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Insights Daily Current Events, December 25, 2013

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December 25, 2013

NATIONAL

Half of Odisha’s iron ore mines lack clearance: Shah Commission

  • According to the Justice M.B. Shah Commission report on illegal iron and manganese ore mining – 94 of the 192 iron ore mining leases in Odisha do not have the mandatory environmental clearances. And of the 96 that did have them, 75 have mined far beyond their permitted levels over the past several years.
  • The report reveals that, how the mines have continued to use a loophole in the law for years and atrociously violated environmental and other norms to pump out iron at a time when international prices of the metal are booming.
  • The mining leases operated close to wildlife areas without adequate protection to wildlife. The mandatory forest clearances had not been obtained in several cases. Water bodies in and around the mines had been polluted. Water had depleted in natural streams in some cases and forestlands impacted adversely in several.
  • A mining project within 10 kilometre vicinity of a protected wildlife area requires mandatory clearance from the National Board of Wildlife, which too was not obtained in several cases.
  • According to the Shah Commission both the Central government authorities and the Odisha government were responsible for the blatant and wide-ranging illegal mining that have continued unchecked for years. It has recommended that the entire extraction in all cases where leases operated without mandatory environmental clearances be treated as illegal and the market value domestic or export recovered from defaulting miners.

Courtesy – Hindu Newspaper

To know more Shah Commission refer our ‘Insights Current Events Analysis Magazine’ (OCTOBER, 2013)

Mind-mapping:

  • Impact of illegal mining on the environment, wildlife and economy of India (also on the health of the people). What are the measures taken by the govt in this regard?
  • Amid a number of rules & regulations and laws formulated by the govt. there have been frequent violations. What do you think is the reason behind it? How can this be rectified? (link this with Goa, Karnataka mining scam)
  • Why was Shah Commission set up?

National Sample Survey Organisation (NSSO) Survey

One-eighth of India’s urban population lives in slums: NSSO

  • According to the latest round of the National Sample Survey – just under 9 million households, or roughly one-eighth of India’s urban population, lives in a slum. The number is significantly lower than the 14 million slum households identified by the Census in 2011
  • NSSO, like the Census, has taken into account both slums notified as such by the State government or the local body, and non-notified slums. The NSSO definition of a non-notified slum was slightly more generous than that of the Census; any crowded settlement with poor sanitation and at least 20 households was considered a slum by the NSSO, while the Census required at least 60-70 households.
  • Maharashtra accounted for 23% of the total slum population according to the NSSO, followed by Andhra Pradesh and West Bengal. Over half of the slum population lived in 53 million-plus cities.

Survey finds better levels of access to drinking water

  • New data on the status of drinking water and sanitation released by NSSO i.e., the 69th round of the National Sample Survey has found significantly better levels of access to drinking water and toilets compared to 2011 census.
  • Over 46% of households in rural India and 77% of households in urban India had drinking water sources within their premises. Compared to the 2011 Census data which had just 35% of rural households and 71% of urban households had drinking water within the premises.
  • Among households in which people had to leave the house to get water, rural population had to spend 20 minutes on average, while for urban households, it took 15 minutes. Residents of Jharkhand had to spend the longest time in fetching water 40 minutes in both rural and urban areas.

INTERNATIONAL

India, Pakistan resolve to protect Line of Control truce

  • The Directors-General of Military Operations (DGMO) s of India and Pakistan have reiterated the resolve and commitment of both sides to continue efforts for ensuring ceasefire, peace and tranquility on the Line of Control (LoC).
  • At the meeting, the first between the DGMOs in 14 years, the two sides have resolved to work towards improved communications between the two by re-energising the existing mechanisms including their hotline contact. Consensus was developed to make hotline Contact between the two DGMOs more effective and result oriented.
  • The talks between the two military officials, held at Wagah in Pakistan, came at the end of a year of extraordinary tensions along the LoC threatening the 10-year-old ceasefire. The last DGMOs meeting was in 1999 after the Kargil war. Consensus was developed to make hotline contact between the two DGMOs more effective and result oriented.
  • The two sides will also hold two Brigade Commander-level flag meetings in the near future, most likely at Uri and Poonch on the LoC.
  • The two sides also agreed to inform each other if any innocent civilian inadvertently crosses LoC to ensure his or her early return.
  • Also there were discussions to check on infiltration, since in 2013 alone there have been 267 attempted infiltrations of the LoC. In January, 2013 two Indian soldiers were killed, one of whom was beheaded. In August, an ambush from the Pakistani side killed five soldiers in the Poonch area.
  • There were also discussions regarding issues concerning the 15 brigades deployed by the Indian Army on its side of the border. India had earlier refused to get drawn into Pakistan’s attempts to include international third parties in the meeting and to discuss a greater role for United Nations observers in ensuring peace along the border or LoC.

