Current Affairs - 8 April 2016

General Affairs 

Panama Papers: Multi Agency Group Holds First Meeting In Delhi

• NEW DELHI:  The Multi Agency Group (MAG) set up to probe the 'Panama Papers' today held its first meeting and chalked out an action plan including approaching tax haven Panama, global economic bodies and the journalist consortium that did the expose for obtaining documents.
  
  The meeting deliberated on the inputs relating to Indians whose names have figured in the expose on offshore entities allegedly floated by individuals and corporates. The top brass of the Central Board of Direct Taxes and representatives of the FIU, RBI and Foreign Tax and Tax Research (FT and TR) participated in the meeting held in the Finance Ministry.
  

  Official sources said a plan of action was charted by the agencies today as part of which the Financial Intelligence Unit and the Income Tax department and FT and TR (under CBDT) will approach the International Consortium of Investigative Journalists (ICIJ) and Panama to obtain more details on the Indian perspective.
  
  The panel, sources said, will also approach global economic bodies like the Organisation for Economic Cooperation and Development (OECD) and Financial Action Task Force (FATF) to not only obtain help in clamping overseas tax evasion but also ensuring global cooperation in this regard.
  
  "As the Panama disclosures involve multiple nations, the member-countries of these two global bodies will have to strengthen their cooperation. The multi-agency group will also seek to obtain cooperation from Panamanian authorities vis-a-vis Indian names," they said.
  
  The sources added that authorities in Panama will be asked to share the complaint registered by law firm Mossack Fonseca which has said that its servers were hacked resulting in the leak of millions of documents on financial data.
  
  The RBI has been entrusted with the task of checking on contraventions of the Liberalised Remittance Scheme (LRS) by those whose names have appeared in the list, they said.
  
  Sources added as India did not have a tax information exchange treaty with Panama. They will be approached through diplomatic channels and with the help of global economic bodies.
  
  After the ICIJ expose and The Indian Express report early this week, government had declared that action will be taken against "unlawful" accounts held abroad by Indians. It constituted the MAG to continuously monitor information in this regard that named 500 people including film actors and industrialists who have allegedly stashed money in offshore entities.
  
  The list was released by International Consortium of Investigative Journalists (ICIJ), which added a disclaimer that there are also "legitimate uses for offshore companies".
  
  The latest list, after similar ones came in the the past like 'Swiss leaks' and the HSBC-list related to Indians, claims it has sourced data in connection to millions of documents which show heads of state, criminals and celebrities using "secret hideaways" in tax haven of Panama.

Omar Abdullah Terms Pakistan Envoy's Statement As 'Body Blow' To PM Modi

• 

  SRINAGAR:  Former Jammu and Kashmir chief minister Omar Abdullah today termed as a "body blow" to Prime Minister Narendra Modi's Pakistan policy the statement of Pakistan envoy Abdul Basit that peace process with India has been suspended.
  
  "PM Modi's Pakistan policy has been delivered a body blow today. Surprisingly the dialogue has been called off by Pakistan," Mr Abdullah wrote on Twitter.
  
  Earlier, Mr Basit during his interaction at the Foreign Correspondents Club in New Delhi today said the bilateral peace process stands "suspended" and also indicated that Pakistan would not allow Indian investigators to travel there, while accusing India of creating unrest in its territory.

Rahul Gandhi A 'Delayed Learner', Says Finance Minister Arun Jaitley

• NEW DELHI:  Taking a dig at Congress vice president Rahul Gandhi, Finance Minister Arun Jaitley today termed him as a "delayed learner" while calling his father late Rajiv Gandhi a "quick learner".
  
  Mr Jaitley also accused the Opposition of raising issues "without basic knowledge about serious issues" and rejected the notion that any 'Rahul factor' was at play.
  
  "I don't consider it as a factor," he said in an interview with ETV news channel when asked about the Rahul factor.
  
  "I want to say about Rajiv ji that he came in politics in 1981 and became the prime minister in 1984. But he was a quick learner," Mr Jaitley said while referring to the late prime minister and Mr Rahul Gandhi's father Rajiv Gandhi.
  
  "I hope he (Rahul Gandhi) also be a quick learner. But till now, he is a delayed learner," he added.
  
  Stating that BJP also raised issues when it was in opposition, Mr Jaitley said he is today "concerned" the Opposition sometimes raises issues without full knowledge.
  
  Asked about the BJP's prospects in Assam, Mr Jaitley said the party has learnt a lesson from Bihar and has formed a broad alliance.
  
