CURRENT AFFAIRS

Newspaper Analysis and Summary – 27th September 2013

SCIENCE AND TECHNOLOGY

Nuclear waste could supply 800 years of power -The Hindu In a drab one-story building here, set between an indoor tennis club and a home appliance showroom, dozens of engineers, physicists and nuclear experts are chasing a radical dream of Bill Gates: a new kind of nuclear reactor that would be fuelled by today’s nuclear waste, supply all the electricity in the United States for the next 800 years and, possibly, cut the risk of nuclear weapons proliferation around the world. The people developing the reactor work for a startup, TerraPower, led by Mr. Gates and a fellow Microsoft billionaire, Nathan Myhrvold. So far, it has raised tens of millions of dollars for the project, but building a prototype reactor could cost $5 billion — a reason Mr. Gates is looking for a home for the demonstration plant in rich and energy-hungry China. Today’s nuclear reactors run on concentrations of three to five per cent uranium 235, an enriched fuel that leaves behind a pure, mostly natural waste, uranium 238. (A uranium bomb runs on more than 90 per cent uranium 235.) In today’s reactors, some uranium 238 is converted to plutonium that is used as a small, supplemental fuel, but most of the plutonium is left behind as waste. In contrast, the TerraPower reactor makes more plutonium from the uranium 238 for use as fuel, and so would run almost entirely on uranium 238. It would need only a small amount of uranium 235, which would help kick-start the reaction. The result, TerraPower’s supporters hope, is that countries would not need to enrich uranium in the quantities they do now, undercutting arguments that they have to have vast stores on hand for a civilian programme. TerraPower’s concept would also blunt the logic behind a second route to a bomb: recovering plutonium from spent reactor fuel, which is how most nuclear weapons are built. Since so much uranium 238 is available, there would be no reason to use that plutonium, TerraPower says. The engineers working for Gates acknowledge the enormous challenges but say they are convinced that he and they are chasing the solution not only to energy and weapons proliferation but also to climate change and poverty. “If you could pick just one thing to lower the price of — to reduce poverty — by far you would pick energy,” Mr. Gates said as he introduced the reactor idea in a speech in 2010. nuclear fuel. TerraPower is not alone in pursuing a reactor that will turn waste uranium into energy, and if such a concept can be commercialised, Mr. Gates might not be the first to do it. General Atomics, which has decades of experience in nuclear power, is pursuing what it calls an “energy multiplier” reactor module on the same general principal. HEALTH

Now five doses will keep rabies away -The Hindu Several years ago, a dog bite meant getting 16 shots of an anti-rabies vaccine on the abdomen. Today, with advanced care, the shots are down to just four or five to prevent the

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CURRENT AFFAIRS onset of rabies, a deadly viral disease. But misconceptions surrounding what to do when bitten by a dog still linger. “Many people continue to follow old remedies that are ineffective. Some apply erukkam paal , coffee powder, mud and cow dung on the dog bite. Some tie a piece of cloth above the wound thinking it will arrest the spread of infection. The only thing to do is wash the wound with soap under running water for 15 minutes. Antiseptic solution can then be applied, but medical help must be sought immediately,” said S. Raghunanthanan, professor of medicine, Madras Medical College (MMC) and Rajiv Gandhi Government General Hospital (GH). Globally, 55,000 people die every year due to rabies. Sixty per cent of these are aged 15 years or below. In India, rabies causes 20,000 deaths every year. At GH, 95 per cent of animal bite cases are dog bites. The hospital receives 50 to 70 cases of animal bites a day, Dr. Raghunanthanan said. To prevent rabies, four to five doses of anti-rabies vaccine are administered on the 0, 3{+r}{+d}, 7{+t}{+h}, 14{+t}{+h}and 28{+t}{+h}days of a bite. “We abandoned the 16-dose vaccine years ago. The present vaccine is safe and it’s the only way to prevent rabies. Rabies is fatal, but 100 per cent preventable. People should not wait to see if the dog lives for 10 days as is done in many cases,” Dr. Raghunanthanan added. In a study undertaken among school and college students and the adult population in the community, MMC’s Institute of Community Medicine found that among school students, 37.3 per cent thought that rabies could spread through an animal’s licks. While 42.8 per cent knew rabies was a killer disease, only 15 per cent knew that it cannot be cured. In the community, 33 per cent were aware of the mode of spread and 47 per cent knew it was a killer disease. No treatment is required if a person feeds or touches a rabies-affected dog or if the dog licks intact skin, said Dr. Raghunanthanan. Doctors say misconceptions about dog bites linger, more awareness needed in the community POLITY AND GOVERNANCE

