RBI raises repo, reverse repo
On March 19, 2010, the Reserve Bank of India (RBI) surprised banks and money market players by raising key policy rates 25 basis points. The move, aimed at taming inflation and anchoring inflationary expectations, marked a reversal in the easy monetary policy regime amid signs of strong economic revival.
The central bank said the repo rate, or the rate at which banks borrow from RBI, is being increased 25 basis points to 5 per cent. Similarly, the reverse repo rate, or the rate at which surplus cash is parked with the central bank, was increased to 3.5 per cent, from 3.25 per cent earlier.
This was the second action since January 2010, when RBI announced a 75-basis point rise in the cash reserve ratio (CRR) to 5.75 per cent.
But, unlike CRR, which is used to manage liquidity in the system, an increase in the repo and reserve repo rates is aimed at signalling an increase in interest rates.
RBI joined central banks in Australia and Malaysia, which raised rates in March, while Norway and Israel did so at the end of 2009. The US Federal Reserve and the European Central Bank are among those waiting for evidence of a more concrete recovery before they unwind record low borrowing costs.
DEFENCE
Delhi High Court orders for Permanent Commission for Women Officers
On March 12, 2010, in a path-breaking judgement, the Delhi High Court has directed the Centre to offer within two months Permanent Commission (PC) to Short Service Commissioned (SSC) women officers of the Air Force and the Army at par with male SSC officers with all consequential benefits, including promotion.
At present, the Indian Army offers permanent commission to women after 10 years of SSC. This is applicable to those who were recruited after March 2009 and that too only in two streams — the Judge Adjutant General (JAG) branch and the Education corps. Women are also recruited in Signals, Engineers, Ordnance and Air Defence but are not eligible for PC.
In the IAF, women are offered a permanent option in the Legal, Accounts and Education corps. Women chopper and transport pilots, engineering corps, Logistics and Meteorological streams are not eligible for permanent commission. At present, there are about 1,050 and 827 women officers in the Army and the IAF, respectively. Separately, the Navy has 280 women.
The benefit would be extended to women officers recruited prior to change of policy (March 2009) and the PC shall be offered to them after completion of five years. However, these benefits would be available only to women officers in service or who approached the HC but retired when the case was pending in the court, the Bench clarified.
The court made significant remark on having women in combat roles saying “the claim of absorption in areas of operation not open for recruitment of women officers cannot be sustained being a policy decision.”
LAW POINT
Live-in not an offence: SC
The Supreme Court has opined that a man and woman living together without marriage cannot be construed as an offence. “Living together is not an offence. It cannot be an offence,” a three judge bench of Chief Justice K.G. Balakrishnan, Deepak Verma and B.S. Chauhan observed.
The court said even Lord Krishna and Radha lived together according to mythology. The apex court made the observation while reserving its judgement on a special leave petition filed by noted south Indian actress Khusboo seeking to quash 22 criminal cases filed against her after she allegedly endorsed pre-marital sex in interviews to various magazines in 2005.
The judges grilled the counsel for some of the complainants in the case and repeatedly stressed that the perceived immoral activities cannot be branded as offence.
The apex court further said the views expressed by Khusboo were personal. “How does it concern you. We are not bothered. At the most it is a personal view. How is it an offence? Under which provision of the law ?” the bench asked the counsel.
Khusboo had approached the apex court after the Madras High Court in 2008 dismissed her plea for quashing the criminal cases filed against her throughout Tamil Nadu.
Promotion fundamental right: SC
The Supreme Court has ruled that governments at the Centre and States should “act as model employers” and that all eligible employees virtually had a “fundamental right” to promotion as guaranteed under Article 16 of the Constitution.
A Bench comprising Justices R.V. Raveendran and Asok Kumar Ganguly made the clarification while directing the Centre and the Union Public Service Commission to grant promotion with retrospective effect to members of the Uttar Pradesh State Civil Service (SSC) who had been affected by a delay of more than two years in the cadre review following the creation of Uttaranchal (now Uttarakhand) in 2000.
