Daily News Notes: 31st March, 2012

· Under-five mortality rate in the country has declined. However more females are dying even now before they reach their fifth birthday. Country's latest Sample Registration System data saysin 2010 15.41 lakh under-five deaths occured as compared to 16.83 lakh in 2009. The child mortality rate is much higher in rural than in urban India. Assam recorded the highest overall under-five mortality rate followed by Madhya Pradesh, Uttar Pradesh, Odisha, Rajasthan, Bihar and Chhattisgarh. Kerala recorded the lowest overall under-five mortality rate of 15 followed by Tamil Nadu, Maharashtra , Delhi , Punjab and Karnataka.
· India continues to retain its position as the world’s leader in the global outsourcing market of IT-ITES (Information Technology and Information Technology Enabled Services). It accounts for almost 58 per cent of global sourcing in 2011 as compared to 55 per cent previous year. Minister of State for Communications said a number of countries like Philippines, China, Malaysia are steadily gaining momentum as destinations for IT-ITES investments.
· In a big boost to its precarious financial position, Air India's Financial Restructuring Plan (FRP) has been approved by a SBI-led consortium of banks. This may enable the ailing carrier save several hundred crore of rupees in the first year itself. Implementation of the FRP would begin after the Union Cabinet approves additional equity infusion into the airline.
· India’s position of commercial transactions with the rest of the world, known as Balance of Payments, fell to a deficit in the December quarter for the first time since the Lehman Brothers collapse, as imports far exceeded exports and capital flows slowed, stoking fears the currency may wobble again. But it may improve in the fiscal fourth quarter ending March because of a surge in overseas fund flows since January at $9 billion, and slowing gold demand, a substantial portion of the imports, due to high prices and taxes. Balance of Payments, a record of trade in goods, invisible services and capital flows into and out of the country, ended in a deficit of $12.8 billion in the December quarter. Slippery Ground: $53.7billion Current account deficit in April-December. It stood at $39.6 billion a year ago $47.5billion Net inflows under Capital & Financial account. The year-ago figure was $52.9 billion $7.1billion Reserves drawdown Current Account Deficit at $19.4 b The current account deficit, the excess of imports of goods and services over exports, touched $19.4 billion, or 4% of the gross domestic product which is considered inimical to economic growth by economists, provisional figures from the Reserve Bank of India show. With reserves enough to just feed about 5 months of imports and repay one year debt, the deficit number is probably the worst the country is facing since 1991 when India pledged its gold to avoid defaults. Net capital inflows in the December quarter fell to $8 billion, from $17.2 billion in the previous quarter as corporates borrowed less from overseas markets due to European banks shutting doors. The Indian rupee moved to the best performer position in Asia this year, from the worst last year due to portfolio flows and central bank curbs on speculation. But the gain is fast eroding with renewed concerns about government finances with fiscal deficit of 5.1% forecast for next fiscal. India’s external economic position has been deteriorating with exports slowing substantially due to the European economic crisis, leading to lower US dollar earnings. But import bill is soaring, thanks to excessive demand and a surge in prices of crude oil, which India imports for more than three-fourths of its requirement and sells petroleum products at subsidised rates. Foreign portfolio flows that had been funding high imports, is also slowing as global investors fear that obstacles to economic growth could lower corporate earnings and thus, returns from stocks. An analysis of various components of balance of payments indicate that the trade deficit rose by more than 50% to $47 billion during October-December ’11 compared to $31 billion in the year-ago period. As a result, despite a rise in invisibles which includes current transfers such as remittances and services income such as software services, the currency account deficit rose sharply to touch almost 4% of GDP.
· The Reserve Bank of India (RBI) said that there was a need for introducing a comprehensive provisioning framework for banks in India with dynamic and countercyclical elements. At present, banks generally make two types of provisions, namely, general provisions on standard assets and specific provisions on non-performing assets (NPAs). Since the level of NPAs varies through the economic cycle, the resultant level of specific provisions also behaves cyclically. Consequently, lower provisioning during upturns, and higher provisioning during downturns have pro-cyclical effect on the real economy. The RBI said that the present provisioning policy has several drawbacks, including the rate of standard asset provisions has not been determined based on any scientific analysis or credit loss history of Indian banks. Further, it said that banks made floating provisions at their own will without any pre-determined rules and not all banks made floating provisions. It makes inter-bank comparison difficult. The present provisioning framework does not have countercyclical or cycle smoothening elements. Though the RBI has been following a policy of countercyclical variation of standard asset provisioning rates, the methodology has been largely based on current available data and judgement, rather than on an analysis of credit cycles and loss history.