Extremely low rate of conviction for politicians -The Hindu An extremely slow rate of conviction has marked the criminal cases of sitting Members of Parliament and Members of Legislative Assemblies, says the data available with the Association for Democratic Reforms (ADR), an NGO working for transparency in governance. Only 0.5 per cent — 24 out of 4,807 MPs and MLAs — have declared in their affidavits to the Election Commission since 2008 that they were convicted at some point in a court of law. When it comes to candidates who have contested various elections, the conviction rate goes down to 0.3 per cent. Only 155 out of the total 47,389 candidates since 2008 have declared in their affidavits that they were convicted at some point in a court of law. In the elections since 2008 — including the 2009 Lok Sabha and State Assembly elections — of the 4,807 elected MPs and MLAs, 30 per cent (1,460) have declared criminal cases against them, 14 per cent of which are serious criminal cases. The percentage for contesting candidates is 17 per cent, of which around eight per cent are serious criminal cases.

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CURRENT AFFAIRS The ADR regarded the “excruciatingly” slow pace of court proceedings as one of the reasons for a very low rate of conviction. It did not rule out the possibility of suppression of information about conviction by those contesting elections because as of now there is no reliable mechanism in place to scrutinise these affidavits. The ADR argued that in case of an appeal in the higher courts, a candidate may merely mention that an appeal is pending in a court and may not declare the conviction in the appropriate section of the affidavit. Prof. Trilochan Sastry of the ADR said: “The current status of convictions declared by candidates as to whether they have been turned down or stayed by a higher court in not available in public. We will only get to know this when these candidates file fresh affidavits with the Election Commission, if and when they choose to contest a fresh election.” Odisha is the most backward, Bihar comes next, Gujarat is less developed, says Raghuram panel -The Hindu A panel headed by Raghuram Rajan has recommended a new index of backwardness to determine which States need special assistance. The new methodology ranks Odisha as India’s most backward State, Bihar, which has been seeking ‘special’ status, as the second most backward, and Gujarat as one of the “less developed” States. Goa is the most developed State. In May this year, the Union government constituted the committee headed by Mr. Rajan, now RBI Governor, to suggest ways to identify indicators of the relative backwardness of the States for equitable allocation of Central funds. Central allocations are governed by the Gadgil-Mukherjee formula that places the greatest weight on the State’s population, followed by other factors like per capita income and literacy. Chief Minister Nitish Kumar’s demand for a ‘special category status’ for Bihar has further pushed the government to review how the Centre allocates funds. The report, which the Prime Minister and the Finance Minister have reviewed, was made public on Thursday. The committee has proposed an index of backwardness composed of 10 equally weighted indicators of monthly per capita consumption expenditure, education, health, household amenities, poverty rate, female literacy, percentage of the Scheduled Caste/Scheduled Tribe population, urbanisation rate, financial inclusion and physical connectivity. The 10 States that score above 0.6 (out of 1) on the composite index have been classified as the “least developed,” the 11 States that scored from 0.4 to 0.6 are “less developed” and the seven that scored less than 0.4 are “relatively developed.” The report recommends that each of these 28 States get 0.3 per cent of overall Central funds allocated and of the remaining 91.6%, three-fourths be made allocations based on need and one-fourth based on the State’s improvements on its performance, to be reviewed every five years. Since States now classified as a ‘special category’ will “find their needs met” through the new allocations, the term ‘special category’ will be retired. Dissent note: One of the panel’s five members, Patna-based Shaibal Gupta of the Asian Development Research Institute has a dissent with the decision to use monthly per capital expenditure derived from National Sample Survey Organisation reports as a measure of income, rather than per capita State domestic product, which he said substantially altered

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CURRENT AFFAIRS State rankings. In its report, the panel, however, defended its choice of indicators: “Since we are interested in measuring the State population’s well-being, a majority of the committee agreed that consumption from the household survey seems more appropriate than income from the national accounts. This is a judgment call, and we also present the index calculated using per capita net State domestic product. The correlation between indices is 0.997.”