  "Now, there are the BJP and the AGP. People say the AGP is not that much powerful now. But if they gain 8-9 per cent vote too, there will be a big margin between victory and defeat," he said.
  
  Also at stake are 12 Bodo-affected seats, he said while adding, "We included them in the alliance so that if we form the government they will be part of it."
  
  "Sometimes, incremental votes come with the alliance of small parties... alliances were made against us in Bihar, following this, we have made a broad-based alliance in reverse of it in Assam," he said.
  
  The senior BJP leader further said there is an "upsurge" for the BJP in Kerala.
  
  Stating that both Left and Congress-led fronts have formed government in the past in Kerala, Mr Jaitley said the BJP will get "a lot of votes" in the state this time.

In A New Role, Manmohan Singh Turns Professor At His Panjab University

• 

  CHANDIGARH:  Former Prime Minister Manmohan Singh will soon take up a new job. The 83-year-old will teach at the Panjab University, where he has taught before and has also been a student.
   
  Dr Singh, an economist credited with steering reforms in the 1990s as finance minister, has accepted the position of professor for the university's Jawaharlal Nehru Chair.
   
  He delivered his last lecture there around 50 years ago.
   
  Given his schedule and age, university officials say they may offer him the option of teaching via videoconference at times.
   
  

  Dr Singh completed his masters from the Panjab University in 1954 with top honours. He joined the university as a senior lecturer in 1957 and went on to become a professor in 1963 before joining the UN in New York in 1966.
   
  "His temperament and his experience will probably help students know how things work... the way international bodies and national bodies work," said Professor RP Banbah, a former Vice Chancellor of the university, who was Dr Singh's senior and is believed to have suggested the idea to him.
   
  "The Manmohan Singh I have known would have never done something which is not fair and not in the interest of the country," he remarked.
   
  There is a buzz on campus around its most famous student.
   
  "We will not only learn about economics as a theoretical subject, but also the policy that led our country away from the depression of 2008 and the 1991 deficit... I believe that it's going to be a good interaction," said a student.
   
  Dr Singh was prime minister for 10 years until his Congress party lost power in 2014. His government is known for major welfare measures like the job guarantee scheme MGNREGA, though his second term as prime minister was mired by corruption allegations and a perception that the government failed to check the economic downslide.

Tamil Nadu Elections: DMK-Congress Conclude Seat Identification Exercise

• CHENNAI:  DMK and Congress today concluded their exercise of identifying the constituencies that would be fought by the latter in the May 16 Assembly polls.
  
  "We are very happy and we are going very satisfied, the 41 constituencies that we identified and sought have been given to us," Tamil Nadu Congress Committee president EVKS Elangovan told reporters emerging from the Gopalapuram residence of DMK chief Karunanidhi.
  
  Earlier, he concluded an agreement with Mr Karunanidhi over the seats that would be fought by his party.
  
  On April 4, DMK allotted 41 seats to Congress and it was announced by them that they would soon identify their seats.
  
  "So far as we are concerned, Kalaignar (Karunanidhi) should become the Chief Minister again and we will work whole-heartedly for that," the TNCC chief said.
  
  He said his party would soon name candidates for all the 41 seats in four or five days.
  
  The constituencies that have been given to Congress are spread across 31 of the 32 districts of Tamil Nadu.
  
  The seats are Tiruttani, Ambattur, Royapuram, Mylapore, Sriperumbudur, Maduravoyal, Arcot, Hosur, Kalasapakkam, Cheyyar, Attur, Sankagiri, Namakkal, Gobichettypalayam, and Udhagamandalam; Kangeyanm, Dharapuram, Sulur, Coimbatore South, Vedachandur, Karur, Tiruchi East, Musiri, Jayamkondam, Kattumannarkoil, Vedaranyam, Nannilam, Papanasam, Pattukottai, Aranthangi, Karaikudi, Madurai North, Thirumangalam, Sivakasi, Mudukulathur, Srivaikundam, Thenkasi, Nanguneri, Colachel, Killiyur and Vilavancode.

Business Affairs 

Sensex ends 215 points down, Nifty below 7,550 as earnings gloom grips markets

• The S&P BSE Sensex on Thursday slipped 215 points to end below its crucial psychological level of 25,000, while broader CNX Nifty went below its key 7,550-mark.

  The headline indices fell to a three-week low as investors took gains off the table, continuing to book in recent outperformers as the upcoming quarterly reporting season is expected to be weak.

