8-august-2014.pdf

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CURRENT AFFAIRS

AUGUST 2014

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TABLE OF CONTENTS

POLITY ...................................................................................................................................................................................... 4

Supreme Court Judgments and Rulings ............................................................................................................................................ 4

SC notice on foreign Funding of political parties ............................................................................................................................................................... 4 Minimum qualification for MPs, MLAs .................................................................................................................................................................................... 4 Supreme Court holds back all coal allocations made since 1993 .............................................................................................................................. 5

Administrative Reforms ........................................................................................................................................................................... 5

Abolishing the PLanning Commission .................................................................................................................................................................................... 5 Banning the capitation fee ............................................................................................................................................................................................................ 8 Government move to check backwindow snooping ........................................................................................................................................................ 8 Fast Track Courts Violate due process: AP Shah ................................................................................................................................................................ 9 TRAI Reccomendations on cross media ownership ......................................................................................................................................................... 9

Legislations and policies ....................................................................................................................................................................... 10

National Judicial Appointments Commission (NJAC) ....................................................................................................................................................10 Several important bill lapse in parliament .........................................................................................................................................................................11 The Juvenile Justice (Care and Protection of Children) Bill, 2014...........................................................................................................................12

ECONOMY ............................................................................................................................................................................. 13

Policy Guidelines by RBI ........................................................................................................................................................................ 13

RBI releases charter of consumer rights..............................................................................................................................................................................13 RBI Governor – Government should focus on increasing revenue collection ...................................................................................................13 RBI to cut down “pre-emptions” to spur efficiency ........................................................................................................................................................13 Reserve Bank proposes ‘anytime anywhere’ bill payment system .........................................................................................................................15

SEBI - Securities Laws (Amendment) Act, 2014 notified ....................................................................................................... 15

Governmental Policies and Schemes ............................................................................................................................................... 17

Pradhan Mantri Jan Dhan Yojana (PMJDY) .........................................................................................................................................................................17 Measure to improve ease of doing business ......................................................................................................................................................................18 Come – Make in India – An analysis .......................................................................................................................................................................................19

SOCIAL ISSUES ..................................................................................................................................................................... 22

Health ............................................................................................................................................................................................................ 22

Who approves use of promotional drugs ............................................................................................................................................................................22 WHO urges crackdown on e-cigarettes ................................................................................................................................................................................22 Experimental vaccine for chikanguniya ...............................................................................................................................................................................22

Social Inclusion ......................................................................................................................................................................................... 23

Absence of a law to protect HIV infected .............................................................................................................................................................................23 Need for a demographic policy in the country ..................................................................................................................................................................23 Maharashtra forms board for Transgender Welfare .....................................................................................................................................................24

Women Related ......................................................................................................................................................................................... 25

Mahila Bank to have 25% presence in rural areas .........................................................................................................................................................25 Marriage driving urban women out of jobs ........................................................................................................................................................................25

INDIA AND WORLD ........................................................................................................................................................... 26

Issue of WTO and Trade Facilitation Agreement ...................................................................................................................... 26

India-China ................................................................................................................................................................................................. 29

China inaugurates new Tibet rail link near Sikkim border .........................................................................................................................................29 China’s other Rail Links close to India ..................................................................................................................................................................................30 ‘Dalai Lama in talks to return’ ...................................................................................................................................................................................................30 China General visited disputed region ..................................................................................................................................................................................30 China wants India to play key role in ‘Silk Road’ plan...................................................................................................................................................31

India-Nepal ................................................................................................................................................................................................. 31

Modi’s visit to Nepal.......................................................................................................................................................................................................................31 Pashupathinath temple ................................................................................................................................................................................................................32 Disappointments .............................................................................................................................................................................................................................32 Deepening energy links ................................................................................................................................................................................................................32

India-Sri Lanka ......................................................................................................................................................................................... 32

Sri Lanka apologises over article on Jayalalithaa ............................................................................................................................................................32 TNA seeks India’s help ..................................................................................................................................................................................................................33

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India-Pakistan ........................................................................................................................................................................................... 33

Talks off the table ............................................................................................................................................................................................................................33 Pakistan, India hold Indus water talks ..................................................................................................................................................................................33

India-Bangladesh ..................................................................................................................................................................................... 33

General (retd) V.K. Singh’s visit ................................................................................................................................................................................................33 ULFA leader wants to come back to India ...........................................................................................................................................................................34

India-Vietnam ............................................................................................................................................................................................ 34

Sushma's Vietnam visit.................................................................................................................................................................................................................34

WORLD AFFAIRS ................................................................................................................................................................ 35

Ebola outbreak in West Africa ........................................................................................................................................................... 35

Symptoms ...........................................................................................................................................................................................................................................35 How it spreads? ................................................................................................................................................................................................................................36 Cure ........................................................................................................................................................................................................................................................36 Experimental treatment ..............................................................................................................................................................................................................36 Response plan ...................................................................................................................................................................................................................................37 WHO declares Ebola an international health emergency ............................................................................................................................................37 Growing unrest sets back Liberia's Ebola fight ................................................................................................................................................................38

Israel-Palestine ......................................................................................................................................................................................... 38

Cause of the Gaza war ...................................................................................................................................................................................................................38 Series of ceasefires and their violations: .............................................................................................................................................................................39 Why ceasefire? ..................................................................................................................................................................................................................................39 Demands of Hamas and Israel...................................................................................................................................................................................................39 Israel’s Iron Dome ...........................................................................................................................................................................................................................39 War damage .......................................................................................................................................................................................................................................40 UN Human Rights Council appoints panel for Palestine inquiry .............................................................................................................................40 Israel, Hamas agree to open-ended Gaza ceasefire.........................................................................................................................................................40 Both Hamas and Israel declare victory in Gaza war .......................................................................................................................................................40 Palestine planning to apply to the International Criminal Court .............................................................................................................................41

ISIS (Islamic State of Iraq and Syria) ............................................................................................................................................. 41

What is ISIS and its Goal? ............................................................................................................................................................................................................41 Root cause of its inception ..........................................................................................................................................................................................................41 Role of foreign fighters .................................................................................................................................................................................................................42 Strategy to deal with ISIS ............................................................................................................................................................................................................42 U.S.’s stand ..........................................................................................................................................................................................................................................42 Role of Qatar ......................................................................................................................................................................................................................................43 Yazidis of Iraq ...................................................................................................................................................................................................................................43 Political crisis in Iraq .....................................................................................................................................................................................................................44

Syria ............................................................................................................................................................................................................... 44

Neutralization of Chemical weapons .....................................................................................................................................................................................44 Syria and ISIS.....................................................................................................................................................................................................................................44 U.S.’s stand ..........................................................................................................................................................................................................................................45 Russia’s stand ....................................................................................................................................................................................................................................45 Syrian rebels attack peacekeepers in Golan Heights .....................................................................................................................................................45 Israel’s stand ......................................................................................................................................................................................................................................45

Hong Kong ................................................................................................................................................................................................... 45

China ruled out open nominations .........................................................................................................................................................................................45 Principle of one country, two systems ..................................................................................................................................................................................45 Occupy Central with Love and Peace (OCLP) ....................................................................................................................................................................45

Political unrest in Pakistan ................................................................................................................................................................. 46

Cause of unrest and demands ...................................................................................................................................................................................................46 Role of Pakistan Army ...................................................................................................................................................................................................................46

Political crisis in Thailand ................................................................................................................................................................... 46

Thai Army chief chosen as Prime Minister .........................................................................................................................................................................47

Cambodia tribunal convicts Khmer Rouge leaders .................................................................................................................. 47

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POLITY

SUPREME COURT JUDGMENTS AND RULINGS

SC NOTICE ON FOREIGN FUNDING OF POLITICAL PARTIES

• The Supreme Court issued notice to the Centre and the Election Commission on a petition filed by the

Congress challenging a Delhi High Court order initiating action against it and other parties for receiving funds

from foreign companies

• Acting on a public interest writ petition, the High Court, finding prima facie violation of the Foreign

Contribution (Regulation) Act (FCRA), said the donations from Sterlite Industries and Sesa accrued from

foreign sources within the meaning of the law.

• The counsel for the petitioner submitted that any company controlled from outside India through a

shareholding arrangement should be deemed to be a foreign company.

MINIMUM QUALIFICATION FOR MPS, MLAS

• The Supreme Court has noted that the time has come for Parliament to prescribe some minimum

qualifications for Parliamentarians/Legislators as prescribed in other fields.

DISQUALIFICATION CRITERIA FOR MINISTERS

• The Supreme Court has refused to add a new disqualification in the Constitution for appointment as

Ministers, saying it was the prerogative of the Prime Minister or the Chief Minister of a State to appoint

Ministers of his/her choice

• This ruling was given in response to a public interest litigation petition filed in 2005 seeking the removal of

tainted Ministers from the Cabinet

• However, the Bench said having regard to the role of a Minister and keeping in view the sanctity of oath he

takes, the Prime Minister would consider not choosing a person against whom charges have been framed for

heinous or serious criminal offences or charges of corruption

ANALYSIS

• By sending a strong message that politicians facing criminal charges framed by a court should be disqualified

from becoming Ministers, the Supreme Court has stepped away from the age-old principle that a “person is

presumed innocent unless proven guilty.

• The court ruled that framing of charges is a judicial act by an experienced judicial mind and not the same as

lodging of an FIR. Charges are framed in a criminal trial after the judge is satisfied there is prima facie

evidence against the accused after perusal of the final charge sheet

• Besides, a tainted Minister heading a “high-integrity institution” cannot take refuge with only a mere

presumption of innocence to defend him

• Showing wise restraint, the Constitution Bench has declined to prescribe any fresh ground for disqualification

for the appointment of Ministers. Instead, it has advised the Prime Minister, as well as the Chief Ministers, to

live up to the trust that the Constitution reposes in them by refraining from advising the President, or the

Governors, when it comes to appointing as Ministers those with the taint of criminality.

• The Election Commission has already mooted some reforms to curb the criminalisation of politics, notably an

amendment to make framing of charges in serious cases the basis for disqualification, instead of conviction,

as it stands now. The message from the latest verdict is that these issues ought to be addressed through

legislation rather than the judicial process.

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SUPREME COURT HOLDS BACK ALL COAL ALLOCATIONS MADE SINCE 1993

• The Supreme Court has the coal blocks allocated from 1993 onwards by a steering committee and through

government dispensation route were illegal, arbitrary, and non-transparent without any objective criteria but

did not cancel them yet.

• The Supreme Court examined the following three questions:

o Whether allocation of coal blocks from 1993 should have been done by way of public auctions;

o Whether the procedure followed by the Screening Committee in making recommendations for

allocation of coal blocks was arbitrary and lacked transparency

o Whether allocation of coal blocks made by way of government dispensation route (i.e. by

Ministry of Coal) is inconsistent with constitutional principles.

• The Supreme Court held that the allocation via public auctions was an administrative decision of the central

government and does not warrant judicial review.

• In addition, it held that the process of allocation of coal mines on the recommendation of the screening

committee is arbitrary as no objective criterion was used to determine the selection of companies.

• Further, the blocks allocated through the government dispensation route to State Public Sector Units was not

permissible under the Coal Mines Nationalisation Act, 1973.

• Thus, all coal blocks allocated from 1993 are illegal. However, the allocation to Ultra Mega Power Projects,

which was done via competitive bidding for lowest tariffs, was not declared illegal. The court will decide

separately the fate of the illegal coal blocks.

ANALYSIS

• The Supreme Court verdict holding coal block allocations made since 1993 illegal confirms a long-known, but

little-acknowledged malaise pervading the administration: cronyism often overshadowing merit, and systems

and processes being undermined by power and influence

• The sweeping nature of the finding that allocation of coal blocks through the government dispensation route

as well as through a non-statutory ‘screening committee’ suffered from arbitrariness is a fierce indictment of

successive governments, rendering it difficult to apportion blame on any particular party or regime.

• Rather, as the judgment points out, the approach was ad hoc and casual. There was no fair and transparent

procedure, and this resulted in unfair distribution of national wealth.

• Political parties may seek to blame one another, and industry may count its losses and lament the verdict’s

impact on the cost and availability of power and the cost of importing or transporting coal. Some may fret

over the viability of existing projects and the fate of investments already made. They may calculate the

impact on financial firms with exposure to this sector. All these factors will now be weighed by the Court

when it sits again to decide whether to cancel the allocations or find a just alternative.

• Those who consider the public interest paramount and are concerned about good governance and the

integrity of institutions will doubtless welcome this judgment. The tasks that remain are, first, to disgorge the

windfall gains made by the players in the scam; second, to save the mining and power sectors from the

consequences of the illegal allocations; and third, to bring to book those guilty of criminal conduct.

ADMINISTRATIVE REFORMS

ABOLISHING THE PLANNING COMMISSION

Planning Commission is an extra-constitutional and non-statutory body. It was established in 1950 by an

executive resolution of the Government of India, on the recommendations of Advisory Planning Board

constituted in 1946, under the chairmanship of K. C. Neogi.

Composition of Planning Commission

1. Prime Minister is the Chairman of the Commission. He presides over the meetings of the Commission.

2. Deputy Chairman is the de-facto executive head. He is responsible for the formulation and submission of

the draft Five-Year-Plan to the Central Cabinet. He enjoys the rank of a cabinet minister. He is not a

member of cabinet, but he is invited to attend its meetings (without a right to vote).

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Planning Commission

• prepares draft Five-Year plan

• assesses resources

• suggests measures to augment resources

• supreme organ of planning for social and economic development

Union Cabinet

• It approves the draft FYP

National Development Council

• Objective is to secure the cooperation of states

• prescribes guidelines for preparation of national plan

• reviews the working of national plan

• It is an advisory body to Planning Commission

Parliament

• Once approved by Parliament, draft FYP becomes official Plan

• It is published in the official Gazette.

3. Finance minister and Planning minister are ex-officio members of the commission.

4. The commission has 4-7 full-time expert members in various fields like Economics, Industry, Science and

General Administration. They enjoy the rank of Ministers of state.

5. The commission has a member secretary. He is usually a senior member of IAS.

Functions of Planning Commission

The Planning Commission's functions as outlined by the Government's 1950 resolution are following:

1. To make an assessment of the material, capital and human resources of the country, including technical

personnel, and investigate the possibilities of augmenting them.

2. To formulate a plan for the most effective and balanced utilisation of country's resources.

3. To define the stages, on the basis of priority, in which the plan should be carried out and propose the

allocation of resources for the due completion of each stage.

4. To indicate the factors which tend to retard economic development

5. To determine the conditions which need to be established for the successful execution of the plan within

the incumbent socio-political situation of the country.

6. To determine the nature of the machinery required for securing the successful implementation of each

stage of the plan in all its aspects.

7. To appraise from time to time the progress achieved in the execution of each stage of the plan and also

recommend the adjustments of policy and measures which are deemed important vis-a-vis a successful

implementation of the plan.

8. To make recommendations from time to time regarding those things which are deemed necessary for

facilitating the execution of these functions. Such recommendations can be related to the prevailing

economic conditions, current policies, measures or development programmes. They can even be given

out in response to some specific problems referred to the commission by the central or the state

governments.

Process of Planning in India

Critical Evaluation

Achievements of Planning Commission:

1. The majority of experts in the Commission are economists, which helps in securing expert and unbiased

opinion on various topics.

2. In March 2013, Planning Commission launched a massive social media campaign for spreading

Awareness about 12th Five Year Plan. It was followed by series of Google+ Hangouts and a Plan

Hackathon. By September 2013, it had made a considerable presence on Social Media with over 1 lakh

Twitter followers which helped in greater involvement of people in planning process.

