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CURRENT AFFAIRS
SEPTEMBER 2014

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TABLE OF CONTENTS
POLITY ......................................................................................................................................................................................5
Supreme Court Judgments and Rulings ............................................................................................................................................5
SC cancels allocation of 214 coal blocks................................................................................................................................................................................. 5
High Court Expands Governors powers to Suspend PSC Chairman ........................................................................................................................ 5
Supreme Court for Independent Probe into encounters ............................................................................................................................................... 5
Undertrials who have served half their likely term to be released .......................................................................................................................... 6
State legislatures free to add official language: SC............................................................................................................................................................ 8

Administrative Reforms ...........................................................................................................................................................................8

Govt readies national e-mail system ........................................................................................................................................................................................ 8
Govt. To train IAS, IPS, IFS officers in dealing with Naxalism...................................................................................................................................... 9
Allow detainees to vote: Election Commission ................................................................................................................................................................... 9

Legislations and policies..........................................................................................................................................................................9

J&K Floods a National Disaster ................................................................................................................................................................................................... 9
Lokpal Search Panel gets freedom of Choice .....................................................................................................................................................................10

ECONOMY ............................................................................................................................................................................. 11
State of Indian Economy....................................................................................................................................................................... 11
India slips to 71st rank in global competitiveness list ..................................................................................................................................................11
Indian economy poised to grow at 5.6 per cent in 2014: UNCTAD ........................................................................................................................12
Industrial production growth slows to 4-month low ....................................................................................................................................................12
Inflation dip to 5 year low...........................................................................................................................................................................................................13
Macroeconomic indicators improving, says RBI Governor ........................................................................................................................................13
Analysis of Overall Indicators ...................................................................................................................................................................................................13

Policy Guildlines By RBI ........................................................................................................................................................................ 14

Key conceptual issues on Global Monetary Policy ..........................................................................................................................................................14
Banks to be carefull about Jan Dhan Yojna RBI.............................................................................................................................................................15
Persisting inflation, a major concern: Rajan ......................................................................................................................................................................17

Policy Guildlines by the Government............................................................................................................................................... 17

Centre set to revise GDP measurement next year...........................................................................................................................................................17
India not to impose anti-dumping duty on solar panels ..............................................................................................................................................18
Government to unveil a new IPR policy ...............................................................................................................................................................................18
Bibek Debroy to chair high-level govt committee on railways .................................................................................................................................19
Governments view on reforming the MSME sector.......................................................................................................................................................20
Centre to spend Rs.33,000 cr on broadband projects ...................................................................................................................................................20

PSU Issues .................................................................................................................................................................................................... 20

Cabinet clears stake sale in Coal India, ONGC and NHPC.............................................................................................................................................20
Hurdles in the process of disinvestment .............................................................................................................................................................................21
Centre to revive five PSUs ...........................................................................................................................................................................................................22
Five States contributed half of PSU investments between 2008 and 2013 ......................................................................................................23

Do not keep taxpayers waiting: CBDT to I-T dept .................................................................................................................... 23

Panel submits report on new gas pricing formula ................................................................................................................... 24
Capital infusion vital for insurance sector: IRDA chief .......................................................................................................... 25
S&Ps rating upgrade to boost foreign investments ................................................................................................................ 25
Pension Reforms ....................................................................................................................................................................................... 26
National Pension Scheme ............................................................................................................................................................................................................27

Informal Economy NSSO Reprot An Analysis ...................................................................................................................... 27

Informal Sector And Need Of Labor Reforms.............................................................................................................................. 28
SOCIAL ISSUES..................................................................................................................................................................... 31
Government wants clarification on transgenders order ....................................................................................................... 31
Bihar Declares transgenders as Third Gender ..................................................................................................................................................................31

SC Clears 3% reservation for disabled in Jobs ............................................................................................................................ 31

HEALTH ................................................................................................................................................................................................... 33
Greater Transparency needed in organ Donation ................................................................................................................... 33
Ayush Mission to be launched soon ................................................................................................................................................. 33
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Plan to reduce infant mortality......................................................................................................................................................... 33

Gates Foundation to help fight kala Azar in India ................................................................................................................... 34
National Health Assurance Mission ................................................................................................................................................ 34
Poor healthcare amongst Indian Tribes ....................................................................................................................................... 34
EDUCATION ............................................................................................................................................................................................. 36
Issue of Indian students moving abroad for education .......................................................................................................... 36
Higher Education bill to be withdrawn from the parliament ............................................................................................. 36
Free lectures in schools and colleges mandatory for scientists .......................................................................................... 37
Central Government to fund Swacch Vidyalaya Campaign ................................................................................................. 37
Link between Sanitation and schooling ........................................................................................................................................ 37
ENVIRONMENT ................................................................................................................................................................... 39
Gomti to be cleaned on lines of river Ganga ................................................................................................................................ 39
Web portal on Ganga rejuvenation launched............................................................................................................................. 39
Wildlife numbers down by half in 40 years: WWF survey (Living Planet Report) .................................................... 39
Climate Change ......................................................................................................................................................................................... 39
UN climate summit .........................................................................................................................................................................................................................39
Global marches draw attention to climate change..........................................................................................................................................................40
UN reports largest annual CO2 increase since 1984......................................................................................................................................................40
World running out of carbon allowance: study by Global Carbon Project........................................................................................................41

Ozone layer showing signs of recovery: UN ................................................................................................................................. 41

Pusa Hydrogel............................................................................................................................................................................................ 41
Dilution of Forest Rights Act ............................................................................................................................................................... 42
IndARC: Indias Arctic observatory.................................................................................................................................................. 42
Bacteria that may help tackle nuclear waste ............................................................................................................................. 43
GEDI: NASA to map earth forests in 3D ......................................................................................................................................... 43
Global biodiversity prize for Indian ................................................................................................................................................. 43
INDIA AND WORLD ........................................................................................................................................................... 44
India - US...................................................................................................................................................................................................... 44
Historical Background ..................................................................................................................................................................................................................44
Areas of Cooperation .....................................................................................................................................................................................................................45
Areas of divergent interests .......................................................................................................................................................................................................47
Looking at India-US Relationship in context of China ...................................................................................................................................................50
Recent Development during Prime Ministers USA visit..............................................................................................................................................51
Challenges in Indo-US relations ...............................................................................................................................................................................................52

India-Bangladesh ..................................................................................................................................................................................... 53
India-Bangladesh Joint Consultative Commission (JCC) meet ..................................................................................................................................53
Bangladesh to restore abandoned rail lines with India................................................................................................................................................54

lifelong visas for Indian diaspora ..................................................................................................................................................... 54

India, Australia seal civil nuclear deal ........................................................................................................................................... 54
Indian-Israeli PMs meet ........................................................................................................................................................................ 54
GMR to build Nepal's largest hydro power plant ...................................................................................................................... 55
Bamiyan to be SAARC cultural capital for 2015 ....................................................................................................................... 55
Security Issues ........................................................................................................................................................................................... 56
Al-Qaeda announces India wing...............................................................................................................................................................................................56

WORLD AFFAIRS ................................................................................................................................................................ 57

Airstrikes on IS .......................................................................................................................................................................................... 57
China slams U.S. broad coalition approach to counter IS.........................................................................................................................................57

Ukraine crisis ............................................................................................................................................................................................. 58

Cause of the crisis............................................................................................................................................................................................................................58
Ukraine, pro-Russian rebels sign ceasefire deal ..............................................................................................................................................................58
EU imposes new sanctions on Russia over Ukraine .......................................................................................................................................................58

Chinas Silk Road to counter Washingtons FTA move ........................................................................................................... 59

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Sri Lanka ...................................................................................................................................................................................................... 59

Chinese President Xi Jinpings visit ........................................................................................................................................................................................59
Sri Lanka to sign FTA with China.............................................................................................................................................................................................59

Afghanistan................................................................................................................................................................................................. 60
Afghanistans presidential rivals sign power deal ..........................................................................................................................................................60
U.S. forces to remain in Afghanistan past end of 2014 .................................................................................................................................................60

Fiji coup leader sworn in as PM ........................................................................................................................................................ 60

Scotland referendum for independence ........................................................................................................................................ 61
SCIENCE & TECH ................................................................................................................................................................. 62
Indias Mars Orbiter Mission (MOM) .............................................................................................................................................. 62
Scientific Instruments ...................................................................................................................................................................................................................62
Liquid Apogee Motor (LAM)/ 440 Newton engine .........................................................................................................................................................63
Issues.....................................................................................................................................................................................................................................................63

NASA's Maven explorer ......................................................................................................................................................................... 64

Rosetta (robotic space probe)............................................................................................................................................................ 64
Mars Curiosity rover reaches its primary destination ............................................................................................................ 65
NASA to make ISS an Earth-observing platform....................................................................................................................... 65
NASA submarine to explore oceans in space ............................................................................................................................... 65
Laniakea....................................................................................................................................................................................................... 65
National Cyber Security and Coordination Centre (NCSC) .................................................................................................. 66
Controlling electron movement key to low-energy computers .......................................................................................... 66
IISc develops molecular "sniffer dog" to detect explosives ................................................................................................... 66
Bash threat ............................................................................................................................................................................................... 67
Facebook to test Internet beaming drones .................................................................................................................................. 67
IISc: novel membrane to filter water and kill bacteria .......................................................................................................... 67
Synthetic Biology...................................................................................................................................................................................... 67
Manjul Bhargava gets Fields Medal, 2014 ................................................................................................................................... 68
Indian born scientist wins prestigious US award...................................................................................................................... 68

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POLITY
SUPREME COURT JUDGMENTS AND RULINGS
SC CANCELS ALLOCATION OF 214 COAL BLOCKS
In an order with far-reaching implications, the Supreme Court has cancelled all but four of the 218 coal block
allocations declared arbitrary and illegal by it in an August 25 judgment.
The decision comes as a windfall for the government as the court has ordered the owners of the cancelled
coal blocks to cough up Rs. 295 as compensation for every tonne of coal they extracted illegally, to make up
for the loss to the exchequer
The government is expected to get Rs. 8,000- 10,000 crore this way. The government is also free to auction
the cancelled blocks.

HIGH COURT EXPANDS GOVERNORS POWERS TO SUSPEND PSC CHAIRMAN

Expanding the powers of Governors, the Karnataka High Court has declared that Governors will get the power
to suspend the chairman or members of a the State Public Service Commission (PSC) soon after making
recommendations to the President for their removal, by making reference to the Supreme Court.
In a first-of-its-kind interpretation on the Governors powers on suspending a PSC chairman or members, the
court made it clear that the starting point of the Presidential reference for their removal will begin with the
Governor making a recommendation to the President, and not from the date of the President making the
actual reference to the Supreme Court based on the Governors recommendation.
Article 317 (2) states that the Governor can suspend a chairman or any member of the PSC in respect of
whom a reference has been made to the Supreme Court under clause (1) until the President has passed
orders on receipt of the report of the Supreme Court on such reference.
But the court said the expression has been made cannot be interpreted to mean a past event but has a
connotation of a continuous circumstance or contemporaneity, the starting point of which is when the
Governor makes a request to the President to make a reference to the Supreme Court for the removal of a
chairman or a member of the PSC.
If held otherwise, the court said , the whole object of suspending power of the Governor would be set at
naught and hence the words has been made cannot be given a past continuous connotation, but must be
read as a present continuous circumstance.
In circumstances such as arrest of a chairman or member of a PSC or malpractices committed during the
process of selection of public servants, the court said, may call for an immediate suspension, and any lapse of
time in suspending the chairman or members of the PSC in such a situation and by allowing them to continue
in the post, could be detrimental to the PSC.

SUPREME COURT FOR INDEPENDENT PROBE INTO ENCOUNTERS

The Supreme Court has ruled that an independent and thorough investigation should be held into encounter
deaths to restore the faith of the public in the police force.
Passing the judgment, a three-judge Bench said the right to live with dignity applied to all and the state had
no right to take the law in its hands by way of extra-judicial killings.
The court noted that policemen would not be excused for committing murder in the name of encounter on
the pretext that they were carrying out the orders of their superior officers or politicians.
SUMMARY OF COURT DIRECTIONS
The court laid down the law on police behaviour in case of encounter deaths through a series of procedural
requirements to be followed strictly. Among these, the court held that no police officer should be given outof-turn promotion or gallantry award immediately after an encounter death but only after the gallantry was
proved beyond doubt.
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 An independent investigation into the encounter death should be done by the CID or officers from another
police station who were not involved in the incident. The probe should be scientific, well-documented and
provide a decisive finding on the nature of death in question.
The probe should be open to a magisterial inquiry and any dissatisfaction about its fairness could be
challenged before a sessions judge, the court held.
Procedural rules also include recording of intelligence tip-off, registering of FIR and providing immediate
medical aid to the suspect shot or inform his family in case of death. State Directors-General of Police would
have to report encounter deaths before the National Human Rights Commission every six months.
ANALYSIS
Killings in police encounters require independent investigation. The killings affect the credibility of the rule of
law and the administration of the criminal justice system.
There is no doubt that police in India have to perform a difficult and delicate task, particularly, when many
hardcore criminals, extremists, terrorists, drug peddlers, smugglers who have organised gangs, have taken
strong roots in the society. But then, such criminals must be dealt with by the police in an efficient and
effective manner so as to bring them to justice by following the rule of law

UNDERTRIALS WHO HAVE SERVED HALF THEIR LIKELY TERM TO BE RELEASED

The Supreme Court has ordered the release of all undertrial prisoners who have already served half the term
of sentence, had they been convicted of the offence for which they were being tried.
The court relied on Section 436A of the Criminal Procedure Code, 1973 (CrPC) to direct all States
The order is likely to benefit thousands of undertrials who are languishing in jails across the country, as they
are unable to pay sureties and bail bond to get out.
The ruling, however, does not apply to those who have been awarded the death sentence.
The court ordered judicial officers across the country to visit prisons in their district over the next two months
to identify the undertrials.
The CJI said the situation demanded immediate action as 66 per cent of the prisoners were undertrials, many
too poor to raise bond money for bail.
The Chief Justice said delays in criminal trials worsened matters for undertrials. They languish in jails
because courts are not enabled to take up their cases. Many States have no finances for courts. There is no
infrastructure, no courtrooms,
BASIC PREMISE BEHIND THE RULING

The primary constitutional and moral concern with undertrial detention is that it violates the normative
principle that there should be no punishment before a finding of guilt by due process. So, undertrial
detention of those suspected, investigated or accused of an offence effectively detains the innocent.
However, all criminal justice systems across the world authorise limited pretrial incarceration to facilitate
investigation and ensure the presence of accused persons during trial. So, the critical challenge in this area is
to identify the normatively optimal and necessary level of pretrial incarceration and then design a criminal
justice system to achieve this.
ANALYSIS OF PROBLEM IN INDIA

The Indian debate on the undertrial problem begins with the empirical claim that the proportion of
undertrials to convicts in our prison system is too high. In 2012, undertrials comprised 66 per cent of the
prison population, and in the period 2001-2010 this rate has on average been a stubborn 67 per cent.
However the question to be asked if this high proportion of undertrials normatively undesirable or a sign of a
pathological criminal justice system.
A high undertrial proportion in the prison population may be the result of too many arrests during the
investigation and trial process or too few convictions at the end of trial. India has an exceptionally low rate of
incarceration which is defined as the number of persons in prison per 1,00,000 population. The International

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Centre for Prison Studies (ICPS) points out that at 30 (2012) the Indian incarceration rate is among the 10
lowest rates in the world.
In absolute numbers, in 2013, there were around 2,49,800 undertrials in India and they formed roughly 70
per cent of the prison population. In the U.S., in the same year, there were more than double that number of
remand non-convicted prisoners (4,75,692). Yet they formed only 21.2 per cent of the prison population.
If our conviction rate improves, then the proportion of undertrials will drop. Taken alone, the high proportion
of undertrials in India is a sign of a pathological criminal justice system. Unless we can show that current
undertrial detention is for excessively long periods or disproportionately targets the poor and the
marginalised, the proportion by itself is not the core problem that we need to focus on.
WHY 436A NOT A SOLUTION

Section 436A was introduced into the CrPC in 2005 to mandatorily release on bail all undertrials who have
already served half the period of their sentence if convicted. The Supreme Court, in its recent order, and civil
society groups have invoked Section 436A of the CrPC as the primary strategy to reduce the undertrial
population. This strategy would work if undertrials are in fact detained for inordinately long periods of time.
However, the National Crime Records Bureau (NCRB) data on prisons shows that between 2001 and 2010, on
average around 40 per cent of undertrials incarcerated in the country spent less than three months in prison;
the largest single category among periods of detention. Further, during the same period, over 60 per cent of
undertrials on average were detained for less than six months. If we include the percentage of undertrials
detained for over six months but less than a year, we find that on average over 80 per cent of undertrials in
India spent less than one year in prison during the years under consideration.
The offences for which these undertrials are being investigated or tried make the futility of a Section 436A
strategy apparent. The single largest category of undertrials by offence was that of murder, which accounted
for close to 22 per cent of all undertrials on average each year. Hence, relatively short periods of undertrial
detention for an overwhelming majority of undertrials than is commonly assumed, together with the long
sentences attached to the offences undertrials are investigated or accused of leads inevitably to the
conclusion that very few undertrials may benefit from Section 436A.
The enactment of Section 436A in 2005 had little impact on the composition of the prison population
thereafter. The new enthusiasm to implement this provision is welcome but is unlikely to be a substantive
solution to the undertrial problem. If undertrial detention numbers are a problem, we must re-articulate
what is the normatively acceptable length of pretrial detention.
THE REAL PROBLEM

Irrespective of the length of undertrial detention, the core of the undertrial problem may be its disparate
social, economic and religious impact.
While existing data sources are inadequate, some preliminary research suggests that the illiterate, lower
castes and members of religious minorities are over-represented in the undertrial population.
In 2012, close to 74 per cent was either illiterate (30 per cent of the undertrial population but only 18 per
cent of the Indian population) or had studied below Class 10 (43.3 per cent of the undertrial population).
A policy response that assumes that the disproportionate numbers of socially and economically
disadvantaged people are subject to unnecessary undertrial detention calls for a focussed Centrally
sponsored public defender programme to replace the ham-handed legal aid services currently administered.
WAY AHEAD

Legal and public policy responses to the undertrial problem should not proceed solely on the proportion of
undertrials in the prison population. Arguably, the high proportion of undertrials is a reflection of the
pathological failure of the criminal justice system to successfully convict and thereby secure peace and
security.
This failure must be resolved by focussing on systematic institutional reform of the investigation and
prosecution of offences. Second, our current legal strategy assumes inordinately long periods of undertrial
detention and we show that a Section 436A-focussed strategy will have minimal impact on the undertrial
population overall.
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 New rules mandating release on the filing of a charge sheet barring limited exceptional circumstances
along with a Centrally sponsored public defenders programme that weeds out the overt or structural
discrimination in the criminal justice system is the best bet for a targeted intervention to reduce the length
and eliminate the disparate impact in undertrial detention in India.

STATE LEGISLATURES FREE TO ADD OFFICIAL LANGUAGE: SC

The Supreme Court has held that there is no bar against a State Legislature declaring a language used in the
State as an official language for the convenience of its citizens.
This means that a widely-used language in a State, once declared an official language by the State Legislature,
would find a place in official communications, advertisements and even signposts.
BACKGROUND

The court passed the order on a petition by U.P. Hindi Sahitya Sammelan against the 1989 amendment to the
Uttar Pradesh Official Language Act, 1951.
The U.P. Legislature introduced Urdu as the second official language of the State, besides Hindi, in the
interest of the Urdu-speaking people.
The Bench upheld the 1989 amendment and declared Urdu as the States second official language. The
Benchs judgment focussed on the question of law as to whether a State Legislature is precluded from
adopting another language used in the State if Hindi has already been declared the official language
CONSTITUTIONAL PROVISION

Article 345 of the Constitution says the Legislature of a State may by law adopt any one or more of the
languages in use in the State or Hindi as the language or languages to be used for all or any of the official
purposes of that State.
The court said that the separate mention of Hindi in the Article was only meant to promote Hindi among
the States. This cannot be taken to mean that the particular State Legislature must sacrifice its power in
promoting other languages within the State.

ADMINISTRATIVE REFORMS
GOVT READIES NATIONAL E-MAIL SYSTEM
The government is working on India's own e-mail service.
The Department of Electronics and Information Technology (DeitY) is working hard to put in place an e-mail
service that will ensure government communications and data are effective and unhackable.
The new email service will have smart features, and has been modeled on the lines of Gmail and Yahoo to
make it user-friendly.
LAUNCH IN PHASES

The new Made in India e-mail service will be first rolled out for the use of the Central government after which
it will be extended to state governments. In the final phase it will also be made available to all Indian citizens
for their interaction with the government. "The new set-up will be backed by enhanced bandwidth and
improved servers positioned in India.
ANALYSIS

Although the government has invested more than Rs.800 crore on modernising its existing National
Informatics Centre (NIC) to ensure effective communication between departments and to have a system that
cannot be hacked, the exercise has not been very successful.
The nic.in network being used now by the government lacks sufficient bandwidth as a result of which it does
not support larger files and makes downloading very slow. This has forced officials to switch to private e-mail
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accounts such as Gmail or Yahoo even for official work, making the nation's decision making system
vulnerable to hacking. As the servers for these e-mail services are in other countries, usually the United
States, communications passing through them are vulnerable and open to misuse and data theft.
The problem has assumed such proportions that security agencies have been regularly issuing guidelines on
Internet usage to all ministries and government departments for fear that the use of Gmail, Hotmail or other
such accounts for internal communication can expose them to interception by networks with servers outside
India.
The Wikileaks revelations concerning India's diplomatic, political and other developments was another
eyeopener.
The purpose behind having an effective and secure e-mail service is to ensure that the information and data
is not leaked.
The new government e-mail service will enhance security of government communications and official data.

GOVT. TO TRAIN IAS, IPS, IFS OFFICERS IN DEALING WITH NAXALISM

The Department of Personnel and Training (DoPT) has written to chief secretaries of eight states seeking
nomination of at least three officers each from Indian Administrative Service (IAS), Indian Police Service (IPS)
and Indian Forest Service (IFS) for the course.
The nominated officers will be trained by armed forces personnel in Chhattisgarh Academy of Administration,
Raipur during October 15-17.
The basic objective of the programme is to increase exposure of IAS, IPS, IFS and other civil services officers
to the military, so as to effectively handle unforeseen situations at short notice.
This, in the long run, is expected to help them to combat future challenges to national security in an
organised manner.

ALLOW DETAINEES TO VOTE: ELECTION COMMISSION

The Election Commission of India has written to the Chief Secretaries of the two States (Maharashtra and
Haryana) to make arrangements for those under preventive detention to exercise their franchise through
postal ballot.
The Election Commission pointed out that sub-section (5) of Section 62 of the Representation of the People
Act, 1951, confers voting rights on electors subjected to preventive detention. And Rule 18 of the Conduct
of Elections Rules, 1961, states that such detainees are entitled to cast their vote through postal ballot.
Under Rule 21(1) of the Conduct of Elections Rules, the appropriate government has to intimate Returning
Officers of the names of voters under preventive detention.

LEGISLATIONS AND POLICIES

J&K FLOODS A NATIONAL DISASTER
Prime Minister Narendra Modi has announced a special assistance of Rs 1,000 crore for the flood-affected
state and declared the calamity as a national disaster
Centre kept a constant touch with state government. Army, Air force and NDRF have been the coordinating
relief operations in the region
WHAT IS A NATIONAL DISASTER

A particular event/calamity when declared a national disaster results in the State getting additional central
assistance.
Once the government declares the disaster of 'severe nature', the state will qualify for immediate relief and
additional assistance from NDRF
Under the existing NDMA Act, if government doesn't declare any calamity as of a 'severe nature', the state
will have to carry out rehabilitation work with the balance available in its own State Disaster Response Fund
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(SDRF) which has shares from both the centre and respective states. The state in that case will not be able to
get fund from the NDRF.

