27.04.2011

Politics & the Nation

• Government to go ahead with Jaitapur nuclear park
• The Centre will go ahead with the 9,900 MW Jaitapur nuclear power park in Maharashtra. A high-level meeting convened by Prime Minister Manmohan Singh on Tuesday decided to set up an autonomous Nuclear Authority of India to address people’s safety concerns.  
• The proposed Nuclear Regulatory Authority will be an autonomous body answerable to Parliament. It will subsume the Atomic Energy Regulatory Board. The government will introduce a Bill to this effect in the monsoon session of Parliament.
• The meeting also decided to provide a higher compensation for displaced people.
• Following the Fukushima disaster, there have been apprehensions about the safety of nuclear plants and this added fuel to protests in Jaitapur. The meeting acknowledged the need for better safety standards and decided to put each of the six reactors at Jaitapur under their own operations system. Government leaders said the operational safety review team of the International Atomic Energy Agency will be invited to conduct safety reviews and audit of all nuclear plants.
• At present, India operates 20 small nuclear reactors at six sites with a capacity of 4,780 MW, or 3% of total power capacity. It hopes to increase nuclear capacity to 7,280 MW by next year, more than 20,000 MW by 2020 and 63,000 MW by 2032, adding nearly 30 reactors.

• Justice PD Dinakaran moves SC to stay probe against him
• Sikkim High Court Chief Justice PD Dinakaran has asked the Supreme Court to stay an inquiry against him by a Parliament-appointed panel.
• The panel, appointed by the Rajya Sabha chairperson Hamid Ansari after the House initiated impeachment motion against him, had asked Dinakaran to respond to the 16 charges framed against him. The panel is examining charges of corruption, land grabbing, abuse of judicial office and amassing wealth disproportionate to known sources of income against Dinakaran. The three-member panel headed by Justice Aftab Alam of the SC, Karnataka High Court Chief Justice JS Khehar and senior advocate PP Rao had rejected Dinakaran’s plea seeking stay on proceedings till he is supplied with all documents being looked into.
• Dinakaran sought quashing of the panel’s order, which rejected his appeal, seeking recusal of PP Rao alleging that he was biased. Dinakaran had said he apprehended that there was likelihood of bias in the proceedings as Rao had earlier campaigned against him when his elevation to the SC was under consideration.
• Charges against Justice Dinakaran, who is due to retire on May 9, 2012, were levelled when he was Chief Justice of the Karnataka HC. He was subsequently transferred to the Sikkim High Court.

• The only Indian Prince who has been invited to the Prince William and Kate wedding
• Raghav Raj Singh, the current maharajsahib of Shivrati, a jagir in the former princely state of Udaipur, is the only Indian aristocrat to be invited to the wedding of Prince William and Kate Middleton in London on Friday.
• He is a good friend of Prince William.  Singh, a Sisodia Rajput, has played with William at the famed Cirencester Park Polo Club and Windsor Polo Club, both favourites of the Wales brothers.
• Wearing a resplendent traditional Mewari sherwani and colourful headgear, he will stand out among the grey morning suit clad men in the congregation. His wife, Shelja Kumari, from the thikana of Umaidnagar in Jodhpur, draped in a classic sari favoured by Indian nobility and heirloom family jewellery is equally likely to stand out.
• An alumnus of Mayo College, Ajmer and St Stephen’s, Delhi, Singh did a stint at Cheltenham College in Gloucestershire as an exchange , which should come in handy for his future foray into healthcare and wellness segment in Rajasthan and Delhi.

