Indian Current Affairs: 08.12.2010

Politics & the Nation

Raising productivity on the farm dovetails into the other challenge facing the Indian economy, of releasing large tracts of land for urbanisation, building roads, opening mines, etc. Paucity of well-connected urban land jacks up the capital and working costs of everything, ranging from hospitals and schools to industry and services. The problem is not shortage of land that can be converted into urban land, but absence of a policy that would harmoniously release land, while making land-losers stakeholders in the new development on their land. The key to releasing land for non-farm use and raising farm productivity is political engagement with the peasantry and the landless poor. Absence of such engagement and resultant alienation of the rural poor will strengthen the forces of schism represented by Maoists and religious terrorists of various shades.
Assorted scams delegitimise state action and actors. A concerted move to clean up political funding and combat corruption now qualifies as growth sustaining reform. Institutional reform to expand and cleanse the judiciary, speed up prosecution and reform political funding are pro-growth steps that brook no delay.
Excerpted from today's ET editorial.

The Indian Mujahideen carried out a low-intensity blast near a crowded temple in Varanasi on Tuesday evening, killing an eighteen-month-old girl and injuring 32 others. An Italian tourist is among the injured. The Indian Mujahideen claimed responsibility and attributed the attack to ‘retribution’ for the demolition of the Babri Masjid. It warned that the date “would haunt India until Muslims are paid back justly and fairly for the loss of the beloved Babri Masjid.
The holy city of Varanasi has been the target of terror attacks in recent years. Terrorists planted bombs at famous Sankatmochan temple in March 2006. This attack killed 22 people. The Sankatmochan blast was also triggered off around 6.30 pm on a Tuesday, the day when special prayers are offered to Hanuman.
Serial blasts took place in the court premises of Varanasi in November 2007. They were reportedly in protest against the refusal of the lawyers to take up the cases of terrorists being tried by UP courts. Earlier, in February 2005, bomb blasts at the Dashashwamedh Ghat claimed 8 lives.

In yet another embarrassment for the UPA, the Madras High Court on Tuesday confirmed that it was A Raja, who in 2009, allegedly tried to influence a High Court judge’s decision in a case being probed by the CBI.
The court also suspended from the bar a top lawyer, RK Chandramohan, who was allegedly involved in the attempt to influence the judge at the minister’s behalf.
A division bench, comprising Justice FM Ibrahim Khalifulla and Justice MM Sundaresh, passed the order suspending Chandramohan from the bar.
The attempt at influencing the judge relates to a case of a father and a son, accused in a marks scandal case in Puducherry, seeking anticipatory bail. The lawyer in that case -- RK Chandramohan -- had approached the judge -- Justice Reghupati -- and handed over his mobile phone to the judge saying that the Union Minister is on line to talk to the judge. Justice Reghupati for his part reportedly discouraged such conduct and had complained to the Chief Justice of India without naming the minister.

A special court of the Central Bureau of Investigation has sentenced former Uttar Pradesh chief secretary Neera Yadav to four years imprisonment after finding her guilty in a 2002 land allocation case.
The charges pertain to illegal allocation of commercial plots in Noida while Yadav, a 1971 batch IAS officer, was the chief executive of the New Okhla Industrial Development Authority.
Despite a barrage of corruption charges against her, Yadav was named chief secretary of Uttar Pradesh in 2005 by the Mulayam Singh Yadav government. In an unprecedented move, the Supreme Court then intervened to direct her removal from the post, as she was facing 23 departmental proceedings at that time and was chargesheeted in corruption cases.
The UP IAS Association ranked her among the most-corrupt officers in a poll conducted in 1997. Yadav took voluntary retirement when Mayawati came to power in 2007. Her husband, Mahendra Singh, a former police officer, was a minister in the BJP government in the state. Singh later joined the Samajwadi Party. Both Singh and Yadav joined BJP in 2009.

Finance & Economy

We all know that the Malegam Committee, appointed by the RBI, is looking into the regulation of MFIs. Reported suicides by borrowers in Andhra Pradesh, crass overlending (many borrowers have up to 10 simultaneous loans from different MFIs), high interest rates (typically 30% or more) and coercive recovery methods are among the issues to be examined.
Take a look at this article by SSA Aiyar giving some thoughts on how the regulation should be. The gist of his argument is that the for-profit MFIs have served a useful social purpose the world over, and need a place in the Indian financial system, too, subject to regulation.

Or is it just a case of some greedy or corrupt bankers being caught with their pants down?
Soon after the arrests, officials from the respective banks were quick to comment that all credit delivery procedures were followed. They went on to say that there is no violation of prudential norms or lending to financially unviable projects. The quality of assets has not been affected etc.
However, if such a development — bankers refuse to call it a scam — has happened despite banks having followed “prudential lending norms”, there could be a loophole in the system. Denying the existence of loopholes, most bankers laid the blame on intermediaries or loan syndicators, whom they felt should be banned because of their propensity to target the most vulnerable banker.

Look at this item which reports about the mid-year review of the economy by the government. India is poised to grow by over 9% in 2011.
Take a look at this graphic too.

The Competition Commission of India has ruled that the foreclosure charges on housing loans being levied by banks is not anti-competitive behaviour.
Read this report in full to know its reasoning.

International

The US government sold off its remaining shares in Citigroup on Monday for $4.35 each, marking an exit from ownership in the bailed-out banking giant with a $12 billion gross profit for taxpayers.
The US Treasury invested a total of $45 billion to bail out Citigroup in 2008 and 2009 during the financial crisis. The company paid back $20 billion in preferred stock, while another $25 billion was converted to 7.7 billion common shares held by the Treasury. It had whittled that stake down over the past year from 27% to less than 7% through controlled sales in the market.
The move to sell the remaining shares in one large offering follows last month’s successful initial public offering in General Motors, which significantly reduced the government's stake. The GM IPO attracted strong interest from domestic institutional investors and foreign sovereign wealth funds alike.
The Treasury said its estimate of a cumulative $12 billion profit from the $45 billion bailout includes gains from the sale of common stock of around $6.85 billion, interest and dividends of $2.9 billion and $2.2 billion in Trust Preferred Securities it received for guarantees on a pool of Citigroup assets.

Indian Current Affairs