Current Affairs - 5 September 2015

General Affairs

Coal Scam: Court to Hear Plea on Summoning Manmohan Singh on September 21

• NEW DELHI:  A special court today set September 21 for hearing the CBI's reply on former Jharkhand chief minister Madhu Koda's plea seeking summoning of former prime minister Manmohan Singh in the coal block allocation case involving Jindal Steel.
  
  Special Judge Bharat Parashar listed the matter for September 21 after special public prosecutor R.S. Cheema submitted that the Central Bureau of Investigation will want to know the opinion of other accused on Koda plea before advancing its argument.
  
  The court directed other accused to file a reply on the plea by September 21.
  
  

  Mr Koda has filed a plea last month seeking summoning of Manmohan Singh in the case.
  
  In his plea, he said: "Materials placed by the CBI shows the said conspiracy, if any, cannot be complete without the involvement of the (then) coal minister (Manmohan Singh) who had the final say in the entire allotment."
  
  He also sought summoning of the then energy secretary Anand Swaroop and the then mines secretary Jai Shankar Tiwari, saying they were part of the three-member sub-group formed by the Jharkhand government to evaluate the pleas of firms and suggest suitable application for recommendation by the state.
  
  The court was hearing a case related to the allocation of Jharkhand's Amarkonda Murgadangal coal block to Jindal Steel and Gagan Sponge.
  
  Apart from Koda, Congress leader Naveen Jindal, former union minister of state for coal Dasari Narayan Rao, former coal secretary H.C. Gupta and others have been named as accused in the case.
  
  They have been charge sheeted for criminal conspiracy and cheating as well as under the Prevention of Corruption Act.
  

Get Ready To Be Paid For Call Drops If Telecom Watchdog Has Its Way

• NEW DELHI:  India's telecom regulator has suggested that cellphone carriers should compensate customers for call drops and poor service quality amid an alarming rate of service failures that even has Prime Minister Narendra Modi vexed.
  
  The Telecom Regulatory Authority of India or TRAI today floated a consultation paper seeking public view on the proposal. The last date for submitting comments on the paper is September 28.
  
  A report by the regulator has found that the call drop problem during peak hours in the last one year has almost doubled. With more than 2 per cent of calls failing, all but one telecom company failed to meet the benchmark in June-July this year. In Delhi, dropped calls were as high as 17 per cent.
  
  

  At present, TRAI levies a penalty on telecom operators for failing to meet service quality benchmarks.
  
  The watchdog said while usage over the last two financial years went up by 6.3 percent, spending network infrastructure by companies only grew 4.6 per cent.
  
  TRAI is considering making it mandatory for telecom service providers to make periodic disclosures about their network capacities and steps taken to optimise networks.
  
  The regulator proposed that any call which gets dropped within five seconds would not be charged, and in case a call gets dropped any time after five seconds, the last pulse of the call should not be included for the purpose of charging.
  
  TRAI has come out with the paper just over a week after Prime Minister Narendra Modi expressed concerns on call drop problem being faced by consumers across the country.
  
  In the past one year, an increasing number of consumers have raised the issue of call drops, complaining that their experience of making voice calls has deteriorated, TRAI said.

Now, 'Kalam Island' to Honour India's Missile Man

• BHUBANESWAR:  One of India's key missile testing facilities - Wheeler Island - located off the coast of Odisha, will be named after President APJ Abdul Kalam, whose death in July this year triggered a nationwide outpouring of grief, the government has said.
  
  Odisha Chief Minister Naveen Patnaik announced the move on Monday joining a league of state governments who have taken to honour Dr Kalam, considered the father of India's missile programme and a widely loved public figure.
  
  Popularly known as 'Missile Man' President Kalam led the scientific team that developed missiles able to carry India's nuclear warheads. He became a national folk hero after helping oversee nuclear tests in 1998 that solidified India's status as a nuclear weapons state. India's first atomic test was in 1974.
  
  President Kalam, who was India's 11th president from 2002 to 2007, died from cardiac arrest in Shillong on July 27 and thousands of people including Prime Minister Narendra Modi attended his funeral in his hometown of Rameshwaram in Tamil Nadu.
  
  Fondly remembered as the 'People's President', his death was mourned widely. The government of Delhi announced it would rename a key road at the heart of the capital city after the former President last week while the Bihar government named an agriculture college after him.
  
