Indian Current Affairs: 28.01.2011

Politics & the Nation

Look at this ET editorial on the subject. Well worth a read.
Take a look at this graphic too in this context. It points out what exactly is wrong with the Lok Pal bill.

Finance & Economy

In today's face-off column Yashwant Sinha and Mani Shankar Aiyar take opposing viewpoints. Well worth a read. Some excerpts:
The argument against the scheme:

Earlier schemes failed to bring any significant amount of black money. They also failed to provide protection to many, including some politicians. Hence there is no point in coming out with one more such scheme.
Such a scheme will encourage people to indulge in more malpractices. Moreover, a tax of 30% on unaccounted income does not make sense when evaders multiply their money.

The focus should be to prevent the creation of more black money and ensure better compliance. India has double taxation avoidance agreements (DTAAs) and tax information exchange agreements to secure information on those who have stashed away money overseas. After the 9/11 terror strike in the US, countries have woken up to the fact that terror funding, drug and corruption money are all interlinked. We need to use our economic clout to make tax havens and countries with banking secrecy laws see reason. If unilateral pressure does not work, we should step up pressure on such countries through multilateral forums such as the G20.

The Union budget 2011-12 will disclose all financial guarantees provided by the government till date, providing a clear picture of the financial position.
The central government’s move, a historical first, will be emulated by state governments and union territories with legislatures, which will reveal all such financial commitments in their budgets.
The government had committed to keeping such guarantees in check by putting a limit of 0.5% of the GDP in any financial year under the Fiscal Responsibility and Budget Management Rules, 2004.
So, far there is no compulsion on the government to reveal these in its financial statement.

The index of industrial production may be under stating the manufacturing growth, as suspected by many experts, says a working paper put out by the advisor to the industry ministry.
The study comes amid concern by a number of economists and the central bank that the manufacturing growth captured by the Index of Industrial Production, or IIP, was perhaps not giving the true picture.
The working paper -- Index of Industrial Production & Annual Survey of Industries -- rightly cautions that some amount of divergence is to be expected between the two measures because of the difference in the nature of the indices.
While the IIP measures the output of a select group of pre-selected units every month, the Annual Survey of Industries (ASI) is a more comprehensive survey capturing data from annual statement of accounts of different units.
The outdated index with 1993-94 is widely believed to be the reason for the IIP failing to capture the true picture.

The term ‘money laundering’ is said to have originated from mafia ownership of Laundromats in the US. Gangsters there were earning huge sums in cash by extortion, prostitution, gambling and bootleg liquor. They needed to show a legitimate source for these monies.

International

Rating agency Standard & Poor’s (S&P) cut Japan’s long-term sovereign debt rating on Thursday for the first time since 2002, saying the country’s government lacked a coherent plan to tackle its mounting debt.
It reduced the rating by one notch to AA minus — three levels below the highest possible rating. Politicians and credit-rating agencies have been warning for years that Japan needs to lower its public-debt pile, by far the worst among rich nations at double the size of its economy, but progress has proved elusive. The yen fell broadly and credit-default swaps on Japan widened after the announcement.
While other developed countries are tackling massive public debt built up during the global financial crisis, Japan’s debt has been growing for years as it tried to revive the economy after a massive property bubble burst in the early 1990s.
Japan’s outstanding long-term government debt is set to reach 869 trillion yen ($10.57 trillion) by the end of March this year, or 181% of GDP, the Ministry of Finance says. If short-term debt is added, Japan’s liabilities will hit 204% of GDP this calendar year, larger than 137% for Greece and 113% for Ireland, according to OECD.

Language Lessons

Supply or feed to surfeit; Indulge (one's appetite) to satiety
Noun: The state of being more than full; The quality of being so overabundant that prices fall; Eating until excessively full

Indian Current Affairs