The Centre and the UPSC contended that the statutory mandate of a cadre review exercise every five years “is qualified by the expression ordinarily” and as such it was not necessary to undertake it every five years. The Bench, however, did not buy this argument. “We hold that the statutory duty which is cast on the State government and the Central government to undertake the cadre review exercise every five years is ordinarily mandatory subject to exceptions which may be justified in the facts of a given case.
“Surely, lethargy, inaction, an absence of a sense of responsibility cannot fall within the category of just exceptions,” the apex court ruled, obviously indicting the UP government for not responding to the Centre’s reminders.
The court accepted the government’s arguments that Rule 4(2) did not have retrospective effect, but refused to interfere with the Delhi HC order which had, by using its special power under Article 142 of the Constitution, directed the Centre to “mitigate the hardship and denial of legitimate rights of the employees” in view of the “facts and circumstances of the case.”
LEGISLATION
Foreign Education Bill
After several years of debate, the Union Cabinet, on March 15, 2010, unanimously approved a Bill that would allow foreign education providers to set up campuses in India and offer degrees. A Bill to this effect was first introduced in the Rajya Sabha in August 1995. The new one is expected to be introduced in Parliament and be voted into law by the monsoon session of 2010.
This is a milestone which will enhance choices, increase competition and benchmark quality. A larger revolution than even in the telecom sector awaits us,” said Kapil Sibal, Union Minister for Human Resource Development (MHRD).
The Foreign Educational Institutions (Regulation of Entry and Operations, Maintenance of Quality and Prevention of Commercialisation) Bill will allow foreign universities to invest at least 51 per cent of the total capital expenditure needed to establish the institute in India. Such institutes will be granted deemed university status under Section 3 of the Universities Grants Commission (UGC) Act, 1956.
The Bill aims to regulate the entry, operation and maintenance of quality assurance and prevention of commercialisation by foreign educational institutions, besides protecting the interest of the student community from sub-standard and ‘fly by night’ operators.
The Bill is aimed at not only bringing in investment in the education sector, but also draw in foreign students, besides helping check the flight of Indians to study (then work and settle) abroad.
PLANNING & ECONOMY
India’s food security goals in danger
An alarming new report by the World Bank has shown that an increasing number of aquifers in India are reaching unsustainable levels of exploitation, endangering long-term food security goals. If current trends continue, in 20 years about 60 per cent of all aquifers in the country will be in a critical condition, putting at risk over a quarter of the harvest, concludes the report “Deep Wells and Prudence: Towards Pragmatic Action for Addressing Groundwater Overexploitation in India”.
The report rings alarm bells for policy makers, warning them against status quo. A rainfall deficit in 1963-66 had decreased India’s food production by 20 per cent, but a similar drought in 1987-88 had very small impact on food production due to widespread prevalence of groundwater, which is now declining.
India is the largest groundwater user in the world, exploiting 230 cubic kilometres of groundwater every year—over a quarter of the global total. Today, groundwater supports 60 per cent of irrigated agriculture and more than 80 per cent of rural and urban water supplies.
Even though there is a major dependence of many sectors on groundwater and it is being overexploited, there is little investment in its management. This inaction has arisen mainly because the solutions often proposed for groundwater management are very controversial, including “command-and-control” regulation of wells and curbing the supply of free or cheap power for groundwater irrigation.
FOREIGN RELATIONS
India to sign extradition treaties with Iran, Sri Lanka, Brazil, France & Israel
After signing extradition treaties with Saudi Arabia and South Korea, India has finalised draft agreements with five more nations—Iran, Sri Lanka, Brazil, France and Israel. The government is now working out the dates on which the treaties can formally be signed.
The treaty with Saudi Arabia was signed in February, during Prime Minister Manmohan Singh’s visit to Riyadh. Another such treaty was signed with South Korea when its President, Lee Myung-Bak, visited New Delhi in January 2010.
