28.12.2010

Politics & the Nation

• PM can't appear before the PAC, say the Rules
• Rule 99 of the Directives of the Speaker did not allow any scope for the prime minister’s personal appearance before the PAC.  The rules are very clear that no minister can be summoned or consulted when the process is on. And consultations can only take place at an informal level after the process is over.
• The rules were amended in 1966 for limiting parliamentary panels’ powers to summon ministers. The last minister to be summoned by a parliamentary committee was C Subramaniam, who held the portfolio of steel.
• However, panel chairman Joshi told reporters that a decision on summoning the prime minister will be taken at an “appropriate time”.
• The Opposition seized upon the limitations imposed by the rules to drive home the point that a JPC alone is the forum for extensive investigations. The leaders of the Opposition also maintained that they will not back down from the demand for the constitution of a joint House panel.
• Telangana MPs on fast
• A crisis is staring the Andhra Pradesh government in the face, following the decision of 11 Congress MPs from Telangana to go on an indefinite hunger strike, asking the government to withdraw all cases against those who took part in the campaign for a separate Telangana state. The students facing charges are largely from Osmania University.
• Earlier this month, the government had withdrawn 562 cases against 2,436 people who participated in the protests for Telangana. About 1,667 cases were filed against 8,047 people between December 2009 and September this year.
• Union Home Minister P Chidambaram had, on December 9 last year, assured that measures would be taken to withdraw cases against students and other agitators. But the state police refused to withdraw the cases saying it would set a wrong precedent.
• An embarrassed government finally gave in to pressure and decided to drop 132 more cases against Telangana protesters on Monday. The decision was taken in a review meeting held by the chief minister along with Home Minister P Sabita Indra Reddy and DGP K Aravinda Rao.
• However, the protesting MPs refused to relent and have decided to continue the fast.  The MPs have also asked the government to withdraw central paramilitary forces from Telangana. The forces were deployed four days ago fearing law and order problem once the Justice Sri Krishna panel, set up to look into the Telangana demand, submits its report on Thursday.
• Son-in-law’s land bank hits former CJI
• A fortnight ago, National Human Rights Commission (NHRC) chairman KG Balakrishnan was on a mission in Kerala’s Kasaragod district to ensure justice for those affected by the toxic side effects of the pesticide endosulfan. In a curious turn of events, Balakrishnan — a former chief justice of the Supreme Court — is now facing allegations that his family members are involved in noxious property deals in Kerala that run into several crores of rupees.
• Within hours of a Malayalam television channel putting out a report pointing to suspicious land deals of Balakrishnan’s son-in-law PV Sreenijan, former Supreme Court justice VR Krishna Iyer demanded that a panel of two or three judges should investigate the matter and punish whoever is found guilty.
• Justice Krishna Iyer, a minister in the EMS Namboodiripad ministry in Kerala in 1957, said it was “a shame” that the names of lawyers and those at the high levels of the judiciary were linked to corruption.
• On Friday, the NHRC is expected to release its report in New Delhi on the endosulfan disaster in Kasaragod district, and suggest recommendations, based on the findings of its team led by KG Balakrishnan that visited Kasaragod on a fact-finding mission. By the time that report is released to bring succour to the pesticide-affected persons in Kasaragod, justice Balakrishnan may himself be at the receiving end of equally toxic findings involving his near and dear ones.
• India may drag US to WTO over H-1B, L-1 visa fee hike
• India may drag the United States to the World Trade Organization, or WTO, over its decision to raise professional visa fees for an extended period and impose a 2% import levy on goods and services sold to the US government.
• The commerce department is studying details of the James Zadroga 9/11 Health and Compensation Act of 2010 which aims to increase visa fee and import taxes on supplies to government to set up a $4.3 billion fund for sharing the healthcare burden of those affected by 9/11 terror attack in New York.
• The final bill, which is now with US President Barak Obama to be signed into law, spells more trouble for Indian industry than the one initially proposed as it imposes an additional levy of 2% on all goods and services sold by Indian companies to the US government and extends the period for higher visa fees from 2014 to 2021.
• The first step would be to seek consultations with the US at the WTO on the contents of the bill and if the matter doesn’t get resolved, a dispute settlement panel could be set up.
• The 2% tax will be levied on countries that are not signatories to the government procurement agreement (GPA) of the WTO, including India.
• Prima facie, the US can give better treatment to domestic suppliers while not giving the same treatment to countries other than the signatories to the GPA as per WTO rules.
• India could, however, use the non-violation track in the dispute settlement to fight the provisions of the bill.

Finance & Economy

• What is our FDI policy?
• Under the extant policy, investments into most sectors fall under the automatic route. Such investments require no prior permission of the government or any regulator and the Indian company receiving the foreign investment is only required to intimate the RBI of any such investment.  But some sectors still require prior government approval and most sectors that require government approval fall within the ‘sensitive’ category.
• Subsidy burden to push oil retailers into red this year
• State-run oil companies — IOC, BPCL and HPCL — will sink into red this fiscal as finance ministry has decided to reimburse only one third of their Rs. 70,000 crore losses for selling fuel at controlled rates.
• The finance ministry's decision would mean that the three fuel retailers would have to absorb combined losses of Rs. 23,333 crore in their balance-sheets. The three firms also get one third compensation from state-run upstream companies such as ONGC and Oil India.
• The oil marketing companies' (OMCs) current subsidy liabilities would be 179% more than their combined net profit of Rs. 13,060 crore last fiscal. The three companies had absorbed only Rs. 5,621 crore last year as subsidy, which was only 12% of their total revenue losses.
• Over 100 cos told to get cost audit done
• Cost audit, which is a system of government scrutiny into a company's production cost and profit margins, is currently mandated for only 44 products in sectors like manufacturing, mining and services.
• The Cost Audit Branch (CAB), a department under the ministry of corporate affairs, in an order issued last week, has asked 115 companies to file their cost audit report for the year ending March 31, 2011. The list of companies includes names like Biocon, Bayer Pharmaceuticals, BASF India, Haldia Petrochemicals, Tata Steel and Steel Authority of India Ltd (SAIL).
• The order is issued under section 233B of the Companies Act with a view to keep track of the costing structure of these companies.
• Cost audit records comprise detailed records of materials, labour, utilities, overheads, depreciation, royalty, research and development expenses, incentives on exports, borrowing costs and inter-company transactions. The data is useful for companies to improve efficiency, while the government uses it for policy making.
• Cost audit provides the regulator an access to how a company manages its pricing scheme and can be an effective way to counter anticompetitive practices and cartelisation.
• Cost records, as procured by the CAB, are on a regular basis passed on to various departments and regulators in the government for research and sectoral analysis. The intention to extend compulsory cost auditing to infrastructure companies has been incorporated in the Companies Bill, likely to be made into a law by the end of this fiscal.
• An expert group has recommended that all companies whose turnover is more than Rs 50 crore should be mandated to maintain cost audit books. At present, companies engaged in only 44 products, including paper and sugar, need to get their accounts cost audited.