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Insights Daily Current Events, December 06, 2013


December 06, 2013


Cabinet finally gives approval for formation of ‘Telangana state’

  • The Union Cabinet has finally approved a bill for the creation of a Telangana state with 10 districts, paving the way for the bifurcation of Andhra Pradesh to give birth to the country’s 29th state.
  • The Cabinet has broadly approved most of the recommendations made by the Group of Ministers (GoM) constituted to consider the contentious issues.

Some of the highlights of the bill are:

  • Telangana will have 10 districts and the rest of Andhra Pradesh will have 13 districts;
  • Greater Hyderabad Municipal Corporation area will remain the common capital for both states for a period not exceeding 10 years;
  • An expert committee will identify the alternative capital for Telangana within 45 days of the gazette notification; a joint public service commission will be in place for the two States;
  • Both States will have special status under Article 371-D of the Constitution for equitable opportunities. The Governor of Telangana will have a special responsibility for security of life, liberty and property of all those who reside in the common capital area.
  • Both Andhra Pradesh and Telangana will get special economic packages for development of backward regions. All tax incentives will continue for the two states.
  • National-level institutions such as IITs and IIMs and an AIIMS will be set up in Andhra Pradesh to ensure that careers of students do not get affected. All educational facilities in Hyderabad will continue for another 10 years under existing system
  • Polavaram project will be declared a national project and will be financed and executed entirely by the Centre. There will be two separate boards for Krishna and Godavari rivers.

Polity related information (from Exam point of View):

Procedure for forming a ‘New State’ (taking Telangana as an example)

  • The constitutional framework for creating a new state might not have changed much since the days of the First State Reorganization Commission headed by Justice Fazal Ali, but logistical challenges and vote bank dynamics have certainly made the task more complex. Before Telangana sees the light of the day, there are a host of legal and administrative challenge.
  • The first step has to be taken by the Union Cabinet to approve the creation of India’s 29th state. The cabinet will form a Group of Ministers (GoM) to draft proposals detailing the bifurcation process which will be eventually drafted into a bill.
  • Under Article 3(e) of the Constitution of India, the draft bill will be sent by the President to the legislature of the concerned state to seek its approval within a time frame “specified in the reference or within such further period as the President may allow.
  • Since the state of Andhra Pradesh (AP) has a bicameral legislature, both the legislative assembly and the legislative council will express their views on this draft bill. However, all this is a mere formality since the President is not obliged to consider the views of the AP legislature
  • Each house has to pass the bill by a simple majority, which in Parliamentary parlance is defined as half the members of each of the houses ‘present and voting’.
  • After passing muster in both houses of Parliament, the bill would go to Rashtrapati Bhavan for the President’s seal, specifying the date on which Telangana will be formed. This will be published in the respective gazettes of the Union government and the Andhra Pradesh government signifying the birth of Telangana


 Four-step procedure Article 3 (Article 3 of Indian Constitution addresses the topic of ‘Formation of new States and alteration of areas, boundaries or names of existing States’) provides the following procedure:

  • Presidential reference is sent to State Assembly.
  • After presidential reference, a resolution is tabled and passed in Assembly.
  • Assembly has to pass a Bill creating the new State/States.
  • A separate Bill has to be ratified by Parliament.

 ‘Politics’ has wrecked sports: Supreme Court

  • The Supreme Court regretted that national game (Hockey) has fallen victim to private interest as businessmen headed these sports bodies. (India could not even qualify for the next Olympics).
  • With regard to a petition filed by the Indian Hockey Federation (IHF) on a dispute with Hockey India (HI), it said that, sports officials were only interested in visiting foreign countries and not in promoting the game. This showed the sad state of affairs.


  • IHF had earlier appealed to restrain HI from participating in the proceedings of 3-member committee appointed by International Hockey Federation (FIH) to find out which body controlled hockey in India.
  • IHF’s plea for restraining HI to attend proceedings before the FIH’s 3-member committee was based on the fact that the Delhi High Court had ruled in its favour, thus making it (IHF) the sole body to represent Indian hockey in the international arena. HI had appealed against this order in apex court.
  • (IHF is similar to Board of Control for Cricket in India (BCCI), a registered society which administers the game of cricket).

Union Govt. rejects demand for ILP in Meghalaya

  • The Union Govt. has rejected the demand for introduction of Inner Line Permit (ILP) system in Meghalaya, saying the Constitution does not provide for expanding the special provision to new areas.
  • The centre justified its stand saying that it was bound by Article 19 (d) of the Constitution, according to which an Indian citizen has the freedom to move throughout the territory of the country. Moreover the Constitution does not allow introduction of ILP in any new area.
  • In a communication to the Meghalaya government, the Union Home Ministry has conveyed that it was bound by Article 19 (d) of the Constitution which allows any Indian citizen to move freely throughout the territory of the country.

What is Inner Line Permit (ILP) system?

