Indian Current Affairs: 04.08.2009

Politics & the Nation

SOCIAL activist Deep Joshi, who has done pioneering work for ‘development of rural communities’, was named along with five others for the prestigious Ramon Magsaysay Award for 2009, considered as Asia’s equivalent of the Nobel Prize.
Joshi is being recognised for “his vision and leadership in bringing professionalism to the NGO movement in India, by effectively combining ‘head’ and ‘heart’ in the transformative development of rural communities.”

Finance & Economy

The prospect of a free trade agreement (FTA) between the European Union (EU) and South Korea is sending shudders through the Chennai headquarters of Hyundai Motor India (HMI).
The proposed trade pact will allow Korean carmakers such as Hyundai, Kia and GMDAT to ship their cars to Europe without paying the 10% duty levied on imports, threatening to erode the competitive advantage enjoyed by Indian carmakers in their largest export market.
This is giving tension to car makers like Hyundai India whose business model will become unviable if the FTA takes shape. Therefore, they are now looking to the government to step in do something about it.

Despite a data deluge on high value transactions, tax sleuths are not able to curb tax evasion.
The value of ‘High Value Transactions’ (HVTs) in the financial year 2007-08 was pegged at Rs 55,70,261 crore, higher than the country’s GDP that year. For 2008-09 though the figures are not yet out, they would surely be far higher.
The Centre’s gross tax revenue — which includes direct and indirect taxes — is just over 10% of the value of HVTs. (Gross tax revenue was estimated at Rs 5,93,147 crore in ’07-08.
One reason for this poor performance appears to be the lack of adequate man power. There are only around 3,500 officers on the job of scrutinising returns which means that even for carrying on with the current level of activity which is abysmally low, an officer has to perform audit of an average of 160 returns in a year. This is as compared to the OECD norm of 60 audits per officer.
The I-T department also performs miserably when it comes to recovery. At the end of 2007-08, ‘tax revenues raised but not realised’ amounted to Rs 1,03,808.52 crore.

International

Take a look at this graphic. It gives details of the scam. If you want to read the full story, you can do so here.

One way of gauzing this return is observing the spreads on credit default swaps. As they are narrowing, Indian corporates are once again able to tap global capital markets. External commercial borrowings (ECBs) by Indian companies rose (for the first time since September 2008 when the collapse of Lehman Bros in the US sent international capital markets crashing) 19% in June 2009 to $1.92 billion.
The downside is that as risk appetite returns and central banks continue their easy money stance, many corporates may be tempted to repeat the excesses of the past: borrow abroad merely because it is available without realising that once these central banks begin to withdraw this liquidity — the much-hyped exit policy — rates of interest could rise dramatically. As a result, a decision that made commercial sense could very rapidly cease to do so when interest rates rise.

Obituary: Subhas Chakraborty

A colorful mass leader with a penchant for courting controversies, Subhas Chakraborty was a rare leader of a regimented Communist party who never shied away from airing views and acting contrary to the party line.
Although his party held the view that religion was the opium of the masses, Chakraborty advocated that CPM leaders should take part in religious festivals to maintain mass contact.
He was against politicians not facing elections. He snubbed people like Karat who are not directly elected to the Parliament.
He also went against the party line of not observing the birthdays of living leaders by organising grand celebrations on Basu’s birthday every year.

Indian Current Affairs