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3. Planning Commission concerns itself with the building of a long-term strategic vision of the future and

decides on priorities of nation. It works out sectoral targets and provides promotional stimulus to the

economy to grow in the desired direction.

4. It also plays an integrative role in the development of a holistic approach to the policy formulation in

critical areas of human and economic development.

Criticism

Questions are being raised about the role of the Planning Commission as the government has been moving

towards market-linked development process since 1991.

In a dynamic and rapidly changing country, the Commission is unable to show a certain kind of nimble-

footedness that it needs in order to be more effective. The biggest casualties of this inability are states (as well

as cities and local governments), which are not given a say as to how they should navigate the fortunes of their

own space. Planning Commission has been criticised both as an institution as well as the way it has functioned.

1. Multiplicity of agencies- Planning Commission vs Finance Commission

Dr P V Rajamannar, Chairman of fourth Finance Commission highlighted the overlapping of functions and

responsibilities between Finance Commission and Planning Commission in federal fiscal transfers. To avoid

this, a practice has grown which has resulted in the limitation of FC to only revenue expenditure.

There is nothing in the Constitution that excludes from capital grants FC’s scope. Central assistance for plan

projects by grants or loans is practically dependent on the recommendations of Planning Commission.

Similarly, the functions of NDC and Planning Commission also overlap.

2. Misdirection- Dr Gadgil criticised Planning Commission saying that it has come to mix itself with the

actual process of the formation of public policies even in matters other than that of development.

Membership of PM and Finance Minister has vested Planning Commission with unnatural importance.

3. Planning Commission is only an advisory body and has no executive responsibility. Its wide terms of

reference have led to its growth as ‘Super Cabinet’, or ‘Parallel Cabinet’.

4. It has become an ‘Economic Cabinet’ not merely for the Union but also for the states. It narrows the

space of state governments to set priorities on expenditure.

5. Plan body exceeds the scope of its authority, particularly its influence on the allocation of funds to state

governments. Funds from the Finance Ministry are being routed to states through it. However, most

states are of the view that this could be done directly by the ministry.

Finance Commission

• Statutory transfer

• to determine revenue gap of each state

• To recommend the distribution of net proceeds of taxes between Centre and states

• Principles that should govern the grants-in-aid to states

• Measures needed to augment the Consolidated fund of the state to supplement the resources of Panchayats and Municipalties, based on the recommendation of State Finance Commission

Planning Commission

• Discretionary grants

• PC is the supreme body for planning for social and economic development

• Central assistance for plan projects by way of grants or loans is dependent on the recommendations of PC

• It is based on Gadgil-Mukherjee formula adopted in 1991

• It acts as interface between Finace Ministry and other ministries

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6. It is staffed largely by non-specialist bureaucrats who lack the expertise to act as a think tank or serve as

an oversight body to review implementation of programmes and policies in the states.

7. The commission along with its advisors came under severe criticism from within the government for

blocking projects. Former roads minister Kamal Nath blamed it for delays in clearing projects. Former

Prime Minister Manmohan Singh had also called for restructuring of the institution.

8. Out of touch with ground realities- Planning Commission was criticised for declaring a very low, and

arguably unrealistic, threshold of poverty of a monthly consumption of 859.6 in urban and 672.8 in

rural areas.

9. Other concerns relate to its opaque functioning, the lack of parliamentary oversight of its leadership and

the lack of accountability of members.

The way out

A report by C. Rangarajan, former chairman of PMEAC, advocated doing away with the distinction between plan

and non-plan expenditure, and change the role of the Planning Commission to a growth Commission. As

suggested by a group of experts and parliamentarians, provisions should be made for active participation of

states in the planning process. Planning must be made a federally empowered function with active participation

of states and in a bottom up mode.

A suggestion is that Planning Commission must act solely as a think-tank sans financial allocation powers. In

Korea and Thailand, planning is done by research bodies, which are effective only because of government's

acceptance. Also, the reinvented Planning Commission should be a lean body. Also, there may be a need to

make the Commission accountable to Parliament.

Conclusion

Centrally directed planning is an anachronism in the present times of greater federal autonomy. But while the

Planning Commission may go, the important tasks it has been carrying out will still have to be carried out.

Actually one of the biggest criticisms of abolition of Planning Commission has been on the ground that no

alternative measures have been suggested. So, it is necessary that a suitable mechanism is put in its place in

accordance with the changed ground realities and the needs of an emerging economy.

BANNING THE CAPITATION FEE

• Banned by law in many States and by the Supreme Court through a judgment in 2003, the collection of

capitation fees remains a “hard reality”,

• The Supreme Court has asked former Union Minister Salman Khurshid to study the issue in depth and suggest

an appropriate mechanism by which it can be effectively stopped.

• In this, he will have the assistance of the various governments in the form of provision of information and

data on complaints.

• Supreme Court has made it amply clear in its numerous statements that Capitation fee is illegal in nature.

• The general thinking of courts has been that while educational institutions are entitled to a surplus of funds

that could be used for further expansion and provision of facilities, they should not indulge in profiteering.

• The education sector has emerged as a significant generator of unaccounted money, as a recent report on

black money points out. No law, however stringent, can be made effective unless the targeted illegality

attracts public odium.

GOVERNMENT MOVE TO CHECK BACKWINDOW SNOOPING

• In order to check the cyber-attacks and spying the Government is planning to make it mandatory for all

telecom equipment to be tested in India from next year.

MOVE AIMED AT CURBING CHINESE INFLUENCE

• The new measures are taking shape at a time when Chinese content in Indian telecom networks is growing

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• In the past two years, Chinese equipment accounted for 60 per cent of total telecom equipment imports and

their percentage is now just over 50 per cent.

• The government had in the past turned down the procurement of Chinese equipment on the suspicion that it

contained a back-window for transmitting information.

FAST TRACK COURTS VIOLATE DUE PROCESS: AP SHAH

• As per the Law Commission Chairman, Justice A P Shah Fast-track courts are not the solution to the problem

of judicial backlog.

• Stating that the quality of justice being delivered by fast-track courts was problematic, he said there was

often a violation of due process.

• He further noted that to unclog the judiciary, traffic and police fines — which the commission found make up

over a third of the lower judiciary’s cases — need to be removed from the court system.

AS FUNDS DRY UP FAST TRACK COURTS CLOSE DOWN

• As per the law ministry, fourteen years after they were first set up, just half the fast-track courts set up across

the country are still functional.

• Only five States — Assam, Goa, Kerala, Meghalaya and Mizoram — still have all their fast-track courts

sanctioned in 2000 functional

• While the setting up of courts, including fast-track courts, is the responsibility of the State governments, the

11th Finance Commission recommended a scheme for the establishment of fast-track courts, and sanctioned

Rs. 500 crore of Central funds for the purpose.

• The initial scheme was to run for five years and by 2005, 1,562 were functioning, the Law Ministry’s data

show.

• On the Supreme Court’s directions, the Central funding was extended by another five years and discontinued

in March 2011.

• By then, the number of fast-track courts still functioning was already down to 1,192.

• After the gang-rape of a young woman in Delhi, the Centre decided to extend the scheme partially until

March 2015 by providing up to Rs. 80 crore a year as matching grant to meet the salaries of the additional

judges. But by July 2014, the number of functional fast-track courts was down to 976

• Rajasthan, Uttarakhand, Himachal Pradesh and Arunachal Pradesh are the worst performers with none of

their sanctioned fast-track courts functional.

• Fast-track courts disposed of over 3 million cases in their first 11 years. However, the quality of justice

delivered by them is disputed, as well as the impact they have on the speed of justice in the rest of the

system.

BACKGROUND OF FAST TRACK COURTS

• Fast-track courts function by the same procedures as other trial and sessions courts, but have better

infrastructure and funding. They are expected to dispose of at least 14 sessions cases a month.

• They were initially meant to look at long-pending cases and those involving undertrials, but were later

directed to try specific cases, such as crimes against women and children.

TRAI RECCOMENDATIONS ON CROSS MEDIA OWNERSHIP

• The Telecom Regulatory Authority of India (TRAI) has suggested to bar political parties and government

departments from entering either broadcasting or TV distribution.

• It has also recommended an independent regulator for the media.

• It also suggested a formula for calculating media dominance that will likely affect at least some media

companies in some markets.

• Both media organization and persons like an MP or MLA paying for favorable news should be held liable and

not only the politician. In case of "advertorials", a clear disclaimer should be mandated, to be printed in bold

letters, stating that the succeeding content has been paid for

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• TRAI said implementing its recommendations would address the immediate purpose of curbing unhealthy

media practices, but there is a need for a comprehensive evaluation of the legislative and legal framework in

order to establish a robust institutional mechanism for the long term. The authority, therefore,

recommended that a commission, perhaps headed by a retired Supreme Court judge, be set up to

comprehensively examine the various issues relating to the media.

LEGISLATIONS AND POLICIES

NATIONAL JUDICIAL APPOINTMENTS COMMISSION (NJAC)

• The Constitution (121st Amendment) Bill, 2014 and the National Judicial Appointments Commission Bill,

2014 were passed by Parliament on August 14, 2014. The Constitution Amendment Bill has to be ratified by

at least 15 (of the 29) state legislatures before it is sent to the President for his assent.

• The Constitution (121st Amendment) Bill, 2014 amends the provisions of the Constitution related to the

appointment of Supreme Court (SC) and High Court (HC) judges, and the transfer of HC judges.

• Currently, the Constitution provides that the President would make such appointments after consulting

with SC and HC judges, as he considers necessary.

• This has been interpreted by the SC to imply that the President will act on the recommendation of a

collegium consisting of the Chief Justice of India and four senior most SC judges.

• The Bill modifies this process by creating a body called National Judicial Appointments Commission (NJAC)

that will make recommendations to the President for such appointments.

IMPORTANT PROVISIONS OF NJAC BILL

• The bill is aimed at enabling the participation of the judiciary, executive and eminent persons to ensure

greater transparency, accountability and objectivity in the appointment of judges to the higher judiciary.

• The NJAC will consist of the following six members:

(i) Chief Justice of India (CJI) (Chairperson)

(ii) Two senior most SC Judges

(iii) UnionMinisterofLawandJustice

(iv) Two eminent persons (to be nominated by the CJI, Prime Minister of India and the Leader of

Opposition in the Lok Sabha).

• The NJAC Bill, 2014 provides for the procedure to be followed by the NJAC in recommending persons for

appointment as CJI, other SC judges and for the appointment and transfer of HC judges.

• Of the two eminent persons, one person would be from the SC/ST/OBC/minority communities or be a

woman. The eminent persons shall be nominated for a period of three years and shall not be eligible for re-

nomination.

• The NJAC will recommend the senior-most judge of the Supreme Court for appointment as the Chief Justice

of India

• For appointing Supreme Court judges, the NJAC will recommend names of persons on the basis of their

ability, merit and other criteria.

• The commission is vested with veto power not to recommend a person for appointment if any two members

do not agree for such recommendation both for the Supreme Court and High Courts.

• If for some reason, the President requests the commission to reconsider certain recommendations and the

recommendation is reiterated, the President is bound to make the appointment.

VETO POWER A CONCERN

• There is apparent parity between judicial nominees (the Chief Justice of India and two senior-most Judges)

and executive representatives (the Law Minister and two eminent persons chosen by a panel comprising the

CJI, the Prime Minister and the Leader of the Opposition) in the six-member NJAC.

• However, any two members can veto any decision. While the veto could act as a restraint on a decision being

pushed through by one bloc, it could be seen as undermining the judicial members' opinion. Also, the CJI can

be outvoted by the political class when it comes to choosing the ‘eminent persons’.

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IMPORTANT MATTERS LEFT FOR REGULATIONS

• Several significant aspects — the criteria of suitability of judges, the conditions for selection, and procedures

on consultation with other judges and eminent advocates, and the manner of eliciting the views of the

Governor and Chief Minister — have been left to regulations to be framed by the Commission.

• Giving the power to amend these regulations to a panel that will itself keep changing from time to time

instead of being cast in law may undermine judicial independence, as the norms could be tweaked for

reasons of expediency.

PETITION FILED AGAINST NJC BILL

• The Supreme Court Advocates on Record Association moved the apex court challenging the constitutional

amendment and National Judicial Appointments Commission Bills.

• The petitioner sought a declaration that the Bills were unconstitutional, null and void, and a direction that the

present collegium system should continue with the appointment of judges.

• The petition said the National Judicial Appointments Commission Bill was introduced even prior to the

Constitution 121 Amendment Bill to give constitutional status to the proposed National Judicial

Appointments Commission. The Bill was passed in both Houses of Parliament by voice vote even as the

provisions of Article 124(2), as originally enacted, were in force

• The petition contended that since Article 124(2) remained intact, there could be no introduction or passing by

Parliament of the legislative Bill, known as the NJAC Bill. It said a constitutional amendment which was invalid

for violation of the basic structure of the Constitution could not be forwarded to the State governments for

ratification.

WHAT IS ARTICLE 124(2)?

• Article 124(2) along with Article 217(1) of the Constitution made provisions for the appointment of judges of

the Supreme Court including the Chief Justice of India and for appointment of judges of the High Courts

including the Chief Justices of the High Courts.

• The new laws have their deficiencies, but they are a product of sustained discussion across all political

lines, and are examples of a non-partisan process of law making.

• Quite contrary to the fears propagated by its critics, the National Judicial Appointments Commission Bill will

replace a failed system with a process that maintains, at the least, an element of fidelity to the Constitution’s

ideals.

SEVERAL IMPORTANT BILL LAPSE IN PARLIAMENT

• After being passed in the Rajya Sabha in 2010, the Women’s Reservation Bill, which provides for 33 per cent

reservation for women in Parliament and Legislative Assemblies, was sent to the Lok Sabha for approval, but

did not see the light of the day for lack of political consensus and will.

• Under Article 107 (5) of the Constitution, it is amongst the 68 government Bills that have lapsed on the

dissolution of the 15th Lok Sabha.

• If the new government wants to give reservation to women, it will have to come up with a fresh legislation

just as it did in the case of the judicial appointments Bill.

• Besides the Women’s Bill, the crucial Bills that have lapsed include the Constitutional 117th Amendment Bill

providing Scheduled Castes and Scheduled Tribes reservation in government job promotions; the Judicial

Standards and Accountability Bill, 2012; the Direct Taxes Code Bill, 2010; and the Rights of Citizens for Time-

Bound Delivery of Goods and Services and Redress of their Grievances Bill, 2011.

CONSTITUTIONAL PROVISION

• Article 107(5) of the Constitution states: A Bill which is pending in the House of People or which having being

passed by the House of the People is pending in the Council of States shall, subject to provisions of Article 108

(joint sitting of both the Houses), lapse on a dissolution of the House of People.

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THE JUVENILE JUSTICE (CARE AND PROTECTION OF CHILDREN) BILL, 2014

• The Juvenile Justice (Care and Protection of Children) Bill, 2014 was introduced in the Lok Sabha. It replaces

the Juvenile Justice (Care and Protection of Children) Act, 2000. • The bill proposes changes to the Juvenile Justice Act of 2000, according to which children over 16 years of

age, who are charged with committing “heinous” crimes, can be tried as adults in a regular criminal court.

• The Juvenile Justice Bill, 2014 requires the Juvenile Justice Board to determine whether the child should be

tried in a regular criminal court if he/ she is over the age of 16, and is alleged to have committed one of the

“heinous” offences listed in the section.

VIEWS AGAINST THIS MOVE

• This process is in itself problematic, as the Board will be making a determination on facts and culpability, at

the initial stage.