LOKPAL SEARCH PANEL GETS FREEDOM OF CHOICE

The Department of Personnel and Training has notified amendments giving autonomy to the Lokpal search
committee to shortlist and recommend names independently for selection of Chairman and members of the
anti-corruption body.
The amendments act as a course correction after the former Supreme Court judge Justice K.T. Thomas opted
out from heading the search committee in March 2014, citing lack of autonomy.
Eminent jurist Fali Nariman too had turned down the post of a member of the panel for that reason.
Justice Thomas had objected to the provision that the search committee should only shortlist candidates
from a list provided by the department.
The amendment made in Rule 10 of the Search Committee Rules removed this roadblock by omitting the
words from among the list of persons provided by the Central Government in the Department of Personnel
and Training.
**For more on the Lokpal controversy refer to our previous current affairs notes

JUSTICE K.T THOMAS NOT SATISFIED

The former Supreme Court judge Justice K.T. Thomas, has said that the amendments were a progressive
departure and a step in the right direction from the earlier version. But he said the amendments still only
addressed half the concerns raised by him.
Justice Thomas said though the Search Committee was free to shortlist names for Lokpal, its
recommendations could still be vetoed by the Selection Committee.
He was referring to a proviso to Section 4 (3) of the Lokpal Act, allowing the Selection Committee to consider
any person other than the persons recommended by the Search Committee.
Justice Thomas said a statutory amendment was required to correct this.
As per him the Search Committee needs to have some value. The committee searches out and recommends
names, but these names can be vetoed by the Selection Committee. If this proviso continues, the Search
Committee continues to be a mute spectator.
He said the law should prescribe the Selection Committee to put on record the reason for vetoing names
suggested by the Search Committee.

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ECONOMY
STATE OF INDIAN ECONOMY
INDIA SLIPS TO 71ST RANK IN GLOBAL COMPETITIVENESS LIST

Weighed down by challenging economic conditions for most part of the past year, India has slipped to 71st
position - the lowest among BRICS countries - in an annual global competitiveness list, with Switzerland
claiming the top spot.
The annual list, released by Geneva-based World Economic Forum (WEF), comes at a time when the new
Indian government has completed 100 days in power and has promised further steps to revive its economy
and the ease of doing business in the country.
Continuing its downward trend and losing 11 places, India ranks 71st. The countrys new government faces
the challenge of improving competitiveness and reviving the economy, which is growing at half the rate of
2010, WEF said.
As per the Global Competitiveness Report 2014-15, Switzerland is the most competitive economy, followed
by Singapore.
China, which has improved its position by one place to 28th spot, leads the BRICS grouping, among which
India has the least ranking. Russia is ranked at 53rd position, followed by South Africa (56) and Brazil (57).
Indias decline of 11 places to 71st, set against the gains of the ASEAN 5 countries, suggests that the
competitiveness divide South and Southeast Asia is becoming more pronounced, WEF said.
Besides India, WEF said that some of the worlds largest emerging market economies continue to face
difficulties in improving competitiveness. These include Saudi Arabia (24th rank), Turkey (45), Mexico (61),
Nigeria (127th), South Africa and Brazil - all of them have slipped in their rankings.

REASONS FOR THE SLIDE

According to the report, Indias slide in the competitiveness rankings began in 2009, when its economy was
still growing at 8.5 per cent (it even grew by 10.3 per cent in 2010).
Back then, however, Indias showing in the Global Competitiveness Index (GCI) was already casting doubt
about the sustainability of this growth.
Since then, the country has been struggling to achieve growth of 5 per cent. The country has declined in
most areas assessed by the GCI since 2007, most strikingly in institutions, business sophistication, financial
market development, and goods market efficiency, it added.
As per the report, there is uneven implementation of structural reforms across different regions and levels
of development as the biggest challenge to sustaining global growth.
Further, The strained global geopolitical situation, the rise of income inequality, and the potential
tightening of the financial conditions could put the still tentative recovery at risk and call for structural
reforms to ensure more sustainable and inclusive growth, WEF Founder and Executive Chairman Klaus
Schwab said.

FURTURISTIC MEASURES

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WEF further said that India needs to create a sound and stable institutional framework for local and foreign
investors as well as improve connectivity.
Talent and innovation are the two areas where leaders in the public and private sectors need to collaborate
more effectively in order to achieve sustainable and inclusive economic development, it added.
The leading economies in the index all possess a track record in developing, accessing and utilising
available talent, as well as in making investments that boost innovation.
These smart and targeted investments have been possible thanks to a coordinated approach based on
strong collaboration between the public and private sectors, the report said
Noting that improving competitiveness would yield huge benefits for India, WEF said it would help rebalance the economy and move the country up the value chain ensuring more solid and stable growth.
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This in turn could result in more employment opportunities for the countrys rapidly growing population,
it added.

BACKGROUND

The rankings are based on WEFs GCI which is based on scores covering 12 categories.
They are institutions, infrastructure, macroeconomic environment, health and primary education, higher
education and training, goods market efficiency, labour market efficiency, financial market development,
technological readiness, market size, business sophistication and innovation.

INDIAN ECONOMY POISED TO GROW AT 5.6 PER CENT IN 2014: UNCTAD

The Indian economy will grow at a rate of 5.6 per cent in 2014 while developing economies as a whole will
see between 4.5 and 5 per cent rise in economic expansion, a report by the United Nations Conference on
Trade and Development (UNCTAD) said.
The UNCTAD Trade and Development report 2015 forecasts that developing economies as a whole are likely
to repeat the performance of previous years, growing at between 4.5 and 5 per cent. It forecasts Chinas
economy to grow by 7.5 per cent in 2014.
Improved performance of mining, manufacturing and services sector pushed Indias economic growth rate
to two-and-a-half- year high of 5.7 per cent in the April-June quarter.
Futher, speaking at the report launch, Jawaharlal Nehru University Professor and economist Jayati Ghosh,
however, said expectations might need to be tempered.
This recent (domestic GDP) growth that everyone is getting excited about it, that there is possibility for 7 or
8 (per cent), yes it is possible but what are we seeing so far, we are seeing another bubble being
generated,
It is not growth based on sustained foundations and the bubble will again be associated with construction,
house prices and the like rather than sustained demand of basic needs, basic infrastructure and so on. So, I
am a little wary of this recent recovery.
Expressing concern over power sector issues, Ms. Ghosh said, There are at least 16 and I think possibly 25
major power investments that are half complete, and are possibly never to be completed, all of which have
taken public sector loans which are paid for finally by all of our money and which are never going to repay.
The UNCTAD report forecasts that growth will exceed 5.5 per cent in Asian and sub-Saharan countries, but
will remain subdued at around 2 per cent in North Africa and Latin America and the Caribbean. Meanwhile,
transition economies are expected to further dip to around 1 per cent, from an already weak performance
in 2013.

INDUSTRIAL PRODUCTION GROWTH SLOWS TO 4-MONTH LOW

Slowing for the second consecutive month, industrial output grew barely 0.5 per cent in July against 3.4 per
cent in June. Factory output had grown 2.6 per cent in July 2013.
Weaker manufacturing growth and sliding consumer durables contributed to the sluggishness.
However, the cumulative growth for April-July is 8.5 per cent against 1.4 per cent in the year-ago period.

ANALYSIS

12

Cumulative industrial growth during April-July remains higher at 3.3 per cent against a contraction of -1 per
cent in April-July 2013.
The manufacturing sector contracted by -1 per cent as against a growth of 2.3 per cent during the same
period in 2013, according to official data released on the Index of Industrial Production (IIP)
The noticeable contraction in the growth of capital goods output has raised concerns over the hope that
was being expressed on a revival in the investments cycle.
The sectors registering positive growth include mining output of which rose 3.3 per cent during April-July as
against a contraction of -0.1 per cent in the same period last year.
Growth in manufacturing also remained positive at 2.3 per cent compared with a decline of -0.1 per cent
due to the low base effect.
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Electricity generation boosted the growth rate, rising 11.4 per cent against 3.9 per cent last year.
In all, 15 industries recorded positive cumulative growth with the highest growth industry being electrical
machinery & apparatus that grew 33.3 per cent.

INFLATION DIP TO 5 YEAR LOW

The Wholesale Price Index inflation fell from 5.2% in July 2014 to 3.7% in August 2014. This is driven by a
decline in food inflation and fuel inflation.
The Consumer Price Index inflation decreased from 8% in July to 7.8% in August. However, food inflation
increased marginally from 9.1% to 9.2%
Softening prices of food items, including vegetables, pulled down the Wholesale Price Index-based (WPI)
inflation to five-year low of 3.74 per cent in August, but it may not bring relief to the industry as the
Reserve Bank of India (RBI) is insisting that there is no point in cutting interest rates to see prices go up
again.
The August WPI inflation is the lowest since October, 2009, when it stood at 1.8 per cent.
According to official data released, inflation in the food segment saw a significant decline to 5.15 per cent in
August from 8.43 per cent in July.
With WPI inflation coming down to five-year low level, India Inc has raised the pitch for lowering of interest
rate to boost industrial output that slipped to four month low of 0.5 per cent in July.
The retail inflation, measured on Consumer Price Index, (CPI) had also eased to 7.8 per cent in August from
7.96 per cent in July.

MACROECONOMIC INDICATORS IMPROVING, SAYS RBI GOVERNOR

The Reserve Bank of India (RBI) Governor Raghuram Rajan, said that the macro-economic indicators were
improving and inflation had been coming down in line with the central banks expectation.
We are in the process of picking up growth, even if the journey is likely to be bumpy at times. Inflation is
coming down, consistent with our forecasts, said Dr. Rajan while addressing the FICCI-IBA annual banking
conference here.
However, he said, inflation is high, and the best solution for the country is to bring it down. I have no
desire to keep interest rates higher than they should be. I want to bring down interest rates when feasible.
The RBI Governor said there was no point in cutting interest rates to see inflation pick up again.
The RBI remains committed to the dis-inflationary path of taking retail inflation to 8 per cent by January,
and further to 6 per cent by January 2016.
Dr. Rajan said that the banking sector was facing a lot of challenges. According to him, public sector banks
must have the independence to take commercial decisions.
However, he told bankers to ensure quality and effectiveness of bank boards. Bank boards have to be more
empowered to hold the bank management accountable, he said. The recent scandals called for better
internal evaluation of lending process, he added.

ANALYSIS OF OVERALL INDICATORS

13

If there is one clear signal that comes out of the latest set of economic data released on inflation, industrial
growth and trade, it is this: the recovery process is on but it is uneven and still in first gear.
Wholesale price inflation was down at a five-year low of 3.7 per cent in August but retail price inflation,
which is the benchmark for the Reserve Bank of India, is still sticky at 7.8 per cent.
Industrial output growth was almost flat at 0.5 per cent in July after a 3.9 per cent rise in June, while export
growth fell to a five-month low of 2.35 per cent in August.
The see-saw in industrial output, especially of consumer durables and capital goods, clearly shows that the
recovery is tentative as yet.
Of course, the crucial automobiles sector is beginning to show firm signs of a turnaround with passenger car
manufacturers seeing a return of demand.
The positive impulses from the auto industry are encouraging because it can have a cascading impact on
downstream industries such as ancillaries that host thousands of jobs.
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Yet, it is worrying that the capital goods industry is still not seeing a viable change in its fortunes. If
anything, this indicates that companies are still not willing to commit investment in fresh capacities.
This fact is also borne out by the poor credit offtake from banks.
Despite the RBIs efforts to free up funds through the two cuts made in statutory liquidity ratio over the last
few months, banks have not seen any increase in lending, which is something that RBI Governor Raghuram
Rajan alluded to a few weeks ago.
What lends confidence are two factors the favourable show by the monsoon in the later half and the
downtrend in global commodity prices, notably crude oil.
The latter is bound to have a salutary impact on inflation and the fiscal deficit; diesel subsidy, for instance,
has already been wiped out.
With the next monetary policy announcement of the RBI close at hand, pressure is rising on the central
bank to review its hawkish stance now that retail inflation is close to its benchmark of 8 per cent by January
2015.
Dr. Rajan, of course does not seem to be in the mood to oblige, going by his remarks a couple of days ago,
and rightly so.
There is little point in tinkering with rates unless the downtrend in inflation is clearly established, which is
not the case now.
The approaching festival season will be crucial for industrial growth as purchases of durables and
automobiles generally picks up during this period.
That may well determine the robustness of the ongoing economic recovery.

POLICY GUILDLINES BY RBI

KEY CONCEPTUAL ISSUES ON GLOBAL MONETARY POLICY

14

Reserve Bank of India Governor Raghuram Rajan, who had predicted the 2008 financial meltdown, has said
that abrupt reversal of low interest rates globally could create substantial amounts of damage and that it
should be done in a predictable and careful way.
He was also worried that altering the price of capital for substantial period of time distorted investment
decision and the nature of the economies.
To a question that whether quickly reversing low rates could backfire, he said that Were in the hole we are
in. To reverse it by changing abruptly would create substantial amounts of damage. So Im with (U.S.
Federal Reserve) officials in saying that as we get out of this, lets get out of this in a predictable and careful
way, rather than in one go,
Asked whether super easy money has led to misallocation of capital, he said his greater worry was that by
altering the price of capital for a substantial period of time, are we also, in a sense, distorting investment
decisions and the nature of economy we will have.
Have we artificially kept the real rate of interest somehow below what should be the appropriate natural
rate of interest today and created bad investment that is not the most appropriate for the economy?
To a question whether long-term low interest rate mean trouble, Dr. Rajan said his sense was that monetary
policy could do only so much, and beyond a certain point, it did more damage than good.
A number of years over central bankers had convinced markets that they would continuously come to their
rescue and would keep rates really low for long that had pushed asset prices beyond fundamentals and
made markets much more vulnerable to adverse news, Mr. Rajan said.
Asked about the lack of coordination in the global financial system led by the U.S., he said the U.S. should
recognise that actions of emerging economies to protect themselves over the long run had come back to
affect the U.S.
He said there was room for greater dialogue on how these policies should be conducted not just to be nice
but because in the medium run it was in the U.S. own self-interest.
If you are not careful about the volatility you create, others will have to respond, and everybody is worse
off, Mr. Rajan said.

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BANKS TO BE CAREFULL ABOUT JAN DHAN YOJNA RBI

The Reserve Bank warned the banks to be more careful while opening accounts under the Jan-Dhan Yojana,
saying that a single individual could open multiple accounts in the lure of Rs 1 lakh insurance cover.

Challenges to JAN DHAN YOJNA

People could open accounts in different banks using different identity documents like PAN card, Aadhar
among others in the lure of getting insurance cover of Rs 1 lakh from all the banks.
The banks should have a single information sharing system by which this possible misuse could be stopped.
Another possible threat was smurfing, the RBI official said.
In this case, hawala operators would spilt the whole amount into several small units beyond the threshold
using several bank accounts and send money overseas.
The last was money mules by which an individual would operate through another persons bank account.
Earlier this week, RBI Governor Raghuram Rajan had cautioned banks on the risks involved in just hunting
for numbers with regards to Jan Dhan scheme, asking them not to compromise on core objectives of the
programme.
The scheme can be a waste if it leads to duplication of accounts, if no transaction happens on the new
accounts and if the new users get bad experiences, he had added.

JAN DHAN YOJNA AN ANALYSIS

The Narendra Modi governments Pradhan Mantri Jan Dhan Yojana (JDY), an ambitious scheme for financial
inclusion aimed at creating 7.5 crore new bank accounts in the banking sector by January 26, 2015, has its
sceptics and critics. There is more than a fair chance that they will be proved wrong.

Nationalisation of Banks in 1969

Think back to the last comparable attempt at financial inclusion Indira Gandhis bold move to nationalise
14 banks in 1969 (with another six being nationalised in 1980). We heard pretty much the same arguments
then.
Bank nationalisation was denounced as populist, a socialist gimmick, politically-motivated and worse.
Today, not many would question the beneficial impact nationalisation had on banking and the Indian
economy. To put JDY in perspective, it is useful to see what bank nationalisation achieved.
Bank nationalisation saw a huge expansion in branches into the hinterland. The expansion of the branch
network, in turn, caused money kept under the mattress to be swept into the banking system.
Cash under the mattress may be savings for an individual but these do not translate into saving for the
economy.
Saving, in economic terms, is whatever is available for lending or investment, that is, savings that come
into the financial system.
Bank nationalisation caused the saving rate to go up from 12 per cent of GDP in 1968-69 to 20 per cent in
1979-80.
The rise in saving facilitated a commensurate rise in the investment rate from 13 per cent to 21 per cent.
The increase in the investment rate set the stage for the growth rate of the economy to shift from the
much-derided Hindu rate of 3.5 per cent up to the 1970s to 5.5 per cent in the 1980s.
It was the first shift in trajectory in Indias economic growth in the post-Independence period.

Other banking reforms

15

Financial inclusion benefited not just the economy but also the public sector banks (PSB) despite initial
setbacks.
Investments in branches and the servicing of millions of small accounts pushed up operational costs in
nationalised banks. Combined with bad loans, the investment resulted in the net worth of public sector
banks turning negative by the early 1990s.
However, the infusion of capital by government was modest by international standards less than 2 per
cent of GDP, compared to anywhere between 5-60 per cent elsewhere.
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Bank recapitalisation was part of a larger package of banking sector reform.

Another key reform was the listing of PSBs which subjected them to market discipline. At the same time,
Indias economic growth began to accelerate in the 1990s.
In these new conditions, the long-run benefits of financial inclusion began to kick in. Inclusion not only
increases deposits, it brings in low-cost deposits through savings and current accounts.
For PSBs, the high proportion of low-cost deposits in total deposits turned out to be a source of competitive
advantage.
Their financial performance improved through the 1990s and the noughties and even after the financial
crisis of 2007 until the problems in the infrastructure sector came to the fore.
Judged over some three decades, bank nationalisation proved a winner with financial inclusion being a key
driver of success.
JDY has the potential to have a similar impact. It could see the household saving rate go up and boost the
overall saving rate.
And it could impart a shot in the arm to PSBs which have been losing market share to new private sector
banks. Financial inclusion entails upfront costs but begins to pay off once a certain scale has been reached.

Direct Benefit Transfer (DBT)

Critics of the scheme contend that merely scaling-up will not help the banks or the economy. They say that
many of the new accounts created by inclusion initiatives in recent years have low balances or remain
inoperative.
They overlook a crucial change in the situation: large amounts are poised to flow into bank accounts, thanks
to the direct benefit transfer scheme (DBT) rolled out in January 2013.
Right now, DBT covers 28 schemes, mostly payment of pensions and scholarships. It will soon cover
payment of subsidies as well as wages under the Mahatma Gandhi National Rural Employment Guarantee
Act (MGNREGA).
Payment of subsidies is scheduled for the first phase of financial inclusion, that is August 2014-August 2015.
Once this happens, PSBs will have substantial float funds (on which they pay zero interest) in the accounts
they have opened.
These are equivalent to low-cost deposits and should compensate for high operational costs. Over time,
banks should have in place the infrastructure and the processes to make loans to the new account holders.
Small loans have been freed from interest rate regulation and we know from the experience of microfinance institutions that they can be hugely lucrative. Then, there is the fee income from selling insurance
products.

The add-ons

16

There are details that need to be worked out.

Every account under the scheme comes with a RuPay debit card and Rs.5,000 overdraft facility in the first
phase.
In the second phase, a Rs.1 lakh accident insurance facility and a Rs.30,000 life insurance facility will be
added.
How exactly the premia on the insurance facilities will be paid for has not been spelt out. Some reports
indicate that the premia will come out of charges levied on RuPay card transactions. Will the volume of
RuPay transactions be large enough to pay for the premia?
Banks need to have an idea of the fee income they can hope to generate from the accounts. If the insurance
premia involve any subsidy, the government must bear the cost.
The Rs.5,000 overdraft facility has given rise to concerns about another loan mela. This would amount to
Rs.37,500 crore for 7.5 crore account holders. These concerns are overblown.
Banks will provide the overdraft facility only after watching the account holders record for six months.
There is an incentive for repayment, which is that the account holder can avail of the facility as often as he
likes. It should be possible to contain losses at an acceptable level.

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Public sector bank-centric

Two aspects of JDY are worth highlighting. First, it is an initiative that combines inclusiveness with the
potential to boost growth could turn out to be spot on.
Second, the government has decided that financial inclusion is best pursued through PSBs.
This is rather different from the view implied by the decision of the Reserve Bank of India (RBI) to use new
institutions, such as payment banks and small banks, to push inclusion.
The RBI seemed to have concluded that not much could be expected of PSBs. If JDY works out as planned,
one wonders whether there will much space left for payment banks.
Why would a customer go to a payment bank that only provides deposit and payment services when he has
access to a full-scope bank?
The governments reliance on PSBs makes sense and not just because there is an enormous
infrastructure that can be readily tapped. Where regulation is weak and contracts ill-developed, it is best to
use public institutions to attain larger objectives, instead of relying on regulation or public-private
partnerships.
It is easier for the government to enforce its writ through institutions that it directly controls.
The reassuring message in JDY is that in pursuing its economic objectives, the government wants to accord
an important role to the public sector even while relying on market mechanisms.

PERSISTING INFLATION, A MAJOR CONCERN: RAJAN

The Reserve Bank of India (RBI) Governor, Raghuram Rajan reiterated that persisting inflation is a major
concern and it has to be contained.
The real problem is inflation that is persistent. We have been emphasising again and again in order to
break the back of inflation, we got to break this persistence, said Dr. Rajan
He said that once inflation is contained, the RBI will be in a much more comfortable position.
According to Dr. Rajan in the last few years, food inflation has been the most significant aspect of inflation
and that there may be a link between Minimum Support Price (MSP) and inflation.
The central bank is also working on a producer price index, said Dr. Rajan. We still dont have a proper
producer price index. It is extremely important to understand the differences between retail and wholesale
prices. Those are things to worry about. We are trying to get this data and hope to receive it relatively
soon,
Further he said that there is a need to improve the quality, quantity and timeliness of GDP data.
He also emphasized on the importance of getting data on construction sector as quickly, capture and get
comprehensive data on consumption.
We need to improve the quality, quantity and scope of our data. We are working on it. We certainly need
timely information on employment We need to get comprehensive data perhaps at a monthly level In
many other countries, the employment data forms the basis for a number of decisions on the monetary
policy, said Dr. Rajan.

POLICY GUILDLINES BY THE GOVERNMENT

CENTRE SET TO REVISE GDP MEASUREMENT NEXT YEAR

17

The Centre will soon revise the way it measures the gross domestic product to reflect under-represented
and informal economic sectors, two government sources said, in an initiative that is expected to show the
economy is larger than previously thought.
The government usually revises the method of calculating national accounts and other macro data every
five years, bringing in a newer base year and adjusting for changes in the economy.
The new government of Prime Minister Narendra Modi, which is committed to raising economic growth and
slashing the fiscal deficit, plans to adjust the measurement early in 2015, a senior official at the Ministry of
Statistics said.