  Wheeler Island, named after an English commandant Lieutenant Wheeler, is used as a missile-testing facility by the union government. The maiden successful test fire of the land-to-land Prithvi Missile was conducted from the mainland and it landed on the then uninhabited Wheeler Island on November 30, 1993.

President Pranab Mukherjee Credits Mother for All His Success

• NEW DELHI:  Taking a trip down the memory lane, President Pranab Mukherjee today said he was an "unparalleled naughty boy" who used to trouble his mother, as he credited her for all the success he has achieved.
  
  "My best teacher was my mother. As I have said I was an unparalleled. I was a trouble for my mother...after a day's of mischief and other things, I used to receive a good deal of thrashing from her.
  
  

  "And after that she used to come and fondle me with all love and care and ask me what I had done from the sunrise to sunset, which I had to tell in a chronological order,"
  
  President Mukherjee told students of class XI and XII at a school in the Rashtrapati Bhavan Estate. The President, who donned the hat of a teacher on the eve of Teachers' Day, said that mothers are the best teachers.
  
  "I must tell you that your mother is best teacher," he said as the students of Dr Rajendra Prasad Sarvodaya Vidyalaya listened with rapt attention.
  
  Pranab Mukherjee, who was born in Mirati village of Birbhum district of West Bengal to freedom fighters Kamada Kinkar Mukherjee and Rajlakshmi, said his father's life revolved around jail to party office and his mother used to take care of him.
  
  The President said he used to accompany the boys of his village, who went with cow herds, and used to play.
  
  "But, as the sun would appear to set, I used to rush back home as I was mortally afraid of darkness despite being a village boy," President Mukherjee admitted.
  
  "I was a naughty boy. I used to give trouble to my mother endlessly. I am sure none of you are or have been so naughty," he said as the students burst into laughter.
  
  During his one-hour class on Indian political history, the President said, "Today I am not any minister or a President. I am just your Mukherjee sir".
  
  President Mukherjee said that he was not a bright student. "I was just an average student. I had to walk five kilometers for my school and used to complain to my mother about the distance.
  
  "She used to tell me that she had no other option and always advised me to work hard."
  
  Remembering the principal of his college, President Mukherjee said that he was an excellent orator who ensured "my interest in history and English".
  
  "While narrating Julius Caesar, our teacher used to play the role of Brutus (who assassinated Caesar), Antony and Caesar.
  
  "It was done so beautifully that within next two years I had finished half of the books of William Shakespeare," he said and thereby indicating that teachers are responsible for kindling the interest of the students into books.
  
  Today's programme was part of 'Be a Teacher' programme where renowned personalities from different walks of life like art, culture, sports, business, politics and civil services take classes and inspire students to achieve excellence in life.

Parents Should Not Impose Their Choices on Children: PM Modi

• NEW DELHI:  On the eve of Teachers Day, Prime Minister Narendra Modi today engaged in a candid interaction with students across the country during which he gave tips on how to ignite their minds, improve oratory and advised parents not to impose choices on children.
  
  The Prime Minister also underscored the need for having good people in politics to take the country to greater heights.
  
  

  Addressing students and later replying to their questions via video conferencing in the second such initiative, PM Modi said he has issued direction to replace 'Character certificates' with Aptitude certificates which will reflect the personality of the students when they leave schools.
  
  A relaxed Prime Minister Modi responded to a range of questions including his school days and dress sense during his 105-minute interaction with 800 students and 60 teachers from schools in Delhi who participated in the event at the Manekshaw auditorium here. Students from nine other states joined the programme through video conference.
  
  The Prime Minister spoke highly about the role of teachers in nation-building and said he interacts with students on the occasion of Teachers' Day as students are their identity.
  
  "Mother gives birth to a child, (guru) teacher gives life (jeevan). There will hardly be anyone in the world who will not admit the role of their mother and teacher in their life," PM Modi said.
  
  The Prime Minister said there must have been great teachers behind every successful doctor, engineer and scientist and exhorted the parents to not force choices on their children.
  
  "Sometimes people wonder why spend time with students on Teachers' Day. It is because students are teachers' identity," he said. There was criticism last year that the Prime Minister had ignored the teachers when he interacted with students on Teachers' Day last year.
  