• The minister of Women and Child Development had said a little earlier that according to the police, 50 per

cent of all sexual crimes were committed by “16-year-olds who know the Juvenile Justice Act so they can do

it. But now for premeditated murder, rape, if we bring them into the purview of the adult world, then it will

scare them.”

• The Minister is wrong. In 2013, juveniles were charged with 3.4 per cent of all the rapes committed in India,

National Crime Records Bureau (NCRB) data show

• The Hindu ’s recent study of rape cases in Delhi’s district courts showed that the largest category of cases (40

per cent of all cases that were fully tried) dealt with elopement and consensual sex between young couples,

and the girl’s parents filing rape charges against the boy. In most of these cases, the boy was between 18 and

20 years of age and the girl between 16 and 18 years.

• Filing kidnapping cases where couples elope or are in relationships is not a new phenomenon

• This use of ‘kidnapping’ to regulate sexual autonomy and choice of young adults is a common practice and

continues till date.

• Parents who disapprove of their young daughters eloping with their partners file kidnapping cases since the

age of majority in the kidnapping section in the IPC is 18 (for women).

• In 2013, Parliament took the retrograde step of increasing the age at which a woman could consent to sexual

acts from 16 to 18.

• With the age at which a woman can consent to sexual relationships being raised, a rape charge can now be

added to the kidnapping charge. This only provided an additional tool to parents and society to not only

indulge in moral policing and curtailing choice, but also to use the criminal law to prevent inter-caste, inter-

class, and inter-religious relationships.

• What happens if a 17-year-old boy indulges in a consensual sexual act with a 15-and-a-half-year-old girl?

Under the proposed new JJ Act, if the Board determines that he should be tried as an adult, he will be tried by

a sessions court, which has no option but to sentence him to a minimum of ten years in prison.

• Rape is a violation of a woman’s sexual autonomy. Increasing the age of consent and decreasing the age of

juvenility does not enhance sexual autonomy but restricts it, since it negates the agency of the woman to

choose a partner, by instead facilitating filing of criminal cases against her partner. In cases of non-consensual

sexual acts, the need of the hour was to strengthen the existing juvenile justice system in order to ensure that

the goal of reformation was effectively achieved.

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ECONOMY

POLICY GUIDELINES BY RBI

RBI RELEASES CHARTER OF CONSUMER RIGHTS

The RBI has released a draft charter of consumer rights for public comments. The five consumer rights will be

applicable to entities regulated by the RBI (such as banks, non-banking financial entities, etc) and are as follows:

• Right to fair treatment: There can be no discrimination on the grounds of age, sex, physical disability,

etc. If certain special products discriminate between consumers, the reasons for the same must be given

by financial service provider when asked for.

• Right to transparency, fair and honest dealings: The financial service provider must provide information

related to contracts in an easy to understand language. Disclosure of the product’s price and associated

risks should be made.

• Right to suitability: Products offered should be appropriate to the needs of the customers.

• Right to privacy: The customer’s personal information should be kept confidential, unless they have

offered specific consent to the financial service provider or such information is required by law.

• Right to grievance redressal and compensation: The customer has a right to hold the financial services

provider accountable for the products offered and to have a clear and easy way for grievance redressal.

RBI GOVERNOR – GOVERNMENT SHOULD FOCUS ON INCREASING REVENUE

COLLECTION

• India has the capacity to bring its fiscal deficit under control, says RBI Governor Raghuram Rajan.

• Reserve Bank of India (RBI) Governor Raghuram Rajan, said while the government might achieve the

target of restricting fiscal deficit to 4.1 per cent of gross domestic product (GDP), more important would

be the manner in which it would do so.

• In an interview to a television channel, Dr. Rajan favoured an approach that focussed on increasing

revenue collection.

• Describing the 4.1 per cent fiscal deficit goal, the difference between the government’s income and

expenditure, for the current fiscal set by the government as an ‘ambitious target’, Dr. Rajan said, “the

government will achieve it if it wants to do so. It has done before. But how it achieves it is what is

important.”

• “India has the capacity to bring its fiscal deficit under control because we don’t spend too much as

fraction of GDP. Where we do a less good job is collecting revenues. So, broadbasing revenue

collection process and expanding the base is the way we can do it,” he said in the interview.

• The RBI Governor saw better prospects for growth in the coming days, a factor that should encourage

the government to move towards the target. During 2013-14, fiscal deficit was 4.5 per cent of GDP.

• “Our sense of 5.5 per cent [GDP growth] is feasible. If it goes beyond that, the government gets some

headroom on the fiscal front,” he added.

• Current Scenario- India’s Index of Industrial Production touched a 19-month high of 4.7 per cent in May

due to a better showing by the mining, power and capital goods sectors. In addition, retail inflation fell

to a 30-month low of 7.31 per cent in June as prices of food items, including vegetables came down.

RBI TO CUT DOWN “PRE-EMPTIONS” TO SPUR EFFICIENCY

A day after he lowered SLR, the mandatory government bond holding requirements for banks, Reserve Bank

Governor Raghuram Rajan said RBI is all for reducing “pre-emptions” over a longer horizon for more efficiency in

the financial system.

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• “The broader, longer term programme of five years, is that we should reduce the amount of pre-

emptions we have in the system including SLR and make a more effective priority sector lending (PSL)

process,” Mr. Rajan said during the customary post-policy call with analysts.

• Further, he drew attention towards the Nachiket Mor committee on PSL and said that the RBI is trying to

make the entire process more effective.

• “These are necessary changes in the system and should not be seen as tied to the monetary cycles,” he

added.

Current Issue with Pre-emptions –

• Various stakeholders in the system, including the banks, have been expressing reservations about the

pre-emptions like the SLR and CRR. In the present scenario, banks have to set invest 22 per cent of their

deposits in government securities and 4 per cent gets parked as cash reserve ratio without any interest

payment.

• Banks carry out lending on whatever remains, and 40 per cent of the lending as well is mandated to be

done to weaker sections of the society under the PSL.

Mr. Rajan conceded that on 5th of August, the 0.50 per cent cut in Statutory Liquidity Ratio is not going to have

any real impact in the immediate future and added that banks will continue carrying excess SLR for the

“foreseeable future”.

Impact of reduction in SLR - The cut in the SLR holding requirement, which has the potential to release an

additional Rs 40,000 crore into the system, offers banks the flexibility to manage their finances better when the

credit demand will go up, he said.

OTHER ISSUES

G-Sec market

• About the limit for foreign institutional investors’ investments in government securities, Mr. Rajan said

the RBI is happy with their renewed interest and also acknowledged their preference for longer maturity

debt of over three years.

• The situation is not such at present wherein foreign investors have come close to breaching the limits on

G-Sec investments and as and when the limits are closer to be exhausted, the RBI may look at relaxing

them, Mr. Rajan said.

• Mr. Rajan added that with the maturity in the Indian markets, many domestic institutions beyond banks

like domestic institutional investors, pension funds and insurance companies will look at deploying their

money in this market.

• He also stressed upon the need for getting more participation from the retail investors in the G-Sec

market.

Monetary Policy

• On the stance of the monetary policy in the days ahead, Mr. Rajan said the primary objective of the RBI

is to ensure that the economy disinflates as per a glided path announced earlier under which it wants to

reduce the headline retail inflation to 8 per cent by January 2015 and narrow it further to 6 per cent by

January 2016.

• Stating that at present the RBI considers the economy on course of its expectations, Mr. Rajan said the

RBI will cut rates if the inflation is faster than expected to boost growth, but will not be averse to hiking

rates should the price-rise fasten.

• At present, the outlook on inflation hinges on the movement of the monsoon with regard to the impact

on the commodity prices and also on supply side measures undertaken by the government, he said.

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• The economy has disinflated “considerably” but it is too early to consider victory as RBI has not been

able to get a good hold over people’s inflationary expectations, he said.

• In the surveys, people’s responses also talk of hyper-inflation, he said, clarifying that the policy will be

driven more by actual inflation on the ground rather than the expectations pronounced in the surveys.

• When asked about a possible rate hike by the US Fed and the RBI’s response in such a situation, Mr.

Rajan said that RBI’s action on the rates will be determined by domestic conditions and not by any

interest rate differentials between the developed world and the country.

• Mr. Rajan also stressed that “we are in the positive real interest rate territory, and we are at par with the

developed world on this”.

RESERVE BANK PROPOSES ‘ANYTIME ANYWHERE’ BILL PAYMENT SYSTEM

• The Reserve Bank of India (RBI), issued draft guidelines for the implementation of Bharat Bill Payment

System (BPPS).

• The draft guidelines outline the requirement and the basic tenets of operating the BBPS, and prescribe

the eligibility criteria, standards for settlement model and customer grievance redressal, roles and

responsibilities and scope for entities seeking to be part of BBPS.

• The RBI has invited comments from stakeholders by September 5.

• Objective - The objective of the BBPS is to implement an integrated bill payment system across the

country and offer interoperable and accessible bill payment service to customers through a network of

agents, enabling multiple payment modes and providing instant confirmation of payment. Hence, it has

been decided that the existing players in the online commerce segment catering to the requirements of

bill payments as well as aggregation of payment services (in relation to bill payments) will be a part of

BBPS.

• The BBPS will function as a tiered structure for operating the bill payment system in the country with a

single brand image providing convenience of ‘anytime anywhere’ bill payment to customers.

• The centralised bill payments infrastructure will consist of two types of entities carrying out distinct

functions – an entity operating the BBPS which will be the standard setting body and will cover standards

related to payment, clearing and settlement process and Bharat Bill Payment Operating Units (BBPOUs),

which will be the authorised operational units, working in adherence to the standards set by the BBPS.

The tiered structure could be further strengthened through an effective establishment of agent network

by the BBPOUs, RBI said.

• The RBI said that the bill payment is a major component of the retail payment transactions and over

30,800 million bills amounting to more than Rs.6 lakh crore are generated each year in the top 20 cities

in the country.

• “Though various forms of payments are accepted, cash and cheque payments continue to be

predominant, particularly at the Biller’s Own Collection Point,’’ the RBI said.

• While the existing systems are safe and robust, they do not fully address the needs of the consumers to

pay a variety of ‘bills’, including utility bills, school/university fee, municipal taxes and the like due to lack

of interoperability in the bill payment processes as well as lack of access to various modes of electronic

payments by a vast majority of customers, the central bank said.

SEBI - SECURITIES LAWS (AMENDMENT) ACT, 2014 NOTIFIED

• The Securities Laws (Amendment) Act, 2014 was notified by the government on August 25, 2014. The

Act amends the Securities and Exchange Board of India Act, 1992 (the SEBI Act) and makes consequential

amendments to the Securities Contracts (Regulation) Act, 1956 and the Depositories Act, 1996.

Why there is a need ?

• The passage of the Securities Laws (Amendment) Bill by Parliament is an important step in empowering

the Securities and Exchange Board of India to deal with financial shenanigans.

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• The regulatory body had not been fully equipped to deal with ingenious schemes masquerading as

collective investment schemes.

• Many of these promised unrealistically high returns to lure gullible depositors, a notable example being

what the Saradha group in West Bengal indulged in.

• They could sustain their “business model” as long as new depositors, lured by advertisement campaigns

boosted by outsized commissions to the sales force and aided by political connections, came trooping in

to repay exiting depositors.

• Others like the Sahara group offered utmost convenience — ostensibly collecting pygmy-size deposits

right at investors’ doorsteps even in remote parts of the country.

The key amendments

• Collective Investment Schemes (CIS): The definition of CIS has been expanded to include all pooling of

funds of Rs 100 crore or above, that are not regulated by any law.

• Search and seizure: The SEBI Act allowed the Securities and Exchange Board of India (SEBI) to conduct

search and seizure operations on a suspected violator‟s premises after obtaining permission from a First

Class Judicial Magistrate. The Act amends this provision, requiring SEBI to obtain permission from the

Magistrate or Judge of a court in Mumbai (as designated by the government).

• Consent settlement and disgorgement: The Act explicitly permits SEBI to: (i) enter into a consent

settlement with a person against whom proceedings have been initiated, and (ii) order disgorgement of

unfair gains made by a market participant.

• Attachment of property: The Act permits SEBI to attach bank accounts and property, and arrest and

detain a person for his failure to comply with disgorgement orders or pay any monetary penalty.

• Special courts: The Act provides for the establishment of special courts to try offences under the SEBI

Act

Analysis

• While there have been other similar acts of malfeasance, the important message from the new

legislation is that the market regulator can deal proactively with them before they assume menacing

proportions.

• SEBI now gets explicit powers to disgorge illegal gains made through fraudulent deposit schemes and

capital market offences. Those who lose money can be recompensed from the sale of recovered assets

of a delinquent company.

• The money collected will be parked in SEBI’s Investor Protection and Education Fund. SEBI can, with a

magistrate’s permission, conduct search and seizure operations and initiate recovery proceedings.

• The new legislation was overdue: the UPA government had promulgated an ordinance in July 2013 and

then presented a draft bill, which lapsed.

• Attention will now be focussed on SEBI, especially on whether it can act decisively against frauds that

have thrived amid a regulatory vacuum.

• In its quarter century of existence, SEBI has had to deal with many sharp practices in the financial

system. Its very creation and periodic strengthening have been in response to one crisis or the other.

• While the new law will deal with extreme cases of malfeasance, SEBI’s overall regulatory framework

needs to be strengthened.

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GOVERNMENTAL POLICIES AND SCHEMES

PRADHAN MANTRI JAN DHAN YOJANA (PMJDY)

Background

• The Pradhan Mantri Jan-Dhan Yojana, a major socio-economic initiative of the National Democratic

Alliance government, was announced by the Prime Minister in his Independence Day speech.

• It is an ambitious attempt at extending formal financial services in a country where only 58.7 per cent of

an estimated 24.67 crore households avail themselves of banking services.

• Despite several steps taken by many governments over the years, financial inclusion has remained

elusive.

• In rural areas 44 per cent of the households and in urban areas 33 per cent of them still do not have a

bank account.

• Unlike in previous action plans, the Jan-Dhan Yojana will have as its focus households rather than

geographical areas.

Key features of PMJDY are:

• Access: The programme aims to provide each household with banking facility either through a bank

branch or a fixed point business correspondent within a reasonable distance. The programme aims to

provide every household with at least one bank account within one year of its launch; it is expected to

cover 7.5 crore households.

• Facilities: Every account holder will be provided a debit card with Rs one lakh accident cover. An

overdraft facility up to Rs 5,000 will also be permitted to Aadhaar enabled accounts after six months of

satisfactory operation of accounts.

• Benefits transfer: PMJDY proposes to channel all central, state and local government benefits to the

beneficiaries through these bank accounts.

• Timeline: The first phase of PMJDY will focus on providing all households with banking facilities and will

be concluded by August 2015. The second phase (to be concluded by August 2018) will focus on:

o provision of accident cover,

o offering pension schemes for unorganised sector workers (like the Swavalamban scheme), and

o creation of a Credit Guarantee Fund for defaults in accounts availing the overdraft facility.

Analysis

• An important innovation is in extending need-based credit facilities to the new account holders upon

their fulfilling certain conditions.

• A smart card — the RuPay card — will be issued. Using this it should be possible for customers to

operate their accounts without any external help.

• This would be one of the most visible manifestations of technology as a tool to further inclusion, others

being money transfers through mobile telephones, e-KYCs and cash management by banks to extend

their services over such wide areas.

• Insurance companies will be asked to offer micro-finance packages including insurance.

Challenges

• Even if operational obstacles can be overcome, there is the important question of keeping the first-time

bank account holders engaged.

• Experience suggests that a high proportion of such accounts are hardly used after the initial enthusiasm

wears off.