Finance & Economy

• Is it the right time to allow export of food grains?
• Yes, argues today's ET editorial.  Look at its reasoning:
• First, India’s stockpile of foodgrains is now around 45 million tonnes, double the buffer stock that is mandated for food security. A bumper harvest is forecast, after which the government will add another 25 million tonnes to this pile.
• Second, the government and its main procuring and stocking arm, the Food Corporation of India (FCI), have proved that they cannot handle such large food stocks. In many places, grains are piled high under plastic sheets, exposed to the weather and rodents. Even after distributing rice for as low as Rs. 1 or Rs. 2 per kilogramme in states like Tamil Nadu and Andhra Pradesh, stocks stubbornly refuse to run down. It is likely that by the time the government decides to do something about this food mountain, worth around Rs. 40,000 crore, much of it would have become dinner for rats.
• Three, food inflation is not being driven by foodgrains, but by the spiralling prices of vegetables, edible oil, pulses and milk. Exports of foodgrains will not add to food price inflation at home; indeed, it might help to increase farmers’ incomes.
• Finally, the most compelling argument is about prices. The glut has pushed market prices of wheat to below the minimum support price (MSP) of Rs. 1,170 per quintal. Indeed, in states like Uttar Pradesh, wheat is being sold for Rs. 1,050 per quintal, a substantial discount to the MSP. In global markets, wheat is being traded at around Rs. 1,530 per quintal. So, if India lifts its export curbs on foodgrains, imposed after the food price scare last year, exporters can make a nifty profit, storage costs would come down and farmers’ incomes would go up, yielding some incentive to invest in technologies to boost productivity.

• RBI fines 19 banks for selling complex derivatives to corporates
• State Bank of India, ICICI Bank, Citibank and Axis Bank are among 19 lenders penalised by the Reserve Bank of India for violating currency derivatives norms and selling products to companies which did not understand them. This ends a three-year dispute between banks and small companies burnt by derivatives.
• The penalty may be small, ranging from 5 lakh to 15 lakh. But the ruling was a blow to banks since it vindicated the claims of tiny companies that claimed banks sold meaningless contracts to earn fees to boost earnings.
• The RBI has been scanning the derivative books of banks for more than a year and had sought information from 22 lenders about these transactions.
• The RBI order vindicates the stand of corporates, some of whom had sued banks on grounds of misselling. Others had claimed that some of the contracts were contrary to law, particularly the FEMA.  Already, most matters had been settled out of court with banks picking up 25-50% of the losses. This order will hasten the settlement of remaining disputes.
• Banks had sold currency derivatives to allow corporates to either improve the earnings on their exports, lower the outgo on imports, or cut the interest and repayment cost on loans.  The better exchange rates that such swaps and options offered always came with risks that most corporates either ignored or thought were academic — eventualities that are unlikely to materialise.
• Several bets backfired when currencies like euro, swiss franc and yen surged in 2007. By late 2007 and early 2008, when corporates were asked to pay up after the markets moved against them, there was a hue and cry. Private lenders, including ICICI Bank, HDFC Bank, ABN Amro (now RBS), Axis and Kotak were sued by companies. Most cases were settled out of court.
• Amid court feuds between banks and corporates, the RBI appointed an inter-departmental group to inspect the trades. The group spotted transactions where the underlier was inadequate while in some cases multiple transactions were done against photocopies of the same document that served as an underlier. In such situations derivative deals are no longer hedges, but pure currency bets.
• In some cases, documents on a company’s past export performance that is used to arrive at a hedging limit was not certified by the auditor. The RBI decision will be followed by parties in the case pending before the SC.

International

• Compulsory sectoral talks not acceptable, says India
• India is examining the latest draft proposals circulated by the World Trade Organisation to bring to life the deadlocked Doha round of global trade talks, but will continue to oppose the US move to make participation in sectoral talks compulsory.
• Disagreement between the US and large developing countries, including India, China and Brazil, over sectoral negotiations to eliminate duties on select industrial goods has been identified by WTO director general Pascal Lamy as the biggest issue blocking the progress of the round.
• The US has been insisting that large developing countries should agree to eliminate tariffs on some industrial goods through compulsory participation in sectoral negotiations while the opposing countries maintain that it is outside the mandate of the Doha round.

• US charges 4 Pakistan based LeT men for 26/11 attack
• The US federal prosecutors have charged four Pakistanis — Sajid Mir, Abu Qahafa, Mazhar Iqbal (also known as Abu al Qama) and ‘Major Iqbal’, all from the Lashker-e-Taiba — as conspirators in the 26/11 attacks on Mumbai. The charges filed before an Illinois court on Tuesday mentions an unnamed individual, ‘Lashker member D,’ as co-conspirator.
• The accused face six counts of aiding and abetting the murder of US citizens in India, and three of the conspirators named in the indictment —Mir, Qahafa and Mazhar Iqbal — have been charged with conspiracy to bomb public places in India.
• The charges against the four LeT men carry a maximum statutory penalty of life imprisonment or death.