  The Prime Minister also launched two commemorative coins -- one of Rs. 125 denomination and another of Rs. 10 on the occasion.
  
  "A teacher can never retire. Being a teacher is not like any other occupation," he said.
  
  PM Modi also said that education should not create "robots" as he emphasised the importance of art and culture in students life.
  
  When a student from Goa asked him about his favourite sport, PM Modi in a lighter vein responded, "We all know the games politicians play." He then narrated, how he used to climb trees and learnt swiming.
  
  On politics, he said "Unfortunately politics has acquired a lot of bad name. Talented people from all walks of life are required in politics."
  
  Elaborating on his direction to issue Aptitude certificates, PM Modi said,"Everybody gets a character certificate from school. I have issued direction to replace character certificate with aptitude certificate," he said.
  
  Listing various initiatives of his government, PM Modi said "My aim is to ensure 24X7 power supply across the country by 2022." He said 18,000 villages where there is no power will be electrified in the next 1,000 days.
  
  Seeking to give a new dimension to teaching, PM Modi asked doctors, engineers and civil servants and others who have excelled in their fields to devote one hour every week or hundred hours every year to teaching children.
  
  "This would give new strength to teaching in the country," he said.
  
  In a lighter vein, he then remarked that politicians would not be the best persons for such a thing.
  
  He said that a good teacher may come from anywhere. He cited an instance of an Anganwadi teacher who taught her students about the use of handkerchief to stay clean.
  
  The students posed a range of questions to the Prime Minister from his choice of clothes, to his inspirations in life, waste management and how to inculcate leadership qualities.
  
  The Prime Minister said he doesn't have a fashion designer. "I only dress sober and simple," he said.
  
  On a question on leadership, PM Modi said that politics has got much maligned but there is need for good, intelligent people to step in this field. He added that the Independence movement under Gandhiji gained strength because people from all walks joined it.
  
  The Prime Minister also told children that they should not get deterred by failure in the pursuit of their goals.
  
  There would be hardly any person who has not faced failure, he said while suggesting to them to read Eleanor H Porter's Pollyanna to inculcate a positive outlook in life.
  
  When a student asked him about how he managed mastery in oratory, PM Modi offered tips on how to become a good speaker.
  
  "To be a good orator, you need to be a good listener...Don't worry about what people will say. Don't be nervous. You should be confident."
  
  The Prime Minister said a habit of keeping notes would also help in a big way. He urged the students to listen to speeches of renowned orators on YouTube.
  
  "You are google guru vidyarthi (students) after all. If you see other speeches online, you will gain confidence," he said.
  
  Earlier, HRD Minister Smriti Irani welcomed the Prime Minister and the students.

Business Affairs 

I-T sleuths asked to give foreign firms a tax break

• Tax officials, long the scourge of foreign investors , are under government pressure to avoid aggressive claims against overseas funds and companies, as the country seeks to repair an image dented by high-profile tax battles.

  The latest dust-up was over a largely overlooked minimum alternate tax (MAT), which had never been applied to foreign portfolio investors before late last year.

  Dozens of letters demanding payments from funds rattled the market, forcing the government this week to scrap claims.

  Now, assessment officers in the revenue department say they have been told by department heads, under orders from the government, that any large claims must be flagged, ending a period of significant autonomy, two tax officials said.

  Officers have also been told not to surprise foreign entities, and to instead engage with taxpayers through meetings, the officials said.

  The new, consensual approach marks a sharp change for a tax department long perceived to aggressively target foreigners, as government seeks to shore up precarious public finances.

  But it has also caused fresh uncertainty for tax collectors, who are seeking more detailed guidance on what the shift means in practice.

  The government is still locked in dispute with Cairn Energy over a retrospective $1.6-billion tax bill, and has been in a battle for over seven years with telecoms group Vodafone over taxes related to the transfer of shares.

  "The message is that the new government wants to project India as an attractive investment destination. These disputes make us look bad," said a senior official in the revenue department.

  "They don't want any surprises, and want to resolve any disputes in an amicable manner."

  Under Finance Minister Arun Jaitley, the government has sought to extend tax collection and tap untaxed onshore and offshore wealth, or "black money", either with the carrot of amnesties or the stick of the threat of prosecution.