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• The plan of inclusion, which is part of the Prime Minister’s vision of a Digital India, requires all-round

support. The government wants to use these accounts for routing cash transfers in lieu of subsidies for

essential commodities.

• Financial inclusion in that sense is therefore much more than extending banking services.

• Accompanied by an equally ambitious programme of spreading financial literacy, it can achieve many

important socio-economic objectives.

Plan for implementation

• In its first phase, the Jan-Dhan Yojana will provide universal access to all the beneficiaries through sub-

service areas (SSA), each of them consisting of 100-150 families in a cluster of villages.

• Each SSA will be serviced by a business correspondent, who is now being given a pivotal role in facilitating

account opening and ensuring smooth bank operations.

• Unlike in previous action plans, the Jan-Dhan Yojana will have as its focus households rather than

geographical areas.

• A smart card — the RuPay card — will be issued. Using this it should be possible for customers to operate

their accounts without any external help. This would be one of the most visible manifestations of

technology as a tool to further inclusion, others being money transfers through mobile telephones, e-KYCs

and cash management by banks to extend their services over such wide areas.

• Insurance companies will be asked to offer micro-finance packages including insurance.

Aadhar Not mandatory

• Aadhaar is not mandatory for opening the account under this scheme.

• A technical platform has been built by National Payment Corporation of India to connect all banks and

telephone network operators in the country. The platform is being built to enable customers to access their

accounts on any mobile handset.

MEASURE TO IMPROVE EASE OF DOING BUSINESS

• The eBiz project being implemented will create an investor centric hub-and-spoke based online single

window model for providing clearances and filing compliances, says DIPP.

• The government, said it had taken a series of steps to improve ease of doing business that included

o having a timeline for clearance of applications,

o de-licensing the manufacturing of many defence products and

o Introduction of e-Biz project for single window clearance.

• “The emphasis has been on simplification and rationalisation of the existing rules and introduction of

information technology to make governance more efficient, effective, simple and user-friendly,” the

Department of Industrial Policy and Promotion said.

• “This project will result in radical improvements in ease of doing business by reducing time, efforts and

costs taken in obtaining clearances and ensuring compliances. Integration with Central government

services is being done on highest priority,” the DIPP said.

• In order to improve the regulatory business environment, all departments and State governments have

been requested to take measures on a priority basis such as mandatory filing of all returns on-line

through a unified form;

• no inspection should be undertaken without the approval of the Head of the Department and for all

non-risk, non-hazardous businesses a system of self-certification should be introduced.

Online registration

• Besides, it has introduced online registration of employers with Employees’ Provident Fund Organisation

(EPFO) and the Employees State Insurance Corporation (ESIC). The government has also done away with

the requirement of affidavit from the applicants of the defence industry.

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• Further, a maximum timeline of 12 weeks has been finalised by the Ministry of Home Affairs for grant of

security clearance on industrial licence applications.

• Now partial commencement of production will be treated as commencement of production of all the

items included in the licence, a move which will facilitate the entrepreneurs from hardship of repeatedly

coming to the administrative ministries for extension of validity of industrial licence.

• The DIPP said the guidelines had been issued to streamline the processing of applications for grant of

extension of validity of industrial licence.

• “Defence products’ list for industrial licensing has been issued, wherein large number of

parts/components, castings/forgings and the like have been excluded from the purview of industrial

licensing,” it added.

COME – MAKE IN INDIA – AN ANALYSIS

• Prime Minister Narendra Modi, in his maiden Independence Day speech, articulated his vision of several

social and economic policy objectives of his government

• The Prime Minister must be commended for stating so clearly that domestic manufacturing will be the

core and central tenet of his foreign investment policy as that puts job creation or employment

generation at the top of the objectives in inviting foreign investment to the country.

Global manufacturing hub

This welcome emphasis in our foreign investment policy on efficient and competitive domestic manufacturing

will serve multiple objectives.

• First and foremost, it will enhance job opportunities within the country;

• Second, it will minimisze the imports of such products into the country, thereby mitigating the pressure

on our trade deficit;

• Third, in the long run, if not in the near-term, it will help augment and diversify our exports from the

manufacturing sector;

• Fourth, it will help in bringing latest technologies into the country and

• Lastly, such domestic manufacturing will help minimize some of the trade frictions we have with other

countries.

• The importance of domestic manufacturing with foreign investment in reducing trade frictions with

other countries is at present ignored or underestimated. As a corollary, the focus on world-class

domestic manufacturing may also be the best way to cope with globalisation and to maximise the

possible benefits from it.

• The size of our domestic market and the abundant availability of skilled and technical manpower at low

cost is a leverage that we need to put to use consciously to induce foreign investors to make India as a

manufacturing hub in their operations.

• If there is one lesson we can learn from the Chinese, it is how the size of the domestic market and the

availability of skilled and disciplined manpower could be put to effective use for the industrial and

technological development of the country with foreign investment.

Action required for translation policy into practice

• It is, however, in the translation of the policy into practice that co-ordinated action is needed on several

fronts.

• First, it is of paramount importance that the foreign investment, foreign trade and intellectual property

rights (IPR) policies are viewed in a holistic manner to ensure that they mutually reinforce each other in

achieving the policy objective of world-class domestic manufacturing.

• Second, with respect to the broad contours of the foreign investment policy, it needs to be remembered

that investment opportunities, as reflected by our large domestic market and low-cost skilled and

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unskilled manpower, may be a necessary, but not a sufficient condition, to induce foreign investors to

come to India with their capital and technology.

• The congeniality of the investment climate or environment, as reflected in the stability of the policies

and the rules as well as the conditions attached to the approval of the investments, is even more

important to assure foreign investors of fair and non-discriminatory treatment.

• The focus of our foreign investment policy should be on the positive aspects of what is produced in India,

with what kind of technology and skills, how efficiently and competitively it is produced, and whether it

is of world-class standards, and not on negative aspects such as ownership and control, enterprise-

specific performance requirements, or other conditions that interfere with the internal commercial

decisions of the enterprises.

Competitive environment

• The best way to ensure that foreign investment is of a high quality and yields value to the country is to

have a policy framework that requires it to operate in an unprotected, open and competitive

environment, and not behind high tariff walls or import restrictions, nor with the aid of subsidies or

other giveaways.

• Third, with respect to the contours of the foreign trade policy, it is by and large confined now to dealing

with exports and imports compartmentally — encouragement of exports with various kinds of subsidies

and prop-ups, and curtailment of imports by high tariffs and other so-called trade remedy measures like

anti-dumping or countervailing duties or other import restrictions.

• Encouragement of domestic manufacturing of world-class standards, either by domestic or foreign

investors or both, has not been a major objective of our foreign trade policy so far.

• Our foreign trade policy must recognise that encouragement of domestic manufacturing of world-class

standards, catering solely even to our own market, is a preferable alternative to protection and

subsidisation through high tariffs, trade remedy measures and financial giveaways.

• Rather, the policy must encourage freer imports of capital goods, industrial raw materials, components,

tools and devices, as well as technology-laden imports, with a view to upgrading the quality and

competitiveness of our domestic manufacturing.

• Fourth, the importance of the protection of intellectual property rights (IPRs) in the scheme of attracting

foreign investment and establishing high quality domestic manufacturing must not be overlooked.

Ensure IP protection

• IPRs do not consist only of pharmaceutical patents as is commonly understood in our country: they

include as well copyright (computer software in our country is protected by copyright), trademarks,

trade secrets, geographical indications, designs, trade secrets, business confidential information and

data, and the like.

• Even if our IPR policies do not have domestic manufacturing as a central objective, they need to be

implemented in such a way that they do not impede or deter technology-oriented domestic investments

from foreign investors. The protection of patents, trademarks, trade secrets, layout designs and the like

is crucial to these and other sectors where we want foreign investment of high quality with modern

technologies.

• Our intellectual property laws are largely in conformity with international standards as reflected in the

TRIPS Agreement of the WTO and other international conventions to which we have subscribed. Yet we

tend to create an impression around the world that we do not value intellectual property or respect its

adequate protection.

Address local woes

• One other aspect that does not fall within the ambit of the aforesaid policies, but which is crucial to

competitive domestic manufacturing needs to be touched upon here.

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• Among the major reasons for our domestic industry being competitively disadvantaged vis-a-vis the rest

of the world, two stand out prominently:

• first, the inadequacy and poor quality of our infrastructure, and second, the high cost of our capital.

• While protection and subsidisation is not the solution, this huge disadvantage faced by the domestic

industry requires to be addressed with priority and ways and means found to mitigate it.

Challenges

• It is too simplistic to assume that people are just waiting to come to India and set shop. India has skill,

abundant labour and, to top it all, English-speaking people.

• Yet, why has the country not seen FDI (foreign direct investment) gushing into it? Hurdles are aplenty for

an overseas investor ‘to make in India’.

• First of all, the country requires an ecosystem that fosters FDI. One Vodafone case is enough to make

oversees investors shy away. In any situation, the country’s interest needs to be protected. There are no

two views on that.

• The problem starts when rules framed after elaborate discussion are tweaked, and that too applied

retrospectively. FDI is possible if there is transparent law, and only if there is stability in rules. Again, it

requires the ability of the government to take the Opposition along.

• The tug-of-war over raising the FDI limit in insurance is a classic case, where limits of frustration —

bordering on exasperation — have already been tested.

• Let alone for overseas investors, making in India has become a pipedream even for Indian companies.

Land has escalated into a major piece of dissuading force for India Inc.

• The abortive foray by the Tatas to make Nano cars in West Bengal, the escalating tension over land

acquisition by SEZs (special economic zones) and the like have ensured that Corporate India thinks many

times over before venturing into any greenfield project.

• With land becoming such a ‘trouble spot’, how can anyone think of a large project? Land ownership —

like gold buying — is a touchy subject in the Indian context. And, the political leadership isn’t making

thing any easier with its opportunistic stand.

• After laws and land, labour is an important clog in the wheel. In an increasingly globalised economy, jobs

tend to move towards one direction, that is, where the labour is cheap.

• Many big names in the global corporate field have moved to countries such as China, India, Thailand et al

to cash in on the labour advantage these countries offer. If China could do, why can’t India? This

question has often been posed in many a discussion forum.

• With a command structure, China could offer a ‘friendly labour ecosystem’ to overseas investors.

• Being a democratic nation, India is differently positioned vis-à-vis the labour. Archaic labour laws have

proved a strong deterrent for any overseas company to set shop in India.

• Much of these have spawned inefficiency in the economy. From labour rights to human resource

management, the employer-employee relationship has acquired a new meaning and definition in the

context of a global village.

• For industry, in general — be it Indian or multinational — a smooth and friendly HR (human resource)

scene is a sine quo non for projects to come up and sustain. Here again, the subject of labour has often

acquired political underpinnings with varied stakeholders taking a narrow stand.

Retaining talent

• “Come, Make in India’’ offer presupposes quicker resolution to issues related to ‘Three Ls’ (laws, land

and labour).

• Microsoft, Google, Apple and others are what they are today because of no mean contributions by

Indians in those firms. You invite outsiders to ‘Make in India’ but insiders go out to ‘make world class

companies’.

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SOCIAL ISSUES

HEALTH

WHO APPROVES USE OF PROMOTIONAL DRUGS

• The World Health Organisation (WHO) has said that in the particular circumstances of the Ebola disease

outbreak and provided certain conditions are met, it is ethical to offer unproven interventions as potential

treatment or prevention.

• WHO has stated ethical criteria must guide the provision of such interventions. These include transparency

about all aspects of care, informed consent, freedom of choice, confidentiality, respect for the person,

preservation of dignity and involvement of the community, according to a statement.

ANALYSIS

• The factors that played a vital role in the WHO’s decision were the continued spread of the disease, about 55

per cent mortality rate and the lack of vaccines/drugs to prevent infection or treat the disease.

• Prior to the WHO clearance, there were three main reasons cited for not supplying the untested drug to dying

Africans.

• First, the level of medical care that is necessary to monitor for any serious adverse effects that might arise

after drug administration is currently not available in the four countries.

• The second reason was the inability of the U.S. to decide who the recipients of a limited supply of drugs

should be.

• The third was the backlash the drug company and the U.S. would face if the experimental drug first used on

Africans were to cause serious adverse effects.

• If many unethical human clinical trials, like the one carried out in 1996 in Nigeria by an American drug

company during a meningitis outbreak, seriously affected the prospects of conducting trials in Africa,

instances such as this only complicate it. So it remains to be seen how successful other Ebola drug treatment

trials would be.

WHO URGES CRACKDOWN ON E-CIGARETTES

• WHO has said that governments should have tougher rules for electronic cigarettes, banning their use

indoors and putting them off limits for minors until more evidence can be gathered about their risk.

• World Health Organization said the popular nicotine-vapour products, particularly the fruit, candy and

alcohol-drink flavours, could serve as gateway addictions for children and adolescents.

• A while earlier, the American Heart Association urged more regulation particularly to keep them out of the

hands of young people and said it supported the use of the battery—powered devices that vaporize nicotine

only as a last resort to help smokers quit.

EXPERIMENTAL VACCINE FOR CHIKANGUNIYA

• An experimental chikungunya vaccine has shown promising results in a small-scale trial carried out in humans

• In the trial, the vaccine was administered as three injections at different doses to 25 healthy volunteers. It

produced protective antibodies in those individuals and was found to be safe and well tolerated

• The vaccine appeared to generate durable immunity. Eleven months after vaccination, the antibody levels in

the volunteers were comparable to those reported after natural chikungunya virus infection, which have

been inferred to be protective.

HOW DOES THE VACCINE WORK?

• The vaccine is made by using human cells grown in culture to produce three proteins found on the surface of

the chikungunya virus.

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• These proteins then self-assemble to form 'virus-like particles,’ which are not infectious but can elicit a

protective immune response when given as an injection.

SOCIAL INCLUSION

ABSENCE OF A LAW TO PROTECT HIV INFECTED

• India still has no anti-discrimination law to protect the interests of HIV positive people

• As a result, discrimination against HIV positive people, including children, rears its ugly head time and again.

• The latest example is the case of 13 HIV positive orphans studying in a school in Rivona, Goa, being forced to

leave school because of pressure from parents of other students;

EARLY TESTING AND TREATMENT PREVENTED

• Stigma and discrimination have affected and gravely impeded the battle against HIV. Besides anxiety and

denial, the mortal fear of being stigmatised and discriminated against prevents many from seeking early

testing and treatment.

• As a result, they not only fail to get timely intervention but also go about infecting others. Only about half of

the 2.1 million people in India who are HIV positive are currently on antiretroviral treatment

• Also, the fact that young children are infected with the virus turns the spotlight on our failing to eliminate

transmission from pregnant mother to child. Preventing vertical transmission is one of the easiest ways to cut

the incidence rate.

FAILURE ON ACCOUNT OF STATE

• This incident amply demonstrates that the state has failed to raise awareness and dispel the myths and

misconceptions about the routes of HIV transmission.

DIFFRENTIAL TREATMENT FOR DIFFERENT INFECTIONS

• Refusal of school admission and expulsion from school are but only the beginning of a long journey of

discrimination and negative social response that HIV positive people encounter.

• Eviction of HIV positive tenants from houses, refusal to employ such people and even ostracism from villages

are not uncommon

• But most alarming is the refusal by most private hospitals to admit HIV positive people, and the fear among

many doctors and paramedics to treat them.

• In stark contrast, doctors have no hesitation in treating those with hepatitis B and C, which are much more

easily transmissible than HIV by the same routes.