With bilateral cooperation in security and counter-terrorism measures assuming significance, India has stepped up efforts to formalise agreements with other nations so suspects can be brought back to the country to be tried under Indian laws. Indian government is giving extradition treaties the utmost importance as intelligence inputs suggest that some nations could be used as safe heavens by terrorists and the underworld.
India has extradition treaties with several countries, including Nepal, Belgium, Netherlands, Canada, UK, Switzerland, Bhutan, USA, UAE and the Russian Federation.
Loan agreement with Japan
India has signed an agreement for Rs 10,500 crore (Yen 215.611 billion) Official Development Assistance (ODA) from Japan. This includes Rs 1,648.36 crore for the second phase of Delhi mass rapid transport system project (DMRTS), Rs 4,422.83 crore for the dedicated rail freight corridor and Rs 2,933 crore for Chennai metro.
Six projects will be covered under the loan, including Sikkim Biodiversity Conservation and Forest Management Project, Kolkata East-West Metro Project (II) and Rengali Irrigation Project (III). With this, the cumulative commitment of ODA from Japan has reached Rs 15,5840 crore.
Visit of Prime Minister Putin of Russia
Russian Prime Minister Vladmir Putin’s one-day visit New Delhi on March 13, 2010, has gone some distance in adding a strong economic dimension to ties between the two nations. The visit helped in building a roadmap to strengthen economic ties, including in the pharmaceutical sector, getting Russian investments in infrastructure projects and accessing Russian markets for Indian services.
Demonstrating the solidity of their strategic relationship to the world, India and Russia sealed multi-billion dollars deals in key areas like defence, nuclear energy, diamond, petroleum and aviation as Russian Prime Minister Vladimir Putin reaffirmed Moscow’s support to Delhi in its fight against terrorism.
The visit is noted for the success in taking this vital strategic partnership forward, giving the much needed economic impetus. A host of steps aimed at scaling up the current $7.5 billion bilateral trade to $20 billion by 2015 were set in motion.
Besides agreement on nuclear reactors, an MoU for cooperation in Russia’s satellite navigation system was also agreed upon during the visit.
Russia announced its readiness to build 16 nuclear reactors for power stations in India. An important agreement was the umbrella pact between the National Power Corporation of India Limited (NPCIL) and the Atom Stroy for Kudankulam III and Kudankulam IV nuclear reactors as part of the nuclear cooperation accord between the two sides. The agreement on peaceful uses of nuclear energy is expected to open more avenues of nuclear cooperation between the two countries. The two sides also signed a pact on serial construction of Russian designed nuclear reactors.
The most significant accords between the two sides were on the Admiral Gorshkov aircraft carrier that was approved by the Union Cabinet for the purchase of the vessel at $ 2.33 billion and the supply of 29 MIG 29K—the sea variant of the fighter used by the IAF—valued at $ 1.5 billion.
India-USA agree on N-reprocessing
India and the United States have reached a deal on reprocessing American-origin spent nuclear fuel to be supplied to India under the landmark civil nuclear agreement signed in September 2008.
The talks were wrapped up well before the August deadline. The US statement noted that these arrangements will enable Indian reprocessing of US-obligated nuclear material under IAEA safeguards. Completion of these arrangements will facilitate participation by US firms in India’s rapidly expanding civil nuclear energy sector.
The reprocessing arrangements were negotiated pursuant to Article 6 (iii) of the US-India civil nuclear cooperation agreement, also called the 123 Agreement. Under the 123 Agreement, India will construct new facilities dedicated for reprocessing the safeguarded nuclear material under IAEA safeguards.
The advanced consent agreement is only the third of its kind ever undertaken by the US. The US has such agreements with the European consortium EURATOM and Japan. China, Brazil, Indonesia, South Korea, which have 123 Agreements with the US, do not have such agreements.
RESERVATIONS
SC okays quota for Andhra Muslims
On March 25, 2010, the Supreme Court okayed religion-based reservation in government jobs and educational institutes in Andhra Pradesh but referred the matter to a constitution bench to decide on its constitutional validity.
