Current Affairs - 19 April 2016

General Affairs 

Supreme Court Refuses To Entertain Plea Against President's Rule In Uttarakhand

• NEW DELHI:  The Supreme Court today refused to entertain a PIL challenging the imposition of President's Rule in Uttarakhand and seeking a CBI probe into alleged horse-trading of legislators.
  
  A bench, comprising Chief Justice TS Thakur and Justice UU Lalit, questioned the petitioner advocate about his "bonafide" and "locus" while asking searching questions as to how he was affected by central rule in the state.
  
  "Do you belong to Uttarakhand? How are you concerned? You have to have some concern. What is your locus? Something should happen somewhere and Mr Sharma will file a PIL. Your credibility gets affected if you file such type of PILs.
  
  "Politics is going on in Uttarakhand, we are not concerned with that. Whenever a situation arises and the Constitution needs to be examined, we will look into it. But without such a situation, we cannot do anything. There is some controversy going on and you come and file a plea," the bench observed after which the petitioner withdrew his plea.
  
  The court's observation came as it heard a plea by advocate ML Sharma who sought a CBI probe into the alleged horse-trading of legislators in the state.

National Herald Case: High Court Reserves Order On Congress Leaders' Plea

• 

  NEW DELHI:  Delhi High Court today reserved its order on pleas filed by Congress leaders against the trial court order summoning documents from Ministries of Finance and Corporate Affairs, other agencies and the balance sheet of the party for 2010-2011 in the National Herald case.
  
  "Order reserved," Justice PS Teji said after the counsel appearing for petitioners concluded their rebuttal arguments in the matter.
  
  Congress President Sonia Gandhi, her son Rahul Gandhi, party leaders Motilal Vora, Oscar Fernandes, Suman Dubey, Sam Pitroda and Young Indian Pvt Ltd (YI) are accused in National Herald case filed by BJP leader Subramanian Swamy.
  
  Mr Swamy has accused them of allegedly conspiring to cheat and misappropriate funds by just paying Rs 50 lakh by which YI obtained the right to recover Rs 90.25 crore which Associated Journals Pvt Ltd (AJL) owed to the Congress party.
  
  During the hearing today, senior advocate Abhishek Manu Singhvi, appearing for Mr Fernandes, told the court that there were "no reasons or objects" in the application filed by Swamy in which he had sought summoning of these documents.
  
  He argued that there was "no application of mind" by the trial judge while allowing the plea and the high court was entitled to reverse the order.
  
  "This court is entitled to reverse the order. This order is fit for reversal," he said.
  
  Senior advocate RS Cheema, who appeared for one of the petitioners, argued that the orders passed by trial court were "non-speaking" and hence cannot be sustained.
  
  "Courts can summon the documents if they are relevant.
  
  These documents can be misutilised for other purposes. Do not permit this litigation to be a launch pad for other things," Mr Cheema said while urging the court to set aside the orders passed by the trial court.
  
  Mr Swamy had earlier argued that the high court should dismiss these pleas seeking stay on the two trial court's decision, including the one summoning the 2010-11 balance sheet of the Indian National Congress (INC) in connection with the case.
  
  Besides summoning the documents, the trial court had also allowed Mr Swmay's application for summoning of balance sheet of 2010-2011 of AJL while observing that the documents of INC and AJL could not be referred to as "personal documents" of the accused.
  
  Refuting the claims by Mr Vora, Mr Fernandes, Mr Dubey, Mr Pitroda and Young Indian Pvt Ltd that they were neither heard nor summoned before passing any order, Mr Swamy had claimed that "they have no locus in the issue".
  
  Mr Vora, Mr Fernandes, Mr Dubey, Mr Pitroda and Young Indian Pvt Ltd have challenged the trial court's January 11 and March 11 orders respectively. The trial court had on December 19 last year granted bail to Sonia Gandhi, Rahul Gandhi, Mr Vora, Mr Fernandes and Mr Dubey, who had appeared before it in pursuance to the summons issued earlier.

