of-school children down from 134.6 lakh in 2005 to 81.5 lakh in 2009. Share of women in organized-sector employment at 20.4% in 2010 March end. MGNREGA: Coverage increases to 5.49 crore households in 2010-11. Cash-rich PSUs allowed buy-back of shares In last-ditch efforts to meet its Rs 40,000 crore divestment target in 2011-12, the Cabinet Committee on Economic Affairs (CCEA) has allowed cash-rich public sector companies to buy back governments equity. Another important event of the divestment calendar was the ONGC auction, with the Union government mopping around Rs 12,000 crore by way of sale of 5 per cent stake in ONGC. It is evident that the government is going in for fast-track methods of auction and share buyback as it has not been able to garner significant amounts through divestment. Fund raising through these options can be done much faster than a followon offer route to the general public.

The Department of Disinvestment had identified about two dozen cash-rich PSUs with a cash balance of nearly Rs 2 lakh crore. The cash-rich companies include SAIL, NMDC, NTPC, Coal India, Oil India, MMTC, Neyveli Lignite, NHPC, BHEL and GAIL. The CCEA also allowed cash-rich companies to invest in other PSUs through crossholdings. This is a remake of the idea tried in 1998 when three oil companiesONGC, IOC and GAILhad invested through crossholdings. According to the markets, this had not really worked. Manipur: Manipur Chief Minister Okram Ibobi Singh once again proved that he is a hard nut to crack. The veteran Congressman led the party to the third consecutive victory in Manipur, the most troubled state in the North-East, belying speculation about a hung Assembly. Uttar Pradesh: The Samajwadi Party won a landslide victory and formed the government without any outside support. It won 224 seats of the 403-member Assembly. While the projection of Mulayum Singh Yadavs son Akhilsh Singh Yadav as the partys new face proved to be a real winner, the SPs ride to power was also helped as it was seen as the strongest party capable of dislodging the Mayawati government. unjab: The Shiromani Akali Dal (SAD)-BJP alliance made history by overcoming anti-incumbency to retain power for the second consecutive term, thus creating history in the Punjab electoral politics. By winning 56 seats on its own and with its alliance partner BJP winning 12 seats, this is the first time in Punjabs history that a ruling party has been voted back to power.

International
Putin is elected President of Russia Vladimir Putin triumphed in Russias Presidential election on March 4, 2012, calling his victory a turning point that had prevented the country falling into the hands of enemies. Second World Nuclear Security Summit South Korea hosted the second world Nuclear Security Summit on March 26, 2012, a gathering first convened in 2010 by President Barack Obama with the goal of securing vulnerable nuclear material by 2014. BRICS summits The grouping has held annual summits since 2009, with member countries taking turns to host. Prior to South Africa's admission, two BRIC summits were held, in 2009 and 2010. The first five-member BRICS summit was held in 2011. The most recent summit took place in New Delhi, India, on March 29, 2012.[20] Summit 3rd 4th 5th Participants BRICS BRICS BRICS Date April 14, 2011 March 29, 2012 2013 Host country China India South Africa Host leader Hu Jintao Manmohan Singh Jacob Zuma Location Sanya New Delhi TBA

DO YOU KNOW
On March 9, 2012, the Reserve Bank of India (RBI) slashed the Cash Reserve Ratio (CRR) by 75 basis points to 4.75 per cent. The move helped in easing the liquidity situation by injecting Rs 480 billion into the banking system. *According to the Forbes magazines annual list of worlds richest, RIL chairman Mukesh Ambani (ranked 19th in global list) continues to be the worlds richest Indian, followed by Savitri Jindal and family (80), Sunil Mittal and family (113), and Kumar Birla (116). Chappar Chiri has a special place in Sikh history. It was here that Banda Singh Bahadur, one of the most respected warriors in Sikh history, won the battle against Wazir Khan, who commanded the Mughal army. The battle was fought in 1710. Recently Chappar Chirri was in news when Mr Parkash Singh Badal chose this place to hold the swearing-in ceremony, on March 14, 2012, after emerging victorious in the Assembly elections. *The fifth unit of the Mundra power plant was synchronized in first week of March 2012, taking its capacity to 4,620 MW and making it the worlds largest single-location coal-fired plant in private sector. China, Poland and Taiwan have three plants exceeding 5,000 MW but they are all State-owned. Mundra is owned by Adani Power and is the fifth largest in the world. *Encyclopaedia Britannica, a 32-volume reference book in homes and libraries worldwide, has decided to stop publishing the print edition for the first time in 244 years and shift focus to digital versions. The book-form of the encyclopaedia had first hit the print in Scotland in 1768. *India Water Week is international level conference to be held from 10 14th April, 2012 at New Delhi. The main theme of the conference is Water, Energy and Food Security call for Solution. The Advance Pricing Agreement (APA) program is proposed to be introduced from July 1, 2012, as per the Union Budget 2012. An APA is an arrangement between the tax payer and tax authority to resolve potential disputes in relation to determination of Arms Length Price (ALP) of an international transaction through an upfront agreement. General Anti-Avoidance Rules (GAAR) generally empowers tax authorities to deny tax benefit on transactions or arrangements which do not have commercial substance or consideration other than achieving tax benefits. In the GAAR proposed in Union Budget 2012, an arrangement will be considered as impermissible avoidance arrangement if its main purpose is to obtain tax benefit and it satisfied one of the four tests(i) transaction not an aLP, (ii) results in misuse or abuse of tax provisions, (iii) lacks commercial substance, and (iv) non-bonafide purpose. *India has emerged as the worlds largest importer of arms, according to the report of the Stockholm International Peace Research Institute (SIPRI). India accounts for 10 per cent of global arm imports between 2007 and 2011. *According to the latest data released by the Planning Commission, poverty in India has significantly declined between 2004-05 and 2009-10. The new estimates are based on a poverty line that averages Rs 672.80 per month (Rs 22.43 per day) in rural areas and Rs 859.60 per month (Rs 28.65 per day) in urban areas for 2009-10. Poverty is down to 29.8 per cent in 2009-10 from 37.2 per cent in 2004-05. Rural poverty declined to 33.8 per cent, from 41.8 per cent, and Urban poverty declined to 20.9 per cent, from 25.7 per cent. While poverty declined by over 10 per cent in the given period in Tripura, Orissa, Sikkim, Uttarakhand, Maharashtra, Himachal Pradesh, Tamil Nadu and Madhya Pradesh, it increased in Nagaland, Manipur, Assam, Meghalaya Bihar, UP and Chattisgarh. *United Nations has declared 2012 as International Year of Cooperatives. It is intended to raise public awareness of the invaluable contributions of cooperative enterprises to poverty reduction, employment generation and social integration. The Year will also highlight the strengths of the cooperative business model as an alternative means of doing business and furthering socio-economic development. *Recognizing the importance of energy for sustainable development, the United Nations General Assembly designated the year 2012 as the International Year of Sustainable Energy for All. This presents a valuable opportunity to raise awareness about the importance of increasing sustainable access to energy, energy efficiency, and renewable energy at the local, national, regional and international levels. *On March 23, 2012, Indias largest Gas pipeline network became operational. Built by GAIL at a cost of Rs 13,100 crore, it has a capacity to carry 66 MMSCMD of Natural Gas. It passes through eight States (Gujarat, Madhya Pradesh, Uttar Pradesh, Rajasthan, Delhi, Haryana, Punjab and Uttarkhand. Major industrial hubs along the network are: Dahej, Bharuch, Ujjain, Indore, Pithampur, Dewas, Kotam Chittorgarh, Bhilwara, Gwalior, Palwal, Faridabad, Agra, Mathura, Gurgaon, Manesar, Bhiwadi, Moradabad, Rudrapur, Ghaziabad, Meerut, Sonipat, Delhi, Saharnpur, Roorkee, Haridwar, Dehradun, Panipat, Ambala, Ludhiana, Jalandhar, Nangal and Bhatinda. *On March 22, 2012, Bihar turned 100 years old. It was on this day in 1912, when the British had carved out the State