To know more about DGMOs, LoC and Border issues between India and Pakistan refer our ‘Insights Current Events Analysis Magazine’ (OCTOBER, 2013)

Mind Mapping:

What do you understand by hotline? Significance of hotline.

Why was the DGMO meeting also these years (nearly for 14 years)? With the DGMO meeting convened recently, what are the future prospects for both India and Pakistan?

Importance of LoC. Border issues between the two countries?

Nepal impasse comes to an end as political parties reach accord

  • Nepal’s political parties, whose differences on the way ahead had led to a deadlock, reached a four-point agreement paving the way for the dissenters to join the Constituent Assembly (CA).
  • The parties have agreed to constitute a parliamentary committee to “investigate and submit suggestions on the questions raised about the CA election.” This was a concession to the UCPN (Maoist) and other dissenting parties which had been demanding a high-level commission outside Parliament to probe election-related questions as one of the conditions to join the CA. The UCPN (Maoist), the largest party in the first CA, had initially welcomed the successful conduct of the second CA election. However, it alleged systematic fraud after the trend showed it was set to lose heavily.
  • The parties also agreed to prepare the draft of the new constitution as per the spirit of the ‘12-point agreement’, the Comprehensive Peace Agreement and the Interim Constitution within six months and promulgate it in a year. They have decided to form a high-level political mechanism with top leaders of major parties as its members in order to complete the remaining tasks of the peace process and help write the constitution. The convenor of the mechanism would be appointed from within the CA.
  • There was also accord on forming a Truth and Reconciliation Commission (TRC), and a Commission on Enforced Disappearances. Both of these commissions have been long overdue. The parties pledged to form them on numerous occasions but never acted on their promise.
  • The leaders of eight political parties – the Nepali Congress, the CPN-UML, the CPN (Maoist), the Madhesi Janadhikar Forum (Democratic), the Tarai Madhes Democratic Party, the Madhesi Janadhikar Forum Nepal, Sadbhawana Party and the Tarai Madhes Sadbhawana Party – signed the agreement. They endorsed the draft of the agreement that was decided by the NC, the UML and the UCPN (M) at an earlier meeting.
  • The agreement was possible after the Nepali Congress and the CPN-UML persuaded the UCPN (Maoist) to soften its stance on joining the CA. The two largest parties – the NC and the UML – had stood firm in the face of demands from the UCPN (M) which subsequently backed down from its position. The Maoists had initially put forth five conditions, including forming of a commission to investigate ‘election fraud’, its chairman Pushpa Kamal Dahal Prachanda as permanent convener of the political mechanism, amendment to the Interim Constitution to take decisions only by consensus, and hold a new election within a year after promulgating the constitution. There was no disagreement over its suggestion of moving forward as per the 12-point agreement, the Comprehensive Peace Agreement and the Interim Constitution.
  • The parties also decided to request the Election Commission yet again to extend the deadline to submit the names of the elected candidates under the proportional representation (PR) electoral system for five more days. The EC has already extended the deadline twice. The election to the Constituent Assembly (CA) was held on November 19, 2013. The deadline extension would further delay the convening of the first meeting of the CA.

ECONOMICS

SEBI makes IPO grading mechanism voluntary

  • The Securities and Exchange Board of India (SEBI) has approved the SEBI (Procedure for Search and Seizure) Regulations, 2013, made on the lines of the provisions in the Income Tax Act, 1961’. This would provide detailed procedures for search and seizure by the regulator.
  • This would also help the market regulator execute search operations and ensure safe custody of any books of accounts or other documents that are seized, as per the Securities Laws (Amendment) Second Ordinance, 2013.
  • The Ordinance has conferred direct powers on SEBI Chairman to authorise the investigating authority or any other SEBI officer to search any premises where incriminating documents are lying and seize such documents for the purpose of investigation.
  • The board has also decided to allow public financial institutions and scheduled banks, issuers authorised to make public issue tax free secured bonds, infrastructure debt funds non-banking financial companies (NBFC) to file shelf prospectus.
  • Earlier, the Companies Act, 1956, had allowed only banks and public financial institutions to file shelf prospectus. However, the Companies Act, 2013, enables SEBI to specify the companies, which can be allowed to file shelf prospectus.
  • SEBI also approved the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2013, which includes guidelines for determining the settlement terms.
  • However, SEBI has excluded serious offences such as insider trading, from the scope of settlement. In order to impart transparency in the process, the roles of internal committees and high powered advisory committee are specifically defined and the regulations also provide for terms of settlement in monetary as well as non-monetary terms or combination of both.
  • SEBI also made IPO grading mechanism ‘voluntary’ instead of ‘mandatory’, amending SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009. And to align with the principles laid down by Financial Stability Board (FSB) on reducing the reliance on Credit Rating Agencies, the SEBI Board has approved the proposal to make the IPO grading mechanism ‘voluntary’ as against the current provision of the same being ‘mandatory’.