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We plan to release GDP data based on the 2011-12 base year by early next year, that could theoretically
revise up the growth estimates, the official said, requesting anonymity as he was not authorised to speak
to media.
The Ministry now takes 2004-05 as the base. Indias informal economy and service sector accounts for over
three-fifths of its $1.8 trillion economy. But precise data are unavailable for these segments, and the
government relies on surveys and samples to calculate their growth.
This is combined with actual output numbers for mainstream industry to produce the GDP data.
In March, 2010, when the government last revised the national accounts, annual economic growth
estimates were upwardly adjusted by 0.8 to 1.7 percentage points for four years, allowing the previous
government to take credit for the countrys highest-ever stretch of economic growth.
Pronob Sen, former chief statistician and current chair of the National Statistics Commission, said the
planned adjustment would likely reveal that the Asias third-largest economy is bigger than previously
reckoned in absolute numbers.
Basically, we have an upward revision because some sectors are not included in the current data, he said,
mentioning higher productivity among informal manufacturing and services firms as well as the advent of
new sectors.
The 2010 revision almost doubled the estimated contribution to the economy made by coaching and tuition
and gave substantially more weight to the construction, trade and hotel industries. The importance of
beauty salons, communication and railways declined.
An upward revision would be a big boost for Mr. Modi and his Finance Minister Arun Jaitley, who is trying to
meet a fiscal deficit target of 4.1 per cent of the GDP and convince global rating agencies to upgrade Indias
sovereign ratings.
Further, The planned adjustment will likely reveal that the Asias third-largest economy is bigger than
previously reckoned in absolute numbers

INDIA NOT TO IMPOSE ANTI-DUMPING DUTY ON SOLAR PANELS

Side-stepping a Commerce Ministry investigation, the Finance Ministry did not notify its recommended antidumping duty on imports of solar panels from four countries, including the U.S. and China.
Owing to the Finance Ministrys inaction, the window that was available to India for slapping these
restrictive duties aimed at protecting the struggling domestic industry has lapsed.
There was no notification. We allowed it to lapse, State Minister for Commerce and Industry
(Independent Charge) Nirmala Sitharaman said.
The Commerce Ministrys quasi-judicial ruling had to be published by the Finance Ministry for which it had a
stipulated timeframe of 3 months.
Following a three-year long investigation, the Commerce Ministry had proposed to the Finance Ministry in
May restrictive anti-dumping duties in the range of $0.11-0.81 per watt on solar cells imported from the
U.S., China, Malaysia and Chinese Taipei.
The investigation had upheld the Indian solar panel manufacturers contention that the subsidies the U.S.
and Chinese competitors receive from their governments allowed them to dump their products in India at
artificially low prices.
Power Minister Piyush Goyal and Road Transport and Highways Minister Nitin Gadkari had both opposed
the Commerce Ministrys recommendation.
Mr. Goyals opposition was on the ground that the domestic solar equipment manufacturing capacity was
insufficient to meet the governments ambitious targets for power generation from green energy sources.

GOVERNMENT TO UNVEIL A NEW IPR POLICY

18

Days before Prime Minister Narendra Modis visit to the US, the government announced it would roll out a
comprehensive intellectual property rights (IPR) policy soon.
We will come up with a policy on IPR and patent rights We are strong in IPR and we will protect our
national interest.

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IPR has been hanging for a very long. There has always been a factor of national interest. We are not going
to be regressed or restrictive. India has a well-established IPR regime, but it is important to spell out a
policy, Commerce and Industry Minister Nirmala Sitharaman told the media.
Asked why the government had suddenly
decided to roll out a policy in this regard, she
said it was imperative for India to have an
overarching policy on intellectual property for
a legitimate fight with countries that raised
questions on the IPR regime here.
She added in the absence of a formal policy,
India hadnt been able to move in a forceful
way in dealing with IPR issues. When there is
a policy, there is consistency and more rigour
to move ahead.
Amitabh Kant, secretary, Department of
Industrial Policy and Promotion, said the
government was keen on upgrading the IPR
regime and the patent office. We will be
clearing the backlog and the pending patent applications. The filings have gone up substantially, he added.
The Centre is planning to bring out a draft IPR policy within four months. Debates and discussions on this
will be carried out for two months, after which a formal policy will be unveiled.
The commerce ministry will also set up a think tank on IPR issues.
India and the US have been engaged in a bitter row over IPR and patents, especially in the pharmaceuticals
sector.
While successive Indian governments have reiterated that the countrys IPR laws are compliant with trading
rules under the World Trade Organization, the US has been vociferous in saying the patent laws here are in
violation of global norms.
In its annual index, the Global Intellectual Property Centre of the US Chamber of Commerce ranked India
the lowest, accusing it of having the weakest IP environment.

BIBEK DEBROY TO CHAIR HIGH-LEVEL GOVT COMMITTEE ON RAILWAYS

19

Objective - In its first attempt at restructuring the railways, the Government has set up a high level
committee to reconfigure the railways board as well as suggest steps for resource mobilisation for major
railway projects, such as tracks to coal bearing areas and increasing line capacity on trunk routes.
Constituents - To be headed by economist Bibek Debroy, the other members are former Cabinet Secretary
K M Chandrashekhar, former National Stock Exchange Managing Director Ravi Narain, Dr. Debroys
colleague in Centre for Policy Research Partha Mukopadhyay and former Procter & Gamble CMD Gurcharan
Das. The sixth member will be a nominee from the Finance Ministry of Finance.
The Government had set up several committees to suggest improving railway functioning since
liberalisation began in the early nineties.
But each time a report was submitted, the Government preferred to cherry-pick a few income generating
recommendations while shelving those relating to changing the department based structure of the Indian
Railways.
As pointed out by Railway Minister D V Sadananda Gowda while presenting the Railway Budget this July,
``funds to the tune of Rs. 50,000 crores per year are required for the next 10 years for ongoing projects
alone.
Further on in his Budget speech, the Minister indicated the Modi Governments priorities``the Railway
Board due to overlapping roles of policy formulation and implementation, has become unwieldy. Therefore
I propose to separate these two functions.
Among others, some sort of revamp of the railways in the last two decades has been suggested by
committees headed by D M Nanjundappa, Prakash Tandon, Anil Kakodkar, Rakesh Mohan and Sam Pitroda.

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GOVERNMENTS VIEW ON REFORMING THE MSME SECTOR

The MSME Ministry is in talks with public sector banks to extend loans to micro, small and medium
enterprises at base rate to help the sector access vast capital from financial institutions at lower costs,
Union Minister said.
Besides, he said the government plans to open 500 district-level incubation centres across the country to
train youth to become entrepreneurs and revitalise the micro, small and medium enterprises (MSME)
sector.
We have drawn up an ambitious plan to open Incubation Centres in 500 districts across the country from
the viewpoint of livelihood.
We will also open 100 high-technology incubation centres. We want to instill confidence among
unemployed youth so that they can become independent, Mr. Mishra said on the sidelines of a PHD
Chamber event in New Delhi.
The Minister also said the government will revise the definition of MSMEs to provide for a higher capital
ceiling, and the new policy should be out in a months time.
We are drafting the new revised MSME policy. It should be out within a months time. Under the new
policy, we will redefine the MSMEs and introduce a new capital limit. At present it is Rs. 25 lakh, Rs. 5 crore
and Rs. 10 crore.
If your turnover exceeds that you are excluded from the ambit of MSMEs and you have to open another
company to avail loan and facilities, he said.
Besides, the Minister launched an App called the PHD-MSME App. The App has been developed with the
help of students of Delhi University.
The App provides solutions to budding entrepreneurs and existing MSME entrepreneurs of different
dimensions like marketing, finance, training and capacity building, different government schemes and
opportunities.
He further said the MSME Ministry is working on setting up of a Credit Guarantee Trust Fund to extend
liberal packages to MSME sector and inputs have already been incorporated in the new draft MSME Policy.
As per stipulation of the new policy, the general procedures as well as procurement procedures would be
vastly simplified and all clearances for setting up of micro and small businesses would be accorded online
within a fixed period of 15 days, assured the Minister.

CENTRE TO SPEND RS.33,000 CR ON BROADBAND PROJECTS

Though the government is promoting the concept of public-private partnership (PPP) in all sectors, it has
decided to keep crucial sectors of the broadband network to be rolled out over the next few years under its
control.
Bulk of this roll out will be for the Digital India plan of connecting all panchayats with broadband and for
closed user group networks exclusively for government organisations.
Speaking at an industry function, Telecom Secretary Rakesh Garg said the government planned to spend
around Rs.33,000 crore over the next three years on various broadband projects with the bulk of funds,
Rs.21,000 crore, to be earmarked for the broadband backbone for the Digital India project which aims to
bring government services to the doorstep of every person by connecting all the 2.5 lakh village
panchayats by March 2017.
Mr. Garg said a note had been sent to the Expenditure Finance Committee for clearance after which it
would be placed before the Cabinet for final nod.
He was confident of the government meeting its target of connecting 50,000 village panchayats by the end
of the current fiscal.

PSU ISSUES
CABINET CLEARS STAKE SALE IN COAL INDIA, ONGC AND NHPC

20

Paving the way for the Modi Governments disinvestment programme, the Cabinet Committee on Economic
Affairs (CCEA) gave its approval to the sale of stakes in Coal India Limited (CIL), Oil and Natural Gas
Corporation (ONGC) and National Hydroelectric Power Corporation (NHPC).
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The Finance Ministry had proposed shares sales of 10 per cent in CIL, 5 per cent in ONGC and 11.36 per cent
in NHPC.
The disinvestment proposals are in line with those originally drafted by the UPA Government before the
elections
The Finance Ministry estimates that the 5 per cent disinvestment in ONGC alone will fetch Rs.18,000 crore
and the 10 per cent stake sale in CIL will rake in at least Rs.25,000 crore.
The stake sales will be completed through Offers for Sales conducted via e-auctions on the stock exchanges.
The government has already selected merchant bankers for managing the disinvestments in ONGC and
NHPC, and is in the process for finalising the managers for CILs offer for sale.
The UPA government had sold a 5-per cent stake in ONGC in 2012 for Rs.14,000 crore.
State-owned LIC had picked up 95 per cent of the total shares on the block for over Rs.12,000 crore.

Background

The disinvestment programme, since it began in the early 1990s, has managed to meet the budgeted
targets only thrice, and the best year was 2012-13 when the government raised Rs.23,957 crore from stake
sales.
This will, therefore, be the best-ever year for disinvestment revenues, but there could be a couple of
hurdles for the government to cross along the way.

Highlights

All the three are firms are blue chip PSUs in which the government is by far the dominant stakeholder. At
present, the government owns 89.65 per cent in Coal India, 85.96 per cent in NHPC and 68.94 per cent in
ONGC.
The government plans to sell 10 per cent in Coal India to yield Rs.23,600 crore, 5 per cent in ONGC
(estimated realisation Rs.19,000 crore) and 13.3 per cent in NHPC (Rs.3,100 crore).
If all goes well, the total realisation from just these three stake sales will exceed Rs.45,000 crore,well past
the budgetary estimate of Rs.43,425 crore, under this category.
That would also make it the highest-ever collections under the governments disinvestment programme.
The previous record was in 2009-10 when the government sold NTPC and NMDC shares and realised
Rs.23,957 crore. To put matters in perspective, CILs divestment alone will fetch that much this year.
The Finance Minister has also budgeted for another Rs.15,000 crore through sale of governments residuary
stake in erstwhile government companies.

HURDLES IN THE PROCESS OF DISINVESTMENT

The employees unions at CIL are up in arms, resisting what they call the privatisation of the company in
which the government now holds 89.65 per cent.
There could be tricky days ahead in getting the unions, which have threatened a strike, on board.
Such an eventuality could bring down the valuation of CIL and consequently the proceeds from stake sale.
The choice of NHPC is also intriguing given that it has not been performing very well.
Plagued by dues from some state utilities and delays in project execution, the company is heading for a loss
this fiscal year, according to its own communication to the government.
The price that the share will fetch may therefore not be optimal for the government.
As for ONGC, clarity on the gas pricing policy of the government will help investors to value the company
better.
The downtrend in global oil prices will reduce the subsidy burden and increase ONGCs profitability.

ANALYSIS
Retail Investors

21

Getting back to this years disinvestment story, retail investors defined as those who bid for less than
Rs.2 lakh, will get sops, a 20 per cent reservation in the issue, and a 5 per cent discount to the issue price.
Surely, employees are bound to get similar concessions and incentives.
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Over several rounds of disinvestment, the government has sought to incentivise retail participation. The
results have been tardy for many reasons.
It is possible the size of the discount is not sufficient. Moreover, the market price of these listed companies
starts converging to the issue price, which, in effect, means that the retail investor will lose his advantage
almost immediately. This has happened with many issues in the past. Retail investors benefit only by
holding on to their shares over the medium-term.
Another relevant issue: notwithstanding the discount, small investors might be hard pressed to invest up to
the maximum in this case Rs.2 lakh in each issue. There will be sundry non-banking finance companies
(NBFCs) and others financing the issue but, as in the past, retail investors might not be tempted.

Methodology of Sale

A point overlooked is the crucial role that the methodology of public sector sale in attracting different types
of investment.
Reports speak of the government opting for the offer for sale of shares through the stock exchanges. This is
one of the two methods introduced by the Securities and Exchange Board of India (SEBI) some three years
ago to aid the disinvestment process, the other being the institutional placement programme (IPP).
Although private companies can also adopt these, it is for the public sector that they are intended.
Through another SEBI stipulation, there should be a minimum public float of at least 25 per cent. Many
PSUs have a smaller size of public holding. The government, which owns substantially more and in a hurry
to comply with the SEBI rule, has often resorted to the first method, the offer for sale through the stock
exchanges.
This is undoubtedly a faster method to the follow-on public offer through a prospectus and involving many
time-consuming clearances. But what is good for the PSU and the government need not be retail investorfriendly.
If the government mops up the nearly Rs.43,500 crore from these offerings, it would be on course to
achieve the budgets ambitious fiscal deficit target at 4.1 per cent of GDP.
However, the point about disinvestment is that it will unlikely yield similar large receipts in the following
years.
The high valuations obtaining at present cannot be taken for granted. Nor will similar quality stocks such as
from the energy sector will be continuously available.
One other dimension is a larger public shareholding exposes the PSU to market discipline and ushers in
greater accountability and transparency.
There is, of course, much that the government can do to nurture the PSUs.
Autonomy for them is a big issue that will weigh with public policy long after the present round of public
sector stake sale is completed.
Having got Cabinet clearance, the disinvestment department should move quickly to complete the sale
process and capitalise on the current positive atmosphere.

CENTRE TO REVIVE FIVE PSUS

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The government on said it had begun the process of reviving five ailing PSUs and is working on one-time
settlement, involving voluntary retirement scheme entailing a cost of Rs.1,000 crore for employees of six
state-run units not capable of revival.
Out of 11 sick PSUs, the process for reviving five has started and these shall be revived.
However, the remaining six units, which cannot be revived, we have decided on making a one-time
settlement proposal of VRS for the employees of these units.
The state-run units, which have been identified by the government for revival, include HMT Machine Tools;
Heavy Engineering Corporation; NEPA; Nagaland Paper & Pulp Co; and Triveni Structurals, Union Heavy
Industries & Public Enterprises Minister Anant Geete said.
Mr. Geete said the government was working on a one-time settlement proposal for six terminally ill PSUs,
which could not be revived, to eliminate higher recurring expenditure.
Since last several years, we have been paying salaries to all the employees sick PSUs. We have spent
Rs.3,000 crore till now on that. Instead of spending more thousand crores on that, it will be better that we
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spend once and for all. We are making a proposal for one-time settlement costing around Rs.1,000 crore for
employees of six PSUs not capable of revival.
The six companies which cannot be revived are: Hindustan Photo Films; HMT Bearings; HMT Watches;
HMT Chinar Watches; Tungabhadra Steel Products Ltd; and Hindustan Cables. These six companies have
employee strength of 3,603, the Minister said at a press conference to mark the 100 days of the NDA
government here.
Mr. Geete also informed that as per the recommendations of the Board for Reconstruction of Public Sector
Enterprises (BRPSE), the government/holding companies have approved revival of 48 out of 58 central
public sector enterprises (CPSEs) and closure of four out of six CPSEs.

FIVE STATES CONTRIBUTED HALF OF PSU INVESTMENTS BETWEEN 2008 AND 2013

According to a study by the Associated Chambers of Commerce & Industry of India (Assocham), 50 per cent
of the major investments amounting to Rs.5.5 lakh crore ($91 billion) - between 2008-09 and 2012-13 in
Central Public Sector Enterprises (CPSEs) came from five States.
Topping the list, Maharashtra alone claimed 20 per cent in the total, followed by Andhra Pradesh (8.4 per
cent), Tamil Nadu (8.1 percent), Odisha (6.7 per cent) and Uttar Pradesh (6.2 per cent), the study said.
The investment would have been much more with improved employment generation had there not been
delays in execution and implementation of the new projects, the study added.
Investment is a function of the state of economy, historical base of the concerned CPSE, industrial
environment and the push factor of the states besides priorities of the central government.
Despite talks of autonomy, the public sector investment decisions are influenced by several factors other
than pure commercial considerations, Assocham Secretary General D.S. Rawat said.
The other States in the list included West Bengal (5.3 per cent), Chhattisgarh (4.8 per cent), Assam (3.9 per
cent), Madhya Pradesh (3.8 per cent) and Himachal Pradesh (3.4 percent)
The CPSEs investment growth rate was recorded at 9.05 percent in 2012-13 on a year-on-year basis as
compared to 13.42 percent in 2011-12, 9.48 percent in 2010-11 and 15.52 percent in 2009-10, the paper
said.

DO NOT KEEP TAXPAYERS WAITING: CBDT TO I-T DEPT

23

The Central Board of Direct Taxes (CBDT), has issued strict instructions to Income Tax department officers
asking them not to keep taxpayers waiting in their offices for getting their work done as such action bring
great embarrassment to the government.
The CBDT, the apex policy making body of the I-T department, issued the fresh directives after it recently
got a number of complaints from taxpayers and others in this regard.
It has been brought to the notice of the Board that some of the officers are issuing notices to the
taxpayers, witnesses, representatives etc. indicating a standard time of appointment. Thus, many persons
called for hearing etc. on a day by an officer are given the same time for appearance.
Naturally the persons are made to wait for their turn.
Such actions, apart from causing avoidable inconvenience to the taxpayers, witnesses, representatives etc.
cause great embarrassment to the government, the CBDT directive said.
All the officers, the directive said, are, therefore, advised to strictly maintain the appointment schedule in
spirit with the Citizens Charter, 2014 of the department which specifically provides that we endeavour to
adhere to the schedule of appointments with taxpayers.
CBDT has asked supervisory rank officers of the department like Chief Commissioners, Commissioners and
Additional Commissioners to ensure that officers reporting to them strictly comply with this instruction
and avoid fixing multiple appointments at the same time.
The importance of the directive can be gauged from the fact that these have been issued after getting
personal approval from CBDT Chairman K V Chowdary who has recently taken over
The Citizen Charter, or the promise made to the taxpayers by the department, envisages that taxpayers will
not be troubled vis-a-vis scheduled appointments and their time would be respected.

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PANEL SUBMITS REPORT ON NEW GAS PRICING FORMULA

24

A four-member committee of secretaries has submitted its report on a new gas pricing mechanism,
prescribing a rate much lower than the doubling of price approved by previous UPA government.
The government had last month constituted a committee comprising of secretaries of power, fertilizer and
expenditure with additional secretary in the oil ministry as its member secretary, to make amends to a
formula notified in January that doubled the gas price to $8.4 per million British thermal unit.
The official said the report will be reviewed in the Oil Ministry before a note is moved to the Cabinet.
Though contents of the report have been kept under wraps, the official indicated that the price increase
may be around 50 per cent. Most of the domestically produced gas is currently sold at a price of $4.2 per
mmBtu.
The panel has tried to strike a balance between demands for a market linked rate by gas producers to make
marginal and deep-sea fields economically viable, and consumers in power and fertilizer sector, who have
said they cannot afford any rate higher than $5.
Though the government had stated that a gas price will be announced by September end, there are
indications that a decision may be put-off until completion of assembly polls in Maharasthra and Haryana in
mid-October.
Any increase, even of $2 per mmBtu, will lead to a hike in CNG price for automobiles, something the ruling
establishment does not want on the eve of state polls.
Industry sources said the previous UPA government had notified the Rangarajan formula in January but
before a rate could be implemented from April 1, general elections were announced and Election
Commission sought postponement of its implementation.
Since elections to Maharashtra and Haryana assembly have already been announced, a deferment can be
sought on similar grounds.
An increase in gas price would have led to increase in cost of urea, power and CNG.
Every dollar increase in gas price will lead to a Rs. 1,370 per tonne rise in urea production cost and a 45
paise per unit increase in electricity tariff (for just the 7 per cent of the nations power generation capacity
based on gas).
Also, there would be a minimum Rs. 2.81 per kg increase in CNG price and a Rs. 1.89 per standard cubic
metre hike in piped cooking gas.
The increase in gas price would bring windfall for the government -- about $2.08 billion (Rs 12,900 crore)
from additional profit petroleum, royalty and taxes accruing from doubling of gas rates, according to oil
ministry estimates.
The Cabinet Committee on Economic Affairs had on June 25 deferred by three months the implementation
of a formula approved by the previous UPA government which would have doubled gas price to USD 8.4 per
million British thermal unit.
Parliamentary Standing Committees on Finance as well as Petroleum had called for a review of the formula
suggested by the Dr C Rangarajan headed panel, saying gas price should have some linkage with the cost of
production.
According to the Oil Ministry, the cost of gas production varies between $1.86 per mmBtu to $4.31 per
mmBtu but a cost-plus price would be perceived negatively by the market.
In their submission to the secretaries panel, energy producers have demanded a natural gas pricing policy
that is legitimate, relevant and credible to maintain investor interest in Indian E&P sector.
State-owned ONGC in its submissions stated that it needs $ 6-7.15 to break-even on gas it plans to produce
from its most prolific KG basin block and a price of between $5.25 and $17.80 per mmBtu to break-even on
production planned from seven small and marginal fields in the western offshore.
BP, which partners Reliance Industries in KG-D6 and other blocks, stated that deeper gas fields are not
viable at a price of anything less than $10.

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CAPITAL INFUSION VITAL FOR INSURANCE SECTOR: IRDA CHIEF

Insurance Regulatory Development Authority chairman T.S. Vijayan said the sector needed capital infusion.
On the sidelines of an ASSOCHAM conference on Digitization & Enhanced FDI in Insurance The road
ahead in Hyderabad, he said the Insurance Amendment Bill that was before Parliament now was drafted in
the year 2006. Since then, it had evolved much and changes had taken place.
He said the Authority had made suggestions to a Standing Committee, especially with respect to areas like
eCommerce and health insurance. About the Authority welcoming the Bill on hiking Foreign Direct
Investment in the insurance sector, he said it was a wrong notion.
That is not the thing. What we have been consistently maintaining is that the industry needs a huge
amount of capital and that if foreign capital is increased, it would be easier flow of capital than all put by
Indians. We are not saying FDI has to come. Capital is required and Indians may not have that much ability
to put all the capital. If more comes, it will help, he said.
Earlier, addressing captains of the industry, he said that instead of constantly talking about the need for
insurance penetration to increase, they could work on coming up with a product that could appeal to the
masses. We need to develop sales professionals. Can you come up with a product that 60 per cent of
people will be able to afford? he asked.
The insurance sector was always in the forefront of leveraging technology, he recalled that apart from the
defence, it was the Life Insurance Corporation of India that were the first to get the lastest IBM 1410 data
processing systems way back, in India. He asked the audience whether any insurance company had
developed an app (application) to help customers compare products.
Use the power of technology to give the power to access policy details to the customer and your problems
will be solved. The industrys strength lies in it Simplify products and processes and that is the way
forward, he reiterated.
A participating member said that simplification of products and the complex nature of product sale and
reduction of distribution, management and operating costs were what were required, apart from free flow
of capital to the sector.

S&PS RATING UPGRADE TO BOOST FOREIGN INVESTMENTS

25

On the back of what it called an improved political setting offering a conducive environment for reforms,
global ratings agency Standard & Poors raised Indias sovereign outlook from negative to stable.
The upgrade signals a greater margin of safety on creditworthiness and thus improves Indias attractiveness
as an investment destination to foreign investors.
The benefits further extend to Indian companies as overseas borrowing rates come down. The stable
outlook augurs well for the rupee that has weakened in the past week.
The S&P cited two reasons for the change in outlook.
o First, a stronger political mandate improves the governments ability to implement reforms, spur
growth and improve its fiscal performance.
o Then, Indias external account has improved.
At the time of the 15th Lok Sabha election, the S&P said it was watching India for structural reforms, adding
that the direction and pace of policy reforms, rather than which political party would come to office, would
affect the sovereign ratings.
With the S&P upgrade, all three major global credit agencies have now placed Indias sovereign rating at the
lowest investment grade but with a stable outlook. S&P cut Indias rating to BBB-minus in April 2012.
All eyes are now on a ratings upgrade, which, S&P said, would be contingent on per-capita gross domestic
product trend growth rising to 5.5 per cent annually.
This translates into a GDP growth rate of 6.5 per cent to 7 per cent. A failure to implement reforms or
deterioration in the fiscal or the external situation could trigger a rating downgrade, S&P cautioned.
Reacting to the news of the upgrade, Finance Secretary Arvind Mayaram told presspersons that he expected
the economy to grow faster than 5.5 per cent in the current fiscal year.

