Indian Current Affairs: 22.05.2009

Politics & the Nation

This is an excellent piece that appeared in today's ET on the subject. Worth a read. Some excerpts for our record:

From Rs 12,000 crore in 2002-03, India’s capital defence procurement budget is expected to touch an estimated Rs 54,000 crore in 2009-2010. If the projected estimations are any indication, India is likely to spend nearly $100 billion on military procurement during the current five year plan (2007-12) and $120 billion in the next plan period (2012-17), the latter coinciding with the last phase of India’s ambitious military modernisation plan. It is thus no surprise that India is a weapons merchants’ paradise.

Despite having a sizeable state-owned defence industrial base, the indigenous contribution to meeting military requirements is pegged at less than 30%.
A set of policy initiatives have followed since 2002, when the government decided to open up the defence sector for private participation and allowed 26% FDI. The government also started implementing many recommendations made by the Kelkar Committee in 2004 toward strengthening self-reliance in defence. It consequently introduced ‘direct offsets’ in large defence contracts under defence procurement procedure in 2005 (DPP, 2005). Offsets provisions have further been elaborated in DPP, 2006 and DPP, 2008 respectively, with offsets banking clause being the latest addition in the latter.

While noting can be a substitute for a full explanation given in the above referred article, we make an attempt at noting the concise points:

Ill-defined offset obligations.
Lack of clarity about offset obligations.
Consensual nature of agreements between suppliers and recipients makes the results non-quantifiable.
Establishmentarian mindsets of the government officials leaves the foreign suppliers clueless while keeping the local businessman frustrated in making the offset policy work.
The state of India - neither being too undeveloped and nor being well developed -- is a contributing factor for the failure of the offset policy takeoff.

This is a Rs. 450 crore initiative from the government that seeks to monitor all communication traffic in the country. In the wake of the Mumbai terror attacks, such monitoring has become a necessity. Read this report to get more details.

Finance & Economy

Agreements that will not be considered anti-competitive are called vertical agreements, which include deals between a manufacturer and a distributor or a retailer aimed at reducing cost and enhancing efficiency.
However, another class of agreements called horizontal agreements, or a cartel, will be presumed as anti-competitive, with the onus of proving innocence lying with the company charged with cartelisation.
The country’s newly formed competition regulator is unlikely to consider agreements among companies aimed at boosting efficiency as anti-competitive, unless it can be conclusively proved that such pacts hamper fair competition.

International

This proposed legislation of the US, which is still at not passed as Act, looks at tripling the US aid to Pakistan. A key congressional panel has passed this legislation granting $1.5 billion annually in non-military aid to Pakistan after dropping an explicit demand to stop cross border terrorism into India. However it mandates that Pakistan will have to prevent cross border attacks into neighbouring countries and cease support, including by any elements within the Pakistan military or its intelligence agency, to extremist and terrorist groups. This is an obvious reference to the support cross border terrorism has been receiving from Pakistani establishment - whether or not it is state controlled.
The panel has also dropped another explicit demand for giving US access to nuclear proliferator AQ Khan as one of the conditions for aid. Instead, it now seeks US “access to Pakistani nationals” who are connected to the proliferation network.
There could be many more changes before the legislation becomes an Act.
India is keenly watching the progress of this legislation in the US.

Read this story. It is really heartening to note that the Rajapaksa government is making the right noises and appears genuinely set for some devolution of power. It should not go back on its promises and get on with the devolution as envisaged in the 13th Amendment and the Indo-Sri Lanka peace accord.

The 13th amendment to the Sri Lankan constitution gave effect to the devolution provisions of the Indo-Lanka Accord, signed in July 1987 by President J.R. Jayewardene and the Indian Prime Minister, Rajiv Gandhi.
It sought to devolve power to newly instituted provincial councils throughout Sri Lanka. It contained three lists detailing respectively the areas of government devolved to the provinces (List I), the powers retained at the centre (the Reserved List — List II) and a Concurrent List (List III) of shared functions which were ultimately controlled by Parliament. The provincial councils were elected in November 1988, but a number of clauses in the amended constitution allowed for the blocking of substantive devolution.

Without our noticing it, many a western country is losing its credit rating.
Britain became the fifth western European Union nation to lose its rating because of the economic slump, following Ireland, Greece, Portugal and Spain.
The UK’s debt load next year will be 66.9% of GDP, exceeding Canada’s 29.1% and Germany’s 58.1%, according to forecasts by the International Monetary Fund.
The US will be at 70.4%, and the 16-nation euro area at 68%, with France at 70.6%, according to the IMF.

Language lessons

A legislative appropriation designed to ingratiate legislators with their constituents
eg: The malaise in the infra area in the recent past was aided by poor governance and pork barrel politics in spite of Dr Singh assuming command of the situation.

Vain and empty boasting
eg: While the government babus engaged in braggadocio, the private industry also joined the bandwagon.

Indian Current Affairs