CURRENT NATIONAL AFFAIRS: FEB-MARCH 2009

Third stimulus package:

The Union government, on February 25, 2009, unveiled a Rs 30,000-crore

stimulus package, the third in a row to boost demand in an economy that has
been feeling the heat of the global meltdown. The package includes a cut in the
median excise duty and service tax rates by 2%. All products that attracted an
excise rate of 10% will now be subject to only 8% while service tax on all products
is down to 10%. On the other hand, this means the fiscal deficit of the
government in 2009-10 will increase to Rs 3,61,935 crore, from Rs 3,32,835 crore
estimated in the interim budget announced on February 16, 2009, provided all
other estimates remain the same. So, fiscal deficit will again cross 6% of GDP as in
2008-09.

Interim Budget:

On February 16, 2009, Finance Minister Pranab Mukherjee presented the interim
Budget to the Parliament. The largely insipid Interim Budget, however, ensured
adequate, even heightened, budgetary allocation to its major flagship
programmes affecting the “common man”. Enhanced allocations have, however,
been made only to sectors that promise employment generation and
infrastructure development and help, in turn, to maintain the fiscal tempo by
addressing the economic slowdown. NREGA, JNNURM (Jawaharlal Nehru Urban
Renewal Mission) and Bharat Nirmal programmes have emerged the biggest
gainers in this category. Budget allocation for education has increased by about Rs
4,000 crore over 2008-09. The government has allocated Rs 1,41,703 crore for
defence, which is 34 per cent rise over the previous fiscal and is one of the
steepest hikes in recent years. The revised fiscal deficit for 2008-09 is now
estimated at as high as 6 per cent of Gross Domestic Product (GDP), against the
budget estimate of 2.5 per cent. In money terms, the fiscal deficit is Rs 3,26,515
crore, against the intended Rs 1,33,287 crore or nearly 2.5 times the targeted
amount.

Railway Budget 2009:

On February 14, 2009, Union Railway Minister Lalu Prasad presented the Railway
Budget to the Parliament. The high point of this Budget was a 2% cut in most long
distance fares. The railways were set to achieve a cumulative cash surplus of Rs
90,000 crore over the course of his tenure, he pointed out. Passenger traffic is
expected to go up by 7 pc and gross traffic receipts are estimated at Rs 93,159 cr.

Steps to boost exports:

During 2008-09, India did achieve an export growth of 30.9 per cent till
September 2008, but since then there has been a setback due to the global
recession. The following sops have been announced by the Union government to
boost exports: Customs duty under export promotion capital goods scheme cut to
3 per cent from 5 per cent; Special incentive of Rs 325 crore for various sectors
like handmade carpets, leather and technical textiles from April 1, 2009;
Threshold limit for recognition as premier trading house reduced to Rs 7,500
crore; Benefit of 5 per cent under “focus product, focus market” scheme for
export of handmade carpets; Authorised persons of gems and jewellery units can
personally carry imported gold of up to 10 kg; Obligation under export promotion
capital goods scheme extended till 2009-10 for sops availed during 2008-09;
Opening of an independent office of DGFT at Srinagar.

Unique ID project:

Marking the beginning of the Herculean task of providing every Indian citizen with
a National Identity Card, the UPA government has earmarked Rs 100 crore for
setting up the Unique Identification Authority of India (UIAI) in the annual plan of
2009-10. The project is aimed at establishing citizenship, addressing security-
related issues and containing frauds, especially in government run schemes. The
UIAI will be responsible for creating and maintaining the core database and laying
down all necessary procedures for issuance and use of the unique ID card,
including arrangements for collection, validation and authentication of
information, proper security of data and rules for sharing and access of data.
Initially, the UID number will be assigned to all voters by building on current
electoral roll data. Progressively, other persons, including those below 18 years,
will be added to the list.
S&P review lowers credit rating:

India’s credit rating is now just one step away from junk status, as Standard and
Poor’s ratings services (S&P) have lowered its outlook on the country’s long-term
sovereign rating from stable to negative, because tax cuts and extra spending to
win votes and fight the economic slowdown have pushed the fiscal deficit to a
record high. Such a move can raise the cost for local firms borrowing abroad as
well as weaken the rupee, though some analysts do not expect that to happen.

