Indian Current Affairs: 20.01.2011

Politics & the Nation

Prime Minister Manmohan Singh on Wednesday undertook cosmetic changes in the portfolios of his ministers, particularly those manning key economic and infrastructure departments, with the impending assembly elections and concerns over charges of corruption emerging as the key drivers behind the reshuffle.
The prime minister went in for only a limited expansion, and a more comprehensive cleansing exercise is expected to follow after the conclusion of the budget session of parliament.
The reshuffle-cum-expansion exercise saw the induction of three new faces, elevation of five ministers, three of them to cabinet rank, and easing the burden of ministers holding more than two portfolios.
Take a look at this updated list of the Union Cabinet.

“We talk of the demographic dividend but cannot see that we are courting a demographic disaster as we sacrifice the possible good for the illusive perfect.”
Writing on the subject of Right to Education, Madhav Chavan, CEO and president of Pratham Education Foundation concludes his essay with the above line. A good article. Can read at least once.

Finance & Economy

The government is set to raise the threshold for independent verification of corporate transactions in the Companies Bill, diluting a proposal it made before a key Parliamentary panel.
The threshold would now be fixed at 1% of a company’s annual turnover as against Rs. 5 lakh suggested by the corporate affairs ministry before the Parliamentary Standing committee on finance.
This means auditors would have to verify all transactions above the 1% threshold with counter parties, such as banks, to ensure their authenticity.
As of now, an audit is primarily a review of a company’s financial statement to establish its truth and fairness. Auditors usually do not go into the veracity of the numbers.
The move to get the transactions independently verified is aimed at checking corporate frauds, like the one involving Satyam Computer Services (now called Mahindra Satyam).
The Bill would also give ‘audit standards’ a statutory recognition, meaning a violation would attract penal action. Currently, accounting standards do not have the force of law.

Finance Minister Pranab Mukherjee on Wednesday asked the state governments to cut local levies on food items to check their soaring prices, but most non-UPA states shot down the idea at the very outset.
States, where the government is not part of the United Progressive Alliance, blamed the central government for the high prices and demanded that it cut duties on petrol and diesel.

The Reserve Bank of India saved banks from taking a knock on their portfolio due to slumping recovery from micro lending and threw a lifeline to embattled microfinance companies after the Andhra Pradesh government imposed restrictions on their functioning.
The central bank relaxed rules on classifying a bad loan when there is a default. Restructuring of loans to the Rs. 25,000-crore microfinance industry will qualify to be classified as standard loans up to March 2011 even if they are not secured.
The central bank’s move is expected to save the banks from providing large sums, rather than lift the fortunes of the sinking microfinance sector.
The central bank has said this move is temporary, as it did with relaxing the classification norms for real estate lending after the collapse of Lehman Brothers in 2008.

International

The European Union is today the sick man of the world economy. The global economic outlook is more promising than thought a year ago. The world economy will grow at 4.5-5% in 2011. Emerging markets will grow at around 7%. The US is poised to grow at 3-3.5%. The EU will be stuck at 2% or less.

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Indian Current Affairs