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PENSION REFORMS

A majority of the workforce today lacks any form of retirement security

It is strange how any debate about Indias pension sector often gets bogged down on details even as the big
picture is completely ignored.
The Employees Provident Fund Organisations (EPFO) recent decision to set its interest rates at 8.75 per
cent for this fiscal was the cue for a raging debate on whether or not it should invest in the stock market.
The recent passage of the Pension Fund Regulatory and Development Authority Act (PFRDA) generated a lot
of heat about foreign investors being allowed to manage Indias retirement savings.
Yet, the basic truth is this: a majority of the workforce today lacks any form of retirement security. Though
India is likely to see its 60-plus population swell from 80 million to nearly 200 million over the next 15 years,
nearly 90 per cent of these people are not covered by any formal pension scheme.

EPFO A year at a time

26

Then there is the fact that even those who are supposedly covered by formal pension schemes arent really
assured of a reasonable retirement kitty.
Take the over 8 crore subscribers of the EPFO. Though their monthly contributions to the EPF are welldefined, the returns they can hope to earn from this fund arent.
The rate at which ones retirement savings grows under the scheme is determined by the interest rates
announced by the EPFO trustees each year.
The primary purpose of any retirement fund is to generate inflation-beating returns. Even as consumer
price inflation (CPI) has accelerated in the last three years, the returns declared by the EPFO have declined.
Against the CPI inflation of 8.4 per cent, 10.2 per cent and 9.5 per cent, respectively, over 2011-12, 2012-13
and 2013-14, the EPFO declared interest rates of 8.25 per cent, 8.50 per cent and 8.75 per cent,
respectively, for these three years. These are much lower than the 9.5 per cent declared in 2010-11.
Returns this year may prove higher than inflation but that is more due to the latter moderating than
because of the EPFO getting its act together.
Over the long-term, the funds inability to deliver over inflation can cost its subscribers dear. They may be
left with much lower purchasing power than they expected when they retire.
The usual solution offered to this problem is to let the EPFO invest, say, 10-15 per cent of its corpus in
equities.
But investing in equities requires hands-on portfolio management, a good sense of market timing, and an
ability to actively churn the portfolio in tune with shifting macro indicators. The organisation has so far
demonstrated very little ability on these.
For one, its current investment strategy, if one can call it that, is restricted mainly to buying and holding
government securities (about 40 per cent of the assets), and parking funds in deposits and bonds of public
sector institutions (32 per cent of assets) and the special deposit scheme of the Government (about 11 per
cent).
Not only are its investments subject to rigid and archaic guidelines but they are also further moderated by
its Board of Trustees.
As a result, the EPFO hasnt even explored triple-A rated corporate bonds or debt mutual funds, which are
allowed under its restrictive mandate.
More active management of the debt portfolio is the need of the hour, before the fund can jump headlong
into equities.
Two, the decision (since 2008) to appoint private fund managers to manage the EPFOs Rs.5-lakh crore-plus
corpus hasnt generated material benefits for its subscribers either.
The restrictive investment rules do not allow these managers to manage the portfolio for the best results.
The inexplicable decision to appoint these fund managers only for three years at a time has also made for
low interest as well as accountability from the chosen managers.
And to top it all, fund managers are selected not mainly for their track record or governance but on the
basis of who bids the lowest management fee.
In the previous round of auctions in 2011 ICICI Prudential AMC, the best performing manager in the
preceding three years was dropped.
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The term of the current managers is expiring this month and it is critical for the EPFO to review both the
term and the selection criteria.

NATIONAL PENSION SCHEME

Subscribers to the National Pension Scheme (NPS) are luckier than those in the EPFO when it comes to
returns.
The NPS is the default pension manager for all government employees since 2003 and is also open to
private and informal sector workers.
Given that this scheme offers a wide menu of asset classes (equities, private and government bonds and
money market instruments) to its managers, most plans have managed to generate a double-digit or at
least inflation-beating return.
The scheme also allows the employee to choose between managers based on their individual return record
and freely switch between them. This has led to better accountability and performance.

PROBLEMS IN NPS

Fund managers only for five-year terms after which they may be changed or replaced. The managers are
again selected primarily based on the fee they bid to manage the assets; Reliance Capital bid 1 basis point
or 1 paisa per Rs.100 in the recent auctions.
Given that a 200-300 basis point fee is the norm to manage mutual fund or insurance assets, the question is
whether such rock-bottom fees will encourage private managers to deploy their best resources or skills in
managing NPS funds.
If you ask the lay investor what is the one quality that he would like from the manager of his retirement
savings, his answer would undoubtedly be stability.
Therefore, it is critical for the NPS to re-examine how it can grant its top performing portfolio managers a
longer tenure so that they can manage the corpus with a long-term orientation.

CONCLUSION

Provided these glitches are ironed out, the NPS, with its voluntary subscriptions and transparent and flexible
plans, can, in fact, emerge as the default retirement solution for most Indians.
Of course, this cannot be accomplished on a shoe-string budget. It would require active marketing effort by
the Centre and distribution incentives that prompt banks, post offices, and other financial intermediaries to
actively showcase the scheme as a good retirement option for the lakhs of Indian workers who today have
no retirement benefits at all.

INFORMAL ECONOMY NSSO REPROT AN ANALYSIS

27

Informal jobs mean vulnerability, lower wages, no social security: NSSO

Nearly three out of four people working in the non-agricultural sector in India are in informal jobs, new data
from the National Sample Survey Office (NSSO) shows.
Eighty per cent of these informal sector employees have no written contract and 72 per cent get no social
security benefits, according to this data.
The NSSOs 68th round looked at the Informal Sector and Conditions of Employment in India for 2011-12,
by conducting a nationally representative household-level sample survey.
It looked at both rural and urban areas, but excluded crop-based farming, covering just over half of Indias
workforce as a result.
In 2013, Credit Suisse economists Neelkanth Mishra and Ravi Shankar estimated Indias informal economy
at 90 per cent of all employment and half of total GDP. They estimated informal employment in the nonfarm sector at 84 per cent, substantially higher than the NSSOs estimate. Only sub-Saharan Africa had a
comparable extent of informalisation.
The NSSO characterises the informal sector as consisting of units operating at a low level of organisation
with little division between labour and capital, and labour relations based on family, social relations or
casual employment.
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Seventy-two per cent of this workforce was in the informal sector, the NSSO found, with the proportion
being higher in rural than urban India.
Nearly all of the self-employed the largest component of the workforce are in informal jobs, while
over 40 per cent of those in regular or salaried jobs are also in informal work arrangements.
In real terms, informal jobs mean vulnerability, the numbers indicate. Of those in the informal sector, 42 per
cent were in temporarily employment.
Wages were lower in the informal sector; while regular/ salaried employees earned Rs 401 per day, those in
the informal sector earned Rs 225 per day.
Nearly 80 per cent of all informal sector workers had no written contracts, 70 per cent got no paid leave and
72 per cent got no social security benefits. Eighty per cent were not members of any union or association.
Informalisation the proportion of informal workers to total workers has fallen significantly since 20045 though the 2009-10 data showed a slight rise, the NSSO says.
Manufacturing, construction, wholesale and retail trade, transportation and storage were the main sectors
employing informal workers, the NSSO found.
Most enterprises hiring informal workers are tiny; three-quarters of all informal workers are in enterprises
of less than six persons, the data shows.
Among the States, Punjab, Uttar Pradesh and West Bengal had the highest proportion of informal workers,
and the north-eastern States, Himachal Pradesh and Goa the lowest.

INFORMAL SECTOR AND NEED OF LABOR REFORMS

28

Discussions on the need for labour reform in India, recharged by recent decisions of the Rajasthan state
government and the central cabinet, focus on the need to deal with the inflexibilities resulting from the
application of the Factories Act.
Too much of Indian manufacturing, it is argued, falls in the category of units subject to that Act, which
employ 10 workers or more if functioning with the aid of power or 20 workers or more when functioning
without the aid of power.
This is seen as a reason to shift the definitional boundary, as is being done in Rajasthan to 20 workers with
power and 40 without, so that more of Indian manufacturing is exempted from meeting the regulatory
provisions of the Act, including those on the terms and conditions of employment.
However, evidence on the issue coming from reports based on the periodic employment and
unemployment surveys (EUS) conducted by the National Sample Survey Organisation suggests that only a
small share of employment is in the organised sector so defined.
The most recent is the just released report on the Informal Sector and Conditions of Employment in India
based on the employment and unemployment survey conducted in the 68th round of the NSS during July
2011 to June 2012.
The NSS adopts a definition of the informal sector which, in the case of manufacturing, is very different
from the residual sector excluded from the statutory definition of the organised manufacturing sector.
The report identifies the informal sector as consisting of proprietary and partnership enterprises
(excluding those run by non-corporate entities such as cooperatives, trusts and non-profit institutions), in
the non-agricultural sector and in agriculture-related activities excluding crop production (AGEGC).
These kinds of non-agricultural enterprises are the ones that do not correspond to the organisationally
more modern enterprises that economists like Simon Kuznets saw as coming to dominate the nonagricultural sector in the course of development.
In that view, besides the diversification of economic activity away from agriculture, modern economic
growth would be accompanied by an increase in the size of non-agricultural enterprises and a growing role
for impersonal forms of organisation (such as the joint-stock company).
Using this definition of the informal sector, the EUS for 2011-12 estimated employment in the informal
component to be about 75 per cent of total usual status employment (principal and subsidiary) in the rural
areas and 69 per cent in urban areas.
The non-agriculture and AGEGC sectors themselves accounted for 41 per cent and 95 per cent of total
employment.

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29

The figures for informal employment are likely to be even larger because enterprises identified as
employers households, which account for employment like the provision of domestic services, are
excluded from the definition of the informal sector.
This implies that an overwhelming share of non-agricultural employment is in the informal sector.
The sub-sectors that account for a dominant share of informal sector employment are manufacturing,
construction and trade (wholesale and retail). They accounted for 76 per cent and 68 per cent respectively
of all workers in the non-agriculture informal sector, in the rural and urban areas, as compared with 71 per
cent and 56 per cent respectively of all workers in the non-agriculture sector.
The fact that sectors like trade and construction are important contributors to the unorganised sector and
to informal employment is of significance, given the argument that it is regulation that is responsible the
proliferation of unorganised units and informal employment.
The really stringent form of size-based regulation applies to the manufacturing sector, in which units that
meet the criteria set by the Factories Act, 1948 need to register themselves and be subject to factory
legislation.
This legal distinction does not apply to non-agricultural sectors outside manufacturing.
This fact notwithstanding, it would be useful to assess the size of the unorganized sector, if the same criteria
used to define unorganised manufacturing are applied to other non-agricultural sectors as well.
This can be done using information culled from unit level data relating to the employment and
unemployment surveys for 2004-05, 2009-10 and 2011-12. This period more or less covers the years of high
growth, when GDP was increasing at a compound rate of 8-9 per cent per annum in most of the years.
This should have had some impact on the nature of employment with an increase in the share of organised
sector employment.
Between 2004-05 and 2011-12, total employment in the country rose from 457.9 million to 472.4 million.
Over the same period employment in the organised, non-agricultural sector, defined to include all units
with 10 or more workers if using power and 20 or more workers if not using power, rose from 28.8 million
to 47.7 million, whereas employment in the unorganised sector rose from 185.4 million to 209.6 million.
That is organised sector employment stood at 6.3 per cent and 10.1 per cent respectively of total
employment in 2004-05 and 2011-12.
In absolute terms there were more who joined the unorganised sectors workforce than the number who
entered the organised sector between the two years. Even in 2011-12, as much as 86 per cent of workers in
the private sector and 50 per cent in the public sector were in units that could be designated as unorganised
based on employment size.
What would happen if the definition of the organised sector is changed to include all units that employ 20
workers or more , whether they use power or not?
That is the definition closest to that suggested as part of the recent labour reform in Rajasthan.
According to the NSS, that would take the share of workers employed in the unorganised sector in 2011-12
to 83 per cent in the public sector and 92 per cent in the private sector, or to 91 per cent of total nonagricultural employment as compared with 81 per cent as per the current definition.
Needless to say, relying on employment size of units alone would exaggerate the size of unorganised
employment relative to a measure of informal employment based on nature of the employment contract.
While the implementation of labour reform uses the employment size definition to demarcate the universe
to which regulation must apply, the substance of reform relates to the nature of employment.
The evidence from the 2011-12 NSS survey regarding the nature of employment outside of crop production
is striking.
According to the survey, among the employees in the AGEGC and non-agricultural sectors, about 79 per
cent had no written job contract - the proportion was about 85 per cent in rural areas (86 per cent for males
and 81 per cent for females) and about 73 per cent in the urban areas (73 per cent for males and 72 per
cent for females).
What is more, the proportion of employees without written job contract has increased between 2004-05
and 2011-12 for males and females of both rural and urban areas.
In the AGEGC and non-agriculture sector, the proportion of employees without written job contract
increased from 74 per cent in 2004-05 to 79 per cent in 2011-12.

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During this period, this proportion increased from 79 per cent to 86 per cent for rural males, from 78 per
cent to 81 per cent for rural females, from 68 per cent to 73 per cent for urban males and from 69 per cent
to 72 per cent for urban females.
In fact, a useful exercise is to rely on the unit level data from NSS surveys and consider the proportion of
employment where any one of three features written contract, provision of social security (pension etc)
and eligibility for paid leaveis present as indicative of employment being formal.
Let us also separate out the organized and unorganized sectors in terms of the employment-size based
definition referred to above. The results are striking. It emerges that 25.6 per cent of employment in the
unorganized public sector and 23 per cent of employment in the organized public sector is informal,
whereas 94.5 per cent of unorganized and 54.3 per cent of organized employment in the private sector is
informal in nature. (If we make the criterion more strict, and designate employment as formal only if some
social security benefit is provided, then the figures change to 41.7, 32.2, 98 and 67.2 respectively.)
Thus, when approached from the employment side non-formal employment still constitutes an
overwhelmingly large proportion of employment outside of crop production in India. This questions the
grounds on which the need for labour reform is often defended.

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SOCIAL ISSUES
GOVERNMENT WANTS CLARIFICATION ON TRANSGENDERS ORDER
Five months after the Supreme Court, in a far-reaching judgment, directed the government to grant legal
recognition to transgenders as a third gender, the Centre has raised several objections against the verdict.
As per the Ministry of Social Justice there was ambiguity in the ruling, as lesbians, gays and bisexuals (LGB)
could not obviously be included in the transgender category. The concept of LGB was based on the sexual
orientation of a person, while the term transgender had to do with a persons own deep sense of gender
identity.
This stand contradicted the Supreme Court, which said transgender was used in a wider sense in the
present age. In words of the bench, Even gays, lesbians and bisexuals are included by the descriptor
transgender. This has come to be known as an umbrella term,
The Ministry also found fault with the courts inclusion of eunuchs in the transgender category. It said the
Oxford Dictionary meaning of eunuch was a castrated man employed to guard womens living areas at an
oriental court.
The ministry said that Eunuchs are not transgenders, nor a variant of transgender. It is a different concept
altogether.
Further, the Ministry asked the court if it expected the government to suo motu include all transgenders in
the Other Backward Classes (OBC). There was an established procedure under the National Commission for
Backward Classes Act, 1993 for this.
BACKGROUND

The judgment, delivered on April 15, had given transgenders the right to decide their own gender.
A Bench of the Supreme Court had directed the government to treat them as socially and educationally
backward classes of citizens.

BIHAR DECLARES TRANSGENDERS AS THIRD GENDER

In a significant decision, the Bihar Cabinet has declared transgenders to be counted as 'third gender' in the
state.
Government has said that the transgenders will be included in Schedule - 2 of the list of Backward Castes in
the state and will be given reservations in government jobs according to the prevalent rules and regulations.

SC CLEARS 3% RESERVATION FOR DISABLED IN JOBS

The Supreme Court has ruled in favour of three per cent reservation for differently-abled candidates in civil
services, not only at the stage of their appointments but also for departmental promotions.
Government sought to point out that the reservation at the stage of promotion may lead to huge
resentment, especially among employees in Group A and Group B categories, since many beneficiaries may
get ahead of their seniors.
The bench, however, told the government that the objective of the reservation policy, as envisaged by
Parliament, was unequivocal that the differently-abled people must get the benefits without technical
impediments.
Giving a level-playing field to more than four crore people with disabilities in India, the apex court held that
the Centre, states and Union Territories were obligated to implement the rules of reservation for this class in
the matters of appointment, selection, direct recruitment, deputation and also for promotions
A bench led by Chief Justice of India R M Lodha reiterated its earlier verdict that the principle of not
exceeding 50 per cent reservation would not be applicable while granting quota for differently-abled people.

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BACKGROUND

The Supreme Court had in October last ruled in favour of a minimum three per cent reservation for the
disabled in central and state government jobs.
Regretting the denial of opportunities to the differently-abled people in the country, the court had quashed
the Centres 2005 office memorandum and the governments claim that the reservation policy not only had
to be different for Group A, B C and D posts but the quota had to confine to identified posts.
The three per cent reservation, as clarified by the apex court in its last years judgment, is to the extent of one
per cent each for the blind, hearing and speech impaired, and persons suffering from locomotor disability or
cerebral palsy.

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HEALTH
GREATER TRANSPARENCY NEEDED IN ORGAN DONATION
Union Health Minister has called for Information Technology-guided transparency in the interface between
organ donors and recipients when the National Organ and Tissue Transplantation Organisation (NOTTO)
becomes operational.
The Minister said no VIP quotas and no recommendations from officers will be entertained.
HOW WILL THE PROCESS BE STREAMLINED?

A general waiting list will be maintained and once a brain-stem dead patients consent is available, a state-ofthe-art retrieval, matching and transplantation operation will swing into action.
A patient who is registered on the waiting list will be given a number which will not change even if he admits
himself to another hospital later.
NOTTO

National Organ and Tissue Transplant Organization (NOTTO) is a National level organization set up under
Directorate General of Health Services, Ministry of Health and Family Welfare.
National Network division of NOTTO would function as apex centre for All India activities of coordination and
networking for procurement and distribution of Organs and Tissues and registry of Organs and Tissues
Donation and Transplantation in the country

AYUSH MISSION TO BE LAUNCHED SOON

The Union Cabinet, has given its nod for launching the National AYUSH Mission (NAM) with core and flexible
components.
It is aimed at addressing the gaps in health services by supporting AYUSH (Ayurveda, Yoga and Naturopathy,
Unani, Siddha and Homoeopathy) care and education, particularly in vulnerable and far-flung areas.
ANALYSIS

Under NAM, special focus will be given to specific needs of such areas and allocation of higher resources in
their annual plans.
The Mission will help in the improvement of AYUSH education through enhancement in the number of
upgraded educational institutions;
Better access to AYUSH services through increase in number of AYUSH hospitals and dispensaries, availability
of drugs and manpower;
Providing sustained availability of quality raw material for AYUSH systems of medicine;
And improving availability of quality Ayurvedic, Siddha, Unani and Homoeopathy drugs through increase in
the number of pharmacies, drug laboratories and improved enforcement mechanism.

PLAN TO REDUCE INFANT MORTALITY

The Central Government has launched a programme to reduce infant mortality and bring down the number
of deaths to a single digit by 2030 from the current 29 deaths per 1,000 live births.
The India Newborn Action Plan (INAP), inaugurated by Union Health Minister Harsh Vardhan, is the first step
towards arresting infant deaths.
INAP has been prepared with the help of expertise drawn from distinguished members of a Technical
Resource Group.
The programme will be implemented under the existing Reproductive, Maternal, Child Health and
Adolescents Plus (RMNCHA+) framework. It would be carried out with the extensive outreach mechanisms
used for fighting polio.

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GATES FOUNDATION TO HELP FIGHT KALA AZAR IN INDIA

Having contributed to the eradication of polio in India, the Gates Foundation is now planning to work with
the new Indian government to wipe out kala azar.
The foundations co-chairs, Melinda Gates and her husband, former Microsoft co-founder and CEO Bill Gates,
recently came to India to meet the new government, including Prime Minister Narendra Modi and his Cabinet
colleagues
MORE ABOUT KALA AZAR

The second largest parasitic killer in the world after malaria, kala azar is concentrated in 52 districts in Bihar,
Uttar Pradesh, Jharkhand and West Bengal.
India officially reported fewer than 5,000 kala azar cases in 2011 and fewer than 100 deaths due to the
disease, according to the World Health Organisation. However, the international health community believes
these to be gross underestimation; while India reported just over 1,000 malaria deaths in 2011, medical
journal Lancet placed the estimate 40 times higher.
Kala azar affects the most marginalised communities. It is highly concentrated geographically. In addition, it is
only carried by humans and not animals in India. Both these factors make it something that can be eradicated

NATIONAL HEALTH ASSURANCE MISSION

The ministry of health and family welfare said it would introduce a universal health insurance programme as
part of its proposed Universal Health Assurance Mission (UHAM).
At present. health insurance touches about 25% of the population. Government will spread the population of
insured rapidly, which will result in a sharp fall in premium rates and (lead to) many consumer benefits.
An autonomous body, UHAM agency, will be formed to ensure above-board operations and genuine
protection of the insured through this scheme, every person will be able to access tertiary healthcare
services. The government will provide 50 essential drugs, a bouquet of diagnostic services and 30 AYUSH
(ayurveda, yoga and naturopathy, unani, siddha and homoeopathy) drugs at all government hospitals and
health centres.
DOUBTS RAISED

Experts say that its well-intentioned but there are critical challenges in this plan. They express fears that with
these insurance schemes, people will go to private sector which is poorly regulated and there have been
instances when patients have been overcharged
They are also wary about the body that would regulate this sector and the ceiling to the insurance cover.

POOR HEALTHCARE AMONGST INDIAN TRIBES

The health status of Indias tribal communities is in need of special attention. Being among the poorest and
most marginalised groups in India, tribals experience extreme levels of health deprivation. The tribal
community lags behind the national average on several vital public health indicators, with women and
children being the most vulnerable.
Several studies on maternal health show poorer nutritional status, higher levels of morbidity and mortality,
and lower utilisation of antenatal and postnatal services among tribals. Under-five mortality rates among
rural tribal children remain startlingly high, at 95 deaths per 1,000 live births in 2006 compared with 70
among all children.
Health problems prevalent in tribal areas include endemic infectious diseases like malaria, tuberculosis, and
diarrhoeal diseases, apart from malnutrition and anaemia. What is worrying is that the prevalence of chronic
diseases such as hypertension and diabetes mellitus, hitherto rare in these populations, is rising, and stroke
and heart disease are now the leading causes of death.
Some of the highest rates of tuberculosis in the country have been reported from the Sahariya tribe of
Madhya Pradesh. Similarly, deaths due to malaria occur disproportionately among tribals.
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REASONS FOR POOR HEALTH

Lack of Research has shown that 75 per cent of Indias tribal population defecates in the open and 33 per cent
does not have access to a clean source of drinking water. Insanitary conditions, ignorance, lack of health
education and poor access to healthcare facilities are the main factors responsible for the poor health of
tribals.
Dietary issues: Further, displacement from their traditional forest homes and natural source of food and lack
of livelihoods makes them dependent on the public distribution system (PDS) and other government
handouts for survival. Most tribal groups are traditionally hunter-gatherers and not accustomed to
agriculture their diets, therefore, are now severely limited in fruits and vegetables as well as good sources
of protein (including fish and meat). Polished rice and cereals available through the PDS have replaced diverse
dietary food baskets.
Healthcare issues: Although the government has provided for the establishment of Primary Health Centres
(PHCs) in tribal areas for every 20,000 population and sub-centres for every 3,000 population, quality
healthcare is not available to the majority of tribals. Posts of doctors and paramedicals are often vacant.
Additionally, the non-availability of essential drugs and equipment, inadequate infrastructure, difficult terrain
and constraints of distance and time (one Auxiliary Nurse Midwife is responsible for 15-20 scattered villages),
and the lack of transport and communication facilities further hinder healthcare delivery. The geographical
and infrastructural challenges to public health and the lack of health-related knowledge among tribals are
exploited by quacks (unqualified medical practitioners), who are often available at the doorstep.
Illiteracy as a hindrance: Levels of illiteracy are high, with 47 per cent in rural areas and 21.8 per cent in
urban areas being unable to read and write. Better educated tribal communities will be better aware of their
healthcare needs (and rights) as well as of better care-seeking practices.
Scarcity of manpower: The poor health of tribal populations cannot be overcome by mere establishment of
more PHCs and sub-centres. Scarcity of trained manpower for health is a major problem and an obstacle to
the extension of health services to rural and tribal areas.
WAY AHEAD

Traditional healers, who are often the first point of care, can be sensitised and trained to deliver simple
interventions like ORS for diarrhoea and anti-malarials as well as to refer patients to the PHC in a timely
manner.
Tribal boys and girls (who complete school but often have no further opportunities) could be trained as
community health workers or nurses and incentivised to stay and work in their own communities. A
successful example is the ASHWINI Gudalur Adivasi hospital in the Nilgiris, where the management and most
staff (except the doctors) are tribal.
Nutritional counselling and education, establishment of kitchen gardens and provision of a more diverse
range of food items through the PDS would help in curtailing macro and micronutrient deficiencies. More
research needs to be done on the traditional herbal medicines used by tribal people and their use
encouraged, wherever beneficial.
Health is intimately linked to food and nutrition security, safe housing and availability of sanitation and clean
drinking water. There are many successful examples of good healthcare delivery in remote tribal areas in our
country (almost all involving dedicated NGOs working with the people). These models need to be scaled up in
order to improve the lives of the most vulnerable and marginalised citizens of our country.