  • ILP is an official travel document issued by an empowered State government to allow inward travel of an Indian citizen into a protected/restricted area for a limited period.
  • It is obligatory for Indian citizens from outside those States to obtain permit for entering the protected State.
  • The document is an effort by the government to regulate movement to certain areas located near the international borders.
  • Currently, ILP is in force in Arunachal Pradesh, Nagaland and Mizoram.
  • Various organisations in Meghalaya have been demanding introduction of ILP claiming the demography of the State has been changed due to the unabated influx.

DoT making inventory of networks for switch to IPv6

  • The Department of Telecommunications (DoT) has started compiling an inventory of all computer networks used by government departments, State and Central public sector undertakings and banks across Tamil Nadu for finalising a plan for transition to the next generation Internet address, IPv6 (Internet Protocol version 6).
  • The DoT’s road map envisaged complete migration to IPv6 by 2017-end as the address capacity of IPv4 had been exhausted.

What is an IP address?

  • An IP address is like a telephone number or a street address. When you connect to the Internet, your device (computer, smartphone, tablet) is assigned an IP address, and any site you visit has an IP address.
  • To send data from one computer to another through the web, a data packet must be transferred across the network containing the IP addresses of both devices.
  • Without IP addresses, computers would not be able to communicate and send data to each other.  It’s essential to the infrastructure of the web.

Courtesy –

IPv4 & IPv6

  • IPv4 stands for Internet Protocol version 4.  It is the underlying technology that makes it possible for us to connect our devices to the web.  Whenever a device access the Internet (whether it’s a PC, Mac, smartphone or other device), it is assigned a unique, numerical IP address such as 
  • IPv4 would be in future replaced with IPv6 (sixth revision )since the Internet is running out of available IPv4 address space (IPv4 uses 32 bits for its Internet addresses), and IPv6 provides an exponentially larger pool of IP addresses (IPv6 utilizes 128 bit addresses)


Advantages of migrating to IPv6:

  • It frees up more space for more Internet users.
  • The other benefits include better quality of service for consumers, support for high-end applications and better security features.
  • IPv6 is designed to allow the Internet to grow steadily, both in terms of the number of hosts connected and the total amount of data traffic transmitted


Policy on disposing surplus coal

  • A three-member panel, headed by Planning Commission (PC) member B.K. Chaturvedi, has said that the captive coal mining players should not be allowed to transfer surplus coal outside the end-use sector which they had been allocated for, and any surplus coal with them should be transferred to either the nearest Coal India Ltd. (CIL) subsidiary or other firms in the same sector facing shortage of coal in linkage coal from CIL.
  • And regarding ‘coal banking system’ (The coal banking proposal will allow companies to transfer coal to another company, where the end-use project has been commissioned before the coal block, and receive the coal at a later stage) CIL has expressed its reluctant to be a part of any coal-banking arrangement.
  • The Power Ministry had conveyed to the committee as well as the Planning Commission that any coal banking system should not lead to profiteering among coal block holders. The government had allocated a total of 218 captive blocks to companies between 1993 and 2011.
  • Of these, 47 blocks have been de-allocated. Captive coal-mining companies were expected to produce 100 tonnes by the end of the last five-year Plan period in March 2012.
  • However, production from captive coal mines has remained stagnant at 30-36 million tonnes over the past four years, giving rise to coal availability crisis. During the same period, CIL’s production has grown by 4.8% to 452 million tonnes.

Related information:

  • Under the Coal Mine Nationalization Act (1973), Coal Mining was exclusively reserved for public sector. Subsequent amendments & notifications allowed select end user industries to engage in captive coal mining- Iron & Steel Industries, Power generation, Cement Production.Two modes of dispensation –
  • Captive dispensation: For a specified end-use to both Private & Govt. companies
  • Govt. dispensation: No end use restriction but only to Govt. companies
  • Since 1993, a total of 198 coal blocks have been awarded to various private & Govt. companies of which 128 have been through Captive Dispensation and the rest through Govt. dispensation route.
  • However, only a handful of these mines are under commercial operation

RBI allows interest rate futures on smaller tenors

  • The RBI would introduce cash-settled interest rate futures on 10-year government bonds, and has also permitted exchanges to launch these derivatives in other smaller tenor securities in the future.
  • The RBI had twice attempted to launch the interest rate futures (IRFs), in 2003 and 2009, but both attempts failed largely due to what participants called faulty product design.
  • Market participants were keen on cash-settled futures rather than a physical delivery, which requires financial firms to deliver an actual security to the investor, as was the case in 2009.
  • The move has been hailed as bold and progressive.

What do you mean by cash-settled interest rate futures?

  • Cash Settlement is a method of settling forward contracts or futures contracts by cash rather than by physical delivery of the underlying asset. The parties settle by paying/receiving the loss/gain related to the contract in cash when the contract expires.
  • In forward or future contracts, the buyer agrees to purchase some asset in the future at a price agreed upon today. In physically settled forward and future contracts, the full purchase price is paid by the buyer, and the actual asset is delivered by the seller.
  • For example: Company A enters into a forward contract to buy 1 million barrels of oil at $70/barrel from company B on a future date. On that future date, Company A would have to pay $70 million to company B and in exchange receive 1 million barrels of oil.
  • However, if the contract was cash-settled, the buyer and the seller would simply exchange the difference in the associated cash positions.