Number of female post graduates in urban India rises:

According to the latest report of the National Sample Survey Organisation (NSSO),
the number of post graduates in every 1,000 males surveyed has increased from
28 in 2001-02 to 35 in 2006-07 in urban India. The number of female post
graduates has increased from 19 to 26 during the same period. The number of
male and female graduates during the same period has increased from 97 and 67
to 111 and 82, respectively. The incidence of illiteracy in rural areas has declined
from 39.5% in 2001-02 to 34.9% in 2006-07. In urban sector, the same has
declined from 19.4% to 16.5% during the same period. What is significant is that
in both urban and rural sectors, the illiteracy rate of female has declined at a
higher rate than that of the male. Female illiteracy rate has declined by 4.6
percentage points in rural areas and 3.4 percentage points decline of the male
illiteracy rate in rural and urban sector respectively, during 2001-02 to 2006-07.
India tops world hunger chart:

India is failing its rural poor with 230 million people being undernourished the
highest for any country in the world. Malnutrition accounts for nearly 50% of child
deaths in India as every third adult (aged 15-49 years) is reported to be thin (BMI
less than 18.5). According to the latest report on the state of food insecurity in
rural India, brought out by the United Nations World Food Programme (WFP),
more than 1.5 million children are at risk of becoming malnourished because of
rising global food prices. The report said that while general inflation declined from
a 13-year high exceeding 12% in July 2008 to less than 5% by the end of January
2009, the inflation for food articles doubled from 5% to over 11% during the same
period. India ranks 94th in the Global Hunger Index of 119 countries, the report
said. More than 27% of world’s undernourished population lives in India.

Government fiddle opens floodgates to FDI:

The Union government has relaxed guidelines on Foreign Direct Investment (FDI)
for companies owned and controlled by Indian citizens. This effectively means
foreign investment in FDI-restricted sectors like telecom, defence production and
single-brand retail can cross set limits. The new guidelines also say that an
investment made by a non-resident entity into an Indian company would be
counted as foreign investment. Under the existing norms, if a firm with, say, 40%
foreign equity and 60% Indian equity had invested Rs 100 crore in another firm,
Rs 40 crore of this amount would be treated as FDI. Under the revised norms it
will now be treated as zero FDI. Relaxation in foreign direct investment (FDI)
norms would not apply to sectors such as multi-brand retail, gambling, atomic
energy and lottery where the government prohibits foreign investment.

Union government to infuse capital in three PSU banks:

In order to strengthen the Public Sector Banks, the Union government has
decided to infuse Rs 3,800 crore into three State-run banks—Central Bank of India
will get Rs 1,400 crore, while UCO Bank and Vijaya Bank will get Rs 1,200 crore
each. The capital infusion would be done in two tranches—the first tranche would
be made available during 2008-09 and the remaining in 2009-10. The capital
infusion will help these banks to raise capital adequacy over 12%, much above the
Basel II norms of 9%. The government holding in Central Bank of India currently
stands at 80.2% cent, in UCO bank 76%, while in Vijaya Bank it is 53%.

CEC’s recommendation rejected by the President:

President Pratibha Patil has rejected the controversial recommendation by Chief

Election Commissioner (CEC) N. Gopalaswami for the removal of Election
Commissioner Navin Chawla, who is now to head the Commission after Mr
Gopalaswami’s term comes to end in April 2009. The decision came as no surprise
since the government had said CEC was not empowered to seek removal of a
fellow Commissioner except when a Presidential reference was made.
Gopalaswami’s action had also attracted sharp criticism from legal luminaries,
although main Opposition party, Bharatiya Janata Party, had strongly supported
the move. The battle in the three-member Election Commission had taken a new
turn on January 31, 2009 when Gopalaswami recommended the removal of
Chawla on a petition by the BJP, which had accused him of partisan functioning,
sparking a furore.