In an interim order, a bench headed by Chief Justice K.G. Balakrishnan extended the benefit of four per cent reservation in jobs and education to 14 other backward classes of Muslims in the State. In the process, it stayed the February order of the State High Court that had quashed the Andhra Pradesh Reservation for Socially and Educationally Backward Classes of Muslims Act, 2007.
But the apex court refused to grant quota benefit to a 15th category of Muslims mentioned in the Act as the social groups were not specified. It also made it clear this was a temporary measure. The constitution bench is expected to take up the case in August 2010.
According to Andhra government, the reason for giving four per cent quota to backward Muslims was because they constitute 5-6 per cent of the State's population. The creamy layer—those who earn over Rs 4 lakh annually, children of class-I officers working with the State/Central governments and those who hold constitutional posts—are not entitled.
All parties barring the BJP welcomed the decision.
Rajya Sabha passes historic Women’s Reservation Bill
Fourteen years after it was envisaged, the Rajya Sabha, on March 10, 2010, passed the landmark Women’s Reservation Bill that will pave the way for reserving 33 per cent seats for women in Parliament and State Assemblies. But prior to that, the legislation has to be seen through in the Lok Sabha.
Of the 186 members present in the Rajya Sabha, 185 voted in favour of the Bill. Barring the parties from the Hindi-belt—Samajwadi Party, Rashtriya Janata Dal and BSP—all other parties that included the constituents of Congress-led UPA and BJP-led NDA supported the Bill that was to carry out the 108th amendment to the Constitution for enabling reservation.
The Congress-led UPA, the BJP-led NDA and also the Left parties were on the same side as the Parliament authored the “historic move”, which could upstage several well ensconced politicians but ensure proper representation of women, which languishes at 11 per cent in Lok Sabha.
SP and RJD MPs walked out even before the discussion began. BSP’s leader in Upper House Satish Chandra Misra walked out after expressing his party’s point of view: “We support the cause of reservation, however, oppose the Bill in its present form.”
The proposed legislation to reserve 33.3 percent seats in Parliament and State Legislatures for women was drafted first by the H D Deve Gowda-led United Front government. The Bill was introduced in the Lok Sabha on September 12, 1996. Though it has been introduced in Parliament several times since then, the Bill could not be passed because of lack of political consensus.
Main points of the legislation
- Seeks to reserve one-third of seats for women in Lok Sabha and State Assemblies.
- Allocation of reserved seats shall be determined by the authority prescribed by the Parliament.
- One-third of the total seats reserved for SCs and STs shall be reserved for women from these groups in LS and Assemblies.
- Reserved seats may be allotted by rotation to different constituencies in the State or Union Territory.
- Reservation of seats for women shall cease to exist 15 years after the commencement of the Act.
Union Cabinet okays tougher laws to deal with hijackers
With terror threats in the aviation sector looming large, the Union government has decided to make the Anti-Hijacking Act of 1982 tougher by including death sentence as a punishment for hijacking a plane with intention of creating a terror strike.
A cabinet meeting headed by Prime Minister Manmohan Singh approved the amendments to be incorporated in the existing Act, which at present only provides for life imprisonment and fine.
The anti-hijack policy that was revised and approved by the Cabinet Committee for Security in 2005 could not be made a law primarily due to lack of consensus on the punishment for the hijacker, having intent of creating terror strike and caught alive.
The policy also has provision for immobilisation of the plane and disallowing it to take off, if the hijack occurs on the Indian soil. Notably, during the Kandahar hijack in December 1999, in which passengers and crew members were exchanged for four dreaded terrorists, security forces had failed to immobilise the plane when it had landed at the Amritsar airport. The CCS, in August 2005, had cleared the proposal to shoot down a commercial plane if it was hijacked. It also strictly ruled out any negotiations with hijackers on meeting any of their demands.
According to the policy, if a rogue aircraft paid no heed to ATC warnings and deviated from its specified path or headed towards any strategic spot, a decision on shooting it down would come into play. In case of an emergency situation, the shoot down orders could be given by the Prime Minister, the Defence Minister or the Home Minister, whoever could be contacted first.
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