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EDUCATION
ISSUE OF INDIAN STUDENTS MOVING ABROAD FOR EDUCATION
Post-graduate students from India are increasingly choosing to study abroad. The U.S. Council of Graduate
Schools new statistics show that offers of admission to Indian post-graduate students are up 25 per cent for
2013-14 from the previous year, compared to a 9 per cent increase for all countries.
While these statistics are only for the U.S., Indias most popular destination, it is likely that other countries
such as Germany, Canada and the U.K. are also seeing significant increases from India.
REASONS

Lack of quality programmes: When bright students look around India for a place to study for an advanced
degree, they find few top-quality programmes. In the social sciences and humanities, there are a small
number of respectable departments, but absolutely none that are considered by international experts as in
the top class of academic programmes. In the hard sciences, biotechnology, and related fields, the situation is
more favourable with a few institutions such as the Indian Institutes of Technology, the All-India Institute of
Medical Sciences, the Tata Institute of Fundamental Research and some others, despite limited
acknowledgement from abroad, being internationally competitive by most measures. But the numbers of
students who can be served by these schools is quite limited. Thus, if a bright Indian wants to study for a
doctorate or even a masters degree at a top department or university in most fields, he or she is forced to
study overseas.
Market Value of the degree: Further, a degree from a top foreign university tends to be valued more in the
Indian job market than a local degree a perception based not only on snobbery but also on facts. While
masters degrees can be quite costly in the U.S., the U.K., Australia, and elsewhere, doctorates are in fact
quite inexpensive because of the likelihood of securing a research or teaching fellowship or assistantship that
pays for most or all of the costs.
Better Infrastructure and facilities: Not only are overseas programmes and departments more prestigious,
they also have far better facilities, laboratories and a more favourable culture of research. Top faculty
members are often more accessible and it is easier to become affiliated with a laboratory or institute.
Academic politics exists everywhere, and Indians may suffer from occasional discrimination abroad, but
overall academic conditions are likely to be better than at home.
Step towards emigration: Finally, studying abroad is often seen as the first step toward emigration. Statistics
show that a very large proportion of students from India and also from China, South Korea and other Asian
countries choose to stay in the U.S. following the completion of doctoral degrees. The reasons for deciding
not to return to India are varied and not hard to discern. Better salaries and facilities abroad, easier access to
research funds, working on cutting-edge topics and many others are part of the mix. And while some are
lured back to India later in their careers, the numbers are small. Once established overseas, either in a
university or in the research or corporate sectors, it is difficult to return.
SOLUTIONS

There is no short-term solution to this problem for India. The only remedy is to build up high-quality capacity
in key disciplines at national institutions so that a greater number of Indian students can obtain excellent
training at home. This means significant investment over time, and careful choices about where to invest
since all universities cannot be top research universities.
It also means significant changes in Indias academic culture to ensure that meritocracy operates at all levels.

HIGHER EDUCATION BILL TO BE WITHDRAWN FROM THE PARLIAMENT

The Union Cabinet has decided to withdraw the Higher Education and Research Bill, 2011, from Parliament in
view of the reservations expressed by the Parliamentary Standing Committee on certain provisions of the
draft legislation.

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MORE ABOUT THE BILL

The Bill which was pending in the Rajya Sabha sought to determine, coordinate, maintain and promote
standards of higher education and research, and subsume existing regulatory bodies in higher education
including the University Grants Commission, the All India Council for Technical Education, the National
Council for Teaching Education and the Distance Education Council (DEC)

FREE LECTURES IN SCHOOLS AND COLLEGES MANDATORY FOR SCIENTISTS

The Centre has decided to make it mandatory for scientists and researchers of the Departments of Science
and Technology, Earth Sciences and the Council for Scientific and Industrial Research to undertake 12 hours
of lecture classes in schools and colleges in an academic year.
The scientist will devise a methodology in his or her area of expertise to make the subject interesting for
students.
The CSIR system and the DST have between them about 6,000 scientists and researchers on their rolls
The performance of the scientists and researchers shall be evaluated every three years. The programme shall
be reviewed annually and the Ministry of Science and Technology shall present to the nation a report card.
At the same time, a special promotion scheme for women scientists, KIRAN (Knowledge and Involvement in
Research Advancement through Nurturing), will allow public sector institutions to make alternate offers to
women who have had a break in their career or have had a change of residence.
ANALYSIS

Scientists who are mostly confined to their labs will share their talent and experience for free as part of their
duties, to inculcate in young students a scientific temper and to bring S and T into a larger domain
The experiment will also help catch young talent in the country.
The Kiran initiative will promote gender parity and help to bring forward women in leadership positions
OBJECTIVES OF KIRAN

To increase the number of women researchers in India.

Provide Research grants particularly to those female researchers and technologists who had to take a break
in career owing to household reasons.
Bring about, as far as achievable, gender parity in the field of science and technology.

CENTRAL GOVERNMENT TO FUND SWACCH VIDYALAYA CAMPAIGN

The Centre will set up a Swachh Bharat Kosh to fund its ambitious Swachh Vidyalaya (Clean Schools)
campaign anchored by the Human Resource Development Ministry
The Ministry said public sector units under 25 Ministries have pledged Rs. 400 crore for the campaign and
private and public sector companies would be encouraged to build toilet blocks in schools.

LINK BETWEEN SANITATION AND SCHOOLING

A couple of decades ago, when the deplorable state of education began to be noticed, the importance of
toilets was highlighted, and Sarva Shiksha Abhiyan (SSA) the governments flagship programme for
universalisation of elementary education included a specific provision for separate toilets for girls and
boys.
But soon after, a shift in focus to learning outcomes made toilets a dirty word as far as education was
concerned, so much so that the emphasis on infrastructure, and toilets in particular, was held almost
responsible for taking attention away from learning. Arguments were made that no correlation could be
found between the presence of toilets and learning levels of children in school; therefore toilets were an
unnecessary expense. Others claimed that since most poor rural children did not have toilets at home, they
would not miss them in school either.

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 But today the debate has again shifted back to the need for having functional toilets after PM Modis
emphasis on cleanliness.
THE NEED FOR FUNCTIONAL TOILETS

Requirement for students: As mandated by the Right to Education Act, all children are required to spend six
hours in school every day. During this period they would want to use the toilets. Irrespective of how and
where they relieve themselves when at home, if the school does not have a functional toilet, they will need to
go outside the school for their bio-breaks. The reality is that if they do leave the school, they are unlikely to
return. Or if they are not allowed to leave, which is often the case for fear of the outcome mentioned above,
they could end up soiling their clothes, for which they are likely to be penalised. A quick look at the
complaints received by the National Commission for Protection of Child Rights (during 2010-2011, for
instance) reveals that many complaints of corporal punishment were made because of this reason. Corporal
punishment, like lack of toilets for girls, is a reason for dropouts.
Requirement for teachers: In addition to all children needing toilets in schools, the teachers also need them.
They are required to spend even longer hours in school to complete non-teaching work as well as prepare for
classes. The lack of adequate toilets often necessitates the locking of toilets by teachers for their exclusive
use. Among poor working conditions for teachers in schools, the lack of toilets is one, and probably
contributes to teachers less than desired rate of attendance.
LACK OF CLARITY ON RESPONSIBILITY

There is a great deal of ambiguity on whose responsibility it is to ensure functional toilets with adequate
water facility in schools. Is it the HRD Ministry or the Ministry of Rural Development (MoRD) or the Ministry
of Drinking Water and Sanitation (MDWS) or all three is what is not clear.
The SSA has a provision for construction of toilets which ranges from Rs. 50,000 per toilet (Himachal Pradesh)
to Rs. 70,000 per toilet (Jharkhand). The provision of sanitation facilities, however, is the responsibility of the
MDWS. As a result, one finds a peculiar situation where scores of schools have constructed toilets but
without sanitation facilities or water supply. Their use, if at all, is naturally limited. What is not clear is who is
responsible for ensuring convergence between these Ministries.
PROBLEM OF KEEPING TOILETS CLEAN

Additionally, there is the issue of keeping toilets clean. At present there is no provision in SSA for the cleaning
of toilets. In fact, during a review of the SSA framework a couple of years ago, this issue was raised and hotly
debated. But it was decided that in the interest of educating children about hygiene and sanitation, no other
provision should be made. Instead, the children and teachers should be encouraged to keep the toilets clean.
The reality, as we all know, is that teachers do not involve themselves in this enterprise. As a result, the
toilets are either cleaned or not cleaned by children or more precisely, they are cleaned by Dalit children
because they can be coerced into doing what other children will refuse to do. If a clean and hygienic
environment is to be provided, some children should not have to create it for others.
WAY AHEAD

If the new government and the HRD Ministry are serious about toilets in schools, they will need to do a more
comprehensive rethink of all that it involves.
In addition to an adequate provision of funds cleaning, sanitation training, maintenance of toilets and other
things, the issue of fixing accountability must be addressed. Else we will keep visiting the basic issues over
and over again, reformulating strategies and recommissioning funds.

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ENVIRONMENT
GOMTI TO BE CLEANED ON LINES OF RIVER GANGA

Noting that the health of rivers is reflective of a countrys condition, Union Home Minister Rajnath Singh
announced cleaning up of river Gomti on the same lines as river Ganga.
The objective of the Centre is not only to develop the country as an economic capital but also a spiritual
capital, for which unhindered flow, cleanliness and clearness of its rivers is necessary.
The banks of Gomti would be developed on the lines of Sabarmati riverfront in Ahmedabad. Union Water
Resources Minister Uma Bharti, said that through short term and long term schemes Ganga would become
visibly clear within three years and it would be made completely clean in 10 years.
Noting that a survey on cleaning Gomti river has been completed, Ms. Bharti said, cleaning Gomti would be
a lot easier than Sabarmati, which had dried up.

WEB PORTAL ON GANGA REJUVENATION LAUNCHED

As part of its efforts to make the Ganga rejuvenation programme a mass movement, the Ministry of Water
Resource launched a web portal to connect with the public on the ambitious project of the NDA
Government. The bilingual website has a provision to receive feedback from the public, where suggestions
can be given about the Ganga Rejuvenation Plan. The public can also upload files up to the size of 4 MB
along with their suggestions
Launching the website, Union Minister for Water Resource Uma Bharti said the launch of the website was
an important tool to connect the public with the gigantic task of Ganga rejuvenation.
The home page of the web portal http://nmcg.nic.in/, which opens with the message of Mahatma Gandhi
on the holy Ganga is an encyclopedia of the largest river basin in India. It also gives details of Namami
Gange, an Integrated Ganga Conservation Mission, for which a sum of Rs 100 crore has been allocated for
development of ghats and beautification of river fronts at Kedarnath, Haridwar, Kanpur, Varanasi,
Allahabad, Patna and Delhi in the current financial year. This apart, the web portal also has an external link
for Gangapedia that details on news, events, blogs and library connected with river Ganga.
The website further contains a wide range of information on clean Ganga mission, conservation of pollution
project, status of NGRBA, Ganga action plan, water quality monitoring, industrial pollution monitoring,
waste water management and comprehensive details of Ganga basin.

WILDLIFE NUMBERS DOWN BY HALF IN 40 YEARS: WWF SURVEY (LIVING PLANET

REPORT)

Wildlife populations around the world more than halved in the 40 years to 2010, according to WWF survey.
The report by WWF (World Wide Fund for Nature) International blames unsustainable human consumption
patterns, loss of habitat, hunting and fishing for an average 52 per cent drop in 10,380 populations of the
3,038 species surveyed.
The report, drawn up jointly with the Zoological Society of London (ZSL), found the loss was greatest in the
poorest countries - 58 per cent - while the richest countries had lifted numbers of mammals, birds, reptiles,
amphibians and fish by 10 per cent. Aquatic animals fared the worst, with average population decline of 76
per cent. Terrestrial animal count dropped by 39 per cent.

CLIMATE CHANGE
UN CLIMATE SUMMIT

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Union Minister of State for Environment Prakash Javadekar in his speech at the UN Climate Summit in New
York on September 23 said that poverty remains a major polluter, just as the fossil fuel led model of
industrialization that began in the West a couple of centuries ago is seen responsible for the growing human
impact on the climate.
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Listing out the initiatives taken by the new government, he said that over $ 15 million have been allocated
to the National Adaptation Fund, $ 80 million for setting up Ultra Mega Solar Projects in several states of
India, $100 million for Ultra-Modern Super Critical Coal Based Thermal Power Technology, and $16 million
for the development of 1 MW solar parks on the banks of canals.
In India, in the last decade alone, the number of vehicles has doubled from 80 million to 160 million. The
recently introduced Corporate Fuel Average Savings standard is an initiative which is expected to yield
potential savings of over 20 million tones of fuel by 2025, he said.
He said evidence shows that countries that have achieved a Human Development Index (HDI) of 0.9 or more
have per capita energy consumption of at least 2.5 tonnes oil equivalent (toe) per year. The current per
capita energy consumption in India is about 0.6 toe per year, which is a fraction of the figures for the
developed world.
With todays technologies and living standards, the energy consumption in India would need to increase by
4 times as Indias HDI increases from the current value of 0.5 to a value of 0.9. The key challenge, he
pointed out, is to enable this higher energy consumption at a cost that people are willing and able to pay,
and with lower carbon intensity.

GLOBAL MARCHES DRAW ATTENTION TO CLIMATE CHANGE

Tens of thousands of activists walked through Manhattan, warning that climate change is destroying the
Earth in stride with demonstrators around the world who urged policymakers to take quick action.
Organizers said more than 100,000 marched in New York. They were joined in midtown Manhattan by
United Nations Secretary-General Ban Ki-moon, former Vice President Al Gore and New York City Mayor Bill
de Blasio.
More than 120 world leaders had convened for the United Nations Climate Summit aimed at galvanizing
political will for a new global climate treaty by the end of 2015.
Flood Wall Street: A day after 100,000 people marched to warn that climate change is destroying the Earth,
more than a thousand activists gathered in lower Manhattans financial district, chanting, carrying signs and
in some places sitting down in the street to protest what they said was corporate and economic institutions
role in the climate crisis.
The organizers of Flood Wall Street said the sit-in aimed to disrupt business in the financial district by
targeting corporate polluters and those profiting from the fossil fuel industry.

UN REPORTS LARGEST ANNUAL CO2 INCREASE SINCE 1984

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The levels of carbon dioxide in the atmosphere rose at the highest rate in nearly three decades in 2013, the
World Meteorological Organisation (WMO) said. The increase the biggest since 1984 was the main
reason why concentrations of greenhouse gases that cause global warming reached a new record level
overall, the UN agency said. The concentration of CO2 in the atmosphere was 42 per cent higher than in the
mid-18th century, before the industrial revolution.
However, the WMO said that last years increase cannot be explained by burning of fossil fuels alone. The
UN agency pointed to changes in the amount of burned biomass, and in the way that the gas is exchanged
between the atmosphere and the biosphere on the ground, as likely additional factors. Although most of
the CO2 ends up in the atmosphere, a quarter is stored in the oceans, where it is making the water more
acidic, the WMO said, warning of negative effects on corals, algae and other marine organisms.
This was possibly related to reduced CO2 uptake by the Earths biosphere in addition to the steadily
increasing CO2 emissions. The bulletin reports on atmospheric concentrations - and not emissions - of
greenhouse gases. Emissions represent what goes into the atmosphere. Concentrations represent what
remains in the atmosphere after the complex system of interactions between the atmosphere, biosphere
and the oceans. About a quarter of the total emissions are taken up by the oceans and another quarter by
the biosphere, reducing in this way the amount of CO2 in the atmosphere. The current rate of ocean
acidification appears unprecedented.

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WORLD RUNNING OUT OF CARBON ALLOWANCE: STUDY BY GLOBAL CARBON

PROJECT

The strong rise in annual carbon dioxide emissions of 2.5% for 2013, taking the total emitted in the year
to 40 billion tonnes means the global carbon budget, calculated as the total we can afford to emit
without pushing temperatures above the critical 2 degree Celsius level, is likely to be used up within just
one generation, or in thirty years from now.
That will mean children now, with no say in their contribution to carbon, will feel the effects throughout
their lives. Scientists think climate change is likely to have catastrophic and irreversible effects, including
rising sea levels, polar melting, droughts, floods and increasingly extreme weather. They have calculated
that this threshold is likely to be breached if global emissions top 1,200 billion tonnes, giving us a carbon
budget to stick to in order to avoid dangerous warming.
Weve already burned through two-thirds of our global carbon allowance and avoiding dangerous climate
change now requires some very difficult choices. Not least of these is how a shrinking global carbon
allowance can be shared equitably between more than 7bn people and where the differences between rich
and poor are so immense.
The study also found that Chinas per capita emissions had surpassed those of Europe for the first time,
between 2013 and 2014.

OZONE LAYER SHOWING SIGNS OF RECOVERY: UN

The Earths protective ozone layer is well on track to recovery in the next few decades thanks to concerted
international action against ozone depleting substances, the latest assessment by scientists across the world
has said.
In 1987, ozone-depleting substances contributed about 10 gigatonnes CO2-equivalent emissions per year.
The Montreal Protocol, which was adopted that year with the aim of reducing ozone depleting substances,
has been successful in reducing these emissions by more than 90 per cent. This decrease is about five times
larger than the annual emissions reduction target for the first commitment period (2008-2012) of the Kyoto
Protocol. According to global models, the Protocol will have prevented 2 million annual cases of skin cancer
by 2030, averted damage to human eyes and immune systems, and protected wildlife and agriculture.
According to the assessment, carried out by the United Nations Environment Programme (UNEP) and the
World Meteorological Organization (WMO), without the Montreal Protocol and associated agreements
atmospheric levels of ozone depleting substances could have increased tenfold by 2050. There have in fact
been decreases in atmospheric abundance of gases such as chlorofluorocarbons (CFCs) and halons, which
are used in refrigerators, spray cans, insulation foam and fire suppression. The full report will be issued in
early 2015.
This is the first comprehensive update in four years, and the summary document says the phase-out of
ozone depleting substances has had a positive spin-off for the global climate because many of these
substances are also potent greenhouse gases. However, the report cautions that the rapid increase in
certain substitutes, which are themselves also potent greenhouse gases, has the potential to undermine
these gains.
International action on the ozone layer is a major environmental success story.

PUSA HYDROGEL

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In view of the growing competition between burgeoning population, agriculture and industry, enhancing
crop productivity with limited quantity of water has become a global necessity. Water conserving
techniques such as drip irrigation, sprinkler irrigation, mulching, water sheds, zero tillage, direct seeding etc.
are being disseminated and adopted by the farmers across countries.
In view of the agriculture specific requirements, scientists at Indian Agricultural Research institute, New
Delhi, developed a granular product called Pusa Hydrogel patented by the Institute, which is being
promoted by ICAR as well as Ministry of Agriculture. The product is available in 250, 500 gm and one kg
packets in the market. During irrigation, the gel absorbs the irrigated water like a sponge and during dry
period releases the water for the plants.
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This technology is suited for farmers growing crops under rainfed and limited water availability areas.
Application of Pusa hydrogel reduces frequency of irrigation in almost all the crops including cereals, pulses,
vegetables and flowers, thus reducing time and money spent on irrigation, labour and water costs.
At present the product has been well adapted in Karnataka, Tamil nadu, Andhra Pradesh, M.P. Besides
farmers from states of Maharashtra, Rajasthan, Haryana, Punjab, Himachal Pradesh, Western U.P. and Bihar
are also increasingly becoming aware about the technology owing to efforts of the KVK Institutes.

DILUTION OF FOREST RIGHTS ACT

The provisions of the Forest Rights Act (FRA) are under threat. The new rules in Maharastra bring back the
Forest department into pre-eminence instead of the gram sabha. Village forests will be managed by a Van
Vyavsthapan Samiti on the lines of a Joint Forest Management Committee with a forest official on board.
While the Maharashtra government drafted the Village Forest Rules in March this year, Andhra Pradesh had
diluted the FRA in 2008 itself by giving community forest rights (CFR) certificates to joint forest
management committees instead of gram sabhas. After protests, the Union Ministry of Tribal Affairs had
kept the rules in abeyance but efforts are on by the Union Environment and Rural Development Ministers to
get that decision revoked.
FRA overrode other legislation regarding forest rights to forest dwellers and it was Central legislation, so
States could not bring in rules contravening it. Also, while the notification said the village forest rules were
not applicable to community forest rights (CFR) areas under the FRA, many CFR claims were pending in
Maharashtra. In reality, every village should be given CFR if it had a forest area and if not, the district
administration had to give reasons which had to be recorded. But the new rules had hijacked the CFR
provision in the FRA and effectively, minor forest produce would be taken back by the Forest department.
On July 4, the Environment Ministry issued guidelines stating that proposals seeking prior approval under
the Forest Conservation Act for prospecting on forest land were exempt from submitting documentary
evidence in support of settlement of rights in accordance with the FRA.
The Supreme Courts Central Empowered Committee had recommended that in-principle clearance should
be given for mining lease renewals without FRA compliance.
In addition, the Campaign for Survival and Dignity found that several mining projects had forged gram sabha
resolutions favouring projects.

INDARC: INDIAS ARCTIC OBSERVATORY

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The deployment of IndARC, the countrys first underwater moored observatory in the Kongsfjorden fjord,
half way between Norway and the North Pole, represents a major milestone in Indias scientific endeavours
in the Arctic region. It is expected to help scientists understand the Arctic climate process and its influence
on the Indian monsoon system.
Designed and developed by scientists from the Earth System Science Organisation (ESSO), National Centre
for Antarctic and Ocean Research (NCAOR), National Institute of Ocean Technology (NIOT) and Indian
National Centre for Ocean Information Services (INCOIS), IndARC was deployed from RV Lance, a research
vessel belonging to the Norwegian Polar Institute on July 23.
The observatory is anchored at a depth of 192 m and has an array of 10 state-of-the-art oceanographic
sensors strategically positioned at various depths in the water. The sensors were programmed to collect
real- time data on seawater temperature, salinity, ocean currents and other vital parameters of the fjord.
The Kongsfjorden is considered a natural laboratory for studying the Arctic climate variability. Scientists
predict that melting of the Arctic glaciers will trigger changes in weather patterns and ocean currents that
could affect other parts of the world. The interaction between the Arctic ice shelf and the deep sea and its
influence on climate shift requires detailed studies over an annual seasonal cycle.
One of the major constraints in such a study has been the difficulty in reaching the location to collect data
during the harsh Arctic winter. The IndARC observatory is an attempt to overcome this lacuna.