General Election dates announced:

India, the world’s largest democracy with 714 million voters, will elect its
representatives over five phases between April 16 and May 13, 2009. The EC will
also hold simultaneous polls in Andhra Pradesh, Orissa and Sikkim. Incidentally,
this is the first scheduled Parliamentary election after the Delimitation
Commission redrew constituencies. Delimitation has also pushed up the number
of scheduled caste seats in Parliament from 79 to 85 and scheduled tribe seats
from 41 to 47. The 2009 polls will also be first photo-electoral rolls-based
Parliamentary election, with 522 of the 543 Lok Sabha constituencies using this
type of rolls.

Standard drill during terror attack being readied:

The Home Ministry is drawing up Standard Operating Procedures (SOPs) to deal

with terror attacks as part of its 100-day action plan to be implemented by May
31, 2009. The guidelines, which will form part of the crisis management plan of
MHA, will cover all aspects of a counter-terror response, including rushing central
forces like NSG to the attack sites, evacuation of civilians and media from the site
and its immediate surroundings, monitoring of communication lines and the
command structure to be followed by various Central and State agencies as they
confront terrorists. This is for the first time that SOPs would be prescribed for
tackling terror crimes. As of now, SOPs are in place for Central forces and State
police operating in Naxal-infested States.

Sukh Ram found guilty of corruption:

After more than 12 years, the law has completed its first course for former
Telecom Minister Sukh Ram when a City Court in Delhi convicted him for
possessing assets disproportionate to his sources of income. Special CBI judge V.K.
Maheshwari held Sukh Ram guilty under provisions of the Prevention of
Corruption Act, 1988, and amassing the properties amounting to Rs 4.25 crore
which were disproportionate to his known source of income, between 1991 to
1996, when he was Minister of State for Communications in the Narasimha Rao
government. Sukh Ram has been handed down a three-year prison term.

Minorities Bill gets approval:

The Lok Sabha has passed the National Commission for Minorities Education
Amendment Bill that grants statutory power to the Commission, which will no
longer need to consult States before according minority status to any educational
institute. The bill further enhances the strength of members of the Commission,
which has several disputes pending for redressal.
Dhaka proposes taskforce for terror:

With the atmosphere between India and Bangladesh clearing up under the Sheikh
Hasina government, India has got a pledge from Bangladesh that it would not
allow terror groups to launch attacks against India from its soil. Security issues,
along with trade, were on top of the agenda during External Affairs Minister
Pranab Mukherjee’s one-day visit to Dhaka on February 9, 2009. Mr Mukherjee
also discussed the viability of setting up a regional taskforce to fight terror. The
only two deals that were signed by Mr Mukherjee and his Bangladeshi
counterpart were on bilateral trade and investment. Mr Mukherjee said that the
deals would cut down the trade gap which has been an issue for Bangladesh.

IPL results in foreign players raking in the moolah:

India, the cricketing nation, seemed to laugh at the global meltdown at an auction
in February 2009, where crores were spent buying the services of 17 overseas
players. Former England skippes Andrew Flintoff and Kevin Pietersen went for
about Rs 7.5 crore apiece ($ 1.55 million), making them jointly the highest
valued players in the Indian Premier League (IPL), more than M.S. Dhoni, bought
for Rs six crore in 2008. Bangladesh’s paceman Mashrafe Mortaza would not
know how to react to the Rs 2.93 crore the Kolkata Knight Riders have paid for his
commercial value. After all, he was valued at a relatively low Rs 24.4 lakh. And
then there was South African J.P. Duminy who was sold for Rs 4.64 crore.
Whatever happened to the recession? Quipped actor Preity Zinta co-owner of
Kings XI Punjab: Recession or no recession, cricket and entertainment always sell.
And the IPL is about both.