• Hence, the compulsion to broad-base the Health Minister’s initiative to “mainstream AIDS awareness to

reduce HIV infection rate” to also address the issue of discrimination cannot be overemphasized

NEED FOR A DEMOGRAPHIC POLICY IN THE COUNTRY

• The Census data released recently show that unemployment in the country, especially among the youth, is

very high, averaging nearly 20 per cent for the age group of 15-24 years.

• In some States like Chhattisgarh, Madhya Pradesh, West Bengal, Rajasthan, Himachal Pradesh and Jammu

and Kashmir, the unemployment rate is above 25 per cent.

• Prosperous States like Punjab, Haryana, Gujarat and Maharashtra have averages that are less than half of the

national average.

• Demographic dividend in the country is not being appropriately used and there is a need to revisit the

demographic policy so as to tap benefits from the youth.

OTHER REASONS FOR HAVING A DEMOGRAPHIC POLICY IN PLACE

• There is also a larger issue of devising a demographic policy to separately meet the requirements of the

young, middle-aged and older segment of the population

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• The reason for unemployment could be the lack of employment because of the quality of education or lack of

opportunities

• India already has a strong outflow of migrants of which two-thirds migrate to the Gulf countries, 13 per cent

migrate to North America while Asian countries, other than Persian Gulf, absorb about 10 percent.

• In contrast, fast-ageing Europe attracts less than 3 per cent of migrants but offers excellent opportunities for

high and medium-skilled labour, especially in Italy, Germany, Poland and France. These opportunities need to

be availed of the near future by appropriate manpower planning.

• In recent years, migration to countries like Spain, Switzerland, Italy and the U.K. has increased but not in

significant numbers to Germany, France and Poland.

• These countries need immigrants as the native population in many of these countries is shrinking

NEED TO PROVIDE SUITABLE SKILLS

• In view of the fact that Indians migrate to the West in large numbers, the need is to ensure that they are

suitably skilled.

• To equip the unskilled and the illiterate with suitable skills, cooperation from countries which are seeking

immigrants can be sought.

• The Ministry of Overseas Indian Affairs can explore guided migration agreements, bilateral with each of the

countries in Europe and multilateral with the Euro area to educate and prepare migrants for the destination

countries.

FOCUSING ON THE ELDERLY IN THE POPULATION

• There is one silent segment of the population, the elderly, which gets neglected in most of the policies of the

government. There are more than 11 crore elderly people in India who are above the age of 60 years —

generally women — who are in urgent need of care, as nearly 90 per cent of them who are associated with

the unorganised sector are not included in any sustainable social security programme.

• While some three crore elderly people who are under the ‘below poverty line’ category get about Rs. 500 as

old age pension, the remaining eight crore have to fend for themselves.

• In view of the weak and inadequate public healthcare system, they have limited access to medical services,

many research studies have discovered.

• In contrast to many countries in Europe where age-related expenditure on health and care is 8-10 per cent of

GDP, it is less than 1 per cent in India.

• Some simple initiatives to help the elderly could include granting respectable amounts of universal pension

and universal insurance to help them live with dignity. The universal pension could increase with age,

especially for women.

MAHARASHTRA FORMS BOARD FOR TRANSGENDER WELFARE

• Only two States have announced formation of a welfare Board for trans genders or made any commitment to

providing them benefits on the basis of recommendations of an expert committee.

• After Tamil Nadu, Maharashtra has become the second State to announce formation of the Board

• Maharashtra was the first State to have a complete study done on the community and announce welfare

schemes recommended by the Supreme Court.

COURT JUDGMENT

• The Supreme Court, in a judgment on April 15, said that recognising the third gender would help transgender

people enjoy human rights, which they were largely deprived of.

• The court said the committee’s recommendations could be examined based on a legal declaration made in its

judgment and implemented within six months.

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WOMEN RELATED

MAHILA BANK TO HAVE 25% PRESENCE IN RURAL AREAS

• Bharatiya Mahila Bank (BMB) is looking to cross 80 branches across the country this year with new ones in

Kochi, Dholpur and other places.

• Additionally, the Bank wants to have a 25% presence in the rural areas

MORE ABOUT BMB

• The Bank is slowly emerging as a chief option for women to get credit on easier terms than commercial

banks.

• It lends money to women who set up small businesses, beauty parlours, day care centres and home-based

initiatives and customers get up to Rs. 1 crore without a credit guarantee.

• They only have to take an insurance policy under the government’s Credit Guarantee Fund Trust Scheme and

pay an annual premium.

• Lending to self-help groups is a major chunk of its micro financing and among others it is helping women buy

sewing machines and cycle rickshaws in Lucknow, a self-help group of Muslim women who do a daily business

of selling omelettes and bread near R.K. Puram in the capital and a chapatti-making business.

• Some big ticket enterprises are also its clients.

• It has a modest Rs. 5 crore budget for advertising and the bank relies on mobilisation camps and word of

mouth to attract customers

• The bank gives ATM cards and since 90 per cent of the customers have mobile phones, phone banking is also

an option.

MARRIAGE DRIVING URBAN WOMEN OUT OF JOBS

• As per date from NSSO, in a country with globally low levels of female workforce participation (women either

working or looking for work), urban areas have lower still numbers.

• Now new research shows that one of the key factors associated with low participation for women in urban

areas is marriage.

• As per the research, being married was strongly associated with not being in the workforce in urban areas.

• While the birth of a child is usually associated with women dropping out of the workforce in the West, in

India marriage is one of the most important factors

• This may reflect a tendency for married women to take on a traditional domestic role that often includes

economic activities that are not considered to be employment based on the [NSSO] definition.

• Urban women with a primary or secondary education were also less likely to be in the workforce than women

at the two ends of the education spectrum - illiterate women and those with a tertiary education.

• Other research has found that women in urban areas with tertiary education participate in the labour market

because they are able to find appealing employment and earnings opportunities while women with less

education participate because of economic difficulties

• Such social norms – like those associated with marriage, child care and domestic responsibilities – have

relegated women into slow-growing areas of the economy like agriculture, teaching and crafts.

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INDIA AND WORLD

ISSUE OF WTO AND TRADE FACILITATION AGREEMENT

Trade Facilitation Agreement not adopted by WTO members

The World Trade Organisation (WTO) held the meeting of the General Council in Geneva from July 24 to July 31,

2014. At the meeting, India did not support the adoption of the Protocol of Amendment for the Trade

Facilitation Agreement (TFA). It held that the adoption of the protocol must be postponed until a permanent

solution on food security is reached, since they are both part of the Bali decisions from December 2013

The General Council could not find a solution and was declared closed on July 31, 2014 without adopting the TFA

protocol.

Background: The Ninth WTO Ministerial Conference, held in Bali in December 2013, issued one declaration and

ten decisions.

The two decisions of importance to India are the decisions on trade facilitation and public stockholding.

• The Trade Facilitation Agreement (TFA), endorsed by India at Bali, aims at greater transparency and

simplification of customs procedure. The TFA was to be added to the WTO Agreement via a Protocol of

Amendment. The protocol had to be adopted by the WTO General Council before July 31, 2014, after

which, it had to be ratified by two-thirds of the member countries by Jul 31, 2015, for it to enter into

force.

• Public stockholding programmes are deemed as support to farmers if the food procured for the purpose

of such a programme is done at supported prices, and not at market prices. WTO limits the support that

governments can provide farmers to 10% of the value of production of the food in question. An interim

solution was agreed upon in which developing members, like India, are protected from being challenged

in WTO on grounds of exceeding their limit. A permanent solution had to be reached by the 11Th

Ministerial Conference in 2017

Analysis

Last December at the World Trade Organization meeting in Bali, the Indian government—then run by the UPA—

agreed to sign the Trade Facilitation Agreement (TFA), which was being hailed as a landmark in trade reforms.

But the new NDA government has, surprisingly, backtracked from that commitment. As a result, the TFA has now

missed its planned deadline of 31 July 2014.

Background

• The TFA aims to facilitate smoother international trade by simplifying customs processes and making

them uniform for all 160 WTO member nations.

• It includes a wide range of provisions for expediting the movement, release and clearance of goods by

ensuring that customs authorities and other related authorities of member nations will employ very

similar forms and procedures.

• It also contains provisions that allow for special treatment for developing and least-developed countries,

aimed at helping them implement the agreement.

• If customs processes are unified and simplified, there could be huge benefits for the world economy—

estimates suggest that it could enable the creation of an additional $1 trillion in global GDP and create

21 million new jobs across the world. This would be a boost of over 1 percent to the global GDP simply

via the reduction of red tape.

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India’s refusal to sign on the dotted line has, therefore, caused alarm and disappointment. In the seven months

since Bali, quite a few countries have already started to make their customs procedures TFA compliant.

Reason for India’s Stand

• The reason for the change in policy is that the Indian government now wants a fast, favourable

reworking of the WTO rules on agricultural subsidies before it signs the TFA.

• India’s vast and expanding food procurement and distribution programme may well be in violation of the

current statutes.

• It is using the TFA as a bargaining tool in demanding a review of the WTO food subsidy norms, though

these are, in fact, not directly linked to the TFA.

The subject of food subsidies was also on the agenda at Bali—in fact, India had negotiated what seemed like a

major concession there.

• The WTO agreed to review the current policy and to make changes by 2017. Until then, India could

continue with its current methods of stockpiling and distributing food.

• The four-year timeline seemed ample for the Indian government to make any necessary changes and

also to persuade the WTO to rewrite its statutes in a favourable way.

• Nevertheless, the government chose to halt TFA negotiations till its demands on subsidies were met.

India’s domestic food commitment

India’s stand on subsidies is linked to its commitments both to procure food at high prices from farmers, as well

as to distribute food at low prices. In 2013, India passed the National Food Security Act.

• The NFSA entitles 820 million people (67 percent of the population) to receive rice, wheat and millet at

highly subsidised prices. (The public distribution system, or PDS, served 320 million people prior to the

NFSA.)

• Each eligible individual can buy 5 kg of rice, wheat and millet per month at prices between Rs 1 and Rs 3

per kg.

• The government buys those commodities from farmers at far higher prices and bears the costs of

stockpiling and distribution. In 2013, the total cost to the government of buying, storing and distributing

rice and wheat was about Rs 18 per kg.

• The total food subsidy in 2012–2013 (prior to the NFSA) was about Rs 101,000 crore. This rose to about

Rs 125,000 crore in the 2013–2014 budget. The cost is estimated to increase to Rs 140,192 crore and Rs

157,701 crore in the 2014–2015 budget and the 2015–2016 budget, respectively.

• Actually, the costs could become a lot higher, since the public distribution infrastructure has to be

refurbished. More warehousing capacity and transportation is required.

• Selling prices are fixed under the act as it stands and cannot be adjusted upwards. Factoring in inflation

as well, future subsidies could balloon further.

Problem

• It is here, with the procurement system and the pricing formulae, that India runs into a problem. Current

WTO rules allow governments to buy food directly from farmers at a price that is no more than 10

percent above the “total cost of production.”

• There is no way to keep the domestic commitments of the NFSA and give farmers 50 percent profits,

without exceeding the WTO’s 10 percent limit.

• India has pointed out that some technical details of the WTO trade rules, such as the method of cost

calculation, need review.

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• Agricultural commodity prices can be very volatile. The WTO uses a method that is designed to average

out fluctuations while adjusting for inflation. The base period for WTO cost calculation is 1986–1988. The

average prices of those three years are adjusted by a standard index to calculate the current rates.

• In theory, this should give a stable, inflation-adjusted, averaged set of current prices. Unfortunately,

inflation adjustment measures don’t work well in practice over such long periods.

• Even more unfortunately, India has experienced massive food inflation in the last three years. So the

1986–1988 base period formula seriously underestimates the current cost.

• Thus, not only is the 10 percent margin over cost much lower than India would like, the cost itself as

calculated by the WTO formula is much lower than the costs in real terms.

There are ways around WTO regulations. Other countries, including the United States, Japan, France and

Germany, have found alternative methods of giving farm subsidies, such as offering farmers better agriculture

infrastructure—or giving them zero-interest loans to create better infrastructure—to reduce costs. They can also

be offered power, fertilisers and other resources at reduced costs, as indeed, the Indian government does,

without breaching WTO regulations.

But currently, the Indian government also holds and distributes vast amounts of food at throwaway prices. There

are very real fears that this will create distortions in food prices—the sort of distortion that the WTO

regulations try to prevent.

• India is one of the world’s biggest producers of rice and wheat—in 2013, its reserves of rice and wheat

were more than double the government’s buffer requirements. India is also one of the biggest exporters

of these crops.

• The availability of large surplus stockpiles and low domestic prices make it quite likely that India could

flood world markets with artificially cheap rice and wheat. This would hurt farmers elsewhere, and it

would mean that the Indian government was offering subsidised food to the rest of the world.

As it happens, India’s stance in insisting that food regulations be sorted out before TFA is signed has found very

little support. Cuba, Bolivia and Venezuela—three left-wing Latin American regimes that also have local food

procurement programmes—appear to be the only countries backing India on this with any commitment.

WAY FORWARD

There are several ways in which a permanent solution could be found to the food subsidy issue. Some of these

were suggested before the Bali agreement was thrashed out. For example, the WTO could:

i) keep the subsidy paid to poor farmers for procurement of food items within the NFSA outside the

ambit of the WTO formula;

ii) change the base for subsidy calculation from 1986–1988 to current periods;

iii) realistically index 1986–88 prices to current levels; or

iv) insert a “peace clause” so that there is no challenge at the WTO even if the 10 percent limit is

breached.

• But none of these have been adopted, because it was decided at Bali to review the issue at leisure.

India’s stance will now lead to an accelerated schedule of review, and presumably these options and

others will be discussed in detail.

• The WTO takes a one-month break in August. If a solution is found after that, the TFA could be signed in

September. Some pragmatic observers believe that a deal will be found by December in any event.

• Other WTO members have already started talking about bilateral trade agreements or the creation of

trade zones—India risks being left out of such arrangements if the TFA founders.

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CONCLUDING REMARKS

• But by using the TFA as a bargaining counter, the government runs the risk of penalising entrepreneurs,

even as it might gain some brownie points with the farm lobby.

• Seen in purely economic terms, while agriculture contributes about 17 percent to India’s GDP, about 42

percent of India’s GDP is generated by overseas trade.

• The Organisation for Economic Cooperation and Development estimates that, for countries like India,

the TFA could help reduce international trade costs by 14.5 percent, which would inevitably lead to

growth in trade, and the generation of jobs.

This is a political gamble the government seems prepared to make. But its measures to safeguard the interests of

farmers will remain compromised as long as India’s PDS is as wasteful and leaky as it is at present.

In 2013, the PDS had around 40 percent leakage, according to Ashok Gulati, who was then the Chairman of the

Commission for Agriculture Costs & Prices. While government subsidies already artificially lower prices, and

present a concern for international trade, these leaks exacerbate the situation even further.

In this respect, the government doesn’t have as high a moral high ground as it seeks when it talks of providing

food to the undernourished as well as ensuring decent profits to farmers. If it has to go beyond political

showmanship, it has to fix the PDS, whatever else it may say or do.

INDIA-CHINA

CHINA INAUGURATES NEW TIBET RAIL LINK NEAR SIKKIM BORDER

• Constructed at a cost of $ 2.16 billion, the railway line stretched over 253 km and connects Tibet’s provincial

capital Lhasa with Xigaze, the second-largest city in Tibet and also the traditional seat of the pro-Beijing

Panchen Lama – considered second important Monk in Tibetan hierarchy.