  But the government has also been sensitive about its reputation among investors at a time when country badly needs billions in foreign investment to accelerate economic recovery and create millions of jobs for a fast-growing workforce.

  While Jaitley has said India is no tax haven, he has also promised to end "tax terrorism".
  
  "NON-ADVERSARIAL"

  Since the new administration took over in May 2014, tax officials had already been told to ease up on foreign investors as part of what Jaitley has pledged will be a "non-adversarial" tax regime.

  But that did not prevent officers from sending out letters to demand MAT payments from funds from late last year.

  Reuters reported in May that tax officers had repeatedly sought clarification from the finance ministry on whether to impose MAT, and proceeded with the claims only after failing to get clear guidance.

  The government last week appointed a new revenue secretary, Hasmukh Adhia, who publicly said he was determined to identify "bad elements" in the tax department and has asked officials to deal with cases in a fair and just manner.

  Finance ministry officials, keen to lay the MAT issue to rest, said on Friday the MAT decision on that tax does not signal a fundamental shift in their approach.

  But revenue department officials say there is a push to avoid confrontation, a move that is unpopular in a department that feels unduly blamed for public relations troubles.

  The officials say that the lack of a written directive - orders are verbal - means a subsequent government could also target them, if they are judged not to have done enough to pursue claims.

  "They are not giving any formal notifications on how to be non-adversarial," one of the officials said.

  "So does that mean we drop any legitimate claims because it creates bad press?"

Why Sensex fell to its 14-month low today

• The BSE Sensex fell more than 2 per cent by 615.24 points on Friday to its lowest in nearly 14 months. The broader Nifty ended 2.15 per cent lower at 7,655.05, its lowest close since August 11, 2014. We take a look at factors which led to a fall in market today.
  
  

  • US jobs data: A key US jobs report is due later in the day. A strong jobs number could cement optimism on the global economy and boost share prices but it could rekindle speculation of an early rate hike by the Federal Reserve, which could hurt risk assets, particularly in emerging economies.
  • FIIs selling: Foreign investors have sold a record Rs 16,877 crore worth of domestic stocks in August. They sold nearly Rs 2,650 crore of stocks in the first three days of this month. The selling continues even after the government has announced retrospective relief to FIIs from MAT.
  • Global markets: Asian markets, Japan's Nikkei fell 2.15 per cent and Hong Kong's Hang Seng shed 0.45 per cent, while Chinese financial markets remained closed on Friday. European markets were also in deep red on anticipations of a strong US jobs data.

BSE Sensex falls 562 points ahead of US jobs report

• The BSE Sensex fell more than 2 per cent on Friday to its lowest in nearly 14 months on caution ahead of a key US jobs report due later in the day.

  A strong jobs number could cement optimism on the global economy and boost share prices but it could rekindle speculation of an early rate hike by the Federal Reserve, which could hurt risk assets, particularly in emerging economies.Strengthening crude oil prices and weakening of rupee value also dented investor sentiments. The BSE Sensex closed 2.18 per cent down at 25,201.90, its lowest since July 15, 2014. The broader Nifty closed 2.15 per cent lower at 7,655.05, its lowest since August 11, 2014.

  "The uncertainty over the US Fed rate hike is spooking global markets and the Nifty is no exception," said Arun Gopalan, vice president at brokerage Systematix Shares & Stocks. "We could witness further downside on the Nifty if the Fed hikes rates in September."

  Both indices closed at their fourth straight weekly loss, after rising over 1 per cent on Thursday.

  ICICI Bank fell 3.37 per cent, while Housing Development Finance Corp dropped 2.39 per cent. Market heavyweight Reliance Industries Ltd was down 2.13 per cent. IT stocks Infosys and TCS fell 2.44 and 2.14 per cent, respectively.Cipla fell 1.13 per cent. The drugmaker earlier announced the acquisition of two generics businesses in the United States.

  Asian shares extended losses on Friday as caution over a US jobs report overshadowed signals from the European Central Bank that it is willing to take further steps to shore up the European economy. China's financial markets were closed on Friday for a national holiday.