· The Reserve Bank of India (RBI) has decided to continue with the enhanced all-in-cost ceiling for external commercial borrowings (ECB) for a further six month period. The all-in-cost ceiling for ECBs with average maturity of three years and up to five years was enhanced to six months Libor plus 350 basis points with effect from November 23, 2011. For more than five years it was raised to six months Libor plus 500 basis points. This was done in the wake of developments in the global financial markets and following difficulties experienced by borrowers in raising ECBs within the existing all-in-cost ceiling. The all-in-cost ceiling will include arranger fee, upfront fee, management fee, handling / processing charges, out-of-pocket and legal expenses, if any. The all-in-cost ceiling is applicable up to September 30, 2012 and will be reviewed thereafter.
· The Lok Sabha passed the judicial accountability legislation that seeks to set up a credible mechanism to probe complaints of misbehaviour by judges. The Judicial Standards and Accountability Bill, 2010, and Constitutional 114th Amendment Bill, 2010, Law aims to aid setting of new probity standards in higher judiciary. The bill seeks to establish credible and expedient mechanism for investigating into individual complaints for misbehaviour or incapacity of a judge of the Supreme Court or of a High Court. It also provides to regulate the procedure for such investigation and for the presentation of an address by parliament to the president in relation to proceeding for removal of a judge and for matters connected with such matters. The bill was introduced in the Lok Sabha in 2010 and was then sent to the parliamentary standing committee on personnel, law and justice, which made a crucial recommendation that seeks to ‘restrain’ judges from making “unwarranted comments” against other constitutional bodies or persons. According to the bill, any judge who makes oral comments against other constitutional authorities and individuals would render himself/herself liable for judicial misconduct. Making a brief reply on the bill, law minister Salman Khurshid said the legislation seeks to set up a mechanism to inquire into complaints against a judge of the Supreme Court or the High Court. The minister said the bill aims at striking a balance between maximizing judicial independence and laying down accountability at the same time for members of the higher judiciary.
· The Comptroller and Auditor-General of India has found that the Orissa government has ‘misused' the Land Acquisition Act for acquiring land for several big industrial projects, including the proposed mega steel plant by South Korean steel major Posco. “Emergency Provisions of Section 17 (4) were misused and applied arbitrarily even without indicating detailed justification for the same and without fulfilment of prescribed conditions,” the CAG has stated. According to the CAG, under the Act, the government is empowered to acquire land in case of urgency, invoking provisions prescribed in Section 17 (4), without giving land losers the opportunity to contest the propriety of the acquisition and the opportunity to be heard as per Section 5 A of the Act. Such acquisitions are to be made for a specific purpose, subject to fulfilment of prescribed conditions and the acquisition process is to be completed within six months, the report says. There can never be denial of citizens' rights under the garb of urgency or necessity. “It was noticed that none of the conditions prescribed in executive instructions of September 1985 for invoking the emergency provisions was fulfilled in all these cases. Instead of giving detailed justification for applying such provision, only general remarks like ‘the project is being executed on a priority basis', ‘requirement of land was emergent in nature' were indicated in the applications by the requisitioning officers,” it says.
· The Comptroller and Auditor-General has slammed the Gujrat government for financial irregularities, particularly for mismanagement of public sector undertakings, resulting in losses of over Rs. 16,000 crore. It has come down heavily on the state-owned Gujarat State Petroleum Corporation (GSPC) for extending “undue benefits” to the Chief Minister's “favoured few,” mainly Adani Energy and Essar Steel companies, which coupled with its poor management and faulty agreements on exploration of oil and gas in the Krishna-Godavari Basin alone cost the exchequer over Rs. 5,000 crore. The main reason for the incorrect estimation was the adoption by the GSPC of a deficient geological model prepared by its joint venture partner, Geo Global Resources of Canada, which led to an escalation of the cost of the exploration phase from Rs. 531.94 crore to Rs. 6,265.68 crore. The CAG report said the GSPC purchased natural gas from the spot market at the prevailing prices and sold it to Adani Energy at a fixed price much lower than the market price, benefiting the private company. Taking 14 to 106 months for environment impact studies in eight out of nine blocks was “unreasonable,” the CAG said. As against the estimated drilling rate a day of 27.76 metres, the actual rate was 22.49 metres in drilling 16 wells in the KG offshore block between July 2004 and April 2010, resulting in an “avoidable expenditure” of Rs. 180.91 crore on drilling work.