• • The line is the second railway line in Tibet and an extension of the Qinghai-Tibet railway, the world’s highest

rail link connecting China’s mainland with Tibet. The rail link will make efficient mobility of its military in the

remote and strategic Himalayan region. It cuts the travel time between Lhasa and Xigaze from the current 4

hours by road to around 2 hours.

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• • Tibet is a highly sensitive region, not just because of continued local opposition to Chinese authority and

control, but because of its strategic position next to neighbors India, Nepal and Myanmar. The rail link close

to the Indian border in Sikkim is also near China’s border with Nepal and Bhutan.

CHINA’S OTHER RAIL LINKS CLOSE TO INDIA

• China plans to build a new important railway line in Tibet close to Arunachal Pradesh, which Chinese analysts

say could act as a “bargaining chip” during the border negotiations with India. China is expected to start the

construction of railway line linking Lhasa to Nyingchi in the east. Nyingchi is located near Arunachal Pradesh,

the closest area to the border. The railway expansion will link Nepal, Bhutan and India by 2020.

• China will construct a railway linking Xigaze with Gyirong County near Nepal under its five year plan ending

2020. Gyirong county has a checkpoint connecting Nepal and Yatung county, close to Indian border near

Sikkim and Bhutan, a trade centre bordering India and Bhutan.

• The rail lines are part of China’s mission to build infrastructure on a large-scale in Tibet by 2020, indenting

for 1,300 km of railway tracks, 1,10,000 km of roadways and several airports, with an investment of more

than $13 billion in the last two decades.

‘DALAI LAMA IN TALKS TO RETURN’

• China’s government in Tibet claims that the Dalai Lama is in talks with Beijing through “personal envoys”, but

the talks are only about the possibility of his return to Tibet and not about Tibet. Many Tibetan leaders had

chosen to return.

• China’s stand:

• As per China, all Tibetans, including the Dalai Lama and the people around him, can return if they accept

Tibet and Taiwan as part of China, and give up ‘splittist’ efforts. Political talks with envoys from Dharamsala

had broken down after nine rounds in 2010, as Dalai Lama had demanded that China withdraw its army from

Tibet.

• China also rejected the proposal by the Prime Minister of the self-styled “Tibetan government in exile”,

Lobsang Sangay, for a larger region to be included in the Tibetan Autonomous Region.

CHINA GENERAL VISITED DISPUTED REGION

• This is the most high-profile visit by a top Chinese leader to the region in many years. General Xu Qiliang,

who is one of two Vice-Chairmen of the Central Military Commission (CMC) headed by President Xi Jinping —

the highest-ranking position in the Chinese Army — made the visit last month to inspect frontier troops in

Xinjiang and Tibet, including in the Aksai Chin region claimed by India, including stops to inspect troops at

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two sites that have been at the centre of recent differences over incursion incidents — near the Karakoram

Pass and the contested Pangong Tso lake.

• Significantly, General Xu also visited a frontier defence company which, sources said, may have been linked

with the three week-long stand-off between Indian and Chinese troops in Depsang, in eastern Ladakh, in

April last year. The stand-off strained bilateral ties ahead of Chinese Premier Li Keqiang’s visit to India last

year and, later, prompted both countries to fortify border cooperation mechanisms and increase the number

of border personnel meeting points along the disputed Line of Actual Control (LAC). Chinese officials have

rejected claims of incursions, pointing out that there were differing perceptions of claim lines.

CHINA WANTS INDIA TO PLAY KEY ROLE IN ‘SILK ROAD’ PLAN

• The masterplan envisages renewing the old Silk Road linkages connecting China to South Asia, Central Asia

and Europe, would be unveiled in two or three months. The plan is expected to emphasise infrastructure

projects aimed at boosting regional connectivity, as well as a range of initiatives such as maritime

connectivity and ecological cooperation. Priority will be given to establishing Special Economic Zones and

industrial parks in the areas connected by the silk road.

• Beijing envisages an economic corridor linking its south-western Yunnan province through Myanmar to

Kolkata as a key segment of a land-based “Silk Road economic belt”, and is also planning to boost ties with

port cities, such as Chennai, through a “Maritime Silk Road” starting out from south-eastern Fujian province

and linking littoral countries in the region.

• Chinese President Xi Jinping first announced the economic belt on a visit to Kazakhstan in September 2013,

and unveiled the Maritime Silk Road plan when visiting Southeast Asia in October.

• More than 2,000 years ago, India, through the passage of the southern Silk Road had very good exchanges

with ancient China. The proposed Bangladesh-China-India-Myanmar (BCIM) from Kunming to Kolkata will

play “a key role” in the economic belt. The first working group meeting of BCIM countries was held in

Kunming in December 2013, with a second to be held this October in Bangladesh.

• On funding infrastructure projects that will form the backbone of the plan, China expects the newly-formed

BRICS New Development Bank idea to play a role. The proposed Asian Infrastructure Investment Bank plan

suggested by China would also support the effort.

INDIA-NEPAL

MODI’S VISIT TO NEPAL

He is the first Indian Prime Minister to pay a bilateral visit to Nepal in 17 years and for the first time a guest has

been invited to address a joint session of the Constituent Assembly and Parliament in Kathmandu.

• In the presence of the two Prime Ministers, the officials signed three memorandum of understanding (MoU):

o tourism development in Nepal,

o Goitre Control Programme in Nepal: India will provide a grant assistance worth NRs 69 million to

supply iodated salt to curb goitre and other diseases related with iodine deficiency.

o co-operation between the state-controlled television channels – Doordarshan and Nepal

Television (NTV).

• They also exchanged terms of reference (ToR) on Pancheshwar Development Authority. Mr. Modi assured

that the work on Pancheshwar Multipurpose Project would begin in a year. After years of negotiations, work

on this joint venture project has not begun. Nepal could prosper by selling electricity to India.

• Mr. Modi also promised to help Nepal in the field of hydropower, infrastructure, space technology and

agriculture.

• India offers $1-bn package for Nepal’s infrastructure development.

• One of the big announcements during Mr. Modi’s visit was the decision to update the 1950 India-Nepal

Peace and Friendship Treaty.

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PASHUPATHINATH TEMPLE

• Prime Minister Narendra Modi performed a special prayer at the 5th century Pashupatinath temple during

his two-day visit to Nepal.

� The temple is situated on the banks of river Bagmati on the outskirts of Kathmandu.

� The temple, listed in UNESCO World Heritage Sites, is one of the most significant Hindu temples of

Shiva, called Pashupati (Lord of Animals) in the world.

� There is a tradition of keeping four priests and one chief priest at the temple from among the

Brahmins of south India for centuries.

• As per Hindu calendar, Mondays of the month of Shrawan are considered auspicious, when around 300,000

people from Nepal and India visit the temple.

DISAPPOINTMENTS

• One of the big disappointments during Mr. Modi’s visit has been the failure to sign the Power Trade

Agreement and the Project Development Agreement, both of which were to serve as a template for

expediting development and energy cooperation between India and Nepal. However, during the Prime

Minister’s meeting with his Nepalese counterpart Sushil Koirala, both sides agreed to sign those agreements

within 45 days.

• Upper Karnali hydropower project: Investment Board Nepal (Nepal government) was to sign the much-

delayed project development agreement (PDA) for the 900MW Upper Karnali hydropower project with the

Indian multinational, GMR, during Prime Minister Narendra Modi’s visit. Investment Board Nepal is a

government body mandated to handle mega projects in the country.

• PM Koirala has asked the Communist Party of Nepal-Unified Marxist Leninist, i.e. (CPN) UML and the main

Opposition, the Unified Communist Party of Nepal (Maoist) to get the decision endorsed by their parties.

• Major opposition to the PDA agreement from the hardline Mohan Baidya-led CPN-Maoist. In public, even

Prachanda and his other party colleagues have asked the government to go slow with any power-related

agreement with India. However, Madhes-based parties have urged Mr. Koirala to sign the PDA with GMR,

sign a power trade agreement and enter into other agreements with India, including completing the postal

highway through Madhes.

DEEPENING ENERGY LINKS

• India has decided to beef up Nepal’s energy security by agreeing to establish a two-phased products

pipeline, which will eventually carry petroleum products from Raxaul in Bihar to Kathmandu to fuel power

plants in Nepal. The initiative dovetails with New Delhi’s decision to forge closer energy linkages with the

eight countries of the South Asian Association for Regional Cooperation (SAARC). India has already decided

to build a pipeline channelling diesel and kerosene to Pakistan from its refinery in Bhatinda.

• The decision implements a 2006 proposal, which was not enforced mainly because Nepal Oil Corp (NOC)

failed to share the cost of the 41-km-long pipeline with the Indian Oil Corporation.

• In the first phase, the products pipeline would be built from Raxaul to Amlekhgunj in Nepal, said a joint

statement that was issued at the end of Prime Minister Narendra Modi’s visit to Nepal. The petroleum

pipeline will be extended to Nepal’s capital in the second phase.

INDIA-SRI LANKA

SRI LANKA APOLOGISES OVER ARTICLE ON JAYALALITHAA

• Sri Lankan Defence Ministry says that the article was published without appropriate authorisation. The

article was published on the Defence Ministry website, accompanied by a graphic representation of Mr.

Modi and Ms. Jayalalithaa. It was critical of Tamil Nadu fishermen and of the claims made by Tamil Nadu to

Kachchatheevu. The writer was Shenali D. Waduge, a regular columnist with the state-run Daily News in

Colombo.

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TNA SEEKS INDIA’S HELP

• Tamil National Alliance (TNA) is an amalgam of Tamil political parties currently in power in Sri Lanka’s Tamil-

majority Northern Province. A five-member delegation led by TNA leader and senior politician R.

Sampanthan met Mr. Modi. The TNA, which swept the historic Northern Provincial polls in September last

year, has since been urging Colombo to devolve more powers to the provinces, as per the 13th Amendment

to Sri Lanka’s Constitution, which followed the Indo-Sri Lanka accord of 1987. TNA alleges that much of the

power remained with the Governor of the Province, appointed by the President. Mr. Rajapaksa, at a recent

press conference with foreign media, categorically said that his government would not part with police

powers.

• The TNA drew the attention of Mr. Modi to the Army’s alleged land-grabbing in the north, heavy

militarisation of the Northern Province and safety of women. During the country’s civil war that spanned

nearly three decades, several thousand Tamils went to India seeking refuge and have since been there.

There are over one lakh refugees in Tamil Nadu living in 115 camps. TNA requested the Indian government

to pressure the Sri Lankan government to release the refugees’ land in the north which has been taken over

by the Army.

• India has been advocating early resumption of talks between the Sri Lankan government and the TNA. While

the Sri Lankan government points to the TNA’s unwillingness to be part of the Parliamentary Select

Committee (PSC) it had set up for the purpose, the TNA appears to have little hope in the PSC, whose

members are constituents of the ruling coalition.

• Mr. Modi urged all stakeholders in Sri Lanka to engage constructively, in a spirit of partnership and mutual

accommodation, towards finding a political solution that builds upon the 13th Amendment of the Sri Lankan

Constitution.

• Prime Minister assured the TNA delegation of India’s continuing support for relief, rehabilitation and

reconstruction works in Northern and Eastern Sri Lanka, particularly in projects relating to housing,

livelihood generation, capacity building, education, hospitals and infrastructure.

INDIA-PAKISTAN

TALKS OFF THE TABLE

• India called off the talks between Foreign Secretaries of the two countries scheduled to be held in Islamabad

on August 25, telling Pakistan bluntly to choose between an Indo-Pak dialogue or hobnobbing with the

separatists. India cancelled the talks, raising strong objections to consultations held with separatist Hurriyat

leaders by Pakistan High Commissioner Abdul Basit.

• Pakistan described the cancellation of the talks as a “setback” to Indo-Pak ties and defended its

consultations with Kashmiri separatists, saying it was a “long-standing practice” to hold such meetings prior

to bilateral parleys.

PAKISTAN, INDIA HOLD INDUS WATER TALKS

• Pakistan has expressed serious concerns over construction and design of Kishanganga Dam, and termed it a

clear violation by India of the Indus Waters Treaty (IWT). Pakistan thinks that it may reduce the required

water discharges to Pakistan. Four other proposed dams by India on the Chenab are also contested by

Pakistan as being in violation of the treaty. Pakistan has also raised objections to the diversion of Chenab

water by India by constructing hydropower projects.

INDIA-BANGLADESH

GENERAL (RETD) V.K. SINGH’S VISIT

• Bangladesh Prime Minister Sheikh Hasina has urged India to sign the Teesta water sharing treaty and

implement the Land Boundary Agreement “as soon as possible.”

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• The Prime Minister had requested India to give Bangladesh transit to Nepal and Bhutan through Indian soil.

General (retd) V.K. Singh said India would act positively in this regard, adding that a rail line should be built

connecting Bangladesh with Nepal and Bhutan. He expressed gratitude to Bangladesh for allowing the use of

the Ashuganj river port for transporting rice to Tripura. He said the government of India would soon

construct an 11-km road from Akhaura to Agartala for goods transportation.

• General (retd) Vijay Kumar Singh is the State Minister for External Affairs and Minister of State (independent

charge) for North East Region of India.

ULFA LEADER WANTS TO COME BACK TO INDIA

• Assam separatist leader Anup Chetia (United Liberation Front of Asom’s leader), who has been in

Bangladesh’s custody since 1997, wishes to be repatriated. India has repeatedly sought Chetia back so that

he can join the peace process.

• The repatriation of Chetia, who is wanted in India for crimes such as murder and abductions, is possible as

India and Bangladesh signed an extradition treaty on January 28, 2013.

• Chetia was arrested in Dhaka in 1997, and tried for trespassing into Bangladesh and possession of forged

Bangladesh passports, foreign currency and a satellite phone. A Dhaka court sentenced him to three, four

and seven years in jail. His prison term ended on February 25, 2007.

INDIA-VIETNAM

SUSHMA'S VIETNAM VISIT

• To give a fillip to India’s bilateral ties with Vietnam and in keeping with Prime Minister Narendra Modi’s Look

East policy, External Affairs Minister Sushma Swaraj visited Vietnam. Swaraj's trip took place just days ahead

of President Pranab Mukherjee's state visit to Vietnam.

• Both the countries also have fairly robust economic ties and the bilateral trade stands at USD 8 billion, of

which Indian exports to the country is about USD 5.4 billion.

• India has for techno-commercial reasons decided to extend the exploration of the oil blocks allotted to it in

the South China Sea for a further period of one year. The exploration was initially scheduled for two years,

starting 2012, but Indian oil companies have called for extending the work for another one year.

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WORLD AFFAIRS

EBOLA OUTBREAK IN WEST AFRICA

• Ebola outbreak since it first emerged in March in the remote tropical forests of Guinea. It is the largest

recorded outbreak of Ebola in history, and has prompted fears the disease could spread beyond Africa’s

borders. Fears grew as the United States warned against travel to the three infected countries Guinea, Sierra

Leone, Liberia, Nigeria etc.

SYMPTOMS

• The symptoms of the disease include fever, headache, fatigue, vomiting and diarrhoea, stomach ache, joint

pain and bleeding.

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•

HOW IT SPREADS?

• Ebola is not easily transmitted. Direct physical contact with bodily fluids (blood, sweat, semen, vomit, urine

and saliva) is needed for Ebola to spread. People who live with or care for patients are most at risk. However,

new cases are mounting in part because sick people are refusing to go to isolation centres in the affected

countries. Ignorance and poverty, as well as entrenched religious and cultural practices, continue to

exacerbate the spread of the disease. Moreover, these countries are pretty poor and don’t have a strong

public health infrastructure.

CURE

• There is currently no licensed drug or vaccine for Ebola, and patients can only be given supportive care to

keep them hydrated. There are a handful of experimental drug and vaccine candidates for Ebola and while

some have had promising results in animals including monkeys, none has been rigorously tested in humans.