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BACTERIA THAT MAY HELP TACKLE NUCLEAR WASTE

Tiny single-cell organisms discovered living under the ground could help with the problem of nuclear waste
disposal, says a study. The bacteria were found in a highly alkaline industrial site in the Peak district in
Britain.
The extremophile - organism that thrives in physically or geochemically extreme conditions that are
detrimental to most life on the Earth - bacteria can thrive under the alkaline conditions expected in cementbased radioactive waste, the researchers said.
Although bacteria with waste-eating properties have been discovered in relatively pristine soils before, this
is the first time that microbes that can survive in the very harsh conditions expected in radioactive waste
disposal sites have been found.

GEDI: NASA TO MAP EARTH FORESTS IN 3D

The US space agency, NASA, is developing the Global Ecosystem Dynamics Investigation (GEDI) Lidar device
to map forests on Earth in 3D and increase understanding of their role in the carbon cycle. The instrument
will be the first to systematically probe the depths of the forests from space.
GEDI Lidar will have a tremendous impact on our ability to monitor forest degradation, adding to the critical
data needed to mitigate the effects of climate change. It is a laser-based system that can measure the
distance from the space-based instrument to Earths surface with enough accuracy to detect subtle
variations, including the tops of trees, the ground, and the vertical distribution of above ground bio-mass in
forests.
In particular, the GEDI data will provide global-scale insights into how much carbon is being stored in the
forest bio-mass. This information will be particularly powerful when combined with the historical record of
changes captured by the USs long standing programme of Earth-orbiting satellites, such as Landsat and
MODIS.
Although it is well-established that trees absorb carbon and store it long-term, scientists have not
quantified exactly how much carbon forests contain. As a result, its not possible to determine how much
carbon would be released if a forest were destroyed, nor how well emissions could be countered by
planting new trees.
The instrument will be built at NASAs Goddard Space Flight Centre in Greenbelt, Maryland. The system is
one of two instrument proposals recently selected for NASAs Earth Venture Instrument programme and is
being led by the University of Maryland, College Park. NASA said GEDI is scheduled to be ready in 2018.

GLOBAL BIODIVERSITY PRIZE FOR INDIAN

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R. Kamal Bawa, president, the Ashoka Trust for Research in Ecology and the Environment (ATREE), India,
and distinguished professor, University of Massachusetts, Boston, is among the three winners of the
MIDORI Prize for Biodiversity 2014. The other two who bagged the prize are: Dr. Alfred Oteng-Yeboah,
Chair, Ghana National Biodiversity Committee, and Dr. Bibiana Vila, principal researcher, the National
Research Council and Director, Vicunas, Camelids and Environment (VICAM), Argentina.
The MIDORI prize is a biennial international prize given by the AEON Environmental Foundation and the
Secretariat of the Convention on Biological Diversity (CBD) to honour individuals who have made
outstanding contributions to the conservation and sustainable use of biodiversity at global, regional or local
levels.

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INDIA AND WORLD

INDIA - US
(a very detailed analysis of India-US relationships is given here including the recent developments)
India and U.S relations have been that of complex interdependence marked with convergence as well as
divergence of interests. President of USA Barack Obama rightly described India and U.S as indispensible
partners. India-US relations have seen its highs and lows.

HISTORICAL BACKGROUND
Different phases of India U.S Relations can be described as follows:
Phase 1: from 1947 to 1971

Soon after independence, India adopted the policy of Non-alignment, and anti-imperialism. India remained
socialist in principles, but adopted liberal political system. The non-alignment movement forced USA to adapt a
two-fold policy towards India.

It led USA to ally with Pakistan as it appeared to benefit western security interests in the region.
On the other hand USA continued to make efforts to bring India under its sphere of influence so as to
challenge the growth of communism and influence of USSR in the region. In the 1962 war against China,
India received help from USA, which prevented Pakistans invasion on the western front when India battled
China on the East and sent USS enterprise to the Bay of Bengal.
In 1971, The Indo-US relations reached a new low when India-Pakistan war broke out. U.S and China voted
for cease fire, but USSRS veto favored India, subsequently, Washington deployed its naval forces in Bay of
Bengal, convincing many in India that US was a major security threat.

Phase 2: 1970 till 1989 (end of Cold War)

Despite of non-alignment, India remained inclined towards USSR, owing to its socialist principles. In order to
counter the influence of USSR, the U.S developed a nexus with Pakistan and China.
After the peaceful nuclear explosion took place at Pokhran, USA started using a discriminatory nuclear
regime, against India, while supporting Pakistan militarily on the other hand.

Phase 3: 1990s onwards

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After the disintegration of USSR, India was forced to look for new allies on the international platform. A
remarkable breakthrough came in Indo-US ties when India took the path of Economic liberalization,
throwing open its economy to the world.
US stand changed towards India and Pakistan both, and US pressurized Pakistan to stop giving support to
anti-India elements in Kashmir and Punjab.
During Clintons presidency pressure was mounted upon India to sign CTBT and NPT, but through its May
1998 test, India made clear that it was willing to exercise nuclear restraint but would not roll back its
nuclear program.
After 9/11 terrorist attack in US, in the year 2001, U.S started viewing India as a strategic partner in fight
against terrorism.
During the Bush years a US started viewing its relationship with India in the larger context of stable balance
of power throughout Asia. Gates were opened for newer cooperation between the two nations in the field
of space and other technologies, civil nuclear energy etc.
The most remarkable breakthrough came after the US visit of PM Manmohan Singh, in 2005. The
negotiations led to ending of US sanctions on India with passing of Hyde act in 2006 and signing of 123

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agreement for civil nuclear cooperation in 2007. America also urged the Nuclear Suppliers Group to end its
global nuclear sanctions against India.

AREAS OF COOPERATION
In 2009, India and U.S launched a ministerial level strategic dialogue which focuses on bilateral relations along
five pillars of mutual interest, namely

Strategic Cooperation
Energy and Climate Change
Education and Development
Economics, Trade and Agriculture
Science and Technology, Health and Innovation

In 2010 President Obamas visit to India marked a new high in the Indo-U.S ties, and he expressed determination
to work with it to establish peace and stability, work towards human rights consolidation and to set rules of
interaction with other nations.
COOPERATION AGAINST TERRORISM

Since 2008 Mumbai terrorist attacks, the United States and India continue to expand their counterterrorism
and homeland security cooperation, enhancing global as well as bilateral security through ongoing
dialogues, capacity building initiatives, and multilateral efforts such as the Global Counter-Terrorism Forum.
The Homeland Security Cooperation is based on the shared values of democracy, and pluralism. It is
cooperation among the two nations to counter the threat of terrorism and other challenges, including cyber
security, counterfeit currency, illicit financing and transnational crimes; and, the deepening technological
and economic partnership between India and the United States.

The Counter-Terrorism and Homeland security cooperation includes following measures:

Holding U.S.-India Homeland Security Dialogue to enhance homeland security cooperation and discuss
building capacity in cyber-security and critical infrastructure protection, countering illicit finance, global
supply chain security, megacity policing, and science and technology.
Helping to facilitate increased access to Homeland Security-Related Technology.
Continue the Counterterrorism Working Group process, including continued exchange of senior experts
through the coming year.
Law enforcement collaboration between Federal Bureau of Investigation and the National Investigative
Agency to improve sharing of electronic evidence to combat cybercrime and mitigate counterterrorism
threats.
In the recent Indian Prime ministerial visit to US, furthering Indo-US cooperation on terrorism, Prime
Minister Narendra Modi and President Barack Obama committed to make "joint and concerted efforts" to
dismantle safe havens for terror and criminal networks like Lashkar-e-Toiba, Jaish-e-Mohammad, Dcompany, Al Qaeda and Haqqani network.

Although India has been able to obtain the commitment of US for counter-terrorism against the groups which
were already in the US hit list and the experts in New Delhi have shown skepticism towards US commitment, yet
for the first time US has taken an open stand against Global terrorism, which can be presumed as a first move
towards putting pressure on Pakistan to act against it terrorist groups.
ENERGY AND CLIMATE CHANGE:

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Promoting Energy Access through Clean Energy (PEACE): launched by the Governments of India and the
United States in 2013 to harness commercial enterprise to bring clean energy access to underserved Indian
villages.
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Climate Change Working Group: The first meeting of the U.S.-India Climate Change Working Group was held
to discuss how best to achieve an ambitious multilateral global agreement on climate change in Paris in
2015 for the post-2020 period.

EDUCATION AND DEVELOPMENT:

Building on our long-standing partnership and support for Indian Institutes of Technology (IIT), the United
States will support the establishment of a new IIT.
USAIDs support of the India-Support for Teacher Education Project.

ECONOMIC RELATIONS AND TRADE COOPERATION:

The U.S continued to be Indias largest trade partner in 2011 and Total Bilateral trade in goods touched USD
63.7 billion in 2013, registering growth of 1.7% over last year.
Indian export stood at $20 billion more than US exports, thus facilitating a favorable balance of trade.
There are several dialogue mechanisms to strengthen bilateral engagement on economic and trade issues,
including a Ministerial Trade Policy Forum (TPF).
India and US are negotiating a Bilateral Investment Treaty(BIT)
The U.S.-India Infrastructure Platform: The U.S.-India Infrastructure Platform is a collaborative effort
between the United States and India, anchored by the two Governments and operated in concert with US
private sectors, to promote U.S. private sector engagement in Indias infrastructure growth and
modernization.
As part of the Economic Dialogue, a separate Commercial Dialogue has been set up to cover (a) Trade
Defence Measures (b) Small and Medium Enterprises and (c) capacity building on Intellectual Property
Rights (IPRs).

U.S. is the third largest source of foreign direct investments into India. Now, growing Indian investments into the
U.S has been a novel feature of the economic ties. President Obamas visit to India in 2013 to sign a deal to
create over 53000 jobs in America points towards contribution that India is now making towards US economy.
Also Indias large market holds opportunities for USA which makes India an inevitable economic partner for USA.
Recently US ambassador to India Kathleen Stephens remarked that US supports Indias economic
development, which clearly indicates that Indias economic rise is in U.S interest.
SCIENCE AND TECHNOLOGY, HEALTH AND INNOVATION

Civil Space Cooperation: Under the U.S.-India Civil Space Joint Working Group (CSJWG), NASA and Indian
Space Research Organization (ISRO) continue to make progress on the NASA-ISRO Synthetic Aperture Radar
(NISAR) mission. This mission is intended to generate a vast bank of earth observation data for use in novel
applications by researchers to benefit global food security, freshwater availability, human health, disaster
prediction and hazard response, climate risks and adaptation, and urban management and planning.
NASA is providing deep space navigation and tracking support to ISROs Mars Orbiter Mission (MOM) as it
continues its journey in space and prepares for its arrival at the Red Planet in late September 2014.
Kalam National Space Society Initiative: India and USA teamed up on space-based energy initiative aimed at
turning both countries into net energy exporters. Laid down by the former President of India, APJ Abdul
Kalam, it envisages harvesting solar power in space for use on Earth.
USAID announced plans to partner with a leading Indian private sector management firm, bringing together
the public and private sectors to scale up effective solutions to end preventable child and maternal deaths
in India by 2035.

INDIA-US DEFENCE TIES

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US share in the Indian military trade has grown manifold since the end of the Cold war period. In late
September 2001, President Bush lifted sanctions imposed under the terms of the 1994 Nuclear Proliferation
Prevention Act following India's nuclear tests in May 1998. The non-proliferation dialogue has bridged many
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of the gaps in understanding between the countries. In a meeting between President Bush and Prime
Minister Vajpayee in November 2001, the two leaders expressed a strong interest in transforming the USIndia bilateral relationship. India looks for not only purchase of military equipment from USA but also for
Defense technology transfers.
India-US military ties hit a new high with US decision to remove DRDO and defense PSU Bharat Dynamics
limited from entities list (the black list that bans high technology trade with them). Indias defense deals are
of huge economic importance to US as it ensures thousands of American jobs back home.
The US will also cooperate as knowledge partner for India's planned National Defence University as well as
technology partner in the Indian Navy. Pledging to intensify cooperation in counter-terrorism and security,
the two countries agreed to step up intelligence sharing.
U.S and Indian soldiers are also engaged in various joint military exercises like Yudh- Abhyas, it is also a
show of combined strength in context of USs Asia Pivot Policy.

Indo-US defense deals

2002-$ 190 million for 12 AN/TPQ-37 fire finder weapon locating radar.
2006-$ 92.5 million for amphibious vessel USS Trent on, with 6 UH-3H helicopter.
2007-$ 962 million for 6C-130J Super Hercules aircraft
2009-$ 2.1 billion for 8P-81 maritime patrol aircraft.
2010-$ 170 million for 24 Harpoon Block-II anti- ship missiles to arm Jaguar fighters.
2010-$ 822 million for 99 GEF-414 engines for Tejas Light Combat Aircraft.

RECENT DEFENSE CO-OPERATIONS AND DEVELOPMENTS

In a natural continuation of the Indo-US nuclear agreement, the US also agreed to back Indias membership
of the Missile Technology Control Regime and Nuclear Suppliers Group, which would mark Indias further
integration into the global nuclear mainstream.
Holding that India and the US are natural global partners, the two countries extended defense cooperation
for another 10 years. Modi invited US companies to participate in defense manufacturing sector in India,
which has recently raised the FDI cap from 26 to 49 percent.
Although India wants to diversify its defense imports and Israel, Russia and France are also contenders for
deals with India, U.S is still an important defense partner. The emphasis in New Delhi is also shifting towards
self reliance in Defense production.

AREAS OF DIVERGENT INTERESTS

Along with various areas of cooperation, India has also seen various points of divergences with USA, which can
be discussed at length, under following headings:
CIVIL NUCLEAR LIABILITY BILL
Indias civil liability for nuclear damages act (2010) was a unique way of dealing with nuclear suppliers liability.
The only two situations in which an operator could claim a subsequent right of recourse against a supplier under
international liability law as well as under domestic law of other countries were
i.
ii.
iii.

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Where the nuclear incident arose out of an act or omission by the supplier with an intent to cause
damage (which is covered under Section 17(c) of the Act); and
A contractual right of recourse i.e. collecting back in case of failure of fulfillment of obligation (which is
covered under Section 17(a) of the Act).
Section 17(b) mentions that the operator would have the ability to reclaim any compensation it may
pay, from a supplier, if the product supplied has patent or latent defects or the service provided is
substandard.
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The law includes language that makes suppliers ( majorly U.S firms) of equipment, raw materials, and services
liable after the construction of a plant during any nuclear accident. Operator could, after compensating the
victims, exercise the right of recourse against the supplier.
The Problem:
These clauses were vehemently criticized by USA, as a supplier country, on the ground that these provisions are
not consistent with the international norms with respect to nuclear liability. This Nuclear Liability Bill was a vital
step to clear the decks for the full implementation of the historic Indo-US civil nuclear deal.
On the other hand India does not want to waive these clauses in the context of the various industrial accidents in
the past, specially the Bhopal Gas tragedy. India needs the cooperation of U.S in order to build high energy
producing capacity reactors in the country.
ISSUE OF INTELLECTUAL PROPERTY RIGHTS
U.S claims that Indian trade practices are detrimental to the US firms, and India infringes the IPR laws.
Pharmaceutical companies: In the Novartis vs. Union of India case, Supreme Court restricted the granting of
patent in case there is no genuine innovation, which does not contribute towards significant rise in therapeutic
efficacy of the drug. This judgment gave a boost to Indias generic drugs market and was in huge favor of Indias
needy poor patients.
US companies are against the relaxations granted on patenting laws at WTO on the request of India. It wants
India to be listed as the Priority Foreign Country which may result into sanctions against India.
USS COMPLAINT AGAINST INDIAS SOLAR POWER PROGRAM:
US has dragged India to WTO, because:

Indias domestic content requirement in Indias Jawaharlal Nehru National Solar Mission. India
required developers of Solar Photovoltaic (PV) projects employing crystalline silicon technology to
use solar modules manufactures in India.

It had excluded solar thin film technologies, which compromised the majority of U.S solar
manufacturing. It was an attempt on part of India to promote and protect its nascent solar industry
and to achieve self reliance in solar energy production.

U.S claims that it badly affects the US domestic solar panel manufacturing industry. The US is
mounting pressure on India to do away with the condition of local-buying of components in the next batch of
solar power projects under the countrys ambitious national solar mission, but India will defend its case in WTO,
in order to protect its nascent indigenous solar industry.
DIVERGENT INTEREST ON CLIMATE CHANGE:
As one of the major emitters of the green house gases in the world, it is the responsibility of U.S to reach a
solution to the problem of Climate change. Instead of taking responsibility of the environmental harm done by
the industrialized developed nations, U.S has not even agreed to be the signatory of the Kyoto Protocol. As a
result of this, there is a danger that more third world nations will shirk away their responsibility to fund capacity
building and other critical measures in developing countries with regard to climate change.
Indias stand as a representative of a developing world
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Common but differentiated Responsibility: Differentiation between developed and developing countries
should find its place in the 2015 global climate deal so that the onus lies on rich nations to contribute
substantially towards taking mitigations steps for handling the menace of climate change.
The developing world still has a heavy burden of developing its economy and improving the life of many of
its deprived people, hence its economic development should not be crippled under the restraint of meeting
carbon emission cut targets.
To make a strong pitch for early capitalization of the Green Climate Fund so that poor nations can use the
money for their adaptation and mitigation efforts to deal with climate change.

What role is India playing in mitigating climate talks?

India along with the BASIC group has emphasized time and again that developed countries should accept
their historical responsibilities of polluting the planet and finance technology transfer to the developing
world.
Not- much success has been achieved by BASIC group, hence India has shown keenness on joining the Like
Minded Developing Countries for common position on climate change.
India is trying to achieve a point of consent, by engaging in bilateral negotiations between India and US, and
between India and China.
There is need for India to emphasize along with other countries the need for strong commitments on the
emission reduction and operationalising the Green Climate Fund (GCF).

This cooperation cannot be achieved without roping U.S into the negotiations and getting its commitment
towards cutting down its emissions as well as formation of a Green Climate Fund.
USS PROBLEM WITH INDIAS BACKTRACKING FROM THE TRADE FACILITATION
AGREEMENT:
It was concerned with procurement and storage of food by state for public distribution of food. India argued
that the adoption of the protocol on trade facilitation should be postponed till a permanent solution to public
stockholding for food security had been worked out. India stuck to its stand even as the deadline for adopting
the protocol on TFA passed on.
USAs objection to the procurement of food and granting subsidies:

A major fear of WTO members is that India will dump its huge stock of food grains on the world market,
crashing food prices
PDS involves providing a subsidy to both farmers and consumers. According to Article 6 of the Agriculture
Agreement, providing minimum support prices for agricultural products is considered distorting and is
subject to limits

Indias argument in favor of not following FTA

India faces serious problems of hunger and under-nutrition, in order to reach its goal of food security India
has to keep stock of food grains for its population.
Indias Food Security act which is binding on the government by law now, implies that government will
provide very cheap food to most vulnerable part of population at extremely low prices.

This requires to procure huge amount of food stock as well as providing subsidies to producers as well as the
consumers of the food crop.
Solution proposed by India
Solution to the deadlock was offered by India at Bali. The current method used by the WTO to compute the
subsidy to producers, is based on the average prices of the year 1986-88. This method is absurd because actual
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prices have increased several-fold since 1986-88. India has argued that the reference price used in the
calculation should be moved forward on a rolling basis. This way it wont be violating the norms of Bali meet.
The developed countries along with US have not approved of Indias solution and continue to oppose Indias
backtracking from the TFA. They propose solutions like Direct cash transfer schemes instead of providing food
subsidies.

LOOKING AT INDIA-US RELATIONSHIP IN CONTEXT OF CHINA

The India US relationship cannot be viewed in isolation from the geopolitical influence of China. Rise of China as
a regional as well as global economic power has been a major reason for Indo-US ties. U.S has adopted the Asia
Pivot policy and assigned a major role to India in it.
INDIA AND ASIA PIVOT

Pivot means something that is central to a given context, on which other things depend.
The year 2012 began with the U.S. President Barack Obama formally announcing the so called pivot to Asia
that involves providing global security with emphasis on military extension and rebalance toward the AsiaPacific region. Such a pivot is not new, but has been in play since the end of the Cold War.
The pivot is sometimes portrayed as reflecting US anxieties about a rising China. The strategy requires a
long-term partnership with India, as an economic and security anchor in the region.

The USAs Asia pivot policy calls for:

Deploying 60 per cent of all American naval forces in Asia in the coming years.
Strengthening its traditional alliances in the region and building new partnerships, including with India.
It is not just a new military strategy. It is complemented by a more active American economic and political
engagement with Asia
The United States has declared that India is a linchpin of the new Asian strategy and is urging Delhi to take
a larger leadership role in the Asia-Pacific region.

The Great Indian Ocean Game

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Consequences of Asia Pivot for India

On its part India has supported US presence in Indian Ocean, although India has refrained from being part of any
alliance as proposed by the US. India has engaged in Trilateral dialogue with US, and Japan.
On the other hand China threatened by the U.S plans for Asia, has shaped its policy of encircling Indian
subcontinent, through its strategy of Sting of Pearls encirclement.
This has opened simultaneously for India a rare opportunity to shape the Asian balance of power and the real
danger of being drawn into the conflict between the worlds foremost power and the rising challenge in the
shape of China. New Delhi does not want a direct confrontation with China, especially when the leaders of both
India and China are emphasizing on the Rise of the Asian Age
India, of course, has the option of accepting the widening power differential with China, eschew rivalry, and
tailor its policies towards greater accommodation. Given its own self-image as a natural leader of the developing
world, India will find it hard to settle for a secondary place in a Sino-centric Asian order and an international
system where Beijing plays a larger role in setting and enforcing rules. Chinas opposition to Indias entry into the
Nuclear Suppliers Group and the UNSC as a permanent member has proven unhelpful as well.
This could, however, change if Beijing could tempt India with a reasonable settlement on the boundary,
addresses its concerns on Pakistan and cuts some space for the pursuit of Indias own ambitions in Asia. Delhi
has recently emphasized that it needs mutual cooperation and peaceful relations with its neighbors in order to
develop and grow; hence India has to carefully balance The Asia Pivot of US, in its own interest.

RECENT DEVELOPMENT DURING PRIME MINISTERS USA VISIT

The recent Visit to US by Prime Minister Modi, rebooted the ties between the two countries which had seen a
rough patch in its ties, owing to the US stand with regard to diplomatic immunity to Indian Diplomat. The IndiaUS relations had dipped after the 2012 budget which did not offer much to the US business houses.
This visit with its pros and cons had much positive than negative for India and US both.

PM announced new visa and travel schemes that will make it easier for people to get to India. This in turn
will help business and people to people connections.
In the U.S.-India Business Council (USIBC) PMs remarks were well-received by USIBC and American
government and business leaders. He evoked trust in them, that policy changes in New Delhi will create an
environment of Ease of doing business and fruitful investment in India.
The most eye-catching cooperation was extended in the field of counterterrorism, with specific
commitment by India and the US to a joint effort to disrupt and dismantle terrorist and criminal networks
such as al-Qaida, Lashkar-e-Taiba, Jaish-e-Mohammad, the D-Company, and the Haqqanis.
There was also notable progress in terms of defence ties, including a commitment to renew the 2005 IndoUS defence framework.
Lower barriers for travel (including visas on arrival for US tourists beginning in 2015), joint cooperation on
smart cities focussed on Ajmer, Vishakhapatnam, and Allahabad.
$1 billion for financing Indias transition into a low carbon and climate resilient economy.
In a natural continuation of the Indo-US nuclear agreement, the US also agreed to back Indias membership
of the Missile Technology Control Regime and Nuclear Suppliers Group, which would mark Indias further
integration into the global nuclear mainstream.