Raghuram Rajan completes 2 yrs at RBI, pressure mounts to cut rates

• As Reserve Bank of India (RBI) Governor Raghuram Rajan , known for his hawkish approach to inflation, completes tumultuous two years at RBI on Friday, calls for rate cuts have become shriller with the Finance Ministry raising alarm bells over a possible deflation demon gobbling up the economy.

  Raghuram Govind Rajan took charge as the 23rd Governor of RBI on September 4, 2013 for a three-year term, amid a bleeding rupee threatening to plunge to 70 levels, very high current account deficit, growth screeching south and rating agencies threatening to junk the sovereign.On his inauguration, the noted monetary economist made several big-bang announcements that promised to change the financial sector landscape radically and to his credit he has successfully implemented many of them in the past two years.

  The Governor successfully brought down retail inflation to 3.8 per cent in July from 9.8 per cent in September 2013.

  Also, many analysts and marketmen described chief economic advisor Arvind Subramanian's Thursday's statement that Rajan should start fearing deflation and not inflation, as a political statement to arm-twist the Governor and devoid of any merit.

  The only few big misses of Rajan are the sudden fall of the rupee following the China crisis, and the massive spike in bad loans that almost doubled. But his achievements, on every other front dwarf these shortcomings.

  Also, probably the biggest criticism that he will face when he leaves the 19th floor corner room at Mint Road, will be that Rajan was a party to the Reserve Bank losing most of its powers and autonomy - as he has accepted the government formula of not having a veto power for the Governor in the proposed Monetary Policy Committee.

  Leading economist and industry veteran DK Pant, chief economist at India Ratings, has described Rajan as "a person with a vision".

  "Rajan has brought in a new dimension to the monetary policy. When he initially took over, the rupee was in a tailspin but his reforms have restored investor confidence," Pant told PTI. Marketmen are more enthused with Rajan, stating that he is the best that has happened to the country in the last two years.

  "You could not have a better person during the last two crisis years. He has brought in structural changes which may not have immediately yielded results, but we may see it happening in future," said a market dealer who wished not to be named.

  "Rajan is a man with a global view and he has brought in changes, which we may not agree now, but I am sure those will be positive for the economy in the long run," is how another bond dealer described the Rajan years.

  Similarly, Dun & Bradstreet India senior economist Arun Singh said Rajan's biggest achievements are "his success in containing CPI inflation and inflation expectations as well as regaining investor confidence in the economy."

  "The Governor has also brought about some important changes to the monetary policy framework. The measures he has taken to bring about resolution of a rising pile of stressed assets will show results in the years to come," Singh said.

  On the macro side, most of the credit for turning around the country from the "Fragile Five" in 2013 to the "only few bright spots" in 2015, Rajan has successfully brought back the economy from the brink- a situation the country had faced only in June 1991.

  His most singular achievement is on the inflation front - getting it down from 9.8 per cent in September 2013, to a healthy 3.78 per cent in July 2015-the lowest since the 1990s, while WPI has been in the negative territory for the past nine consecutive months with July print coming in at -4.05 per cent, the lowest in the past three decades.

  However, the Governor feels that there is more distance to be covered on the same and cited the elevated household expectations on price rise as a worry, which can potentially inhibit him from delivering on the Finance Ministry's wish for a rate cut.

  The steep price declines, along with a 7 per cent GDP print in the first quarter of 2015-16, down from 7.5 per cent in the previous quarter, have the CEA Arvind Subramanian calling for urgent rate cuts, arguing that the economy is headed to a much bigger crisis of deflation and not inflation, on Wednesday.

  Rajan's measures have seen CAD coming down from a high 5.2 per cent of GDP in 2012-13 to a healthy 0.2 per cent as for the March 2015 quarter, which has seen foreign investors flocking back to the country.

  On a balance, most credit for low CAD should go to external factors with crude plunging from $114.2 to a barrel on September 2, 2013 to $47.5 on September 1 this year, though.

  While improving CAD situation also had its positive impact on the foreign exchange front, which has been hovering at record highs for the past many months. The forex reserves jumped more than 30 per cent to $355 billion as per the latest RBI data, up from $274 billion on September 6, 2013, which is more than sufficient to cover 9 months of imports.

SIT recommends steps to curb money laundering

• The Supreme Court-appointed SIT on black money has come out with a slew of recommendations to curb various ways of money laundering, including misuse of exemption on long-term capital gains tax, Participatory Notes and creation of shell companies.

