Politics & the Nation
  • Obama raises pitch against outsourcing
    • US President Barack Obama on Thursday once again targeted the outsourcing of jobs overseas by American companies, increasing the pressure on local firms in an attempt to secure some benefit in the polls ahead of the crucial November elections in his country.
    • Obama’s party, the Democrats, face a hugely disillusioned and angry electorate on November 2, and are widely expected to lose control of the House of Representatives. The US president has spent the last few days trying to rally his base with promises to protect jobs and spur economic growth.
    • His reference to ending tax breaks does not mean that US companies get tax breaks for shipping jobs overseas. Instead, the US tax code allows them to keep the income they earn overseas without incurring a tax liability. In order to encourage more local hiring, Obama also gave a speech in January this year where he suggested a $5,000 credit for every job a company created (net new job) and an overall limit of $500,000 credit per company for availing such benefits.
    • While there is still no specific proposal elaborating how Obama plans to end the tax breaks, such measures could mean that large outsourcing customers such as GE and Citibank might have to pay certain taxes on their income from international markets, making it less attractive for customers to send IT projects to cheaper offshore locations such as India. To this end, Obama is proposing reforming the taxation of the overseas income of multinational corporations. Under current law, firms don’t pay taxes to the US government on income earned abroad until they bring the money back to the United States.
    • Many experts say that ending these tax breaks will not stop outsourcing. The economic logic of sending jobs to low-cost centres is so compelling that companies will keep doing it.
  • Sonia Gandhi chips in with a solution to the land acquisition juggernaut
    • With the hinterland witnessing several violent agitation against land acquisition, Congress president Sonia Gandhi on Thursday pitched for a policy that will ensure justifiable compensation for the displaced.
    • Ms Gandhi suggested that Haryana’s land acquisition policy was worth emulating, setting the stage for a drastic overhaul of a draft bill prepared by the Centre for amending the 115-year-old land acquisition law.
    • Ms Gandhi also said the compensation package should be a mix of cash and annuity benefits.
    • Haryana has been offering highest market rates in the country for land acquired from farmers for development projects. The state government has fixed the minimum floor rates for acquisition of land ranging from 8 lakh to 20 lakh per acre depending upon the area. Farmers also get an annuity for 33 years over and above the land compensation. The annuity has been fixed at 15,000 per acre per year, with an increase of 500 per acre every year, for 33 years.
  • Why are EVMs good?
    • EVMs not only have reduced the time to declare results but also have dramatically improved the overall conduct of elections in the country.
    • EVMs have eased the voting process, simplified the election logistics, brought down the cost of transportation — as compared to that for paper ballots, reduced the count of invalid votes and put a check on bogus voting.
    • Further, randomised assignment of EVMs to polling stations, customised arrangement of party/candidates on the EVM in order of their filing of valid nominations, a limit on votes that an EVM can capture per minute and on number of votes that it can hold — all have made the EVM-based elections healthier and far more reliable than polls using paper ballots.
    • And above all, by minimising the use of paper, we are contributing to ‘saving trees’.
Finance & Economy
  • On GAAR
    • GAAR stands for General Anti Avoidance Rule.  This is proposed in the draft DTC -- Direct Taxes Code.
    • GAAR gives sweeping powers to income tax commissioners to treat an arrangement as impermissible if ‘the intention of the taxpayer is to derive tax benefit and the transaction lacks commercial substance or is not for a bona fide purpose.’ Benefits available under tax treaties can also be denied if GAAR provisions are invoked. At a time when treaty abuse is rampant and MNCs not above cutting a sharp deal, GAAR is just the right armour for a beleaguered IT department.
  • Supreme Court rules that all payments made abroad are not within the ambit of withholding tax
    • The Supreme Court on Thursday rejected the incometax department’s contention that companies based in India were liable to deduct tax when they make any payment overseas, offering relief to domestic firms and multinational companies based here that would have had to cough up huge amounts as tax on payments made to overseas suppliers.
    • The Thursday’s judgement given by a bench comprising chief justice of India, justice S H Kapadia, and justice K S Radhakrisnan, has made it clear that withholding tax has to be deducted only if the non-resident’s income was chargeable to tax in India.
  • Titbits on cloud computing market
    • Cloud computing refers to a pay-per-use model where applications and software are accessed over internet and not owned by users. It has three parts: software-as-a-service (SaaS), platform as a service (PaaS) and infrastructure as a service (IaaS).
    • A recent study estimates the global cloud computing market will reach $70 billion by 2015. India, with its ecosystem of over 1,300 independent software vendors (ISVs), 1.4 million developers and more than 11,000 system integrators (SIs and custom software development organisations), is ideally poised to address this growing opportunity. Indian cloud computing market is expected to top $1.08 billion by 2015, from the current $110 million.
  • Necessary party vs. proper party in legal disputes
    • Take a look at this statement: The apex court also said that the CCI is a necessary party in all appeals before the Tribunal where the investigation was taken up suo moto. In all other cases, the CCI is a proper party before the Tribunal.
    • What is meant by a 'necessary party' and a 'proper party' here?
    • Necessary party is a person or entity whose interests will be affected by the outcome of a lawsuit, whose absence as a party in the suit prevents a judgment on all issues, but who cannot be joined in the lawsuit because that would deny jurisdiction to the particular court (such as shifting jurisdiction from a state to federal court). In this rare technical situation, a necessary party who is not in the suit differs from an "indispensable party," who must be joined if the lawsuit is to proceed, and from a "proper party" who could be joined but is not essential.
    • A proper party is a person or entity who has an interest (financial or protection of some legal rights) in the subject matter of a lawsuit and, therefore, can join in the lawsuit as he/she/it wishes, or may be brought into the suit (as an unnecessary party) by one of the parties to the legal action. However, the judgment may leave some matters undecided.
  • Why are Regional Trade Agreements (RTAs) flourishing?  Can WTO do something about it?
    • (Excerpted from an op-ed that appeared in today's ET.)
    • RTAs are a result of the changing international political order after 1991: the emergence of a multipolar order as against the hegemonic US dominance prior to this. While the WTO is a unique mandatory international forum, others are likely to emerge in areas like climate change. The main fault of the WTO lies in the demonstration (especially after the Uruguay round) that distribution of global economic gains is a function of distribution of political power. As US hegemony declines, the growth of RTAs might well be a consequence of emergence of multipolar negotiating blocs. Weaker developing countries, in particular are attempting to be part of every bloc possible. Regional blocs are the most (but not only) obvious choice.
    • The bottom line? As long as global economic gains are perceived as unequally distributed, RTAs will flourish. The WTO must address this issue rather than mere tariff reductions if the proliferation of RTAs is to slow down. The issue is political not economic.
Language lessons
  • skittish: Adjective
    • Unpredictably excitable (especially of horses)
    • Synonyms: flighty, nervous, skittery
  • din: Verb
    • Make a resonant sound, like artillery; Instil (into a person) by constant repetition
    • eg: Lunches aren’t free, it has been dinned into our heads long enough for ...
  • apoplexy: Noun
    • A sudden loss of consciousness resulting when the rupture or occlusion of a blood vessel leads to oxygen lack in the brain