Sushil Kumar Modi Dares Nitish Kumar To Ban RSS In Bihar

• PATNA:  A day after Nitish Kumar pledged to work for making a 'Sangh-Mukt' country, senior BJP leader Sushil Kumar Modi today dared the Bihar chief minister to ban the RSS in Bihar if he had the courage to do so.
  
  "Congress has seen the results of banning the RSS, as the 'patriotic' organization has gained from strength to strength on all occasions it was banned by the Congress governments. If Nitish Kumar has guts, then he should impose ban on the RSS in Bihar. The BJP is ready to meet such a challenge," Mr Modi said in a terse statement.
  
  Mr Modi's hardline assertions came hours after the chief minister today reiterated his pledge to work for making India a 'Sangh-Mukt' country and described the outfits as divisive and aimed at confusing the people by spreading rumours.
  
  The senior BJP leader also alleged that by seeking to make the country 'Sangh-Mukt', the chief minister was trying to deflect attention from pressing issues like hunger, water scarcity, corruption and collapse in law and order that people were facing in Bihar at present.
  
  "The people of Bihar had given him (Kumar) mandate to address issues like hunger, corruption and crime, but he has started singing a different tune by seeking to free India from the RSS which is a patriotic organisation," the former deputy chief minister said.

Fresh Protests In Handwara With Army At The Centre Of Public Ire

• 

  HANDWARA, JAMMU AND KASHMIR:  Fresh protests erupted today in Kashmir's Handwara town where people have demanded that an Army post be removed after clashes that started on Tuesday with the allegation that a schoolgirl had been molested by a soldier. In the past week, five people have been killed in firing by security forces.
   
  Handwara was placed under curfew again as hundreds of protesters came out on the streets the moment the restrictions were relaxed in the morning.
   
  Among those killed in firing over the past few days were 15-year-old Arif Dar and young cricketer Nayeem Bhat.
   The Army, facing public anger, suspects a conspiracy behind the protests. Sources say the Army has decided to change its tactic and confine itself to counter-terrorism operations while keeping out of policing. Recently, it refused a request from the state to help the police in maintaining calm.
   
  

  The Army suspects the protests are part of a plan to discredit the force and whip up trouble at a time when terrorists have become desperate.
   
  Till March this year, 26 terrorists are believed to have been killed in Handwara and Kupwara. Sources say terrorists are finding it difficult to operate in former hotbeds of militancy. Intelligence reports indicate that money is being pumped into the Valley to fuel protests.
   
  In 2010 about 100 people were killed when security forces fired upon protesters trying to storm installations. Investigations later revealed that ISI had asked the separatist to trigger protest across the valley and create as much as unrest as possible. "It is sometime similar, but perhaps this time the sole focus is the Indian army," a top commander said.
   
  In counter-terror operations too, the local police have been asked to handle flash protest by villagers.
   
  Sources say the Army has said that removing its posts would weaken counter-insurgency ops in the Valley.
   
  On Tuesday, after allegations that an Army jawan had molested a 15-year-old schoolgirl circulated in Handwara, a large group of protesters circled the main Army post and set it on fire. Refuting the charge, the Army released a video filmed inside a police station, in which the girl says she was harassed by a schoolboy, not a soldier.
   
  Her mother, however, said that the statement was made under pressure and the teen had "screamed at seeing a jawan" when she had gone to the washroom.
   
  The mother has filed a petition before the high court accusing the police of illegally detaining the girl.
   
  On the high court's directive, the police took the girl to a court on the weekend to record her statement. The police claim that the girl has again denied that she was molested and accused two local boys of harassing her. Police say a First Information Report or FIR has been registered against two persons including a school boy accused of spreading rumours and instigating protests and clashes.

Nitish Kumar Comes Down Heavily On Chargesheeted Party Lawmaker

• PATNA:  Bihar Chief Minister Nitish Kumar today refused to accept the defence of JD(U)'s Rajya Sabha lawmaker Anil Sahni, chargesheeted by CBI in LTC scam, and said he should have resigned and fought the charges in court.
  