The fatality rate has been about 60 percent.

EXPERIMENTAL TREATMENT

• It involves giving a survivor’s blood to a patient. It might be aimed at seeing whether any antibodies the

survivor made to the virus could help someone else fight off the infection. This approach has been tried in

previous Ebola outbreaks with mixed results. ZMapp drug made by Mapp Biopharmaceutical Inc. of San

Diego is being used to treat Ebola. It has never been tested in humans. An early version worked in some

monkeys infected with Ebola. It’s aimed at boosting the immune system’s efforts to fight off Ebola. The drug

is a mixture of three antibodies engineered to recognize Ebola and bind to infected cells so the immune

system can kill them.

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•

RESPONSE PLAN

• The World Health Organisation is launching a new joint $100 million new response plan to the outbreak. It

includes deploying hundreds more health workers to Sierra Leone, Liberia and Guinea. According to WHO,

Ebola is moving faster than the efforts to control the disease. Sierra Leone is now sending teams door-to-

door in search of Ebola patients and others who have been exposed to the disease.

• Meanwhile, other countries are taking precautions to prevent the spread. The African Union mission in

Somalia cancelled a planned troop rotation by Sierra Leone forces in an effort to prevent Ebola from crossing

into the Horn of Africa country. Seychelles withdrew from the African Cup rather than allow Sierra Leone’s

soccer team to travel to the Indian Ocean island.

• Liberia’s President has declared a state of emergency in the West African nation amid an Ebola outbreak that

shows no signs of slowing.

WHO DECLARES EBOLA AN INTERNATIONAL HEALTH EMERGENCY

• WHO declared similar emergencies for the swine flu pandemic in 2009 and for polio in May.

The WHO declared it is ethical to use untested drugs and vaccines in the ongoing Ebola outbreak in West

Africa, although the tiny supply of one experimental treatment has been depleted and it could be many

months until more is available. ZMapp is made in tobacco plants, and U.S. officials have estimated that only

a modest amount could be produced in two or three months, unless some way to speed up production is

found.

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•

GROWING UNREST SETS BACK LIBERIA'S EBOLA FIGHT

• 17 people, in Monrovia’s West Point slum area, fled an Ebola medical centre over the weekend when it was

attacked by looters who stole blood-stained sheets and mattresses that could spread the infection and took

them into an enormous slum. The raid was triggered by fears that people with the disease were being

brought there from all over the country. Authorities have struggled to treat and isolate the sick, in part

because of widespread fear that treatment centres are places where people go to die. Many sick people

have hidden in their homes, relatives have sometimes taken their loved ones away from health centres, and

mobs have occasionally attacked health workers.

ISRAEL-PALESTINE

CAUSE OF THE GAZA WAR

• The Gaza war grew out of the killing of three Israeli teens in the West Bank in June. Israel blamed the killings

on Hamas and launched a massive arrest campaign, rounding up hundreds of the group’s members in the

West Bank, as Hamas and other militants unleashed rocket fire from Gaza. In recent years, Hamas has built a

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network of attack tunnels under the border with Gaza that Israel says its forces largely demolished during

the Gaza war.

SERIES OF CEASEFIRES AND THEIR VIOLATIONS:

• Multiple humanitarian ceasefires have been announced since the conflict began, but each has been broken

within a few hours by renewed fighting. U.S. President, Obama as well as the Secretary of State, John Kerry,

have been seeking a ceasefire.

• Three-day ceasefire that was to take effect on August 1st was broken in 3 hours. Israel bombarded the

southern Gaza town of Rafah as troops searched for 2nd Lt. Hadar Goldin, an officer they believe was

captured by Hamas in an ambush. However, a day later it was found that he was killed in the battle.

• Israel has gone to great lengths in the past to get back its captured soldiers. In 2011, it traded hundreds of

Palestinian prisoners for an Israeli soldier who had been captured by Hamas and other militants five years

earlier. The capture of two soldiers in a cross-border operation by Lebanon’s Hezbollah in 2006 sparked a 34-

day war between the Iran-backed Shiite group and Israel.

WHY CEASEFIRE?

• During the lull, Egypt hosts indirect talks between Israel and Hamas in Cairo on a more durable truce.

However, Israel does meet directly with members of either Hamas or Islamic Jihad officials because it

considers them terrorist organisations.

• Palestinian President Mahmoud Abbas, a long-time rival of Hamas, likely will play a key role in any new

border deal for Gaza. Mr. Abbas lost control of Gaza after Hamas seized the territory in 2007. He is expected

to regain a foothold there under the Egyptian-brokered agreement. In such a scenario, forces loyal to Mr.

Abbas could be posted at Gaza’s border crossings to allay fears by Israel and Egypt about renewed attempts

by Hamas to smuggle weapons into the territory.

• Abbas held talks in Qatar with the top political leader of Hamas in exile, Khaled Mashaal, and the emir of

Qatar. Aides have said Mr. Abbas plans to ask the U.N. Security Council to demand Israel’s withdrawal from

all lands captured in the 1967 Mideast war to make way for an independent Palestinian state.

• A ceasefire allows UN and humanitarian partners to restock food, water and other supplies, and to survey

the damages. Under the ceasefire, Israeli troops on the ground in Gaza can continue to destroy tunnels along

the heavily guarded frontier, but only those that are behind Israeli defensive lines and lead into Israel.

• In recent weeks Turkey and Qatar, which have warmer ties to Hamas but are at odds with Egypt, have tried

to help broker a ceasefire agreement, with no results.

DEMANDS OF HAMAS AND ISRAEL

• For a final ceasefire and for easing the border restrictions, Israel demands to demilitarise the Gaza Strip and

disarm Hamas, which Hamas vehemently opposes.

• Hamas insists on establishing a seaport and airport in the Gaza Strip, easing Israel’s blockade there by

opening the Gaza crossings, and releasing 56 Hamas members who were arrested by Israeli forces in the

West Bank in June after three Israeli teens were abducted and killed.

• The Cairo talks focused on new border arrangements for Gaza, including the lifting of a blockade by Israel

and Egypt and reconstruction of the battered territory. Israel and Egypt had enforced the blockade to

varying degrees since Hamas seized Gaza by force in 2007. Palestinians and members of the international

community have criticised the blockade (known to the Palestinians as “the siege”) as collective punishment.

Movement in and out of Gaza is limited, and the economy has ground to a standstill and unemployment is

over 50 percent. Israel argues that it needs to keep Gaza’s borders as long as Hamas tries to smuggle

weapons into Gaza. Israel also is concerned that material for reconstruction could be diverted by Hamas for

military purposes.

ISRAEL’S IRON DOME

• Iron Dome is a mobile all-weather air defence system developed by Rafael Advanced Defence Systems. The

Iron Dome system has emerged as a game-changer in the current round of violence, with Israeli officials

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citing a success rate as high as 90 percent. The system is designed to intercept and destroy short-

range rockets and artillery shells fired from distances of 4 kilometres to 70 kilometres away and whose

trajectory would take them to a populated area. Iron Dome was declared operational and initially deployed

on 27th March 2011. It is part of a future multi-tiered missile defence system that Israel is developing, that

will also include Arrow 2, Arrow 3, Iron Beam and David's Sling.

• The U.S. Congress rushed through a $225 million bill to support Israel’s missile defence system. The money

will go to restocking Israel’s Iron Dome. Mr. Obama reiterated his support for Israel’s right to self-defence

while urging greater protection for Palestinian civilians.

WAR DAMAGE

• The seven-week war killed more than 2,200 people. At least 2,100 Palestinians, majority of them civilians,

have been killed in the conflict, along with 67 Israelis, mostly soldiers, according to figures cited by the UN

Office for the Coordination of Humanitarian Affairs (OCHA). The heavy death toll has eclipsed that of

previous rounds of fighting in 2009 and 2012. In addition, some 425,000 people are seeking shelter either in

UN Relief and Works Agency for Palestine Refugees in the Near East (UNRWA) facilities, government shelters

or with host families. The UN agency estimates that reconstruction and repair costs of these houses will be

USD 410 million.

• Israel accuses Hamas of using civilian areas (apartment buildings, mosques or schools) for cover and says the

Islamic militant group is responsible for the heavy death toll because it has been using civilians as “human

shields.”

UN HUMAN RIGHTS COUNCIL APPOINTS PANEL FOR PALESTINE INQUIRY

• The UN Human Rights Council President Baudelaire Ndong Ella announced a three-member panel to

investigate the human rights violations in the occupied Palestinian territory, particularly in the conflict-torn

Gaza Strip. Ms. Ella appointed Canadian William Schabas to serve as chair of the independent international

commission of inquiry. The commission also comprises British lawyer Amal Alamuddin and Doudou Diene

from Senegal.

ISRAEL, HAMAS AGREE TO OPEN-ENDED GAZA CEASEFIRE

• Under the Egyptian-brokered deal, Israel is to ease imports into Gaza, including aid and material for

reconstruction. It also allows Palestinians to fish six nautical miles, up from three nautical miles.

• The Israeli Navy has been restricting fishing by Gaza fishermen in the Mediterranean Sea, citing possible

security alarms about attempts to deliver weapons by sea. While Israel was launching its military operation

in Gaza in July, the Palestinians said that its military enforced a 500-metre restriction on fishing, comparing

with a previous distance of three nautical miles off shore.

BOTH HAMAS AND ISRAEL DECLARE VICTORY IN GAZA WAR

• Israel’s Prime Minister declared victory in the recent war against Hamas in the Gaza Strip, saying the military

campaign had dealt a heavy blow and a ceasefire deal gave no concessions to the Islamic militant group.

Israel says the last of the tunnels has nearly been destroyed. However, both hardliners in his governing

coalition, as well as residents of southern Israel, have said the war was a failure because it did not halt

Hamas’ rocket attacks or oust the group from power.

• Despite the heavy damage, Hamas also has claimed victory, saying the Israeli assault failed to stop its rocket

and mortar fire. It has boasted that it forced thousands of Israelis living in border communities to evacuate

their homes, and that it controlled when the people could come home.

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PALESTINE PLANNING TO APPLY TO THE INTERNATIONAL CRIMINAL COURT

• It’s in the hope of holding Israel responsible for alleged violations of war crimes’ law in Israeli-occupied

territories. An earlier attempt by the Palestinians to join the ICC in 2009 failed because the court wasn’t

certain the territories qualified as a state. Palestinians argue that it’s no longer an issue since the state of

Palestine was recognized by the U.N. General Assembly as a non-member observer state in November 2012.

• Israel rejects the court’s authority, while membership for the Palestinians could also open the door for an

investigation of Hamas.

ISIS (ISLAMIC STATE OF IRAQ AND SYRIA)

WHAT IS ISIS AND ITS GOAL?

• It’s an al—Qaeda—breakaway group. The Islamic State, previously known as the Islamic State in Iraq and the

Levant, has recently proclaimed to establish an ” Islamic Caliphate” in parts of Syria and Iraq, threatening the

political geography in the region. The group, led by Abu Bakr al-Baghdadi who is said to be commanding over

70,000 fighters, said their goal is to establish an Islamic state in Iraq and Syria, imposing its harsh

interpretation of Islamic Sharia law.

ROOT CAUSE OF ITS INCEPTION

• The sectarian struggle is at the heart of the unrest, which stems from the country’s three main ethnic groups

(Shias, Sunnis and Kurds) being far from reaching any agreement regarding a national unity government.

• Advances: The Islamic State has been fighting rival rebels and Kurdish forces, and, to a lesser extent, the

Syrian Army. Iraq’s autonomous Kurdish region is the only force opposing the extremists in the north. There

are growing fears across the Middle East that no regional military can slow the group’s momentum. The

Islamic State is now the most capable military power in the Middle East outside Israel. Less than three

months after taking Iraq’s second and fourth biggest cities, much of Anbar province and the Syrian border,

the group is establishing itself with extraordinary speed as a regional power that will determine the fate of

both countries.

• Iraqi militants seized Mosul Dam (or Saddam Dam), the country's largest dam, located north of Iraq’s

second—largest city Mosul, which fell to the militants on June 10. However, it was soon recaptured by the

Iraqi and Kurdish forces, backed by the US air-strikes.

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•

ROLE OF FOREIGN FIGHTERS

• It is estimated that foreign fighters from about 50 countries, including from India and about 100 from the

U.S. are fighting for the ISIL. Obama is to convene a UNSC meeting on foreign fighters. The return of

radicalised battle-hardened jihadists to their home countries or other vulnerable destinations has the

potential to widen the scope of the violence.

STRATEGY TO DEAL WITH ISIS

• Western leaders have indicated that a key strategy in tackling IS will involve trying to deprive it of the

support of the 20 million Sunni Arabs who live between Damascus and Baghdad.

• U.N. Security Council imposed sanctions on six men for recruiting or financing foreign fighters and

threatened additional sanctions against those supporting terrorist groups.

• The resolution adopted urges all countries to meet their obligations under a resolution adopted immediately

after the Sept. 11, 2001 terrorist attacks in the United States. It demanded that all 193 U.N. member states

adopt national laws to combat terrorism. It notes “with concern” that oil fields controlled by the Islamic

State group, Jabhat al-Nusra and other al-Qaeda-linked groups are generating income that is supporting

their recruitment efforts and ability to carry out terrorist operations.

U.S.’S STAND

• American combat troops will not be returning to fight in Iraq, because there’s no American military solution

to the larger crisis in Iraq. The only lasting solution is reconciliation among Iraqi communities and stronger

Iraqi security forces.

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• Though he authorised a two-pronged military intervention in Iraq (first direct military action by the U.S. in

Iraq since troops pulled out in 2011), aimed both at protecting American personnel and assets located in the

conflict zones (American troops and the U.S. consulate in the northern city of Irbil), and also at staving off “a

potential act of genocide,” in the Sinjar area where nearly 50,000 members of the Yazidi minority community

were trapped atop a mountain besieged by IS fighters, according to United Nations figures. U.S. had begun

conducting humanitarian airdrops at the request of the Iraqi government. Airdrops were performed by one

C-17 and two C-130 cargo aircraft, escorted by two F/A-18 fighters.

• In contrast to Washington’s decision to invade Iraq more than a decade ago, both the airdrop and the

authorisation of military action against the Islamic State group were widely welcomed by Iraqi and Kurdish

officials fearful of the militants’ lightning advance across the country. Meanwhile, U.S., Britain and France

has begun directly providing weapons to the Kurdish peshmerga forces.

• Larger role for U.S. army in the future?

• There is a speculation that the U.S. military might have to step into Iraq to protect Iraqi Christians and other

religious minorities. Domestic U.S. politics too may push the President deeper into a war scenario in the

region, particularly with the mid-term elections looming in November and Republicans calling for a broader

battle against IS.

• Taking help of terrorist organizations?

• The efforts of U.S. President Barack Obama to rescue thousands of members of the Yazidi religious minority

community appear to be involving an eclectic mix of Kurdish units from Turkey, Syria, Iraq and Iran, among

which the Turkish-based Kurdistan Workers' Party, or PKK is considered by the U.S. to be a “terrorist

organisation. While lobbying efforts are concurrently underway in the U.S. to have the PKK de-listed from its

terror designation. In addition, the Washington Post reported, Washington is arming two other Iraqi Kurdish

factions, the PUK and KDP, which are also categorised as “Tier III” terror organisations by the State

Department.

• U.S. policy of non-negotiation

• The U.S. policy of non-negotiation with terror or militant groups, specifically its refusal to pay ransom for

hostages, has been thrown into the spotlight since the decapitation of Mr. Foley, for whom Islamic State

apparently demanded $132.5 million from his family.