  The 30-share index ended the day at 24,685, down 215.21 points, while broad-based 50-share index quoted 7,546, down 67.90 points at close.

  Market breadth turned negative with 19 of the 30 Sensex components ending the day in red.

  After surging 10.8 per cent in March, the NSE Nifty is down 2.1 per cent so far this month, after the Reserve Bank of India cut interest rates by 25 basis points as widely expected, and not the 50 bps cut some investors had hoped for.

  Markets are now focused on January-March earnings reports amid worries companies continued to suffer due to lacklustre economic growth and weak global demand.

  Next week, cement makers ACC and Ambuja Cements, and software services provider Infosys are due to report their earnings results.

  "On the earnings front, it's not like we are going to see a robust turnaround. So from a short to medium-term perspective, for those who have low risk appetite, I think it is prudent to book profits," said Gaurang Shah, vice president at Geojit BNP Paribas.

  Auto maker Maruti Suzuki fell 2.81 per cent, as the yen hit a fresh 17-month low against the dollar in Asian trade. Every 1 per cent appreciation in the yen affects 15-20 bps of operating margin for Maruti Suzuki, according to broker HSBC.

  HDFC dropped 2.58 per cent after the private housing lender said it would set aside 4.5 billion rupees ($67.66 million) as special provision for the quarter ended March 31.

  Among the gainers, Future Retail, which operates Big Bazaar and Home Town retail chains, rose over 5 per cent after asset management firm SSG Capital said it would buy 40 per cent stake in Future Retail's logistics unit Future Supply Chain. The scrip ended flat.

  Meanwhile, Oil spiked above $40 per barrel this morning after a 5-per cent jump in the previous session thanks to fall in US inventory draw. 

Cairn faces Rs 10,247-cr fine on top of Rs 29k cr tax demand

• 
  

  British oil explorer Cairn Energy Plc faces up to Rs 10,247-crore penalty over and above the Rs 29,000 crore in tax and interest demand slapped on it by the I-T Department using a retrospective legislation.

  In a circular to shareholders, the company said it had on February 4 received "a final assessment order from the Indian Income Tax Department in amount of Rs 10,247 crore plus interest back dated to 2007 totalling Rs 18,800 crore.

  "The aggregate amount of Rs 29,000 crore excludes any applicable penalties which may also be applied to the final assessment (potentially up to 100 per cent of the final assessment order, excluding interest)."

  The I-T Department had on January 22, 2014 issued a draft assessment order of Rs 10,247 crore on alleged capital gains Cairn made in a 2006 reorganisation of its India business. The final assessment order was issued on February 4, 2016.

  The notice was, however, issued before Finance Minister Arun Jaitley in his Budget for 2016-17 made a one-time offer to waive interest and penalty if the companies paid the principal amount to settle the retrospective tax disputes.

  "Cairn strongly contests the final assessment proceedings in India and is pursuing its rights under Indian law to appeal the assessment, both in respect of the basis of taxation and the quantum assessed and to protect from enforcement against the assets of CUHL," the company said in the circular.

  CUHL is a Cairn subsidiary.

  Enforcement of any tax liability deemed due by the Indian Income Tax Department "will be limited to the assets of CUHL which have a current value of approximately $477 million, and comprise principally Cairn's residual 10 per cent shareholding in Cairn India, which has already been provisionally attached by the Indian Income Tax Department," it said.

  I-T Department alleges that Cairn Energy made a capital gain of Rs 24,503.50 crore in 2006 when it transferred shares of Indian assets that were held in a subsidiary set up in the tax haven of Jersey, to newly incorporated Cairn India.

  It listed Cairn India Ltd on the stock exchanges through an initial public offering (IPO) thereafter. Through the IPO, it raised Rs 8,616 crore and then in 2011 went on to sell a majority stake in Cairn India to mining giant Vedanta Group for $8.67 billion.

  Cairn Energy still holds 9.8 per cent in Cairn India.

  The company said it on March 11 this year filed a Notice of Dispute under The UK-India Investment Treaty to protect its legal position and shareholder interests.

  "The international arbitration proceedings formally commenced in January 2016 following the agreement between Cairn and the Government of India on the appointment of a panel of three international arbitrators under the terms of the UK-India Investment Treaty," it said.

  Cairn said it strongly contests the basis of the assessment order and the Notice of Dispute is supported by detailed legal advice on the strength of the legal protections available to it under international law.