  Coming down heavily on the lawmaker, the new JD(U) president said the issue is related to ethics and "if the Rajya Sabha takes any decision to dismiss him on this ground, the party will welcome the logical step."
  
  About Mr Sahni continuously pleading innocence and refusing to quit from the Upper House, Mr Kumar castigated him by commenting, "You alone is speaking truth!"
  
  "CBI chargesheeted Sahni and Rajya Sabha Chairman Hamid Ansari gave approval to CBI to prosecute him. The Chairman must have given his permission only after perusing all necessary documents," he said and refused to defend the lawmaker.
  
  "Even after this if you (Sahni) have to fight the charge, go to court and do it legally after quitting Parliament," Mr Kumar said adding "this (display of morality by resigning) would have created good impression about him within the party instead of embarrassing it which he did by his conduct."
  
  "You have not been elected by the people, but the party sent you to Rajya Sabha twice. You should have displayed morality and quit after the Chairman gave nod for the prosecution," he said.
  
  Anil Sahni was sent to Upper House after the demise of his lawmaker father Mahendra Sahni in January 2010.
  
  Stating that the party has served the lawmaker showcause notice and he has to it reply within a week, the JD(U) chief said, "We will not hesitate to take stern action against him after the time to reply to the showcause notice ends."
  
  CBI had filed a chargesheet against Mr Sahni alleging that he conspired with other persons and used forged e-tickets and fake boarding passes to defraud Rajya Sabha to the tune of Rs 23.71 lakh as travel and dearness allowance reimbursement without undertaking the actual journey.

Business Affairs 

Sebi to tighten disclosure norms for rating agencies

• Concerned over severe spill-over impact of recent drastic downgrades by rating agencies, market regulator Sebi plans to strengthen its disclosure guidelines for issuance and review of the ratings by such entities.

  Besides, Sebi is also considering asking the Credit Rating Agencies (CRAs) to hive off their activities involving rating of instruments other than securities, as they do not fall under Sebi's jurisdiction, a senior official said.

  Besides debt and other securities, the CRAs also give ratings for various financing facilities, projects and fixed deposits, while some of them also undertake works like grading of NGOs and Real Estate properties.

  "Hiving off such activities will also ensure that there is no dual reporting or action by two or more regulators for the same violation," the official added.

  Sebi had set up a Committee, comprising members from all Credit Rating Agencies (CRAs), to review the functioning of CRAs in order to enhance the standards and procedures related to assignment of ratings and review of the same.

  The Committee submitted its report after incorporating recommendations and suggestions of all CRAs. Besides, the issues related to functioning of CRAs have also been deliberated upon by the International Advisory Board of Sebi.

  The markets regulator is now finalising its policy actions with regard to CRAs after taking into account the suggestions made by the expert committee as well as by its International Advisory Board.

  Among the proposed measures, CRAs would have to adopt a policy regarding suspension and subsequent withdrawal of rating and disclose the same publicly.

  It has also been suggested that Sebi would provide a format of the press release regarding suspension to remove any ambiguity and ensure uniformity across various CRAs.

  Sebi also wants disclosure of all ratings assigned by the CRA, whether accepted or not by the issuer, even in case of non-public issues.

  Other proposed measures include strengthening the agreement between the Issuer and CRA to improve client co-operation, public disclosure of the CRAs' procedures for ongoing monitoring of credit ratings and disclosure of rating transition of the issuer.

  The CRAs would also need to publicly disclose various 'criteria' used for rating and the same would need to be referenced in their press releases.

  There would be a periodic review of the criteria used for rating and public disclosure of the periodicity of review.

  The internal document governing rating process would need to be made available on the website of CRAs.

  Sebi also plans to put in place a mechanism for evaluating and enhancing the performance of CRAs, along with terms of reference for internal audits of CRAs.

  Accountability of the CRAs, rating committee, analysts, including provisions for checks and balances, would need to be clearly defined in the internal governing document and rating manual of the CRA.

  There would be restrictions on participation of business development team and other employees with revenue targets in analytical processes. Besides, a defined process would be required for evaluating performance of Rating Committee members. 