CURRENT INTERNATIONAL AFFAIRS

Terror bouncer hits Lanka cricket team in Pakistan:

On March 3, 2009, six Pakistani policemen were killed and six Sri Lankan cricketers
were injured when gunmen armed with automatic weapons attacked the visiting
team’s convoy as it headed for Lahore’s Gaddafi stadium. A military helicopter
later evacuated the cricketers as Sri Lanka cancelled its Pakistan tour. Police said
12 terrorists were involved in the attack. India voiced its strong condemnation of
the dastardly attack on Sri Lankan cricketers in Lahore, warning that such
incidents would continue to occur until Pakistan dismantled the terrorist
infrastructure on its territory.

Pakistan acknowledges part of Mumbai attack was planned there:

Pakistan has accepted for the first time that the Mumbai terrorist attacks were
launched from its shores and at least partly plotted on its soil. Interior Ministry
Chief Rehman Malik also said Pakistan had arrested most of the main suspects
and had started criminal proceedings against them. India termed the
development as positive and expressed willingness to share what-ever it can after
examining the issues raised by Islamabad. The revelations appear to suggest that
Pakistan is serious about punishing those behind the November attacks, which
killed 183 people and stirred fear that the nuclear-armed neighbours could slide
towards war.

Pakistan—Election ban for Sharif brothers:

Triggering a fresh round of political instability in Pakistan, former Prime Minister

Nawaz Sharif and his brother, Shahbaz Sharif, Chief Minister of the Punjab
province, have been barred from contesting elections and holding office. Within
hours of the Supreme Court ruling on February 26, 2009, upholding the ban on
the Sharif brothers, Governor’s rule was imposed on the Punjab province. As
people hit the streets in Lahore, Nawaz Sharif accused President Asif Ali Zardari of
being behind the move to disqualify him from contesting elections and asked
people to come out on the streets to protest the move. The PML-N chief said that
the bone of contention between his party and President Zardari was the NRO
(National Reconciliation Ordinance) under which criminal cases against Zardari
and other politicians were dropped by the Musharraf administration. The former
PM said the reason why the Chief Justice and other deposed judges were not
being reinstated was because these judges would question the validity of the
NRO.
Taliban seal truce in Pakistan’s Swat:

Taliban fighters and Pakistani officials agreed on February 21, 2009, to a

permanent ceasefire in the north-western Swat valley. The outlawed Tahreek-i-
Taliban Swat (TTS) formally accepted the Swat accord. It also promised to release
all security personnel in its custody, unconditionally. The Swat peace accord
appeared progressing substantially with life returning rapidly to normalcy in
Swat’s main cities. Having been freed from its engagement in Swat and Bajour,
Pakistan army is likely to refocus full attention on tribal militants along the
Afghanistan border.

Bangladesh—BDR mutiny:

The 33-hour mutiny by Bangladesh Rifles (BDR) troopers ended February 26,
2009, as the rebels laid down their arms in the face of an imminent attack by the
army, which had moved tanks into position for an assault on the BDR
headquarters in Dhaka. The mutiny by troopers of the Bangladesh rifles, the
country’s border guards, had spread to several towns despite Prime Minister
Sheikh Hasina’s warning of stern action to quell the unrest. Political observers said
the government’s dilemma was that it was banking on the army to stop the
rebellion, while the troopers’ grievances are largely centred on poor wages and
discrimination as compared to the army.
India and China may hold the key to world’s economic survival:

In a survey of the global outlook for 2009, the Economist Intelligence Unit (EIU)
makes some stark and dire observations. EIU believes that the economic crisis
could last at least a couple of years. While the EIU survey says that China may
hold the key to the world’s economic survival, many economists in India believe
that it could be both India and China. These are the only two countries that could
account for growth rates of at least 4.5%.