On the one hand India could convince the US-India Business Council that the government has no business being
in business, clarifying that government in New Delhi saw its role as a facilitator, thus ensuring a favorable
environment for business and investment in India.
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On the other hand Prime Ministers speech at The Madison Square pulled huge crowd of American-Indian, thus
signaling their greater role in the US economic and political future, which is also going to influence Indo-US ties.

CHALLENGES IN INDO-US RELATIONS

Superficial commitments
The Indo-US relationship has been steadily growing in terms of the treaties and cooperation yet in content, the
relationship has failed to achieve its commitment. The differences in the national interests also manifest itself in
the cooperation and the ties between the two countries.
In the past US has not desisted from having friendly relations with Pakistan, to further its geopolitical interests,
thus there is a trust deficit in the relationship.
Indias Concern towards balancing ties with US and China
India is supposed to acquire a leading role in USs Asia Pivot policy, which is in US interest more than it is in
Indias interest, in the context of the growing cooperation between New Delhi and Beijing. Closeness to one,
may agonize the other, which may not be in favor of Indias plan to invite investments in the economy and
indulge in nuclear and technological co-operations.
US stand towards terrorism
India has been one of the oldest victims of terrorism, in the world; hence Indias stand towards non-state
terrorist as well as terrorist states has been clear from the beginning. While on the other hand U.S policies
towards terror outfits have been shaped by its national and geo-political interests. U.S has also adopted policies
of distinguishing between the good Taliban and the bad Taliban. Prime Ministerial speech at UN indirectly
condemned the countries taking such stands towards terrorism.
India as a important part of South-South cooperation
Important role of India, in south-south cooperation and forums like the BRICS, makes it a representative of the
developing world. It highlights its differences in the field of climate change cooperation, economic interests of
the developing countries, as against the Brettenwoods institutions, issue of food subsidies etc, thus creating a
divide between the goals of India and US.
But the call of the time is to ignore all the differences and move towards cooperation with U.S in Indias national
interest. This is also the stand adopted by New Delhi which became clear during the recent Prime ministerial visit
to US. There are also various areas of cooperation which should be identified and India and U.S should both take
steps towards moving closer in the field of space and other technological exchanges, nuclear cooperation, and
checking the powers of a rising Dragon. India should keep following its national interests through strategic
partnerships, as per the changing environment in the international arena, because in the International relations
there are no permanent enemies or foes, but only permanent national interests.

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INDIA-BANGLADESH
INDIA-BANGLADESH JOINT CONSULTATIVE COMMISSION (JCC) MEET

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The third India-Bangladesh Joint Consultative Commission (JCC) meet was held in New Delhi on 20
September 2014.
Bangladesh said that unresolved issues between the two neighbours should be resolved to take forward
bilateral ties. A wide range of issues such as trade, connectivity, power, water resources, security, border
management, introduction of coastal shipping, infrastructure, people-to-people contacts, culture,
environment and education were discussed. The alleged killing of Bangladeshi citizens along the border was
also high on the agenda.
It was learnt that the Bangladesh side was likely to seek a specific timeframe from India to resolve the
pending Teesta water sharing treaty and Land Boundary Agreement (LBA).
An MoU was signed for affiliation of the Nalanda University in Bihar.
Both regional and sub-regional issues particularly BIMSTEC, SAARC and BCIM-EC were discussed.
The two sides stressed on the need for effective implementation of the Coordinated Border Management
Plan (CBMP), including regular coordination and exchanges between nodal officers at different levels for
better border management so as to prevent cross border criminal activities, illegal movement , incidents of
violence and tragic loss of lives.
Bangladesh appreciated the measures taken by India to bring down the number of tragic loss of lives at the
border. Both sides agreed that the number should come down to zero. They also agreed on the need for
early completion of fencing of remaining vulnerable patches along the border.
Responding to Bangladesh sides request for immediate opening of immigration facilities at PhulbariBanglabandha, the Indian side conveyed that construction work has begun at Phulbari and that the
immigration post would be operationalised soon.
Both sides noted the progress on the preparation of the Detailed Project Report (DPR) for the Inland River
Port at Ashuganj and recognised the need for its expeditious construction.
The Indian side reiterated its earlier commitment that it would not take any unilateral decision on the
Himalayan component of the proposed River Interlinking project which may adversely affect Bangladesh.
The various measures taken for enhancement of trade and investment between the two countries were
noted, and two sides agreed that all barriers to trade should be removed. It was noted by both sides that a
significant step towards enhancing market access for Bangladesh products to India was taken through the
duty free quota free access given by India to Bangladesh products in 2011. Bangladesh side handed over a
list of barriers to trade being faced by Bangladesh exports to India. It was also agreed to increase Indian
investments in Bangladesh. This would not only reduce the trade gap but also increase Bangladeshs exports
to third countries. In this context, India welcomed the decision of Bangladesh to allocate land for a Special
Economic Zone for India and extend necessary cooperation to interested Indian entrepreneurs to invest in
it.
The two sides stressed the urgent need for up-gradation of infrastructure of the Land Customs Stations
(LCSs)/Land Ports and Integrated Check Posts (ICPs) in a coordinated manner. While expressing satisfaction
that the ICP at Akhaura-Agartala has been functional since November 2013, the two sides agreed on the
need for optimizing utilization of the modern facilities created there.
It was already agreed that India would not allow its territory to be used against Bangladesh. Regarding
media reports that Indian Saradha company was financing the Jamaat-e-Islami in Bangladesh, it was said
that it was a matter best left to Indias own investigation.
The Joint Consultative Commission was constituted under the Framework Agreement on Cooperation for
Development. The agreement was signed during the visit of former Prime Minister Dr Manmohan Singh to
Bangladesh in September 2011.

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BANGLADESH TO RESTORE ABANDONED RAIL LINES WITH INDIA

Bangladesh might restore the abandoned railway connectivity that existed before the partition of India to
boost trade and people-to-people contact. After the partition of India in 1947, many railway lines between
the two neighbours had snapped.
With the help of Indian investment preliminary works have started to lay a 15-km railway track to link
Tripuras capital Agartala with Bangladeshs south-eastern city of Akhaurah. The Indian Railway
Construction Company (IRCON) would lay the new railway tracks on both sides of the border. The projects
include Dhaka-Tongi and Khulna-Mongla railway line extension and manufacturing of 120 coaches for
Bangladesh railways.
Agartala is 1,650 km from Kolkata and 2,637 km from New Delhi via Guwahati and West Bengal, whereas
the distance between the Tripura capital and Kolkata through Bangladesh is just about 350 km. India has for
long been seeking land, sea and rail access through Bangladesh for ferrying goods and heavy machinery to
its northeast from abroad and other parts of the country.

LIFELONG VISAS FOR INDIAN DIASPORA

Modi announced several measures to ease travel to their motherland including:

o life-long visas.
o People of Indian Origin (PIOs) in staying in India for long would not have to report to police.
o In addition, the Indian missions in the US would grant long-term visas to US citizens and US tourists
would get visa on arrival in India.
o Online visas would be introduced and Visa outsourcing services expanded to reduce current problems.
Currently PIO cards, given to those who themselves, their parents or grandparents or their spouse, were
one-time Indian citizens, allow for visa-free travel to and from India. However, a PIO card is only valid for 15
years. Also, if ones stay in India is going to exceed 180 days on any single visit, one needs to register within
30 days of the expiry of 180 days with the concerned Foreigners Regional Registration Officer/Foreigners
Registration Officer or local police authorities.
On the other hand, the Overseas Citizenship of India (OCI) card given to only those who themselves or their
parents were one time citizens, has lifelong visa-free travel and does not require the holder to register with
any office regardless of the length of their stay.
Eventually the PIO and OCI schemes will be combined in a new scheme and also cover spouses.

INDIA, AUSTRALIA SEAL CIVIL NUCLEAR DEAL

In a major step towards realising its nuclear energy ambitions, India signed a civil nuclear cooperation
agreement with Australia.
The two nations have held five rounds of negotiations on the deal since 2012, when Australia reversed its
policy on nuclear sales to India. The policy was based on Indias refusal to sign the Nuclear Non-Proliferation
Treaty.
Australia has about a third of the worlds recoverable uranium resources and exports nearly 7,000 tonnes of
it a year.
Prime Minister of Australia, Mr. Tony Abbott told that the exception was made in view of Indias model
behaviour on its nuclear capabilities. He said that he is keen that more Indian investment should follow the
signing of this nuclear deal, which clears uranium sales to India.

INDIAN-ISRAELI PMS MEET

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In the first meeting between Indian and Israeli Prime Ministers in more than a decade, the two Prime
Ministers spoke about improving bilateral ties and bilateral trade at about $6 billion, on a range of issues
from cooperation in agriculture to cooperation on anti-terror technology.
Israel is one of Indias largest defence suppliers, and Mr. Modi discussed his governments decision to open
up Foreign Direct Investment (FDI) in the field to 49 per cent.
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He also told Mr. Netanyahu that Israel should consider defence partnerships based in India, in line with his
Make in India initiative.
Mr. Modi and Mr. Netanyahu also discussed ways of increasing bilateral ties in the areas of agriculture,
water management and urban development.
Mr. Netanyahu has invited Mr. Modi to visit Israel soon, and if Mr. Modi goes he will be the first Indian
Prime Minister to do so.
There are other factors that denote the shift in Indias position. To begin with, the Prime Minister will be
meeting Mr. Netanyahu, but has not met with Palestinian Prime Minister Mahmoud Abbas who was here in
New York at the same time.
In the past few years, India has taken a more nuanced position on the Palestinian-Israel conflict, away from
its pro-Palestine stance of the past. While India voted against Israel at the UN Human Right Council this year
during the recent conflict in Gaza where more than 2,200 people were killed, for example, the government
refused to condemn Israels actions in its statement.
Mr. Modis speech at the UN also saw a departure from the past years, when the Indian speech regularly
made references to the Palestinian struggle in the past.

GMR TO BUILD NEPAL'S LARGEST HYDRO POWER PLANT

Nepals government has endorsed plans for GMR to build the Himalayan nations largest hydro power plant
in a small step toward easing chronic power shortages and attracting new investment.
GMR Group announced finalisation and execution of the project development agreement (PDA), with the
Nepal government, for the 900 MW Upper Karnali Hydro Power Project. The $1.15 billion Hydro power
plant would be the biggest private foreign investment in Nepal.
GMR would take five years to build the plant, dam the Karnali River in north-western Nepal (Surkhet,
Dailekh and Achham districts) and construct transmission lines. It was awarded to the Group through an
international competitive bidding process in 2008 on BOOT basis.
GMR Group said the project is expected to generate about 3,500 MUs annually. Of this, 420 MUs, which is
12 per cent of installed capacity, has been earmarked as free power to Nepal. The Nepal Electricity
Authority will have 27 per cent free equity stake in the project. At the end of the 25 year concession period,
the Group is to transfer the full ownership to the Nepal government. This agreement would open the door
for more foreign investment to enter Nepal to develop hydro power projects.

BAMIYAN TO BE SAARC CULTURAL CAPITAL FOR 2015

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Bamiyan, the Afghan town which shot into prominence when the Taliban blew up two ancient statues of the
Buddha in 2001, has been selected to be the SAARC cultural capital for a year beginning April 2015. Dhaka
will be the SAARC cultural capital in 2016-17. The year 2016-17 will also be declared the SAARC Year of
Cultural Heritage.
Finalising the cultural capitals for the next two years was part of the Delhi Resolution which was adopted at the
conference while preparing a road map on cultural ties till 2017.
The SAARC countries also agreed to formulate proposals for transnational nominations for the World Heritage
List and a regional list of heritage sites.
Indias Project Mausam got a fillip as the Delhi Resolution agrees to recognise the impact and contribution of
maritime routes and the monsoon as also other inland relations through centuries of trade, migration and
colonialism.
In a measure aimed at promoting literature produced in local languages of the region, the Ministers decided to
make them accessible to readers across the world through translations in not just English but SAARC languages.
Other areas of cooperation decided upon include promoting traditions unique to the region, digital mapping of
historic sites in member countries, preparing inventories of cultural assets, preservation of folklore and other
oral traditions besides a common entrance rate to monuments in the region for people from SAARC countries.

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SECURITY ISSUES
AL-QAEDA ANNOUNCES INDIA WING

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Al Qaeda leader Ayman al Zawahiri announced the formation of an Indian branch of his militant group,
which would spread Islamic rule and "raise the flag of jihad" across the subcontinent.
In a 55-minute video posted online, Zawahiri also renewed a longstanding vow of loyalty to Afghan Taliban
leader Mullah Omar, in an apparent snub to the Islamic State armed group challenging al Qaeda for
leadership of transnational Islamist militancy.
Zawahiri described the formation of "Al Qaeda in the Indian Subcontinent" as a glad tidings for Muslims "in
Burma, Bangladesh, Assam, Gujurat, Ahmedabad, and Kashmir" and said the new wing would rescue
Muslims there from injustice and oppression.
However, while al Qaeda is very much at home in the Afghanistan-Pakistan border area, due to influential
contacts and a long presence there, it is a minnow compared to local militant groups in terms of manpower
and regional knowledge.
Counter-terrorism experts say al Qaeda's ageing leaders are struggling to compete for recruits with Islamic
State, which has galvanised young followers around the world by carving out tracts of territory across the
Iraq-Syria border.
Al-Qaeda plans for expansion into the Indian subcontinent were part of its efforts to carve out its own
territory as it competes for recruits, money, and ideological supremacy with IS. Recent military gains by IS
and its increasing efforts to recruit militants from South Asia has created alarm among the al-Qaeda
leadership that it will become second fiddle to IS.
In this context it was noteworthy that Zawahiri reiterated al-Qaedas loyalty to Afghan Taliban leader
Mullah Omar and refrained from attacking Pakistan as al-Qaeda has in the past. It may also indicate closer
cooperation between al-Qaeda and its long-time ally LeT, which was behind the attack on India's consulate
in Herat in Afghanistan in June.
IS fell out with Zawahiri in 2013 over its expansion into Syria, where Baghdadi's followers have carried out
beheadings, crucifixions, and mass executions. Islamic State's effort at state-building is something never
attempted by al Qaeda's central leaders, who traditionally have preferred to plot complex attacks on targets
in the West. Zawahri called for unity among militants and criticised "discord" echoing a common al
Qaeda complaint against Islamic State's record of clashing with rival Islamist groups in Syria. The statement
also warned al Qaeda's new wing against oppressing local Muslim populations another complaint levelled
against Islamic State by critics in Iraq and Syria.
Counterterrorism experts in the U.S. suggested that while Indias pluralistic democracy would militate
against their efforts the possibility of al Qaida tying up with Lashkar-e-Taiba could spell trouble for the
government of Prime Minister Narendra Modi. India is an open society with a robust democracy, free
media, and pluralistic values, so the al-Qaeda message is unlikely to resonate with most Indians.
Although in some cases state-level dissent may lead to disagreements with central government policies, for
example in Kashmir, they were unlikely to heed the call of al-Qaeda, because Kashmiris have a tradition of
practicing Sufi Islam, which is anathema to the organisations austere and hardline Salafism.
An US expert said that more generally Zawahiris statement suggests that groups priority would be to
support efforts to terrorise India and carry out mass causality attacks, and in that context the priority of the
Modi government ought to be close cooperation with the U.S. and Afghanistan to keep pressure on alQaeda.

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WORLD AFFAIRS
AIRSTRIKES ON IS

Nearly 40 countries, including 10 Arab states, have signed up to a U.S.-led plan to tackle the extremist
group. However, the U.S. refused Iran to attend, prompting Tehran to dismiss the talks as just for show.
Earlier, U.S. President Barack Obama had presented a strategy to fight the IS in both Iraq and Syria.
U.S. launched airstrikes around Haditha Dam in western Iraq. U.S. officials said the offensive was an effort to beat
back the militants from the dam, which remained under Iraqi control. The militants could have opened or
damaged the dam, flooding wide areas as far as Baghdads international airport, where hundreds of U.S.
personnel are stationed.
The United States and its Arab allies (an unexpected coalition of five Arab nations- Bahrain, Saudi Arabia, Jordan,
Qatar and the United Arab Emirates) also mounted airstrikes against oil refineries controlled by the Islamic State
in eastern Syria, to choke off a crucial source of revenue for the militant group. France and UK have also taken
part in strikes in Iraq.
Islamic State's war chest probably included about $1 million a day in revenues from black-market oil sales as well
as smuggling, robberies, and ransom payments for hostages.
Speaking at the United Nations, U.S. President Barack Obama singled out the goal of choking off Islamic
State financing and to stop the flow of fighters into and out of the region.
Mr. Obama has vowed to hunt down the group after it beheaded two American journalists, James Foley and
Steven Sotloff. Another video was released later appearing to show the beheading of a British hostage David
Haines. The violence in Iraq in the recent months has displaced an estimated 1.2 million people.
In a striking shift for a President who has been reluctant to take military action in the past, Mr. Obama declared
that force is the only language the militants understand. The threat from the Islamic State group has already
drawn Mr. Obama back into conflicts in the Middle East that he has long sought to avoid, particularly in Syria,
which is mired in a bloody three-year civil war. Just months ago, the president appeared to be on track to fulfil
his pledge to end the U.S.-led wars he inherited in Iraq and Afghanistan.
Mr. Obama sought to distinguish this current military campaign from those lengthy wars, declaring that he has
no intention of sending U.S. troops to occupy foreign lands. He also pressed Middle Eastern nations to look
beyond military action and take steps to reject the ideology that has spawned groups like the Islamic State and to
cut off funding that has allowed that terror group and others to thrive.
The U.N. Security Council adopted a resolution recently authorising world powers to take action against those
who support the IS and the al-Qaeda linked Nusra Front. The resolution was quickly followed by a U.S. appeal to
form an international coalition.
Later, U.S. President Barack Obama authorised its air force to strike IS positions in Syria, similar to the airstrikes
U.S. war jets have been carrying out in Iraq. But the strikes lack coordination with the Syrian government, a move
that was deemed by Damascus as an encroaching upon Syrian sovereignty.

CHINA SLAMS U.S. BROAD COALITION APPROACH TO COUNTER IS

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China has slammed as futile the effort by the United States to counter the Islamic State (IS) outside the
mandate of the United Nations Security Council (UNSC), amid calls that India should join the broad
coalition led by Washington and its western allies.
The commentary specifically pointed out that the U.S. had first secretly connived with the IS the Jihadi
group operating in West Asia known for its extreme brutality in Syria, till the time the situation spiralled
out of control.
In sync with the perception that the Global War on Terror (GWOT) had become a cover for regime
change, the article pointed out that Washington has its own set of rules to define the act of terrorism and
even use it as a lame excuse to interfere in other countrys internal affairs.
There is a growing perception in Beijing that the U.S. approach of combating global Jihad, starting with its
interventions in Afghanistan and Iraq, has, in fact had the opposite effect, leading to the emergence of
extreme terrorism, which the IS exemplifies.

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Contrary to the U.S. strategy, China is advocating a comprehensive U.N.-driven initiative that strikes at all
aspects that nurture terrorism, that includes measures taken in political, security, economic, financial,
intelligence and ideological fields.
The Chinese have made it plain that Syria and Iran two countries that are best equipped to do so must
play a central role in countering the IS.

UKRAINE CRISIS
CAUSE OF THE CRISIS

Many of those in Russian-speaking eastern Ukraine distrust the new central government in Kiev, which
came to power after the February ouster of former President Viktor Yanukovych, whose power base was in
eastern Ukraine.
The insurgency in mostly Russianspeaking eastern Ukraine flared up in April, a month after Moscows
annexation of Ukraines peninsula of Crimea in response to the ouster of Ukraines former proRussian
president and Kievs shifted policy towards the European Union.

UKRAINE, PRO-RUSSIAN REBELS SIGN CEASEFIRE DEAL

Ukraine and pro-Russian rebels agreed a ceasefire, the first step towards ending a conflict in eastern
Ukraine that has caused the worst standoff between Moscow and the West since the Cold War ended. The
deal was agreed at peace talks with representatives of Russia and the OSCE security and rights group in the
Belarussian capital Minsk. But a senior rebel leader said the separatists still wanted a formal split from
Ukraine.
A humanitarian corridor would be created for refugees and aid, a prisoner exchange would take place, and
rebuilding work would begin in conflict areas.
A ceasefire in June lasted 10 days but officials in Kiev hoped the new accord would bring a more lasting. Mr.
Poroshenko changed his position and pushed for a ceasefire after the tide turned in the conflict and
Ukrainian troops were beaten back by a resurgent rebel force which the West says has received military
support from Russia. Moscow denies arming the rebels or sending in Russian troops.
Mr. Putin for the first time put his name to a concrete peace plan, proposing seven steps which would leave
rebels in control of territory that accounts for about one tenth of Ukraine's population and an even larger
share of its industry. It would also require Ukraine to remain unaligned. Although the Kremlin leader may
not have secured all his goals, he had reason to secure a settlement because of the growing impact of
sanctions on Russia's stuttering economy. Public support for Mr. Putin is high because of the seizure of
Crimea, a Russian territory until Soviet leader Nikita Khrushchev gave it to Ukraine 70 years ago, but this
could change if the conflict drags on and many Russians are killed.
Mr. Putin's key goals appear now to be to ensure Ukraine, a country of more than 40 million where Moscow
has long had major influence, does not join NATO and that the eastern regions of Ukraine win much more
autonomy. Although Mr. Poroshenko still calls for Crimea to be part of Ukraine, there is little chance of
Russia giving it up. Ukraine was ready to grant a significant decentralisation of power and economic
freedom to the regions as well as the right to use the language of their choice and an amnesty as part of a
political settlement, he said.

EU IMPOSES NEW SANCTIONS ON RUSSIA OVER UKRAINE

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The European Union imposed sanctions against large Russian energy and defence companies, including a
subsidiary of Gazprom and the manufacturer of Kalashnikov rifles.
Twenty-four new individuals have been hit with EU asset freezes and travel bans, bringing the total to 119.
However, Brussels has been more reluctant than Washington to sanction Russia because of its broad
economic ties. Moscow is an important gas supplier for many EU nations and it is the blocs third-largest
trading partner overall. The EUs sanctions, however, have more impact than those imposed by the U.S.
since the EU is Russias largest trading partner by far.
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CHINAS SILK ROAD TO COUNTER WASHINGTONS FTA MOVE

Chinas drive to deepen linkages among the littoral states in South and South East Asia through a revival of
the Maritime Silk Road (MSR) project, has deeper geopolitical resonance as it follows the U.S.-led Trans
Pacific Partnership (TPP) initiative, which seeks to forge a regional free trade agreement in the Asia-Pacific
region.
The twelve participating countries in the TPP include Washingtons major allies such as Japan, Australia and
New Zealand, apart from Vietnam, Singapore and Malaysia.
Observers point out that Beijing is interpreting the U.S. Pivot to Asia a doctrinal shift of concentrating
additional forces and equipment in the Asia-Pacific, that runs parallel to the TPP -- as part of a China
containment strategy steered by Washington and its allies.
The MSR is part of a string of Silk Road initiatives that the Chinese are undertaking that includes the
Bangladesh-China-India-Myanmar (BCIM) corridor, which aspires to establish economic linkages between
South and Southeast Asia.
Analysts point out that the recently established BRICS Development Bank and the Asian Infrastructure
Development Bank (AIDB) could be roped in to fund projects within the Silk Road framework.
Officials in the Fujian province say that China will support funding for the development of marine industry,
including ship building, logistical infrastructure and industrial parks in countries that participate in the MSR
initiative.

SRI LANKA
CHINESE PRESIDENT XI JINPINGS VISIT

Chinese President Xi Jinping inaugurated a $1.4 billion port city being built on an artificial island near
Colombo. The Colombo Port City, funded largely by Chinese loans, is designed to become a key link in a
maritime route China hopes will boost trade with Europe. Aside from offering a base to international
shippers, the port city is expected to ease traffic and congestion in Colombos busy business district.
The countries would step up high-level exchanges, including those of defence authorities, with the aim of
deepening the China-Sri Lanka Strategic Cooperative Partnership. Sri Lanka has had strong ties with China,
which has consistently backed the country at the U.N. Human Rights Council where it faces a U.S.-backed
resolution that calls for an international probe into its rights record.
Ever since Sri Lankas civil war ended in 2009, sections in New Delhi have been worried about the increasing
influence China seems to have over the island nation.
China card was however drastically diminishing in size in the context of emerging Indo-China relations in
the last few years, and particularly so after Prime Minister Narendra Modi assumed charge.
Observing that much of the economic engagement was politicised, experts are of the view that progress on
Indian projects had slowed down since 2012, after India voted against Sri Lanka at the Human Rights
Council.
In 2014, India abstained from voting on the resolution, pressing what analysts termed a reset button in
Indo-Lanka diplomacy, however China's apparently growing influence remains a concern among many.
However, experts pointed out that the Chinese commercial loans were rather expensive with high interest
rates, while Indias assistance included a considerable grant component.