Wholesale prices fall for 17th straight month in March

• 
  

  Wholesale prices fell for a 17th straight month in March, declining by an annual 0.85 per cent, driven down by tumbling prices of oil and manufactured goods, government data showed on Monday.

  The pace of fall was faster than a 0.77 per cent annual decline forecast by economists in a Reuters poll. In February, the index fell a provisional 0.91 per cent.

  Wholesale fuel prices dropped 8.30 per cent from a year ago in March, while prices of manufactured goods declined 0.13 per cent year on year.

  Food prices last month gained 3.73 per cent year-on-year, compared with a provisional 3.35 per cent gain in February.

Govt chases $117 billion in elusive back taxes

• 
  

  The finance ministry is asking for regular progress reports from tax collectors and has set a date for an amnesty to pay off arrears on undeclared domestic assets, as the government intensifies efforts to meet its ambitious deficit target.

  A series of announcements in recent weeks aims to streamline tax collection in a country where the tax-to-GDP ratio, at 16.6 per cent, is among the lowest among emerging economies. Only about one in 18 earning individuals pays tax.

  Arrears now amount to some $117 billion, roughly four times what they were six years ago.

  Yet one tax official estimated only 15-20 per cent of that was realistically recoverable, with many major debtors simply unable to pay. Even the lower target would take years to achieve, he said, given country's sluggish legal process.

  Tax officials may go increasingly after entities they think can pay, with possible repercussions for long-running disputes between the government and companies such as Vodafone and Cairn Energy.

  The need for money is pressing.

  In the Union Budget, Finance Minister Arun Jaitley stuck to an ambitious pledge of reducing the fiscal deficit to 3.5 per cent of gross domestic product from 3.9 per cent, and improved tax collection could help meet that target.

  "The finance minister asks almost every week how much tax arrears have we recovered," said a senior finance ministry official, requesting anonymity as he was not authorised to speak to the media on tax issues.

  Hasmukh Adhia, the top bureaucrat in charge of revenue and a long-time aide of Prime Minister Narendra Modi, is driving the effort, officials said. Adhia did not respond to an interview request.

  "The government has to recover the arrears in any case from the taxpayers from whom it is due," finance ministry spokesman DS Malik said.

  Jaitley faces big spending demands, including paying for a 24 per cent wage hike for nearly 10 million government employees and pensioners this year.

  Tax arrears amount to about 6 per cent of country's $2 trillion GDP and are more than the government's market borrowing target of $90 billion this fiscal year.

  In fiscal year 2015/16, authorities recovered nearly $5.2 billion, according to tax department data as of February 29. But they also raised new tax demands of over $18 billion.

  Some current and former finance ministry officials said they were reluctant to reach settlements or write off losses even when it was clear the money was lost, fearing political retribution and corruption investigations.

  Instead, they said they made new demands for back taxes to be paid, raised targets and left others to clean up the mess. One official said he did not know of a single decision to write off a major tax demand in the last 10 years.

  Modi's government is trying to modernise the system, tax experts said.

  For example, tax officials have been told to not appeal tax tribunals' decisions involving dues of up to Rs 1 million, and Jaitley has offered to settle outstanding tax disputes out of court, although it comes with conditions.

  He has promised not to invoke a contentious rule on retrospective taxes, at the heart of a bruising dispute with Vodafone, in future.

  "We want people to clean up their taxation issues," Jaitley said last month, while warning of "sleepless nights" to evaders using offshore accounts.

  He also offered a three-month amnesty to taxpayers, starting June 1, to pay off taxes on undeclared domestic assets.

  A similar scheme announced last year to declare foreign assets yielded recovery of less than $1 billion in extra taxes.

  Amit Maheshwari, a Delhi-based corporate tax consultant, said the government could do little to settle past tax disputes, but was trying to reduce future litigation.

  "The government is trying to project an investor- and taxpayer-friendly regime."

  Some Rs 4.4 trillion in outstanding tax dues are owed by companies and the remaining 3.3 trillion by individuals, tax department data obtained by Reuters show.