from Bengal Presidency. On this occasion States own anthem (Bihar Gaan) and State prayer Bihar Prarthna Geet) were released. World Glaucoma Day is observed on March 12. *World Forestry Day is observed on March 21. *World Water Day is observed on March 22. *Fifty eight leaders, including US President Barrack Obama and Prime Minister Manmohan Singh, took part in the two-day Nuclear Security Summit from March 26, 2012, in Seoul, South Korea. *According to the annual India Philanthropy Report, 2012, brought out by Bain & Company Inc., more than a third of High Networth Individuals (HNIs) who turned to philanthropy in 2011 were below 30 years. Wealthy Indians pledged 3.1% of their income to philanthropy, up from 2.3% in 2010. Education remained the most popular cause, followed by food and clothing. *The Union government has hiked the interest rates for small savings schemes like the Public Provident Fund (PPF) and the National Savings Certificate (NSC) by 0.2 percentage points. The interest rate on the PPF has been increased from 8.6 per cent to 8.8 per cent, while the new rates on the 5-year NSC have been revised from 8.4 per cent to 8.6 per cent. *The fourth BRICS Summit was held in New Delhi in March 2012. *Infosys co-founder N.R. Narayana Murthy is among 12 greatest entrepreneurs of our time, according to a Fortune magazine list, which is topped by Apples late chief Steve Jobs. It also includes Microsoft founder Bill Gates and Facebook CEO Mark Zuckerberg. *India and China have agreed to observe 2012 as Year of Friendship. *As per the latest Consumer Price index (CPI) figures, Bangalore is the costliest city in India, followed by Mumbai, Chennai,Kolkata and Delhi. *Delhi Daredevils players will wear blue ribbons during their IPL 2012 matches, to support UNICEFs initiative to protect and empower the girl child in India. *India Government Mint, Kolkata celebrated its Diamond Jubilee on March 31, 2012. An ISO 9001:2008 unit of Security Printing and Minting Corporation of India Limited, it was the first mint to successfully process pure Nickel for minting coins in Asia. Medallion for national and international events, civil and military decorations like Bharat Ratna, Param Vir Chakra etc. are all minted here.

Business news

*In a first of its kind alliance, the largest private sector lender, ICICI Bank, the third-largest public sector lender, Bank of Baroda, and Citi Financial (the NBFC arm of Citigroup) have decided to form the first Infrastructure Development Fund (IDF). *Larsen and Tuobro (L&T) has named Krishnamurthi Venkataramanan as the CEO and Managing Director of the company. Current chairman and Managing director, A.M. Naik will continue as executive chairman. *Bharat Dynamics Ltd has unveiled a plan to set-up a surface-to-air missile unit in Hyderabad at a total cost of Rs 30,000 crore. *The board of IT major Tech Mahindra Ltd has approved the merger with Mahindra Satyam, in a stock deal valued at about USD one billion, at swap ratio of 2:17, becoming Indias fifth largest software exporter by revenue. L&T MF will Fidelity Mutual Fund in India. The combined entity, with about Rs 13,000 crore in Assets under Management (AUM), will be the 13th largest fund house in India and 10th in terms of equity assets. *Mahindra & Mahindra has announced two defence sector a joint-venturesone with government of Israel-owned Rafael Advanced Defence Systems and another JV with US-based Telephonics Corp.