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Insights Daily Current Events, December 07, 2013


December 07, 2013


India-Maldives relationship on the right track again

  • Following 2 years of testing times, India and Maldives are all set to restore their friendly relationship, with the upcoming visit of the newly elected President, Abdulla Yameen, from December 23 to 25, 2013.
  • On further strengthening of the ties between the two countries, India would formally hand over an indigenously made helicopter for surveillance and domain awareness operations in northern Maldives.
  • India has already gifted Maldives an advanced light helicopter (ALH) for its southernmost island Addu. This ALH will be for the northern most inhabited island.
  • Also both sides would be signing a package of measures to resume projects that had been stalled after Mohd Nasheed was ousted as President in February, 2012.
  • These include the construction of a national police academy, refurbishing of the Indira Gandhi Hospital in Male and setting up a faculty for teaching tourism and hospitality.
  • Also there are other issues – cancellation of a contract given to GMR, said to be the single biggest foreign investment proposal in Maldives, Tata Housing’s real estate project and Tattva Global’s contract for waste management, which needs to be looked into for better diplomatic relationships between the two countires.

India and Middle-East

  • External Affairs Minister Salman Khurshid would be visiting ‘Middle-East’ to take stock of the evolving alignments there following the developments on Iran’s nuclear issue and Saudi Arabia’s refusal to take up a non-permanent seat in the United Nations Security Council.
  • Mr. Khurshid would also visit Manama (Bahrain), where he would hold talks with the top leadership and also participate in the Manama Dialogue. Bahrain too has had its share of Arab Spring that led to intervention by Saudi Arabian security forces. But the level of violence has been negligible compared to some other countries in the region.
  • Bahrain’s importance for India stems from it being the home to more than 3.5 lakh Indians, the largest expatriate community in the country. It is part of the six-nation Gulf Cooperation Council where over 70 Indians live. India sources 60 % of its oil from the region with cumulative trade of over $170 billion.

Courtesy –

India’s stand prevails in Bali meet

  • Finally at the 9th Ministerial of the WTO, the draft Ministerial Decision put up for endorsement to the member-countries safeguards India’s position on both food security and trade facilitation.
  • However, Cuba and Venezuela are delaying the adoption of the Ministerial draft for due to some issues concerned with the respective countries.
  • The draft proposes an interim mechanism to safeguard minimum support prices (MSP) to farmers against WTO caps till a permanent solution is adopted.
  • Adoption of the draft would be the first major decision of the century on global trade after the WTO came into being.


Revenue-sharing norm for oil sector as per recommendation of Rangarajan Committee & CAG

  • The Finance Ministry has asked the Petroleum and Natural Gas Ministry to formulate a proposal for inter-Ministerial consultations on the revenue sharing arrangement suggested by the Rangarajan Committee for the oil and gas sector.
  • In the 2013 Budget speech the Finance Minister had stated that oil and gas exploration contracts would be awarded on a revenue-sharing basis, shifting from the current profit-sharing one.
  • The Comptroller and Auditor General (CAG), in its report in 2012, had strongly pitched for shifting to a revenue-sharing formula, stating that the current production-sharing contracts (PSCs) provided for explorers to first recover all of their capital and operating expenditure before sharing profits with the government under a specific formula. However, gas producers have strongly opposed to the new formula. But the Finance Ministry is keen that the new formula should be adopted for the oil and gas blocks offering under New Exploration Licensing Policy (NELP) Round X, expected in 2014.
  • The CAG had, in its report, criticised the Petroleum Ministry and the Directorate-General of Hydrocarbons for having failed to protect the government’s financial interests, and had called for structural changes in the present PSCs for the management of hydrocarbon exploration and production, involving the private sector.
  • Under the revenue-sharing model, there is no element of cost-recovery, and the government and the operator will share revenues according to a pre-determined formula.

Double taxation Avoidance Agreement (DTAA)

What is Double Taxation?

Double taxation is the levying of tax by two or more jurisdictions on the same declared income (in the case of income taxes), asset (in the case of capital taxes), or financial transaction (in the case of sales taxes). This double liability is often mitigated by tax treaties between countries.

What is Double Tax Avoidance Agreement (DTAA)?

DTAA also referred as Tax Treaty is a bilateral economic agreement between two nations that aims to avoid or eliminate double taxation of the same income in two countries.

DTAA provides that business profits will be taxable in the source country if the activities of an enterprise constitute a permanent establishment (PE)


  • Deals with the black money menace
  • Provides solutions to avoid double taxation of same income
  • The agreements generally provide for other matters of common interest of the two countries such as exchange of information, mutual assistance procedure for resolution of disputes and for mutual assistance in effecting recovery of taxes
  • It will provide tax stability to the residents of both the countries and will facilitate mutual economic


A large number of foreign institutional investors who trade on the Indian stock markets operate from Mauritius and the second being Singapore. According to the tax treaty between India and Mauritius, capital gains arising from the sale of shares are taxable in the country of residence of the shareholder and not in the country of residence of the company whose shares have been sold. Therefore, a company resident in Mauritius selling shares of an Indian company will not pay tax in India. Since there is no capital gains tax in Mauritius, the gain will escape tax altogether.