  Last year the government told Parliament that just 17 people owed the government Rs 2.14 trillion , with each more than Rs 10 billion in arrears.

  Among them is Hasan Ali Khan, a businessman who raised racing horses for a living.

  In 2007, tax officials raided his offices in Maharashtra state for not filing returns since 2001, and charged him with tax evasion and money laundering violations.

  They also slapped a back tax demand on Khan of nearly Rs 370 billion.

  After a near decade-long battle, which saw Khan imprisoned for more than four years, the tax tribunal cut his liability to Rs 30 million.

  In the ruling on February 29 the tribunal said tax authorities did not have evidence of his income to back their demand and should reassess his case.

  Khan was not available for comment. His lawyer said he planned to appeal the new tax demand.

CBDT proposes foreign tax credit rules, to help corporates

• 
  

  To provide relief to corporates having income abroad, the tax department on Monday proposed simplified 'Foreign Tax Credit' rules allowing companies to claim credit for taxes paid overseas.

  The Central Board of Direct Taxes (CBDT) in its draft FTC rules said tax credit will be available to entities paying taxes in any country, including those with which India has Double Taxation Avoidance Agreement (DTAA).

  The credit for foreign tax shall be available against the amount of tax, surcharge and cess payable under the Act but not in respect of any sum payable by way of interest, fee or penalty, said the draft rules on which the CBDT has invited comments from stakeholders by May 2.

  It further said no credit shall be available in respect of any amount of foreign tax which is disputed in any manner by the assessee.

  The tax credit, CBDT said, will be the aggregate of the amounts of credit computed separately for each source of income arising from a particular country or specified territory.

  The tax credit shall also be available against minimum alternate tax (MAT) liability. This will nip in the bud an issue that could have led to litigation, said Rakesh Nangia, Managing Partner, Nangia & Co.

  The foreign tax credit, the draft rule said, shall be determined by conversion of the currency of payment of foreign tax at the telegraphic transfer buying rate on the date on which such tax has been paid or deducted.

  The proposed rules will reduce the hassle in claiming credit from the Income Tax department on tax paid in other countries, Nangia said. Clarity on provisions relating to FTC shall provide the promised relief from double taxation agreed by way of Double Taxation Avoidance Agreements.

  Time to time clarification, announcement and notifications from CBDT providing tax clarity and tax simplicity are taking India to the next level of a tax simplified and non-adversarial tax regime, he added. The entities claiming tax credit will have to submit proof of tax paid.

  These would include certificate from the tax authority or a TDS certificate, online acknowledgement of foreign tax payment and a declaration that the amount being claimed is not under any dispute. The absence of FTC rules, Nangia said, was making it difficult for taxpayers and tax authorities to agree on credit claims and led to uncertainty as well as litigation. The FTC rules will provide much needed clarity and guidance on the issue. 

Why Modi govt may have to bank on spending for economic growth

• 
  

  

  Expansion is a distant dream for many Indian manufacturers as they grapple with under-utilised factories and towering debts, putting pressure on Prime Minister Narenda Modi to count on government spending instead of private investment to boost Asia's third-biggest economy .

  There is a renewed manufacturing push under Modi's flagship 'Make In India', but with global demand depressed, factories remain under-utilised and plans to increase corporate investment are left on the back burner.

  Capacity utilisation was at 72.5 per cent in October-December, according to the latest Order Books, Inventories and Capacity Utilisation Survey conducted by the Reserve Bank of India (RBI).

  Total capital expenditure is expected to slump 14 per cent in the year ending March 2017, according to a Reuters analysis of 133 Indian companies for which comparable data since 2011 is available. That would be the biggest decline in at least seven years. In the industrials sector, capital spending is expected to slide 22 per cent. In utilities, materials and energy, declines of up to 24 per cent are expected.

  Squeezing cash flows further is the reluctance of commercial banks to lend despite a cut in the RBI's key policy rate this month to a more than five-year low. Only three out of 45 domestic commercial banks have lowered interest rates, with most arguing they cannot cut costs for borrowers as they too are facing tight cash conditions.