Time blames Bush, Clinton, Jiabao for financial crisis:

Former US Presidents George W. Bush and Bill Clinton, and Chinese Premier Wen
Jiabao are on the list of 25 people to blame for the financial crisis, compiled by
Time magazine. The list also features former Federal Reserve Chairman Alan
Greenspan, past Securities and Exchange Commission Chief Chris Cox, former
Treasury secretary Hank Paulson and American Consumers, among others.
Pointing out that Bush embraced a governing philosophy of de-regulation, the
magazine said it trickled down to federal oversight agencies, which in turn eased
off on banks, and mortgage brokers.

US economy drop biggest since 1982:

The US economy suffered its deepest contraction since early 1982 in the fourth
quarter, shrinking at a much worse-than-expected at a much worse-than-
expected 6.2% annual rate as exports plunged and consumers slashed spending. A
separate report showed mounting job losses had turned consumers gloomier in
February, evidence that the US recession continues to deepen. The final
Reuters/University of Michigan Consumer Sentiment Index for February fell to
56.3 from January’s 61.2. The commerce department said consumer spending
which accounts for more than two-thirds of domestic economic activity, dropped
at a 4.3 per cent rate in the fourth quarter, the biggest decline since the second
quarter of 180. The spending decline dropped more than 3 percentage points off
GDP.

Success of US stimulus tough to measure:

Deciding whether the US government’s $ 1.5 trillion

economic bailout is a success or a failure may end up being more an exercise of
politics and perception than exact science. Markers for determining the outcome
of the treasury’s $700 billion in rescue funding for the financial sector and the $87
billion economic stimulus package are not all clear-cut and can end up relying on
eye-of-the-beholder judgements. There are “the what if” scenarios and the
possibility that the government’s best intentions will have unintended
consequences. But experts tend to agree that doing nothing was not an option
and, regardless of political affiliation. Some economists say the bailout of big
banks was not helpful because it took away their incentive to restructure by
providing a taxpayer-funded cushion.
Additional American troops to Afghanistan:

In an attempt to stabilize a deteriorating situation, President Barack Obama has

approved sending 17,000 more US troops to Afghanistan over the next few
months. It was Obama’s first major military decision. “There is no more solemn
duty as President than the decision to deploy our armed forces into harm’s way”,
he said. The United States already has 38,000 troops in Afghanistan, apart from
30,000 military personnel from allied nations. But the violence is expected to rise
further in the spring and afterwards in the run-up to Presidential elections set for
August 20, 2009. The new troops are expected to be deployed in the south, which
has been worst hit. The situation in Afghanistan, Obama said, had not received
the strategic attention, direction and resources it urgently required.

Pakistan signs FTA with China:

China and Pakistan signed a Free Trade Agreement (FTA) during the four-day visit
of Pakistani President Asif Ali Zardari to Hubei and Shanghai, China. Zardari’s
mission was largely focused on economy and investment issues because the
Pakistani President did not get to meet the top echelons of Chinese leadership
who were busy hosting the first official visit of Hilary Clinton, the US Secretary of
State. Meanwhile, China has signed an agreement with Pakistan’s main Islamic
party, Jamaat-e-Islami despite the fact that official credo of China is atheism. A
China observer said as part of the agreement with Beijing’s Communist leaders,
Jamaat-e-Islami has promised not to encourage Islamic Uighur separatists in the
Xinjiang region, which is a hotbed of the East Turkmenistan movement.
Bailed out US companies can’t hire people on H1-B:

In what could be seen as a major blow to Indian IT professionals, the US Congress

has prohibited banks and firms receiving federal bailout
money from hiring people on H-1B visas in place of Americans laid off by them
due to the economic meltdown. The measure forms part of the American
Recovery and Reinvestment Act, popularly known as the Stimulus Bill. The Act
makes a provision of USD 787 billion for reviving the battered US economy. The
measure as finally approved by the Congress, would require the bailed-out banks
to hire only Americans for two years unless they could prove they were not
replacing laid-off Americans with guest workers.

Extra - GK

HAL, India’s military plane maker, and Bharat Electronics Ltd have jointly bid to
build the Rustom-branded UAV of India’s Aeronautical Development
Establishment, or ADE, which is designing the medium-altitude long-endurance
Drone.