HC directs Centre to finalise its under-preparation national email policy - The Hindu The Delhi High Court on Thursday directed the Centre to finalise its under-preparation national email policy within four weeks and submit to it. During the hearing of a public interest litigation in the matter, counsel for the Centre informed the Court that the government was preparing a draft national email policy for online communications of official records. Earlier, the counsel for the petitioner informed the Bench that the government was violating the Public Records Act, 1993 prohibiting sending out official records outside the country by exchanging communication of official records through private email service providers like Google which had installed its servers in the U.S.A. Minors opening accounts: Former Bharatiya Janata Party ideologue Govindacharya, the petitioner, has alleged that social networking sites are allowing minors to open accounts as it helps them generate huge earnings. Violation: Drawing the attention of the Bench to the use of a private email service by an investigating agency to announce a monetary award on an accused for providing information regarding a blast and opening of an email account on it by a Union Minister, counsel for the petitioner Virag Gupta, submitted that these two instances were the Act’s violation. The government also filed an office memorandum of the Union Ministry for Home Affairs of 2004 in the Court advising that “the Ministries/ Departments should not host their websites in the servers of private parties or servers not located in India.” “The Ministries/Departments were also requested to host their websites on NIC or ERNET or in any other server owned by the Government of India or the State Government Server,” the memorandum further said. The memorandum was sent to the Secretaries of the Union Ministries in 2005 and to the Department of Information Technology in 2007. Meanwhile, the counsel for Google and Facebook informed the Court that they had appointed grievance officers to deal with the violation of the Information Technology (Intermediary) Rules, 2011. People can now lodge complaints with these officers in case of violation of the Rules, including opening accounts on the social networking sites by children below 13 years of age, Mr. Gupta said. INTERNATIONAL RELATIONS

India should move forward on composite dialogue: Pakistan -The Hindu Asserting that peace with India was the sentiment of national Parliament, Pakistan said India needs to move forward on the composite dialogue and address contentious topics such as Sir Creek dialogue, Siachen dispute and Kashmir issue to ensure economic and trade partnership between the two nations, which is the desire of the people on both sides, moves on fast track.

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CURRENT AFFAIRS Talking to a group of journalists from India on Thursday during the 8th edition of Pakistan Trade Expo here, Minister of State for Commerce and Privatisation, Engineer Khurram Dastagir Khan said the future of Afghanistan was also very close to the heart of people of Pakistan and the Nawaz Sharif government and India needs to engage more with Pakistan on the issue in view of the withdrawal of U.S.-led allied forces from that country next year. “If India takes a single step on addressing the outstanding issues and starts the political dialogue with full vigour, we will take five steps to give a big boost to trade. Both the political dialogue and trade relations have to move in a parallel manner. We know that the economic relationship has hit a roadblock. Peace with India has been the sentiment of the new Parliament of Pakistan and the Nawaz Sharif government… and we should not allow this golden opportunity slip away,” Mr. Khan said. He said talking peace with India was a very sensitive issue in Pakistan and the composite dialogue has to show a positive progress for trade to grow which will throw up immense opportunities for businesses from both sides. “We expect positive outcome from Mr. Sharif and Dr. Singh’s meeting in New York on September 29. But a firm dialogue can only be expected after the installation of a new government in India after the 2014 elections,” he added. Stating that trade could act as a cushion at times when political developments and differences between the two countries threaten to derail the dialogue, Mr. Khan said time had come for both to show their people that relationship could move forward under any circumstances.

Manmohan, Obama to meet amid U.S. concerns over liability law -The Hindu Hours before Prime Minister Manmohan Singh landed in the U.S. to hold what is likely to be his final official meeting with President Barack Obama, a senior administration official said the White House continued to have “specific concerns” regarding India’s nuclear liability law. In a background call with the media, the official however firmly pushed back on any notion that the bilateral relationship had “plateaued,” arguing that Friday’s Oval Office meeting between the two heads of government would be a “short working visit” that would address a wide range of bilateral issues and set out a roadmap for the path ahead into the 21st century, that would also consider the post-2014-elections scenario in India. While progress with the landmark civilian nuclear energy agreement slowed after India adopted the nuclear liability law, the signing of a “pre-early-works agreement” between nuclear supplier companies in the U.S. and India’s nuclear operator, the Nuclear Power Corporation of India Limited (NPCIL), appeared imminent on the eve of Mr. Singh’s visit. However, there does not appear to be any official planned timeframe within which an actual deal could be inked between U.S. nuclear suppliers and the NPCIL, which could lead to the production of safe nuclear energy within the terms of Indian law. The administration official this week said that in a complex relationship such as the one that existed between New Delhi and Washington, there would always be areas where “room for more progress,” existed, and in this case those areas include concerns that the U.S. government and corporations have regarding certain Indian economic policies. While the Obama administration has pointed out that “contentious issues” of the past, including nuclear