· Assam recorded a declining trend in enrolment and saw a high dropout rate of students despite incurring an expenditure of Rs. 12,631 crore during the five-year period from 2006 to 2011. This was revealed in a report of the Comptroller and Auditor General of India (CAG) for the year ended March 2011. The report showed that 78 schools in the State went without enrolment during 2006-2010 but the reasons for non-enrolment were not analysed by the Education Department. Schematic and other funds to the tune of Rs. 303 crore were lying unspent/undisbursed with District Elementary Education (DEE) authorities as well as seven selected districts for periods ranging from three months to more than 33 years resulting in resource gap in providing necessary interventions. Inadequate infrastructural facilities in schools, shortfall in opening new schools in accordance with norms, inadequacy in training of teachers, poor management of mid-day meal scheme including other health interventions, absence of effective mechanism of tracking and enrolment of “out of school children,” uneven deployment of teachers, high pupil-teacher ratio and irregular supply of free text books were some of the audit findings. Though the target year for achieving the Universal Elementary Education (UEE) goal was 2005, the report revealed that even at the end of March 2011, as many as 1.25 lakh children remained “out of school.” Neither the DEE nor the Sarva Shiksha Abhiyan Mission had conducted any survey during 2006-2011 for identification of Below Poverty Line (BPL) students enrolled in the elementary education sector. Moreover, although the audit called for records on a number of BPL students, no records were made available for audit by the seven selected districts.
· Assam, known for its scenic beauty and wildlife habitats, has more reasons to attract tourist with increasing numbers of elephants. The State’s Forest Department has recorded 5 thousand 620 wild elephants as per 2011 elephant census report. With this, the state witnessed an increase of 374 elephants.The state has five elephant reserves where 4,267 elephants were found. Out of which, Kaziranga-Karbi Anglong reserve sheltered the highest number. Kaziranga and Manas National park, two of the World Heritage Sites, had the highest elephant population among the sanctuaries and national parks. Manas National Park had the highest density with 189 elephants per 100 square kilometres.
· Earth Hour is being observed today, across the globe to create awareness, about climate change, and to encourage support for environmentally sustainable action. The global initiative by World Wildlife Fund encourages people around the world to switch off lights today for an hour beginning at 8.30 pm in each time zone. The Earth Hour movement started in Sydney in 2007 has grown in subsequent years. According to Earth Hour's website, a record 147 countries and territories are preparing to take part in the event. This year the sixth edition of Earth Hour will see six cities in India to compete for the title of the Earth Hour 2012 championship city. The award will be given on the basis of people's participation and electricity saved during the one hour . A candle light march will mark the event in the national capital where NCC cadets will form 60+, the symbol for Earth Hour, in front of Amar Jawan Jyoti at India Gate. Under the Roshini Programme to reduce consumption of electricity in the main building of Rashtrapati Bhavan, Earth Hour will also be observed by switching off all non-esential lights. Zakir Malik AIR News,Delhi.
· India inked three loan agreements worth $826 million with the Asian Development Bank (ADB) to shore up the country's power transmission systems for efficient transfer of electricity from surplus regions to deficit regions. According to an official statement here, a $500-million sovereign-guaranteed loan along with a $250-million non-sovereign corporate loan will help establish a more than 1,300-kilometre inter-regional transmission link to allow bulk transfer of electricity from independent power producers in Chhattisgarh to high power demand areas in the north, including the National Capital Territory (NCR) region of Delhi. Another agreement under the umbrella of Indo-German bilateral development cooperation programme was signed between Rural Electrification Corporation (REC) and KfW (German Development Bank) for a loan of euro 100.1 million for financing ‘Clean energy for rural development' projects. The loan component is aimed at supporting such projects in the field of renewable energy and energy efficiency which contribute to rural development.
· The United Nations has asked India to repeal the Armed Forces (Special Powers) Act, saying it had no role to play in a democracy, since the right to life is in effect suspended, and this is done without the safeguards applicable to states of emergency. “The repeal of this law will not only bring domestic law more in line with international standards, but also send out a powerful message that instead of a military approach the government is committed to respect for the right to life of all people of the country,” it said. The AFSPA — in force since 1957 in the North-East and since 1990 in Jammu and Kashmir — has become a symbol of excessive State power. It have heard extensive evidence of action taken under this law that resulted in innocent lives being lost, in Jammu and Kashmir and in Assam, where witnesses from neighbouring States also assembled. On the Gujarat violence, Gujarat killings of Muslims in 2002 and Kandhamal killings of Christians in 2007-08, it said that it had heard evidence regarding a number of instances where inter-community violence had occurred, resulted in large scale loss of life. While adding that deadly violence had been used by Maoists, insurgents and terrorists, it further stated that the state has a right to defend itself against such aggression, provided it abides by the international standards. The state, however, cannot adopt unlawful or unconstitutional means or create vigilante force to counter such violence. Among other kinds of extrajudicial killings highlighted by the UN Special Rapporteur were excessive use of force by police including fake encounters, custodial deaths and traditional practices affecting women such as honour killings, and dowry deaths.