  "While interactions are ongoing with the Indian Income Tax Department, Cairn continues to be restricted from selling its shares in Cairn India and from accessing the related dividends," it said in the circular.

  The company said in addition to the resolution of the tax dispute, it is also seeking full recompense for the loss of value resulting from the restriction on its shares in Cairn India.

  Cairn Energy has not received any dividend from Cairn India during the previous three years. It said it was entitled to receiving total dividend of about USD 38 million held by Cairn India in escrow for CUHL.

  Stating that international arbitration proceedings have commenced with the Government of India to seek resolution of the retrospective tax dispute, Cairn said it would seek $1 billion as compensation from Government of India.

  "The total assets of the Cairn subsidiary against which the Indian Tax Authorities are seeking to pursue a tax claim are $477 million, including primarily the group's near 10 per cent shareholding in Cairn India Ltd and any recovery by the authorities would be limited to these assets," it added.

WTO says global trade will remain sluggish in 2016

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  The World Trade Organization has forecasted a sluggish 2.8 per cent growth in the volume of world trade in 2016, unchanged from the level of increase registered the previous year.

  A status quo in world trade does not augur well for India's export prospects, which have been declining continuously in the past 15 months.  The forecast also indicates that Commerce Minister Nirmala Sitharaman's task to revive India's sagging export growth by focusing on making special economic zones more business friendly, could be tough as key developed markets is likely to remain sluggish.
  
  A press release issued by WTO today said the imports of developed countries should moderate this year, while demand for imported goods in developing Asian economies should pick up.

  "Risks to this forecast are mostly on the downside, including a sharper than expected slowing of the Chinese economy, worsening financial market volatility, and exposure of countries with large foreign debts to sharp exchange rate movements," it stated.

  "Trade is still registering positive growth, albeit at a disappointing rate," WTO Director-General Roberto Azevêdo stated. "This will be the fifth consecutive year of trade growth below 3 per cent. Moreover, while the volume of global trade is growing, its value has fallen because of shifting exchange rates and falls in commodity prices. This could undermine fragile economic growth in vulnerable developing countries. There remains as well the threat of creeping protectionism as many governments continue to apply trade restrictions and the stock of these barriers continues to grow."

  According to WTO, a number of steps - from rolling back trade restrictive measures, to implementing the WTO Trade Facilitation Agreement - by member countries can aid trade growth.

  The 2015 result marks the fourth consecutive year in which growth in world merchandise trade stayed below 3 per cent on an annual basis. Trade was also unusually volatile over the course of the year, falling in the second quarter in both developed and developing countries before rebounding in the final half.

  On the positive side, WTO indicates that global trade could benefit if monetary support from the European Central Bank succeeds in generating faster growth in the euro area during the year. It also states that 2017 could be better as the global trade growth could rise to 3.6 per cent.

LIC clocks Rs 11k-cr profit via equity investments in FY'16

• 
  

  Life insurance firm LIC has made a profit of Rs 11,000 crore through its equity investments in the recently concluded 2015-16, a senior official said.

  "We saw some profit booking opportunities during the fiscal and have made a profit of Rs 11,000 crore through our equity investments in the recently concluded FY16," its executive director for investment operations, Pravin Kutumbe said.

  He said the largest domestic investor pumped-in Rs 2.70 lakh crore across equity and debt markets in the fiscal, of which Rs 65,000 crore was in the equity segment.

  The depressed markets towards the latter part of the year led to the corporation exceeding on its equity investments target of Rs 60,000 crore announced earlier, he said.

  He said the banking sector, where a thorough clean-up is underway, presents value buying opportunities at present.

  The executive director, however, declined to give a sense of how the Life Insurance Corporation (LIC) of India looks at the broader market.

  Even in the difficult times, there are stocks which are at their 52-week high and the LIC makes money by exiting in such investments, he said.

  Comparable figures for the state-run company's performance last fiscal were, however, not immediately available.

  Kutumbe said having announced a target of investing up to Rs 1.5 lakh crore to help the Railways, LIC has loaned Rs 7,000 crore to it in 2015-16 and scale it up as Railways comes up with its needs.

  The money has been loaned at a coupon of 0.30 per cent over the benchmark government securities for the year, he said.

  There was a 10.82 per cent correction in the 30-share benchmark of the BSE during the fiscal. It opened the fiscal at 28,260 points and closed at 25,341 points on March 31, 2016, making it a not-so-happy year due to the volatilities.