In an effort to improve the capital adequacy of the public sector banks—UCO

Bank, Central Bank of India and the Vijaya Bank—the Union government has
decided to infuse Rs 3,800 crore into the three banks.
Khmer Rouge was a Maoistregime that ruled Cambodia from 1975-1979. It was
founded and led by Pol Pot, who died in 1998. It abolished religion, school and
currency in a bid to create agrarian utopia.

Providing legal space for green concerns, the Karnataka High Court has
announced the setting up of the Bench to exclusively deal with environmental
issues. This is a first in the legal history of the country.

Mega Food Parks program is modelled on the lines of creation of a three-tier

structure for value adding enabling infrastructure in food producing clusters in
the country. The scheme aims to provide expenditure- linked financial assistance
of 50% (75% in difficult and ITDP areas), limited to 50 crore per Mega Food Park,
to leverage an equivalent investment in enabling infrastructure and Rs 200-250
crore in value adding activities. Locations of the mega food parks will be: Shirwal
(Maharashtra), Ranchi (Jharkhand), Chikmanglur (Karnataka), Dharmapuri
(Tamilnadu), Jalandhar (Punjab), Haridwar (Uttarakhand), Jagdishpur-Raibareily
(UP), Jangipur (West Bengal), Chittoor (Andhra Pradesh), Nalbari—Assam
(Northeast)

India ranks 94th in the Global Hunger Index of 119 countries.

Samrupa was the world’s first cloned buffalo calf. It was to be India’s answer to
Dolly the sheep. But unlike Dolly, the first mammal cloned 13 years ago, who lived
for seven years, Samrupa succumbed to a lung infection five days after it was
born.

The Planning Commission had recommended Maha-navratna status to BHEL,

Bharat Petroleum, Hindustan Aeronautics, Hindustan Petroleum, Indian Oil,
NMDC, Power Grid Corporation, REC and SAIL. Maha-navratna status would give
these companies freedom to make investments up to 50% of their net worth,
while the investment cap on a single project would go up to 25% of their net
worth. The tag will also have given them greater functional autonomy for forming
joint ventures.

Delhi Metro has become the first rail network in the world to get a UN certificate
for preventing over 90,000 tonnes of carbon dioxide from being released into the
atmosphere.

Oscar is the name given to the annual award given by the US-based Academy of
Motion Picture, Arts and Science for achievement in film industry. The awards are
given in 24 annual categories and 6 special categories. First Oscar award was
given in 1929.
India’s first dedicated Small and Medium Pharmaceutical Industry Centre (SMPIC)
has been inaugurated in Mohali. The centre is located on the premises of the
National Institute of Pharmaceutical Education and Research (NIPER).

India has slipped three notches in the UNIDO’s industrial competitiveness index
to feature at the 54th position, even as the government expressed optimism that
the country would move up the ladder once the list is updated.

ONGC and the newly-incorporated National Aviation Company of India Ltd

(NACIL) are placed on the extremes in a recent survey of central PSUs, with the oil
firm making the highest profits and the aviation giant incurring the biggest losses.
ONGC earned a profit of Rs 16,702 crore in 2007-08, almost thrice its nearest rival
Steel Authority of India Limited (SAIL). On the other extreme was NACIL, formed
as a holding company after the merger of Air India and Indian Airlines in 2007,
which incurred a loss of Rs 2,226 crore during the year.

The contribution to the exchequer by 242 PSUs, which includes excise duty,
customs duty, corporate tax and dividend, increased by more than 11% during
2007-08, according to the 48th Public enterprises Survey. However, PSU’s
dividend and interest paid to the government totalled Rs 20,172.5 crore in 2007-
08, marginally down from Rs 20,942 crore in the previous year.
One of the Army’s oldest armoured regiments, 7 Cavalry, observed its 225th
Raising Day in 2009. Raised in 1784, 7 Cavalry is the Army’s second oldest and the
most highly decorated armoured unit, having earned 21 battle and theatre
honours of which nine are from post-independence operations.