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CURRENT AFFAIRS energy, defence, and clean energy cooperation, were now “centre-pieces” of the relationship today, India is also likely to use the occasion of Mr. Singh’s visit to flag its concerns. Specifically, New Delhi has continued to worry about the potential adverse impact that the comprehensive immigration reform bill currently working its way through the U.S. Congress could have on businesses employing skilled Indian workers. In this regard, the White House pushed back this week saying that Indian nationals were the largest recipients of H-1B and L1 visas by a wide margin and, contrarily, the legislation under consideration brings significant benefits to Indian nationals. It would also appear likely that the Indian delegation will push back on the increasingly strident calls by the U.S. for India to fall in line with the Montreal Protocol and scale back Indian companies’ use of refrigerant gases. Earlier, The Hindu broke the news that if India yielded to the U.S. demand, which officials reportedly said Mr. Obama might personally bring up in his meeting with Mr. Singh, it would have to adopt alternative technologies that were 20 times more costly, mainly proprietary to a few U.S.-based companies, and in some cases “untested for safety.” Although The Hindu has also broken a series of news items on the U.S. National Security Agency’s surveillance of Indian establishments, including India’s diplomatic posts in the U.S., neither side appeared to indicate that any further discussion of this matter would take place during Mr. Singh’s visit. ECONOMY

Rajan questions merit of low interest rates to spur growth -The Hindu Reserve Bank of India Governor Raghuram Rajan is questioning whether current ultra-low interest rates are the right way to return to growth after the financial crisis. Dr. Rajan said central banks warded off a collapse of the global financial system through bank bailouts and rate cuts. Central bankers, he said, were ‘heroes’ for halting the collapse. But global growth since then had been disappointing, and Dr. Rajan said it was time to ask if there were better tools than the rock bottom rates used by major central banks in the rich world, including the U.S. Federal Reserve, Bank of England, Bank of Japan, and European Central Bank. Dr. Rajan said low rates could have unintended consequences. He said, for instance, that they could encourage people in their 60s to save instead of spend because the low returns mean they were unable to reach their retirement savings goal. At a speech in Frankfurt, Dr. Rajan said he did not have the answers, but said it was time to ask, “Are ultra low rates the solution or part of the problem?” Low rates could encourage banks and financial institutions to invest, but Dr. Rajan questioned whether that was leading to an increase in new businesses. “There may be no connection or only a limited one, if uncertainty holds back investment,” he said. Appearing at Frankfurt’s Goethe University to accept the Deutsche Bank prize in financial economics, Dr. Rajan said he was making a last speech as an academic economist instead of as a central banker. Dr. Rajan, the former chief economist at the International Monetary Fund, won plaudits for predicting the possibility of a global financial crisis before the 2007-09 turmoil began. He is on leave from his post as finance professor at the University of Chicago.

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CURRENT AFFAIRS Neutral stance: Asked about the RBI’s policy stance, Dr. Rajan said: “At this point we are neutral, we will see how things develop.’’ He said that inflation was not due just to higher food prices. “Unfortunately there is still some inflation when you strip out the effects of food and energy. Therefore, it is not just food, it’s other factors also, which are driving inflation,’’ Dr. Rajan told reporters on the sidelines of a conference here. “CPI core (inflation) is about 8.2 per cent, that is certainly high, but I think we are looking at all aspects of inflation at this point.’’ — AP, Reuters

