Print Friendly, PDF & Email

Insights Daily Current Events – October 22, 2013



India holds ground on the G-33 plan to pay farmers inflation-linked price

  • The government is going to place a fresh G-33 proposal before the parliament seeking to enable developing economies to meet the challenges of food security for their large populations.

What is the issue all about?

  • From the Developing countries perspective: As per the proposal, that is to be discussed at the December(2013) WTO meet in Bali, developing nations must be allowed to consider higher inflation rate occurring in their economies to justify higher procurement prices offered to farmers.
  • At present, the reference price (or the base price) for procurement is linked to what was decided in 1986-88 when the Agreement on Agriculture (AoA) was negotiated under the World Trade Organisation.
  • India, which has had over 500 per cent inflation (compounded) since 1988, has called for full inflation allowance which will help the government procure grain from farmers. The proposal of the G-33 countries is in line with India’s position but the West will resist this change.
  • Developed countries perspective: However, the U.S and the EU are of the view that the AoA does not commit full allowance for inflation and have proposed a “peace clause” which would defer this matter by three years during which period the developing countries can continue to procure grain as they are doing now even if it is violative of the AoA.
  • India is cautious over the ‘acceptability of the peace clause’ as this may violate AoA. It, therefore, wants to stand its ground and push for the G-33 proposal seeking full allowance for excess inflation.
  • Clause 18.4 of the AoA mentions that developing economies shall receive “due allowance for inflation” in determining procurement prices.
  • For India, the WTO meet at Bali meet is critical because its food security law will involve procuring over 60 million tonnes of foodgrains to feed 70 % of the population.
  • India is the largest public procurer of grain and next comes Indonesia which has a strong food procurement policy. Pakistan too delivers subsidised food through direct cash transfer.

SC orders Centre to conduct five clinical trials

  • The Supreme Court has allowed the Centre to conduct five clinical trials that were approved this year (2013) after ensuring proper mechanism and procedure to ensure the safety of patients along with audio-visual recording of participants maintaining the principle of confidentiality and preservation of documentation.
  • Ministry of Health and Family Welfare (MoHFW) and representative of the Drug Controller General of India (DCGI) admitted that the 157 trials were approved by the DCGI only on the recommendation of the New Drug Advisory Committee (NDAC) and without the approval of the Apex and Technical Committees formed after the order of the  Supreme court(on January,2013)
  • In the pretext of this admission, the SC has ordered the Centre to re-examine 157 clinical trials of Global Clinical Trial (GCT), including New Chemical Entities (NCEs) by the Apex and Technical Committees.
  • It is said that that evaluation would be done on the 157 trials with emphasis on assessment of risk vs. benefits for patients, innovations to existing therapeutic options and benefits to medical needs of the country. Only after the assessment of the committees, the 157 trials would be considered.
  • It was also noted that, there were no checks and balances in the framework, where investigators were paid by sponsors, and ethics committees were part of hospital with the absence of proper mechanisms to ensure patients’ safety.


India Russia on further consolidation of Strategic Relationship

  • The 14th Annual Summit kicked off from 21st October, 2013. There were wide range of issues discussed and agreements signed at the annual summit held in Russia. Below are the issues discussed:
  • Kudankulam, Nuclear reactor was the high point of India-Russia ties. PM Manmohan Singh had conveyed India’s commitment to “fully implement the road map on civil nuclear co-operation” signed by the two countries in 2010.The agreement envisages Russia supplying 15 to 18 nuclear reactors in locations across India.
  • This was in reference to the 2010 nuclear liability law that has been a stumbling block in finalizing an agreement for Units 3 and 4 at the project in Tamil Nadu.

On the Economic front:

  • The bilateral trade is only $ 11 billion, and there were talks on further increasing the trade. Despite an adverse global situation, the trade between the two countries had risen by 25 % in 2012.
  • The emphasis was on the “quality” of trade as it included machinery and equipment.
  • There was an agreement between the two sides to study the possibility of an overland gas pipeline. India and Russia are also working on increasing ONGC Videsh Limited’s involvement in oil and gas exploration in Russia, where the company already has its largest investments.
  • In order to give economic ties a boost, India has also sought Russian support for concluding a Free Trade Agreement (FTA) with the customs union of Russia, Kazakhstan and Belarus.