  Here is what the SIT recommends:

  • The Special Investigating Team (SIT) has advocated action under anti-money laundering law for trade-based money laundering, putting a cap on huge cash transactions as these mostly take place in illegal activities like drug trade and betting deals.
  • In its report submitted to the apex court, the SIT said there was a need to check the generation of black money in the education sector and through donations to religious institutions and charities.
  • The SIT has emphasised the need for establishing additional courts to decide the pending cases under the Income Tax Act, establishment of Central KYC Registry and empowering the Directorate of Revenue Intelligence under the Special Economic Zone Act.
  • A specific recommendation has been made to check generation of black money through cricket betting.
  • While dealing with the misuse of exemption on Long Term Capital gains tax for money laundering, the SIT has recommended that SEBI needs to have an effective monitoring mechanism to study the unusual rise in stock prices of companies when such an increase takes place.
  • It said Enforcement Directorate should then be informed to take action under Prevention of Money Laundering Act for the predicate offences.
  • While deliberating on the misuse of Participatory notes for money laundering, the panel said it is clear that obtaining information on "beneficial ownership" of P-notes is of crucial importance to prevent their misuse. "SEBI needs to examine the issue raised above and come up with regulations where the 'final beneficial owner' of P-notes /ODIs are known," it said adding that the information of "beneficial owner" with SEBI should be in form of individual whose KYC information is known to it.
  • The SIT in its third report dealt with the issue of shell companies and beneficial ownership and said the strategy to curb this menace has to be two-fold.

  1. Firstly, there should be proactive detection of creation of shell companies which would involve intelligence gathering through regular data mining and dissemination of information to various law enforcement agencies for active surveillance.
  2. Secondly, there should be deterrent penal action against persons involved in the creation of shell companies and providing accommodation entries.

  • SIT's recommendation said Serious Frauds Investigation Office (SFIO) needs to "actively and regularly mine the MCA 21 database for certain red flag indicators."
  • Further there is need for sharing of information on such high risk companies with law enforcement agencies, it said.
  • SIT recommended action under PMLA for trade-based money laundering detected by DRI where violation of section 132 of Customs Act has been found "must be shared by DRI with the Enforcement Directorate to enable ED to take action under Prevention of Money Laundering Act."
  • The SIT further said that the illegal activity of cricket betting requires to be controlled by some provisions which are deterrent to all the concerned. "However, considering the fact that large amount of black money is generated and used in this sector, it is suggested that some appropriate legislative directions or rules or regulations are required to be put in place to curb the menace of such betting," it said.

General Awareness

RBI to issue Rs 5 coin on golden jubilee of 1965 Indo-Pak war

• • 
    The Reserve Bank of India (RBI) will shortly put into circulation Rs 5 coins to commemorate golden jubilee of Indo-Pak War 1965. The coins will be legal tender as provided in The Coinage Act 2011 and existing coins in this denomination will also continue to be legal tender.

    About the Coin:

    • The new coin in the obverse will bear Lion Capital of Ashoka Pillar in the centre with ‘Satyamev Jayate’ inscribed below it.
    • On the reverse it will bear image of ‘Amar Jawan’ monument along with the design of olive leaves branch on its left and right sides at the center, with the inscription ‘veerata aur balidan’ in Devnagri script on the left upperperiphery and ‘VALOUR AND SACRIFICE’ in English on the right upper
    • Also, ‘GOLDEN JUBILEE 1965 OPERATIONS’ in English on the lower periphery will be written on the reverse side of the coin.
    • Furthermore, the year ‘2015’ will be written below the image of the monument.

    Significance of the incident:

    The war started in April 1965 following Pakistan’s Operation Gibraltar, which was designed to infiltrate forces into Indian Sovereign territory of Jammu & Kashmir to precipitate an insurgency. Under the dynamic leadership of then Prime Minister Lal Bahadur Shastri, Indian Army retaliated with Pakistan’s infiltration by launching a full-scale military attack on West Pakistan. The 17 day war ended following diplomatic intervention by the then Soviet Union (USSR) and United States and the subsequent issuance of the Tashkent Declaration between India and Pakistan but did not mandate victory of either India or Pakistan. However, both countries have claimed victory in this war. This war had witnessed the largest tank battle since World War II.