SRI LANKA TO SIGN FTA WITH CHINA

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During his visit, Mr. Xi will visit the site of a $1.4-billion port city development project, Beijings latest
investment in Sri Lanka, adjoining Colombos commercial port, which is also funded by China. His visit to Sri
Lanka the first by a Chinese President in nearly three decades has evoked much interest, with Sri
Lanka and China set to sign 20 major agreements, including the Free Trade Agreement (FTA).
Sri Lanka will also join Chinas efforts in the 21st Silk Road trade cooperation.

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Since Sri Lankas civil war ended in 2009, China has been heavily investing in infrastructure, including ports,
expressways, an airport and a power plant amounting to $4 billion, according to Chinese state media
reports.

AFGHANISTAN
AFGHANISTANS PRESIDENTIAL RIVALS SIGN POWER DEAL

The drawn-out election was meant to mark the first democratic transfer of power in Afghanistan's troubled
history but the disputes between Mr. Ghani and Mr. Abdullah, a former foreign minister, ruined hopes for a
smooth transition. Mr. Karzai has ruled since soon after the Taliban government was ousted by U.S.-backed
Afghan forces in late 2001.
Mr. Ghani and Mr. Abdullah finally struck a power-sharing deal. As part of that deal, the winner would
become the new president and the runner-up would nominate a chief executive with newly expanded
powers.
The new administration faces huge challenges in fighting an emboldened Taliban-led insurgency and paying
its bills amid plummeting tax revenue. It will also face significant difficulty in improving the lives of ordinary
Afghans who face hard times as aid flows fall and as contracts with the NATO-led coalition dry up as most
foreign troops leave by the end of the year.

U.S. FORCES TO REMAIN IN AFGHANISTAN PAST END OF 2014

Officials from Afghanistan and the United States signed a long-delayed security agreement to allow
American troops to stay in the country after the end of the year, fulfilling a campaign promise by new
President Ashraf Ghani.
Under the terms of agreement, about 12,000 foreign troops are expected to stay to train and assist Afghan
security forces after the U.S.-led military mission formally ends its combat mission at the end of 2014.
Mr. Ghani's predecessor, Hamid Karzai, had long refused to agree to the deal, souring his ties with the
United States.

FIJI COUP LEADER SWORN IN AS PM

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Voreqe Frank Bainimamara was sworn in as Fijis Prime Minister, after his party won the island nations first
general election since he led a military coup in 2006.
Mr. Bainimarama, a former navy officer, led coups in 2000 and in 2006, when he ousted the elected
government amid tensions between indigenous Fijians and the descendants of Indian labourers who make
up the rest of the population.
The 2006 coup saw Fiji lose its Commonwealth membership and diplomatic ties with New Zealand and
Australia.
Election officials and international observers said the election appeared to be fair. Australia, the United
States and the European Union commended authorities on the manner in which the process was
conducted.
Mr. Bainimaramas supporters say the charismatic leader did much to develop Fiji. In promoting racial
reconciliation, he earned praise from Indians but alienated many of his fellow indigenous Fijians.
Critics call him a dictator and say he did little more than line his own pockets and those of his cronies. They
claimed he brought changes to the constitution and electoral laws to avoid prosecution for treason and to
stay in power.

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SCOTLAND REFERENDUM FOR INDEPENDENCE

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The yes/no to independence referendum was held in Scotland (only) for all residents who are 16 and above.
It was to decide whether Scotland will become an independent country or remain in the United Kingdom.
Alex Salmond, currently First Minister for Scotland from the Scottish National Party (SNP) leads the Yes
[for independence] campaign, and Alistair Darling, former Prime Minister Tony Blairs media manager heads
the Better Together campaign.
The No campaign received 2.1 million votes or 55.3 per cent of the total votes cast; the Yes side trailed
with 1.8 million or 44.7 per cent of the votes.
With Scotlands decisive rejection of the Independence option in the landmark referendum, the political
focus in both Edinburgh and Westminster has shifted to the question of devo max (maximum devolution)
and the specifics of the devolution package that the leaders of the three main parties of the United
Kingdom promised on the eve of the referendum.

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SCIENCE & TECH

INDIAS MARS ORBITER MISSION (MOM)

India had accomplished a gigantic feat of putting a spacecraft in orbit around Mars in its first attempt. MOM
spacecraft is the only such endeavour so far to have met with success on the maiden attempt. NASA took
two attempts to get so far; the Soviet Union, three. India is the first Asian country and ISRO the fourth space
agency to send a satellite to the Red Planet.
The spacecraft was launched on its nine-month-long odyssey on a PSLV rocket from Sriharikota in Andhra
Pradesh on November 5, last year. It had escaped the Earths gravitational field on December 1 and was
placed in the Martian orbit on September 24. The orbiter will keep moving in an elliptical path for at least
six months. Mission Operations Complex-2 (MOX-2) is the nerve centre of Indias Mars mission.
Until the Mars mission, ISRO functioned as a FedEx-for-space, launching the scientific instrument cargo, or
scientific payload, of other countries, and Indian telecommunication and meteorological satellites into orbit
around Earth using largely its Polar Satellite Launch Vehicle (PSLV) rockets. Since 1993, PSLV rockets have
launched 65 satellites in 25 launches, including India's Moon and Mars missions. But now ISRO has
convinced the world that it can also plan and execute long-term missions and the associated logistical
nightmares. MOM's success has helped India show up China to assert itself as a regional space-power that
not only markets itself as a low-cost hub, but also as a country that can set the agenda for regional
cooperation.

SCIENTIFIC INSTRUMENTS
MOM aims to study the Martian surface and mineral composition and scan its atmosphere for methane, an
indicator of life. The spacecraft is equipped with five instruments:

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Thermal Infrared Imaging Spectrometer: Maps the surface temperature to understand the composition and
mineralogy of Mars.
Mars Colour Camera: Provides images of Martian surface features and weather events, such as dust storms.
It will also supply images of Mars' two moons, Phobos and Deimos.
Methane Sensor: Looks for methane in the Martian atmosphere. The presence of this gas might be an
indicator of life on the planet.
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Mars Exospheric Neutral Composition Analyser: Analyses neutral gas atoms found in the outermost part of
the Martian atmosphere
Lyman Alpha Photometer: Measures relative abundance of two isotopes of Hydrogen (deuterium and
hydrogen) in order to understand processes by which Mars has been losing its atmosphere, thereby turning
from a wet planet to a dry one.

The science instruments together weigh about 15 kg. They were built by different ISRO facilities such as Space
Applications Centre-Ahmedabad, Laboratory for Electro-Optic Systems-Bangalore and Space Physics LaboratoryThiruvananthapuram.

LIQUID APOGEE MOTOR (LAM)/ 440 NEWTON ENGINE

A liquid-propellant engine aboard India's Mars Orbiter that helped it to go into orbit around the Red Planet.
It is carried on such satellites so that they can be moved from the temporary orbit in which launch vehicles
place them to the appropriate operational location.
This engine was originally developed by the Indian Space Research Organisation (ISRO) for its
communication satellites. It also propelled Indias Chandrayaan-1 lunar probe to the Moon and hurled the
Mars Orbiter beyond Earths clutches.

ISSUES

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Scientific payload limit: The PSLV series of rockets are built to carry payloads of up to about 1,500 kg to the
geostationary transfer orbit, which is as high as MOM needed to go before switching to a heliocentric orbit.
This places direct limits on what kinds of instruments ISRO can or can't send up. In comparison, the NASA
Mars Atmosphere and Volatile Evolution (MAVEN) space probe that got into orbit around Mars on
September 21 weighed 2,454 kg and its scientific payload, 65 kg. So if mission scopes are to expand, and
India is to make the best of the foreign interest, its scientific aspirations and technological capabilities will
have to expand, too. This can be good news for Indian cosmologists and astrophysicists who, like many
other scientists in India, have been clamoring for a hike in research and development funding since the early
1990s.
ISRO's future really depends on the Geosynchronous Satellite Launch Vehicle (GSLV) rockets. The GSLV is
expected to be able to carry at most 1,000 kg more to the geostationary transfer orbit than the PSLV. The
difference in capability as well as complexity lies with the engines. The PSLV has a four-stage engine with
alternating solid and liquid stages. The GSLV has a three-stage engine of solid, liquid and cryogenic stages.
The cryogenic stage has been the stumbling block because it had to be indigenously developed and its first
successful flight was only in January this year.
Lack of an inclusive scientific agenda: The mission was executed in a really short span of time. A feasibility
study was conducted in 2010, the federal approval received in 2012, and the payload launched a year later,
all on a feeble budget of about $74 million. That's one-ninth the cost of the MAVEN space probe, $670
million. This bespeaks its original purpose being a demonstration of the perseverance of ISRO personnel,
especially considering everything else about the mission was a cobbling together of well-tested
components. That MOM had a scientific payload on board seems incidental even if its observations will
soon be the center of (much less) attention.
Scientific collaboration: There are moves afoot for ISRO and NASA to work with one another and share data
from their respective Mars probes. With the data collected by MAVEN and the Mars Orbiter, NASA and ISRO
scientists will have a wealth of information to help solve mysteries regarding the Mars atmosphere. In
addition, the two space agencies are talking about setting up a Joint Mars Working Group to coordinate
their plans for studying the planet.

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NASA'S MAVEN EXPLORER

The Maven spacecraft arrived at the red planet after a 442 million-mile (700 million kilometres) journey that
began nearly a year ago. NASA confirmed that the robotic explorer slipped into Martian orbit as planned.
Now the real work begins for the $671 million mission.

Then Maven will start probing the Martian upper atmosphere. The spacecraft will conduct its observations
from orbit; its not meant to land. Scientists believe the Martian atmosphere holds clues as to how Earths
neighbour went from being warm and wet billions of years ago to cold and dry. That early moist world may
have harboured microbial life, a tantalizing question yet to be answered.

ROSETTA (ROBOTIC SPACE PROBE)

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The European Space Agency will attempt to land the first spacecraft on a comet in November to provide
clues to the solar systems 4.6 billion-year history.
Philae, a landing module weighing about 100 kg that is part of Rosetta (robotic space probe), will probably
touch down on Nov 11 on the surface of Comet 67P/Churyumov-Gerasimenko, which the unmanned
spacecraft has been orbiting and observing from a distance of less than 100 km since Aug 6. Rosetta was
launched in 2004, and, over the past 10 years, has travelled almost 6.4 billion km on its odyssey to try and
obtain data relating to the solar systems origin.
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Philaes landing site, currently known as Site J, is located on the smaller of the comets two lobes, with a
backup site on the larger lobe. The Rosetta orbiter will continue to study the comet and its environment
using its 11 science instruments as they orbit the Sun together, said ESA. The analyses made by the Rosetta
orbiter will be complemented by the in situ measurements performed by Philaes 10 instruments.
The comet is on an elliptical 6.5-year orbit that takes it from beyond Jupiter at its furthest point, to between
the orbits of Mars and Earth at its closest to the Sun. Rosetta will accompany the comet for more than a
year as they swing around the Sun and back to the outer solar system again.

MARS CURIOSITY ROVER REACHES ITS PRIMARY DESTINATION

After more than two years of touching down on Mars, NASAs Curiosity rover has finally reached the
foothills of Mount Sharp, the primary destination it was designed to explore. Mount Sharp is a MountRainier-size mountain at the centre of the vast Gale Crater and the rover missions long-term prime
destination.
After landing inside Gale Crater in August 2012, Curiosity fulfilled in its first year of operations its major
science goal of determining whether Mars ever offered environmental conditions favourable for microbial
life.

NASA TO MAKE ISS AN EARTH-OBSERVING PLATFORM

In a bid to monitor Earth better, the National Aeronautics and Space Administration (NASA) is adding a
number of Earth-observing instruments to the International Space Station (ISS) that will increase the
leverage of the space stations unique vantage point in space.
Scheduled to be launched this month, the first NASA Earth-observing instrument called ISS-RapidScat will
monitor ocean winds for climate research as well as weather predictions and hurricane monitoring.
The second instrument scheduled for a December launch is the Cloud Aerosol Transport System (CATS), a
laser instrument that will measure clouds and the location and distribution of airborne particles such as
mineral dust and smoke in the atmosphere.
Before the end of the decade, six NASA Earth science instruments will be mounted atop the ISS to help
scientists study our changing planet.
Most of the agencys free flying, Earth observing satellites orbit the planet over the poles at altitudes higher
than 400 miles in order to gather data from all parts of the planet. Although the space station does not pass
over Earths Polar Regions, its 240-mile-high orbit does offer logistical and scientific advantages.

NASA SUBMARINE TO EXPLORE OCEANS IN SPACE

US space agency NASA is developing a space submarine to explore ocean waters on Titan, one of Saturns
moons. Titan is the only other body in the solar system besides earth with liquid oceans on its surface. NASA
now plans to send both the boat and a submarine to study seas on Titan. The space submarine, part of
NASAs Innovative Advanced Concepts (NIAC), should be able to communicate from beneath the waves.

LANIAKEA

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Milky Way is a suburb of a supercluster called Laniakea. No longer will a standard home address followed by
the Earth, the solar system, the Milky Way, the universe suffice for aficionados of the extended
astronomical location system.
The extra line places the Milky Way in a vast network of neighbouring galaxies or supercluster that forms
a spectacular web of stars and planets stretching across 520 million light years of our local patch of
universe. Named Laniakea, meaning immeasurable heaven in Hawaiian, the supercluster contains 100,000
large galaxies that together have the mass of 100 million billion suns. Our home galaxy, the Milky Way, lies
on the far outskirts of Laniakea near the border with another supercluster of galaxies named Perseus-Pisces.

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NATIONAL CYBER SECURITY AND COORDINATION CENTRE (NCSC)

India will soon get an overarching body for cyber intelligence and security, IT and Communications Minister
Ravi Shankar Prasad said. A year in the works, the National Cyber Security and Coordination Centre (NCSC)
will analyse Internet traffic data scanned and integrated from various gateway routers at a centralised
location. It will facilitate real-time assessment of cyber-security threats and generate actionable reports for
various agencies. It is expected to subsume the work done by CERT-In as well as issue alerts in the event of a
cyber-attack.
As a multi-agency body under the Department of Electronics and IT, the NCSC will include the National
Security Council Secretariat, the Intelligence Bureau, the Research and Analysis Wing (RAW), the Indian
Computer Emergency Response Team (CERT-In), the National Technical Research Organisation (NTRO), the
three armed forces and the Department of Telecommunications.

CONTROLLING ELECTRON MOVEMENT KEY TO LOW-ENERGY COMPUTERS

Electrons that break the rules and move perpendicular to the applied electric field could be the key to
delivering next generation, low-energy computers, scientists say. Researchers from the University of
Manchester and Massachusetts Institute of Technology have described a material in which electrons move
at a controllable angle to applied fields, similar to sailboats driven diagonally to the wind.
The material is graphene - one atom-thick chicken wire made from carbon - but with a difference. It is
transformed to a new so-called superlattice state by placing it on top of boron nitride, also known as white
graphite, and then aligning the crystal lattices of the two materials. In contrast to metallic graphene, a
graphene superlattice behaves as a semiconductor.
In original graphene, charge carriers behave like massless neutrinos moving at the speed of light and having
the electron charge. Although an excellent conductor, graphene does not allow for easy switching on and
off of current, which is at the heart of what a transistor does. Electrons in graphene superlattices are
different and behave as neutrinos that acquired a notable mass. This results in a new, relativistic behaviour
so that electrons can now skew at large angles to applied fields. The effect is huge, as found in the
Manchester-MIT experiments.
Beyond the discovery, the observed phenomenon may also help enhance the performance of graphene
electronics, making it a worthy companion to silicon, researchers said. The work suggests that transistors
made from graphene superlattices should consume less energy than conventional semiconductor
transistors because charge carriers drift perpendicular to the electric field, which results in little energy
dissipation.

IISC DEVELOPS MOLECULAR "SNIFFER DOG" TO DETECT EXPLOSIVES

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Scientists at the Indian Institute of Science (IISc.) have created a highly sensitive fluorescent polymer that
scouts out a class of commonly used explosives. TNT and other nitroaromatic compounds, which are used in
a cocktail of chemicals in landmines and plastic explosive devices, release vapours that quench the
polymers, reducing their glow. While the drop in fluorescence is not visible to the naked eye, it is visually
sensed and interpreted by a high resolution spectrometer.
The two types of fluorescent polymers supramolecular polymers and porous metallic-organic polymer
are electron-rich and pick up vapour from TNT and other nitroaromatic explosives much like a molecular
sniffer dog.
Nitroaromatic compounds are replacing conventional metal-based weapons in the explosives industry and
these compounds are available commercially. Besides their explosive nature, the chemicals contaminate
groundwater after military operations and an efficient method to detect them at low concentrations is now
needed. The next step is to develop similar systems to detect other forms of explosives such as RDX and
ammonium nitrate.

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BASH THREAT

A newly discovered security bug in a widely used piece of Linux software, known as Bash, could pose a
bigger threat to computer users than the Heartbleed bug that surfaced in April, cyber experts warned.
Bash is a shell, i.e. the software used to control the command prompt on many Unix computers. It has been
produced by the Free Software Foundation. Hackers can exploit a bug in Bash to take complete control of a
targeted system. US-CERT, issued an alert saying the vulnerability affected Unix-based operating systems,
including Linux and Apple Incs Mac OS X.
The Heartbleed bug allowed hackers to spy on computers but not take control of them.

FACEBOOK TO TEST INTERNET BEAMING DRONES

Facebook plans to start testing its Internet-carrying solar-powered drones in 2015, with the ultimate aim of
getting two-thirds of the global population online. Mark Zuckerberg had unveiled Facebooks Connectivity
Lab and its partnership with the Internet.org project in March this year.
The initiative seeks to use solar-powered unmanned aerial vehicles to beam internet down to the two thirds
of the global population who are not yet connected. In order for us to fly these planes unmanned planes
that have to fly for months, or perhaps years at a time have to fly above the weather, above all airspace
(between 60,000 and 90,000 feet). Routinely, planes dont fly there, and certainly not drones. The size of
the planes will be roughly the size of a commercial aircraft.

IISC: NOVEL MEMBRANE TO FILTER WATER AND KILL BACTERIA

A low-cost water purification membrane capable of filtering out objects greater than one micron size and
also killing E. coli bacteria has been developed by the Bangalore-based Indian Institute of Science (IISc)
researchers and Steer Engineering Pvt. Ltd, Bangalore.
The novel membrane with pores as small as 0.57-0.68 microns was developed by mixing two polymers
polyethylene (PE) and polyethylene oxide (PEO) at 180 degree C. Unlike PE, PEO is water-soluble and the
two polymers are immiscible.
In order to create pores that are sub-micron in size, the amount of PEO polymer distributed in the PE matrix
should also be sub-micron in size. To achieve this, only a tiny amount of PEO was taken compared with PE.
Also, the polymers mixed at 180 degree C were sheared at high speed to produce tiny droplets of PEO. The
higher the shear rate, the smaller the droplets. The PEO droplets on the matrix were then removed to
create tiny holes.
Going further, the researchers rendered the membrane antibacterial against E.coli. For this, grapheme oxide
(GO) was mixed with PE and PEO and the graphene oxide was made functional with amine groups. The
tablet-shaped samples with tiny holes are hydrophobic (water repellent) in nature.
There are two ways in which the bacteria may be getting killed. The roughness of the grapheme oxide
surface is one factor while the interaction of the amine group of the tablet with the phosphate group of the
lipids present in the cell could be another. Since the tablet is hydrophobic in nature, the killed E. coli to a
large extent do not stick to the membrane.
Though it cannot remove salinity, its ability to filter particles larger than one micron makes the membrane
attractive. To remove salinity one has to use reverse osmosis.

SYNTHETIC BIOLOGY

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Synthetic Biology in simple terms is the application of engineering principles to biology. Knowledge of the
Human genome sequence led to the evolution of omics sciences (genomics, proteomics, metabolomics
etc). This resulted in the analysis of almost every conceivable metabolite within the cell, permitting a global
reductionist view of the living cell.
By the turn of the new millennium a small group of engineers, physicists, computer scientists and biologists
came together and wondered whether engineering principles can be applied to study and manipulate living
cells for productive purposes. In Engineering the parts of a machine would consist of wires, transistors,
relays, valves, diodes, electronic switches etc. In biological machines, the parts would be genes, proteins,
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RNAs, promoters, inducers, repressors etc. In simple terms an activator molecule would turn on the switch
to make a protein that can act as an activator or repressor (on or off) switch of another pathway.
An array of such linked pathways can be made to generate circuits that can give the desired output in terms
of a new molecule or a new function. The difference between electronic circuits and biological circuits is
that the former functions as an independent assembly, whereas the latter has to function within a living
cell.
India needs to build interdisciplinary research teams and also create a new institute to foster the area. We
need academia-industry collaboration to embark on innovation and move beyond reverse engineering.

MANJUL BHARGAVA GETS FIELDS MEDAL, 2014

Manjul Bhargava, of Princeton Uniersity, was awarded the Fields Medal for his pioneering work on several
long standing and important problems in number theory, and for the methods he has introduced to achieve
this phenomenal progress methods that will influence research for years to come.
The Fields Medal, known as the Nobel Prize of Mathematics, has an age limit of 40, and therefore
recognizes outstanding contributions by young mathematicians who are expected to influence the
development of the subject in the years ahead. He was awarded the First SASTRA Ramanujan Prize. This
prize has a stricter age limit of 32 because Ramanujan achieved so much in his brief life of 32 years.
Bhargava's PhD thesis concerns a problem going back to Carl Friedrich Gauss, one of the greatest
mathematicians in history. In the nineteenth century, Gauss had discovered a fundamental composition law
for binary quadratic forms which are homogeneous polynomial functions of degree two in two variables. No
formula or law of the Gauss type was known for cubic or higher degree forms. Bhargava broke the impasse
of 200 years by producing a composition law for cubic and higher degree forms. His next assault was on the
important problem concerning ranks of elliptic curves and the famous Birch and Swinnerton-Dyer (BSD)
Conjecture, which is one of the Millennium Prize Problems.

INDIAN BORN SCIENTIST WINS PRESTIGIOUS US AWARD

India-born scientist Dr. Thomas John Colacot has won the American Chemical Societys ACS Award in
Industrial Chemistry, one of the top honours in the field. He studied at St. Berchmans College,
Changanacherry, Kerala and IIT, Chennai, and is the first Indian to get the award in industrial chemistry. He
also holds an MBA degree and was elected as a Fellow of the Royal Society of Chemistry. Currently Global
R&D manager in the homogenous catalysis area at Johnson Matthey, a specialty chemicals company, Mr.
Colacot directs research in US, UK and in Indian labs.
The award is sponsored by the ACS Division of Business Development and Management and the ACS
Division of Industrial and Engineering Chemistry. It recognizes his outstanding contributions to the
development and commercialization of ligands and precatalysts for metal-catalyzed organic synthesis,
particularly cross-couplings, for industrial and academic use and applications.
Mr. Colacot had received Royal Society of Chemistrys RSC Applied Catalysis Award in 2012 for his
contributions to the area of catalysis. His work on cross-coupling is particularly acclaimed. Mr. Colacot
started working in the area of palladium catalyzed cross-coupling in 1995. The catalysts developed in his
labs are currently used to make new drugs for Hepatitis C, a deadly disease with no cure, one pill per week
for type II diabetics, and many hypertension drugs.

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