New rules for foreign investors

  • The government has agreed to provide similar tax treatment to foreign portfolio investors (FPIs), as available to FIIs now. The three categories of foreign portfolio investors – FIIs (foreign institutional investors), sub-accounts and qualified foreign investors (QFIs) would be given similar tax treatment as available to FIIs now.
  • The new rules aim to bring all foreign investors under a common framework called the SEBI (Foreign Portfolio Investors) Regulations, 2013. These measures come at a time when the rupee has weakened considerably against the dollar and recently hit its all-time low levels of 60 against the U.S. currency. Also, FIIs have been pulling out money from the Indian debt market, which has resulted in lower yields on government bonds.

Related information:

Foreign portfolio investment (FPI):

  • FPI is the entry of funds into a country where foreigners make purchases in the country’s stock and bond markets, sometimes for speculation.
  • It is a usually short term investment (sometimes less than a year, or with involvement in the management of the company), as opposed to the longer term Foreign Direct Investment partnership (possibly through joint venture), involving transfer of technology and “know-how”.
  • For example, Ford Motor Company may invest in a manufacturing plant in Mexico, yet not be in direct control of its affairs. Foreign Portfolio Investment (FPI): passive holdings of securities and other financial assets, which do NOT entail active management or control of the securities’s issuer.
  • FPI is positively influenced by high rates of return and reduction of risk through geographic diversification. The return on FPI is normally in the form of interest payments or non-voting dividends.

Courtesy- Wikipedia

To know more about Financial Stability Board (FSB):

  • The FSB has been established to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies.
  • It brings together national authorities responsible for financial stability in significant international financial centres, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts.
  • The FSB is chaired by Mark Carney, Governor of the Bank of England. Its Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.
  • As obligations of membership, members of the FSB commit to pursue the maintenance of financial stability, maintain the openness and transparency of the financial sector, implement international financial standards, and agree to undergo periodic peer reviews, using among other evidence IMF/World Bank public Financial Sector Assessment Program reports.

Courtesy- http://www.financialstabilityboard.org

To know more about IPO, refer our ‘Insights Current Events Analysis Magazine’ (NOVEMBER, 2013)

Reserve Bank warns against Bitcoin use

  • The RBI has warned the public against the use of virtual currencies such as Bitcoin, pointing out that users expose themselves to potential financial, legal and security related risks.
  • The advisory comes after the borderless digital currency has begun to gain widespread acceptance in India, despite poor Internet penetration and a natural scepticism to assets not backed by tangible entities such as land.
  • The RBI also said that it had been examining the issues associated with the usage of virtual currencies under the legal and regulatory framework of the country. In its list of potential risks, the RBI has highlighted problems such as losses arising out of hacking, no sources of customer recourse and the general financial volatility surrounding Bitcoins.
  • According to RBI, ‘the creation, trading or usage of virtual currencies including Bitcoins are not authorised by any central bank or monetary authority. As such, there is no established framework for recourse to customer problems’. Also as Bitcoins are being traded on exchange platforms, whose legal status is unclear, the traders of virtual currencies are exposed to legal as well as financial risks.
  • Bitcoins, and other virtual currencies, have been gaining currency quickly in India. According to SourceForge, an online platform that connects consumers to open-source projects such as Bitcoin and facilitates client downloads, there have been more than 35,000 downloads in India since the launch of Bitcoin in November, 2008.
  • A number of India-based trading platforms and exchanges have sprung up over the last six months, catering to Indian users by allowing them to purchase Bitcoin in rupees. The RBI, however, has pointed out that no regulatory approval has been obtained by any entities that carry out such activities.
  • Also there have been several media reports on the usage of Bitcoins for illicit and illegal activities. Hence the RBI has warned that, the absence of information of counterparties could subject users to unintentional breaches of anti-money laundering.

To know more about Bitcoins refer our “Insights Current Events Magazine, NOVEMBER 2013” and http://insightsonindia.com/2013/12/17/all-about-bitcoins/