Ban on zero per cent interest schemes to hit festive season sales -The Hindu Sales of high-value consumer electronics, including smartphones and LED TVs, will be severely affected in the upcoming festive season following the Reserve Bank of India’s (RBI) ban on zero per cent interest schemes offered by banks. “I don’t support this (RBI’s) move. The withdrawal of the provision (of zero per cent interest scheme) is not right. It will have tremendous impact on sales of high-value consumer durables. This will not enhance consumption (in a slowing economy),” said B. S. Nagesh, Chairman of Retailers Association of India. “People are fully aware that it (interest component) is funded by the manufacturer or retailer. I don’t see anything wrong with the scheme. Now, there will be lot of hassle in paperwork for processing of loans and it will impact sales,” Mr. Nagesh added. “It is a big blow ahead of the season. About 25 per cent of our sales are through EMI (equated monthly instalment) schemes, and the ban will affect sales. Large part of the affordability is through EMIs and amidst the gloom in the economy, this will not help anyone,” said Himanshu Chakrawarti, CEO, The MobileStore Ltd. Future Group Chairman Kishore Biyani declined to comment on the matter but said that consumer durables constituted very small portion of Biz Bazaar’s sales. Commercial banks declined to come on record as the ban had been imposed by the RBI . “The decision will also affect us. In most cases, manufacturers funded the interest part. The interest subvention was taken care of by the cash discounts. Apart from getting business, the zero per cent interest schemes also made the card-holders to stick to us for the entire tenure of the loan which got us additional business through further use of the card,” said an executive of a private bank asking not to be named. Meanwhile, manufacturers are getting ready with alternative plans to boost sales. “This move will definitely impact consumer buying sentiment. The EMI schemes were very popular. Now we will be rolling out other marketing schemes for the festive season but we don’t have any substitute for zero per cent EMI schemes,” said a Samsung spokesperson.

GAAR rules notified -The Hindu The government has notified the controversial anti-avoidance tax rules, which will be implemented from April, 2016, and apply to business arrangements with a tax benefit exceeding Rs.3 crore. The General Anti Avoidance Rules (GAAR) provisions will come into force from April 1, 2016, the Central Board of Direct Taxes (CBDT) said in a notification dated September 23.

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CURRENT AFFAIRS EDITORIALS

RBI focus still on currency stability -The Hindu Reserve Bank of India governor Raghuram Rajan’s maiden monetary policy announcement has evoked contrary responses. India’s financial markets and a section of the business community have reacted adversely to his decision to increase the repo rate in his policy statement. This is understandable. Dr. Rajan had been in favour of lowering interest rates during his brief stint at the Finance Ministry. That and the terrific buzz that accompanied his assumption of office had led to expectations in some quarters that a rate cut was likely. Others in the business community and many in the media, who had pilloried Dr. Subbarao for his anti-inflationary stance, have made something of a volte face . They have been quick to portray Dr. Rajan as an inflation hawk. Reading of the policy: Both Dr. Rajan’s detractors and admirers may be wrong in their reading of the monetary policy statement. It appears more plausible that Dr. Rajan’s policy stance is aimed at shoring up the rupee ahead of a change in the U.S. Fed’s policy about three months from now. The RBI may find it prudent not to say so for fear of adding to nervousness in the currency markets. It may choose to couch its stance in anti-inflationary terms. But currency stability seems to weigh more heavily on the RBI than its statement would suggest. Sustaining growth also appears to be a consideration. Consider the changes effected in the policy statement. Banks can today borrow from the RBI in two ways. One is the repo route but only to the extent of 0.5 per cent of their liabilities. Any requirement in excess of what can be financed by repos can be met through the Marginal Standing Facility (up to 2 per cent of liabilities). In its policy statement, the RBI cut the MSF rate by 75 basis points and raised the repo rate by 25 basis points. The governor claimed that the net effect would be to “reduce the cost of bank financing substantially.” This is debatable. Analysts estimate that the MSF and the repo account for about 55 per cent and 45 per cent respectively of bank borrowing from the RBI. Factoring in the changes in the two rates, yes, the cost of bank borrowings from the RBI can be expected to decline. The cost of certificates of deposit (CD), which are of maturity of one year or less, has also fallen. However, a cut in the MSF rate only impacts short-term interest rates. Long-term rates are influenced by the repo rate. We should expect long-term rates to rise following the RBI statement — and this is already reflected in a rise of about 30 basis points in 10-year government securities. It is not just yields on long-term government securities that will rise. When the RBI raises the repo rate, it is a signal that rates across the spectrum will go up, including rates on term deposits. The overall cost of a bank’s deposits will be determined by the composition of its deposits — how much of these are short-term and how much long-term. Once long-term yields rise, deposits will veer towards the long end. It is more than likely than the total cost of deposits will increase and that this increase will overwhelm the decrease in the cost of borrowing from the RBI. The overall cost of funds for banks may, therefore, be expected to go up. Several bankers have been quoted as saying that they see the overall cost of funds rising for their own banks. Indeed, an anti-inflationary stance, in order to be effective, must necessarily mean a rise in banks’ aggregate funding costs and hence in lending rates. There is