• While the U.S. defends this policy on the grounds that the paying of ransom encourages future hostage-

taking and also it has proven to be a lucrative ‘business’ for terrorists and yielded them millions of dollars in

2014, European governments appear to be more willing to pay.

ROLE OF QATAR

• The energy-rich OPEC member has come under renewed scrutiny over its ties to militants, including the

Palestinian Hamas and Syrian rebel groups. A German official last week suggested that Qatar may also play a

role in funding the Islamic State group, which is fighting in Iraq and Syria. Qatar denies funding ISIS.

• The Gulf state is home to exiled Hamas leader Khaled Mashaal and is a key financial patron for the Gaza

Strip, which Hamas controls. Qatar denies financially backing Hamas, however, and has sought to play a role

in brokering a truce to end fighting between the group and Israel. The Qatari emir, Sheik Tamim bin Hamad

Al Thani, last week held talks in Doha with Western—backed Palestinian President Mahmoud Abbas, whose

Fatah movement has strained relations with Hamas. Abbas also met with Mashaal during his visit. Recently,

Qatar negotiated release of a U.S. journalist in Syria.

YAZIDIS OF IRAQ

• The Yazidis, who face murderous attacks by ISIS militants, are a Kurdish speaking minority in Iraq, said to

number less than half a million. They follow an ancient religion with ties to Zoroastrianism and worship

Melek Tawwus, or the Peacock Angel. Their religion is said to have similarities with Hinduism.

• In their temples, Yazidi worshippers make wishes and then throw a scarf around a big rock. If the scarf stays

on top of the rock, the wish will be fulfilled. If it falls on the ground, the worshipper has two more chances.

• They live primarily in the Lalesh Valley in northern Iraq, 560 km from Baghdad. They fled their homes after

the Islamic State group issued an ultimatum to convert to Islam, pay a religious fine, flee their homes or face

death. Members of this ethnic group have migrated towards Syria, Georgia, Armenia, and Europe.

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POLITICAL CRISIS IN IRAQ

• Iraq’s new President Fouad Massoum snubbed the powerful incumbent Prime Minister Nouri al-Maliki and

nominated the Deputy Speaker of Parliament, Haider al-Ibadi to form the new government, raising fears of

more infighting in the government as country faces the threat of Sunni militants in the north.

• The crisis in Baghdad escalated when Mr. al-Maliki’s Shiite alliance backed Mr. al-Abadi to replace him, and

the incumbent threatened legal action, saying the attempt to push him out was a violation of the

constitution. However, the decision by Iraq’s embattled Nouri al-Maliki to step down as Prime Minister

defused a political deadlock that has plunged Iraq into political uncertainty.

• Mr. al-Ibadi was nominated for the post by the Iraqi National Alliance, a coalition of Shia parties that Mr. al-

Maliki’s State of Law is part of, but has turned against him. Mr. Al-Maliki’s Shia-dominated bloc won the

most parliament seats in April elections and the Prime Minister sees himself as rightfully keeping the post.

Few lawmakers called the nomination of al—Ibadi as unconstitutional on the ground that Mr. al-Maliki’s

party is the largest bloc and the National Alliance has no right to present any candidate.

• Critics say Mr. al-Maliki, a Shia, contributed to the crisis by monopolising power and pursuing a sectarian

agenda that alienated the country’s Sunni and Kurdish minorities. Mr. Al-Ibadi’s nomination came hours

after Mr. al-Maliki deployed his elite security forces in the streets of Baghdad.

SYRIA

NEUTRALIZATION OF CHEMICAL WEAPONS

• The United States informed the UN Security Council that it has neutralised about 60 per cent of Syria’s most

toxic chemicals. Syria agreed to surrender its chemical arsenal last fall when the U.S. threatened missile

strikes in retaliation for a chemical attack on a rebel-held suburb of Damascus. The attack is believed to have

killed more than 1,000 people.

• In early July, some 661 tons of Syria’s most toxic chemicals were transferred onto the U.S. cargo vessel MV

Cape Ray in the Italian port of Gioia Tauro. The ship moved into international waters and began the two-

month process of destroying the chemicals. Once the U.S. has neutralised all the chemicals, the residue will

be sent to Germany and Finland for final disposal.

SYRIA AND ISIS

• Islamic State jihadists turn their sights back on Syria, where they seized full control of Tabqa airbase in

eastern Syria, that stood between the terror group and a rush for the Mediterranean coast that could split

the country in two. Military personnel withdrew from the Tabqa military airport “to secure their safety”. It

was the last government outpost in the north-eastern province of al-Raqqa. Islamic State had previously

established full control last year of al-Raqqa province, with the exception of three heavily defended military

bases. The other two both fell in recent weeks.

• IS continues to move back towards areas it controlled north of Aleppo until February, using weapons the

group looted from abandoned Iraqi military bases. Despite IS gradually subsuming parts of the opposition in

northern Syria, the Syrian regime had not attacked the terror group until it launched its offensive into Iraq

on June 10. However, the military’s campaign around Damascus has succeeded in pushing the rebels farther

from the heart of the city. Government troops are backed by fighters from the Lebanese Hezbollah, a Shiite

militant group.

• The jihadists have made considerable territorial gains in eastern Syria in recent months, capturing most of

Deir al-Zour province to link its strongholds in al-Raqqa and across the border in Iraq. Some of the tribes in

the Deir al-Zour province have been deadlocked in battles with the IS which now controls large swathes of

that oil-rich province. Earlier this month, the IS killed some 700 tribesmen in two weeks.

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U.S.’S STAND

• U.S. rejects Bashar al-Assad’s offer to cooperate with West in combatting Islamist terrorists in Syria, saying

the leader was responsible for the current civil war, which arose after pro-reform protests were brutally put

down.

RUSSIA’S STAND

• Russia has been one of Syrian President Bashar Assad’s main allies and has used its veto power four times at

the 15-nation Security Council to prevent international sanctions on Syria.

SYRIAN REBELS ATTACK PEACEKEEPERS IN GOLAN HEIGHTS

• Syrian rebel groups, including the Nusra Front (an Al Qaeda offshoot based in Syria), overran the Quneitra

crossing - located on the frontier between Syrian and Israeli controlled parts of the Golan Heights, seizing 44

Fijian peacekeepers. They later managed to escape. Various rebel groups have been engaged in intense

fighting with the Syrian military in and near the Golan Heights.

• The U.N. mission, known as UNDOF, has 1,223 troops from six countries- Fiji, India, Ireland, Nepal,

Netherlands and the Philippines. The troops are part of the UN observer force which has monitored the

disengagement zone between Israel and Syria since 1974 following the 1973 Arab-Israeli war.

ISRAEL’S STAND

• Israel has avoided taking sides in the three-year civil war in Syria, though Israeli troops have responded to

occasional mortar fire that has landed on the Israeli side of the Golan. Israel says some of the attacks have

been accidental spillover, while others have been intentional. It has always held Syria responsible for any

cross-border fire.

• Israel captured the Golan Heights from Syria in the 1967 Mideast war from Syria and subsequently annexed

it in a move that has never been internationally recognized.

HONG KONG

CHINA RULED OUT OPEN NOMINATIONS

• China ruled out allowing open nominations in the inaugural election for Hong Kong’s leader, saying they

would create a “chaotic society”. In setting tight limits on how far electoral reforms can go in Hong Kong,

Beijing issued its firmest reminder yet that it’s still in charge despite the substantial autonomy it promised

the city after taking control from Britain in 1997.

• The guidelines laid down by China’s communist leaders ratchet up the potential for a showdown pitting

Beijing against Hong Kong democracy supporters, a group that represents a broad swath of society, including

students, religious leaders and financial workers.

PRINCIPLE OF ONE COUNTRY, TWO SYSTEMS

• Under the principle of “one country, two systems,” Hong Kong is granted a high degree of control over its

own affairs and civil liberties unseen on the mainland. The decision sharpened fears that China is reneging

on its promise to let Hong Kong’s leader be directly elected by voters, rather than the current committee of

mostly pro-Beijing tycoons.

OCCUPY CENTRAL WITH LOVE AND PEACE (OCLP)

• It is a proposed nonviolent occupation protest for universal suffrage scheduled to take place in Central, Hong

Kong in the second half of 2014. The campaign was initiated by Benny Tai Yiu-ting, Associate Professor of

Law at the University of Hong Kong.

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• Political tensions spiked in June when Chinese officials released a policy “white paper” declaring that Hong

Kong’s “high degree of autonomy ... comes solely from the authorization by the central leadership”. Many

read the policy paper as asserting Beijing’s dominance of Hong Kong’s affairs and hit the streets and the

Internet in protest. Occupy Central drew Beijing’s rebuke by organising an online referendum to bolster

support for full democracy that received nearly 800,000 votes.

• Also, recently the incumbent leader of the nearby Chinese-controlled casino capital of Macau, Fernando

Chui, was elected to a second five-year term by a Beijing-friendly committee even though 95 percent of the

votes cast in a similar referendum were in favour of universal suffrage in 2019.

POLITICAL UNREST IN PAKISTAN

CAUSE OF UNREST AND DEMANDS

• Mr. Imran Khan and Mr. Qadri have both alleged rigging in the polls in 2013 and called for a re-election. In

the elections, Sharif’s PML-N had won 190 out of 342 seats. Mr. Khan’s PTI (Tehreek-e-Insaf) got 34 seats,

the third largest bloc in the legislature.

• PTI’s demands: PTI’s media advisor Faisal Vawda said the party’s six demands to the government included

the resignations of Mr. Sharif and his brother and Punjab Chief Minister Shahbaz Sharif, electoral reforms,

disbanding and reconstitution of the Election Commission of Pakistan, recounts on certain constituencies,

action against those involved in rigging and re-elections. It is unlikely Mr. Sharif would give ground on those

demands, which the government considers illegal. But it’s hoped that Mr. Sharif will offer Mr. Khan a full

audit of ballots to address his concerns about rigging in last year’s poll.

• PAT’s demands: Canada-based, anti-government, moderate cleric Tahir-ul-Qadri, the chief of Pakistan Awami

Tehrik (PAT), announced that his group will hold a “Martyrs’ Day” in protest of the killings of his 14 activists

in a police attack at the party headquarters in Model Town on June 17. Earlier, a one-man judicial

commission appointed by the Shahbaz Sharif government to probe the incident in its report had reportedly

held provincial departments responsible for the incident. Mr. Qadri had rejected the commission, saying an

independent probe into the incident will take place once the Sharif brothers are out of power.

• Pakistan Tehreek-e-Insaf (PTI) leader Khan initiated his ‘Azadi March’ from Zaman Park, Lahore, while Mr.

Qadri launched his ‘Inqelab March’ from the Model Town area of the city. Both of them, though not officially

allied, are calling for the ouster of the government that they condemn as corrupt.

• Tactics adopted for protest: Anti—government leader Imran Khan announced civil disobedience movement.

He asked the people not to pay taxes and bills. Imran vows to storm Sharif’s house; Qadri calls for encircling

parliament

ROLE OF PAKISTAN ARMY

• The Army had earlier asked all stakeholders in the crisis to hold “meaningful” talks to end the crisis and has

taken charge of the Interior Ministry’s control room.

• Mr. Khan and Mr. Qadri had told their supporters that they have accepted the Army’s mediation offer and

will wait for more time to address to their demands. The announcement will further fuel speculation that the

army could use the crisis to re-assert its dominance over civilian government, with which it has several

disagreements.

• The Army, which has so far been passive in the confrontation between the government and protesters, has a

history of capturing power from democratically elected governments. In its 67-year history, Pakistan has

witnessed three coups, including one against Mr. Sharif in 1999 by the then Army Chief General Parvez

Musharraf.

POLITICAL CRISIS IN THAILAND

• Former Thailand Prime Minister Yingluck Shinawatra, who is facing legal allegations in her country, returned

to the country. Ms. Yingluck will have to fight a high-profile case in which the National Anti-Corruption

Commission (NACC) has accused her of negligence of duty in overseeing a controversial rice-pledging

scheme.

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• The NACC has forwarded the case to the Office of the Attorney-General (OAG) for indictment. The OAG is yet

to examine the evidence and witnesses to decide if there are sufficient grounds for pressing charges against

Ms. Yingluck in the Supreme Court’s Criminal Division for Holders of Political Positions. If found guilty, she

could face a jail term, as well as a five-year ban from politics.

• In the meantime, an investigative panel of the Election Commission (EC) has alleged that Ms. Yingluck, along

with eight other former cabinet ministers and national police chief, had abused power by using public funds

to campaign for the already-nullified the February general election. The EC will have to decide whether to

take the case to the Supreme Court’s Election Cases Division for ruling. If found guilty, those involved could

face up to 10 years in prison, a maximum fine of 200,000 baht (about $6,186) and a 10-year ban from

elections.

THAI ARMY CHIEF CHOSEN AS PRIME MINISTER

• Thailand’s Army chief, Prayuth Chan-ocha, assumed charge as the Thai Prime Minister after the junta-picked

National Legislative Assembly overwhelmingly approved his nomination, consolidating the military’s hold on

power three months after he ousted the elected government in a coup. He is the first serving army officer to

assume the top office in 22 years, since Gen Suchinda Krapayoon, who took office on April 7, 1992. Gen

Suchinda’s term ended after only 47 days following the Black May uprising that threw him out and re-

installed a democratic regime. Gen. Prayuth assumed the new post following an endorsement from King

Bhumibol Adulyadej, who appointed him as the country’s 29th Prime Minister.

• The military seized power on May 22, two weeks after Yingluck Shinawatra, the country’s first woman Prime

Minister, was forced to resign following a controversial court ruling for abusing power. Thailand has been

embroiled in political turmoil since Ms. Yingluck’s brother Thaksin Shinawatra was ousted as prime minister

in a coup in 2006. Mr. Thaksin is in self-imposed exile in Dubai since 2008 to avoid prison for a corruption

conviction that he insists was politically motivated. Mr. Thaksin is reviled by much of Thailand’s royalist elite

but he or his parties have won every election since 2001.

• Since taking power, the junta has abrogated the Constitution, curtailed civil liberties under martial law and

interrogated hundreds of political opponents, activists and academics.

CAMBODIA TRIBUNAL CONVICTS KHMER ROUGE LEADERS

• Three and a half decades after the rule of Cambodia’s Khmer Rouge ended, a U.N.-backed war crimes

tribunal sentenced two top leaders of the regime to life in prison on war crimes charges for their role in the

1970s.

• The historic verdicts were announced against Khieu Samphan, the regime’s former head of state, and Nuon

Chea, its chief ideologue, the only two leaders of the regime left to stand trial.

• The case, covering the forced exodus of millions of people from Cambodia’s towns and cities and a mass

killing, is just part of the Cambodian story. Nearly a quarter of the population died under their rule, through

a combination starvation, medical neglect, overwork and execution when the group held power in 1975-79.

• Many have criticised the slow justice, and its cost. The tribunal, formally known as the Extraordinary

Chambers in the Courts of Cambodia and comprising of Cambodian and international jurists, began

operations in 2006. It has since spent more than $200 million, yet it had convicted only one defendant prison

director Kaing Guek Eav, who was sentenced to life imprisonment in 2011.

• The current trial began in November 2011 and started out with four Khmer Rouge leaders. Former Foreign

Minister Ieng Sary died in 2013, while his wife, Social Affairs Minister Ieng Thirith, was deemed unfit to stand

trial due to dementia in 2012. The group’s top leader, Pol Pot, died in 1998.

Copyright © by Vision IAS

All rights are reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any

form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission of Vision

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