From the Defence Perspective:

  • Both India and Russia have resolved to enhance cooperation in the fields of rocket, missile and naval technologies and weapon systems
  • As a key defence partner, India would be involved in joint design, development and production of key defence platforms
  • Both the sides have agreed to extend indefinitely their 15-year-old partnership for producing the BrahMos supersonic anti-ship missile and to develop a still more potent hypersonic version of the missile.
  • The joint statement welcomed the completion of trials of the Vikramaditya aircraft carrier, the delivery this year of the Trikant frigate, the sixth stealth frigate Russia has built for the Indian Navy, as well as licensed production of the Su-30MKI fighter plane and T-90S tanks. Progress in the construction of the fifth-generation fighter aircraft and multi-role transport aircraft was also in the list.
  • Plans for further cooperation in aviation technologies (helicopters and aircraft) and shipbuilding would be discussed next month (November, 2013) during the defence minister’s visit.
  • India and Russia have also agreed to enhance cooperation in space technologies.
  • India is the only country to which Russia has agreed to give access to Glonass (Russia’s equivalent of the U.S. Global Positioning System (GPS)) military-grade signals, which will enable the Indian military to greatly improve the accuracy of its weapon systems.

On the International issues:

  • Both have rejected military solution in the crisis-ridden Middle East country (Syria) as there is a strong belief that the crisis should not be resolved by force, and could be settled only through political means
  • Declaring “no tolerance for sheltering, arming, training or financing of terrorists,” the two sides condemned terrorist acts as “attacks on the freedom and democratic values” and “aimed at undermining the territorial integrity” of India and Russia.
  • According to a joint statement issued at the summit “Russia would welcome India’s participation in Geneva-2” international conference on Syria, being held jointly by Russia and the United States.
  • Russia has reiterated its “strong support’ to India for a permanent seat in the U.N. Security Council (UNSC) and for full membership in the Shanghai Cooperation Organization (SCO)
  • Russia has also agreed on giving ‘due consideration’ to India’s bid to join the Missile Technology Control Regime(MTCR) and to support its full membership in the Nuclear Suppliers Group (NSG)
  • The two sides have affirmed their commitment to further intensify political interactions in the Russia-India-China triangular format (RIC).Both the sides have stressed the importance of next month’s(November) meeting of the RIC Foreign Ministers in India,  as it is essential to continue consultations concerning regional security at the level of High Representatives of China, India and Russia.

India agrees for FTA with Belarus, Kazakhstan, Russia

  • To further strengthen the economic ties, India has agreed to initiate free trade agreement (FTA) with the customs union of Belarus, Kazakhstan and Russia (RBK)
  • India and Russia have agreed to work towards the creation of a Joint Study Group for studying the possibility of signing a Comprehensive Economic Cooperation Agreement (CECA) between India and the Customs Union of RBK.
  • The joint statement was issued after the 14th India-Russia annual summit meeting between Prime Minister Manmohan Singh and Russian President Vladimir Putin.

More about the Customs Union of Belarus, Kazakhstan, and Russia (RBK)

  • The Customs Union of RBK came into existence on January 1, 2010 between the states of Belarus, Kazakhstan, and Russia.
  • The Customs Union was launched as a first step towards forming a broader European Union-type economic alliance of former Soviet states.
  • The member states are planning to continue with economic integration and were set to remove all customs borders between each other after July 2011.
  • On November 2011, the member states put together a joint commission on fostering closer economic ties, planning to create a Eurasian Union by 2015.
  • Since January 1, 2012, the three states are a single economic space.
  • The United States is opposed to the Customs Union, seeing it as an attempt to reestablish a Russian dominated USSR-type union amongst the Post-Soviet states

Courtesy – Wikipedia

Significance of CECA

  • The three countries took their economic integration to a new level with the implementation of the common economic space, which provides for free movement of goods, services and people.
  • Under the CECA, two sides would significantly reduce duties on the maximum number of tradable goods, liberalise norms for service and investments; facilitate movement of professionals.