Courtesy- Economic Times, Wikipedia,


‘Open Defecation’ a bane to the Indian society & the economy as a whole

  • According to a recent report released by WHO and UNICEF, over half of the India’s population defecate in the open. This has serious consequences on the health of the individual and ‘demographic dividend’ and the future growth prospects of India.
  • Though experts and political leaders have raised this issue and called for “more toilets than temples”, there is not much improvement in this regard.
  • India to its record has most number of people who defecate in the open and Bihar alone has a higher rate than any other country in the world to continue this practice indicates the seriousness of this issue.
  • Even neighbouring countries like Bangladesh, Pakistan, Nepal have done well in this regard. For instance by reducing open defecation from 32% to 4% during 1990-2011, Bangladesh has fared extremely well. The reduction has been about 50% in the case of Nepal (84 to 43%) and Pakistan (52 to 23%) during the same period( in India, the reduction is from 74% to only about 50% in 2011)
  • Determined to resolve this issue, the Indian government has come up with its mission to completely eliminate this practice by 2022 and 50% of all gram panchayats by 2017. And had also taken certain measures like increasing the amount to be spent for household toilets in rural areas from Rs.4,600 to Rs.10,000 in 2012.
  • However, it must be realised here that, financial incentives alone cannot end or drastically reduce the percentage of people continuing with this practice. If other countries have achieved it, there is no reason why India cannot do it.
  • The need to aggressively address the issue cannot be overemphasised as open defecation affects children, especially those below five, the most. This practice causes diarrhoea, one of the most common communicable diseases in India and a number one killer of young children. Frequent diarrhoeal events result in under-nutrition. This is why nearly 50 % of under-five children in rural areas are stunted, wasted and underweight. Children weakened by this disease are in turn more prone to opportunistic infections such as pneumonia.
  • A recent report released by the World Bank reveals even more dangerous consequences- it has gone beyond the physical impact of this issue and has found a link between open defecation and reduced cognitive achievements. It’s high time that the government shows more pro-activeness and creates awareness on this issue

(As a ‘tribute’ to a Great Leader and Human Being we have included this article on Nelson Mandela !! )

The world has lost one of the greatest figures of the 20th century in the passing of Nelson Mandela, iconic revolutionary who ended apartheid in South Africa. Africa’s last great statesman, Mandela presided over a largely peaceful political transition and stepped aside after only one term in power.

He was the first black President of South Africa and under his aegis, the country dismantled the institutional legacy of apartheid and racism. He remained the country’s moral compass in the silence of his twilight in much the same way he served as the liberation movement’s rallying cry through 27 years of incarceration.

He appointed a Truth and Reconciliation Commission that might have fallen short of conclusively addressing apartheid-era atrocities but saved the nation from a descent into bloodshed.

The former President is being mourned across the nation. His loss is most acutely felt at the headquarters of the African National Congress (ANC), the party he joined in 1943 and subsequently led to electoral victory in 1994. In a manner reminiscent of the Indian National Congress (INC) in post-Independence India, the ANC has long used Mandela’s name and liberation credentials to cement its position as the natural party of government. The prolonged and often bitter row between the government, his heirs and sections of the party about his hospitalisation, burial site and memorial foundation underscored his continued importance to the ANC’s project of political hegemony long after his retirement.

Mandela’s death comes at the time when the ANC is preparing for an election that may see its share of the vote fall below 60%, illustrating creeping voter discontent. Moving forward, the ANC’s greatest challenge is likely to be the “born frees”, a generation of South Africans born after the collapse of the hated colonial regime, who are less susceptible to the party’s emotive message of liberation.

For these young citizens, the most poignant reminder of oppression is the one that Mr. Mandela did not address — land, natural resources and the ownership of Africa’s richest economy. Rather than democratising the economy, Mr. Mandela’s successors have used so-called black empowerment programmes to enrich a tiny elite, creating space for a mass politics as espoused by Julius Malema, a firebrand former ANC Youth League leader who has launched his own political front, the Economic Freedom Fighters (EFF). Mr. Malema is himself facing charges of corruption, suggesting the EFF may not be the ANC’s most potent foe.

Statesmen are forged and ultimately limited by the circumstances of their struggles. By leading his country out of the horrors of racial segregation, Mr. Mandela has won his place in history. His successors must now seek their own.

Courtesy – Hindu Newspaper