  It touched a high of 29,094 points on April 15 last year and passed through choppy waters towards the latter part of the fiscal, which led to it registering a year's low of 22,494 points on February 29.

Power reforms likely to pressure states' budgets: RBI

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  Power reforms are likely to put pressure on state governments' budgets, potentially forcing them to cut spending needed to support economic growth, the Reserve Bank of India (RBI) said in a report on Thursday.

  States could find themselves deviating from the path of fiscal consolidation as they take on an additional interest burden from debt tied to state utilities.

  A government plan announced in November provides for states participating in the programme to convert up to 75 per cent of the Rs 4.3-trillion ($64.6-billion) loans and debt held by their utilities into bonds, and assume all interest payments and redemptions.

  Such a process "would considerably reduce the fiscal space of states, which might lead to curtailment of capital expenditure with an adverse impact on growth," the RBI said in its report on state finance.

  So far 15 of 29 states have joined the government's so-called Ujwal Discom Assurance Yojana (UDAY) plan.

  The RBI urged states to cut "unproductive" expenditure and boost non-tax revenues to improve the quality of fiscal consolidation.

  The state government cash surplus stood at Rs 1.88 trillion by the end of March, the central bank said.

  The estimated combined fiscal deficit of states would fall to 2.4 per cent of gross domestic product in the financial year ending in March 2016 from 2.9 per cent the year before, the RBI said.

  But it forecast a sharp cut in the small savings rate announced by the government would increase states' market borrowing, as the proceeds from these deposits were shared between the central government and the states.

General Awareness

World Health Day – April 7 2016

• • 
    

    World Health Day is marked at this time every year to celebrate the founding of the World Health Organization, the world’s leading health organisation, on 7 April 1948.

    • Each year, a theme is selected for World Health Day that highlights an area of concern for the WHO.
    • This year the spotlight is on diabetes and the reasons are obvious. The number of people with diabetes has risen from 108 million in 1980 to 422 million in 2014.
    • World Health Day is one of eight official global public health campaigns marked by WHO. This year the day is observed with theme: Halt the rise: beatdiabetes

    Goals of WHD 2016 are

    1. Scale Up Prevention
    2. Strengthen Care
    3. Enhance Surveillance.

    Diabetes Key Facts:

    • Diabetes is a lifelong condition that causes someone’s blood sugar (glucose) level to become too high.
    • The diseases has two types viz, Type 1, Type 2, Gestational, Impaired Glucose Tolerance (IGT) and Impaired Fasting Glycaemia.
    • It can lead to a heart attack, stroke, blindness, kidney failure and lower limb amputation, and caused 1.5million deaths globally in 2012. While High blood glucose also caused 2.2million deaths.
    • Type 1 but it often runs in families so is thought to be genetic. However Type 2 Diabetes develops if you are over 40 you have a close relative with diabetes, are overweight or obese, or are of south Asian, Chinese descendent.

     Complications:

    • Massive levels of blood sugar levels can cause eye damage, stroke, and cerebral circulation damage, gum disease, heart, kidney disease, and peripheral nerve damage, blood circulation problems in the legs, foot ulcers and amputations.

    Health Minister launches new health initiatives and Mobile APPS

    On World Health Day, the Health Minister J P Nadda launched theSwasth Bharat Mobile application and ANM Online application-ANMOL.

    • ANMOL is a tablet-based application that enables ANMs to enter and updated data for beneficiaries of their jurisdiction.
    • This will ensure more prompt entry and updation of data as well as improve the data quality since the data will be entered at source by providers of health servicesthemselves.
    • The Application is Aadhaar-merged, it will help in authentication of the records of field workers and beneficiaries.

    E-RaktKosh:

    • The Health Minister also launched E-RaktKosh initiative. It is an integrated Blood Bank Management Information System that has been conceptualized and developed after multiple consultations with all stakeholders.
    • This web-based mechanism interconnects all the Blood Banks of the State into a single network.

    India Fights Dengue App:

    • This application will be used to fight against Vector Borne Diseases, especially Dengue, can be won only with effective community participation,
    • The App empowers the community members how to contribute towards prevention of Dengue.

    Guidelines for Dialysis Centre:

    • The Minister stated that every district in India will have the facility of a Dialysis Centre operated under the PPP mode.
    • He unveiled the findings of the ICMR India DIABetes aka INDIAB Study Phase I, along with WHO Global Report on Diabetes, WHO India Technical Report on Diabetes in India.