· BRICS nations have decided to examine the viability of a development bank for developing countries, besides agreeing to make life a little simpler for those trading within the grouping by settling transactions in local currency. But in both cases the outcome fell short of expectations as four members — India, Russia, Brazil and South Africa — seemed to fear the clout that China would enjoy if the proposal to set up a bank and move to a single currency went through. As a result, finance ministers have been tasked to study the feasibility of a multilateral agency modelled on the lines of the World Bank or the Asian Development Bank to generate resources for funding infrastructure and core sector projects in the BRICS nations as well as other emerging economies. The idea is also to ensure adequate financing during a period of global economic uncertainty. The joint working group will submit a report at the next meeting, a joint declaration said. The five countries signed a master agreement to ensure that purchases from the other members of the groups are settled in local currency. The move is being seen as a step towards replacing dollar as the main currency of trade. Once the arrangement is in place, funds routed through the five designated banks, an Indian buyer can make the payment to a Chinese supplier in yuan instead of first converting the rupee into dollars and then reconverting it into the Chinese currency. Although the summit may have ended a little short of expectations on the overall substance, the five countries were not short of words. They blamed the US and Europe for generating excessive liquidity in the global financial system as part of their strategy to boost local economic activity. On Wednesday, Brazilian president Dilma Rousseff had said that the steps taken in the developed countries had created “monetary tsunami” as most BRICS nations had to initiate measures to check excessive volatility in capital flows and commodity prices. “...it is critical for advanced economies to adopt responsible macro-economic and financial policies, avoid creating excessive global liquidity and undertake structural reforms to lift growth that create jobs,” the Delhi Declaration said.
· Even as Finance Minister Pranab Mukherjee faces flak from corporates at home and abroad on his budget proposal to tax Vodafone-type deals through retrospective amendment, World Bank president Robert Zoellick sought to side with the government saying India wanted the company to pay tax at some place. Among other tax proposals aimed at plugging tax evasion, the budget for 2012-13 had proposed amending the relevant provisions in the Income Tax Act with retrospective effect so as to bring capital gains through Vodafone-type merger and acquisition deals under the tax net. As for India's economic growth, he noted that both the government's and the World Bank's projections were the same — an expansion of 7 per cent. On the global economic scenario, he said the crisis in the Middle East was likely to continue and that would tend to push up oil prices. “The increase in oil prices has certain risk factor on the world economy. This is significantly driven by political and security uncertainties in the Gulf ... All countries will have to be aware that the problem is not going to go away so soon … There will continue to be a point of uncertainty and that is why at the bank we try to help countries deal with that and try to support,” he said. The World Bank chief also expressed the multilateral lending agency's willingness to support the BRICS proposal on setting up a development bank with the aim of insulating their economies from the current economic problems, rising oil prices and currency volatility. However, on the issue of his successor after he demits office in June, Mr. Zoellick stressed that it was important to keep the top job at some international institutions with the United States to get the support of the world's largest economy.
· The former President of Argentina, Carlos Menem, is to stand trial for allegedly obstructing an investigation into an attack on a Jewish cultural centre in Buenos Aires. Argentina blamed the Lebanese militant group Hezbollah for the 1994 bombing, which killed 85 people. But prosecutors say evidence indicating the involvement of local accomplices in the attack, was covered up. No-one has ever been convicted of the car bombing.
· Chinese President Hu Jintao today met Cambodian King Norodom Sihamoni in Phnom Penh to discuss the development of all-round cooperation between the two countries which aimed at enhancing the comprehensive strategic partnership of cooperation. The two sides are expected to discuss ways to enhance the comprehensive strategic partnership of cooperation, and exchange views on major world and regional issues of mutual concern.
· US President Barack Obama has approved slapping of fresh sanctions against Iran’s oil sector saying, there is enough oil in the world markets, to ensure the move will not hit consumers. The move is set to have major implications for Tehran, as it forces the companies around the world to choose between trade with the United States and buying oil from Iran. Under the law, Obama can sanction foreign banks that carry out oil-related transactions with Iran's central bank and cut them off from the U.S. financial system. As an incentive to the countries which have significantly cut their Iranian oil purchases, Washington has exempted Japan and 10 EU countries from sanctions. Shortly before Obama’s announcement, Turkey announced 20 per cent cut in oil imports from Iran. China, India ,South Korea, France, Britain, Spain, Greece and Italy have been major buyers of Iranian oil in the past.
· In Syria, opposition activists have reported fresh shelling in major cities. UN envoy Kofi Annan has urged President Bashar al-Assad to implement a ceasefire immediately, being the stronger party in the conflict. His six point peace plan calls for a UN supervised ceasefire, access to humanitarian services; and talks between the government and the opposition. Syrian President Bashar Al Assad has accepted the plan with the rider that it will work only if armed opponents stop terrorist activities.