  Devang Shah, head of investor relations at Tata Steel, told Reuters that the RBI rate cut would help capital expenditure but not immediately. "We don't plan any fresh capex," he said.

  Public spending, rather than private, is more likely to give a new lease of life to investment in India's manufacturing sector, as the government pushes to increase spending on roads, railways, smart cities and renewable energy.

  In the government's latest budget, $32 billion will be set aside for infrastructure development, up 22.5 per cent from the previous year, with a focus on rural communities where a drought has crushed farming incomes.

General Awareness

GENERAL AWARENESS PRACTICE QUESTIONS

• • 1. Who was the Chairman of 14th Finance Commission? – Dr. Y.V.Reddy
    2. The India Institute of Advanced Studies is located in– Shimla 
    3. Virtual water implies– Volume of water required to produce a commodity or service 
    4. The main security guard of International Trade is– WTO 
    5. The Government Securities on which no interest is paid and the Government only pays the Face Value of the bond on its maturity are called– Zero Coupon Bonds 
    6. Meera Seth Committee was associated with– the development of handloom industry 
    7. Which company has started a rural marketing network called e-chaupals ? – ITC 
    8. Non-Resident Inday Day is observed on– January 9 
    9. 'Closed Economy' is that economy in which– Neither export nor import takes place 
    10. The document 'Planning Commission's India Vision 2020' has been proposed by– A Committee headed by Shyam Prasad Gupta 
    11. Where was First Trade Point in India established? – New Delhi (August 16, 1994) 
    12. Nabinagar Power Plant situated in Bihar belongs to– Indian Railways 
    13. IIP stands for– Index of Industrial Production 
    14. Aam Aadmi Bima Yojana was launched on– August 31, 2007 
    15. For which item is Tirpur well known as a huge exporter to many parts of the world– Knitted garments 
    16. National Rural Development Institute is situated at– Hyderabad 
    17. The World's seventh largest city in terms of billionaire population is– Mumbai 
    18. Where is the Bank Press Note located? – Dewas (M.P.) 
    19. 'Axis Bank' is the new proposed name for– UTI Bank 
    20. Swam Jayanti Shahri Rozgar Yojana (SJSRY) was introduced on– December 1, 1997 
    22. Whose name is associated with formulation of Planning Strategy in Second Five Year Plan ? – Prasant Chandra Mahalanobis 
    23. Indian Planning Commission was constituted in– 1950 
    24. Swamajayanti Gram Swarojgar Yojana (SGSY) aims at– Establishing a large number of micro-enterprises in rural areas of the country 
    25 The outline of second five year plan was made by – P. C. Mahalanobis 
    26. Employment Assurance Scheme (EAS) was launched on– October 2, 1993
     27. Bank Rate is the rate at which– Reserve Bank of India lends money to Commercial Banks 
    28. The first multipurpose river valley project of independent India is– Damodar Valley Corporation 
    29. Devaluation means– To reduce the value of home currency in terms of other currency 
    30. The Government proposals for the levy of new taxes, alterations in the present tax structure are in the form of– Finance Bill 
    31. When personal direct taxes are subtracted from personal income the obtained value is called– Disposable Personal Income 
    32. Who maintains foreign exchange reserve in our country ? – Reserve Bank of India (RBI) 
    33. India is the second largest producer of– Nitrogenous fertilizer in the world 
    34. RBI was nationalised in– 1949 
    35. J. J. Irani Committee was associated with– Company Law Reforms
    36. Which constitutional body is appointed by the President under Article 280 every five years to review Centre State financial relations ? – Finance Commission
    37. The Ministry which gives financial support to Mid-day meal scheme for the benefit of Class I to V students in Government or Government aided schools is– Ministry of Human Resource Development 
    38. National Safety Council to check casualties in industrial units to reduce the incidence of dangers and to promote the awareness for safety among the labourers was constituted in– 1966 
    39. In India, the first bank of limited liability managed by Indians and founded in 1881 was– Oudh Commercial Bank
    40. Who is called the father of Operation Flood in India? – Verghese Kurien