France, Mexico join the list of critics on U.S. NSA spying

  • After a series of criticisms across the globe over the U.S. National Security Agency (NSA) -mass surveillance and global spying activities, France and Mexico have joined the list of critics. Just recently did Brazil announce a plan to host a global meeting on Internet governance.
  • Ever since Edward Snowden disclosed in June, 2013 that the NSA had been spying not just on U.S. enemies but its closest allies as well, several countries have lodged formal complaints with U.S. However, there is no adequate reasoning given by the U.S government.
  • It has been reported that the U.S. has monitored over 70 million phone calls, e-mails and internet traffic over 30 days and that the spying included industrial espionage and listening-in to top level government conversations.
  • The NSA’s hacking of the e-mail account of former Mexican President Felipe Calderon drew strong criticism from its Foreign Ministry, and made Mexico the latest in the growing list of nations, which includes India, that were targets of covert U.S. surveillance.

U.S. against raising emission reduction targets in 2015 pact

  • The United States has strongly recommended the UN Framework Convention on Climate Change (UNFCCC) to ensure that voluntary emission reduction targets would not be reviewed in case public consultations showed that they cumulatively fell short of maintaining the global target temperature of below 2 degrees Celsius.

What are the U.S demands?

  • Outlining its demands for the new climate change agreement to be signed in 2015, the U.S. has said that the pact would concentrate only on the “core provisions” – on mitigation and transparency. Whereas the other key elements of climate talks — “adaptation, finance and technology” should be addressed among a less cumbersome set of decisions at the annual negotiations of the convention.
  • According to the U.S. the participation will be maximised only if each country must put forth ‘emission-reduction’ commitment it deems fair and fitting to its circumstances. That means U.S is calling for a ‘voluntary commitment’.
  • However, in the case of pressure, it should be countries choice to revise the emission target upwards.
  • The U.S. has also stressed on a single transparency regime for all countries instead of a different one for developing countries and another for developed ones.

U.N. warns of fresh military buildup in DR Congo

  • U.N. envoys have warned of a new military buildup by government forces and rebels in eastern Democratic Republic of Congo (DRC) as peace talks have stalled.
  • Negotiations in Kampala between the DRC government and M-23 mutineers have been suspended. U.N. officials who had mediated over the talks, has appealed for new efforts by the two sides but raised fears of new conflict and that M-23 was forcing young men among refugee families returning from neighbouring countries to train for fighting.


Inclusion of liquor, petroleum products under GST opposed

  • In the revised draft of the Constitution Amendment Bill (to implement GST), circulated to the States on September 18, 2013 the Centre had proposed inclusion of petroleum and liquor under the GST.
  • But several States have opposed inclusion of petroleum products and liquor under the proposed Goods and Services Tax (GST) regime as the move would severely affect their revenues. Some States also expressed their reservation to inclusion of ‘entry tax’ under the GST ambit.

What is GST? Its significance? It’s Demerits?

  • The Kelkar Task Force on implementation of the FRBM Act, 2003 had pointed out that although the indirect tax policy in India has been steadily progressing in the direction of VAT principle since 1986, the existing system of taxation of goods and services still suffers from many problems and had suggested a comprehensive GST based on VAT principle.
  • GST system is targeted to be a simple, transparent and efficient system of indirect taxation as has been adopted by over 130 countries around the world.
  • GST involves taxation of goods and services in an integrated manner as the blurring of line of demarcation between goods and services has made separate taxation of goods and services untenable.
  • Introduction of GST to replace the existing multiple tax structures of Centre and State taxes is not only desirable but imperative in the emerging economic environment. Increasingly, services are used or consumed in production and distribution of goods and vice versa.
  • Separate taxation of goods and services often requires splitting of transactions value into value of goods and services for taxation, which leads to greater complexities, administration and compliances costs. Integration of various Central and State taxes into a GST system would make it possible to give full credit for inputs taxes collected.
  • GST, being a destination-based consumption tax based on VAT principle, would also greatly help in removing economic distortions caused by present complex tax structure and will help in development of a common national market.
  • The primary benefit of GST, when introduced, would be the removal of cascading effect of taxes which acts like a hidden cost and makes goods and services uncompetitive both in domestic and international markets.
  • GST would check leakage of revenue and the States should be able to realize tax revenues commensurate to consumption of goods and services within their territory.
  • It would provide a stable source of tax revenue and would play a very vital role in sewing India together into one common market.
  • For the consumer, the biggest advantage of the GST would be its transparent character as well as the reduction in the overall tax burden on goods which is currently in the range of about 25-30%.

Courtesy- Ministry of Finance (GoI), PIB

For further reading, you can follow the below link

Tax Reform Commission: Measures to strengthen financial sector

  • The Tax Administration Reform Commission (TARC), set up by the Finance Ministry to suggest measures to prevent economic offences among other things, is expected to submit its report in six months.

What is TARC?

  • TARC is an advisory body to the Ministry of Finance. The term of the 7-member TARC is 18 months. The Chairman Parthasarathi Shome.

Functions of TARC

  • The terms of reference of the Commission include a review of the existing mechanism of dispute resolution and methods to widen tax base.
  • The TARC will also recommend measures to strengthen inter-agency information sharing between Central Board of Direct Taxes (CBDT), the Central Board of Excise and Custom (CBEC), the Financial Intelligence Unit (FIU), the Enforcement Directorate, and also with banking as well as financial sectors.
  • It will be provided information and quantitative data of CBDT and CBEC to do statistical analysis for making recommendations.
  • It will review the existing mechanism and recommend measures to enhance predictive analysis to detect and prevent tax and economic offences.
  • It will recommend a system to enforce better tax mechanism by size, segment and nature of taxes and taxpayers that should cover methods to encourage voluntary tax compliance.
  • TARC is in line with Finance Ministers proposal that, ‘an emerging economy must have a tax system that reflects best global practises. TARC would be setup to review the application of tax policies and tax laws and submit periodic reports that can be implemented to strengthen the capacity of Indian tax system’.


‘Gaia’ to detect killer asteroids

  • The powerful Gaia space telescope designed to create a 3D map of stars in the Milky Way will also detect killer asteroids on its collision course with Earth.
  • It will be launched in November, 2013.

Significance/Importance of the telescope

  • The European Space Agency’s (ESA) 800 million pounds probe will become the Earth’s first early warning system against asteroid impacts — even though it lies centuries ahead.
  • One of the important tasks of the telescope, featuring the most high-powered video camera ever built, is to stare at the space between the Earth and the Sun to plot the tracks of the thousands of asteroids moving there.
  • Astronomers have not been able to spot such asteroids because they orbit between the Earth and the Sun; the sun’s radiation usually blinds the telescopes.  These asteroids are regarded as the most dangerous because their orbits often cross the Earth’s orbit.


Malala inspires curriculum for schools and colleges

  • Malala Yousafzai, Human Rights activist- the Pakistani girl targeted by Taliban because she championed education for girls, has inspired the development of a school curriculum.
  • George Washington University has announced that it is creating multimedia curriculum tools to accompany I am Malala, a book recently released by Ms. Yousafzai.
  • Free of charge, the curriculum will focus on themes such as the importance of a woman’s voice and political extremism. The multimedia tools won’t just look at Malala’s story, but also on how the same issues have been reflected elsewhere, such as when girls face child marriage and pressures to leave school.

First Indonesian bank branch

  • Bank Internasional Indonesia (BII), a subsidiary of Southeast Asia’s fourth largest bank Maybank, formally launched its first branch in the country.