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CURRENT AFFAIRS a contradiction in claiming that the recent moves are intended to fight inflation but will end up lowering banks’ cost of funds. For banks, short-term costs of borrowing had risen sharply following the RBI’s tightening of liquidity in July. It was only a matter of time before long-term rates began to catch up. If fighting inflation was the overriding priority, the RBI might have simply persisted with the status quo . What considerations, then, underlie the measures in the latest policy statement? One is maintaining the present tempo of growth. The sharp rise in short-term rates was having a big impact on firms’ working capital costs. There was the danger that this could cause growth to fall even below the modest 5 per cent that is expected in 2013-14. Moreover, the MSF rate was in danger of becoming the de factopolicy rate. This could have caused long-term rates to rise to stratospheric levels. It was important, therefore, to lower the MSF rate and bring it closer to the repo rate. Inflation and growth: The hike in the repo rate has been positioned as an anti-inflationary stance. Of course, it is so. What is overlooked, however, is that the measures announced last July, put together, were even more anti-inflationary in their potential impact. What is attempted now is a better balance between inflation and growth. The more important consideration in hiking the repo rate appears to be to push up yields on long-term government securities. This will help maintain a desirable differential with respect to U.S. interest rates ahead of the tapering of QE (quantitative easing) due in about three months from now. Evidently, the RBI takes a serious view of the impact the impending taper could have on the rupee and the Indian economy. The RBI’s caution is well-merited in light of the debate on the taper in the U.S. itself. It is becoming evident that the calibrated reversal of QE, which the Fed would like, may not be easy to accomplish. Financial markets are forward-looking in nature. Once they know that taper has begun, they will immediately price in the final outcome. This means that the gradual increase in interest rates, which the Fed would like to engineer, may not happen. Instead, yields will rise sharply right away to reflect the end of the taper. It appears that the Fed is trapped in a Chakravyuha of its own making. A sharp rise in interest rates in the U.S. is bad news for emerging markets, including India, which the rating agency, Moody’s, sees as among the most vulnerable. It spells a sudden and large exodus of funds and a sharp depreciation in the currency. This is the contingency for which the RBI would like to keep the Indian economy in readiness. It would like to nudge the rupee to a level that it feels comfortable with in preparation for the buffeting that may lie ahead. What would that level be? Well, the Economic Affairs secretary has said that the right level for the rupee today is Rs 59-60. The rupee today is close to Rs 63. The RBI may want to move it up to Rs 60 before the taper begins. It is banking on two initiatives to achieve this outcome. One is the swap facility it has provided to banks to bring in foreign currency NRI deposits with a minimum tenure of three years. The RBI is offering the swap at a cost of 3.5 per cent, which is well below the hedging cost in the market. The other is the swap facility for banks’ foreign currency borrowings up to 100 per cent of their tier I capital at a concessional rate of one per cent below the market rate. The two schemes together are estimated to bring in about $15 bn -20 bn in the next six months; $1.4 bn has already come in. This inflow of

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CURRENT AFFAIRS foreign exchange, if accompanied by signs that the economy is moving towards the current account deficit target of $790 bn, has the potential to cause the rupee to move closer to Rs 60. The RBI’s monetary policy statement is not only or even primarily about inflation. It has more to do with currency stability, and it also has to do with growth. It does not address another important objective, financial stability, but Dr. Rajan has promised to do so in the weeks ahead. Many will find the RBI’s stance altogether reassuring. It reinforces the RBI’s commitment to multiple objectives for monetary policy, as distinct from the single objective of price stability. It is a welcome assertion of the RBI’s distinctive perception of the current economic situation. It has been said of many who joined the RBI from the ministry that the RBI has a way of quickly converting them to its own view. If Dr. Rajan has indeed been subject to a quick conversion, it bodes well for the autonomy for which the RBI has come to be respected.

Spying on a strategic partner -The Hindu “It is not actually snooping,” was External Affairs Minister Salman Khurshid’s response in July when the Guardian , based on Edward Snowden’s leak of U.S. National Security Agency documents, reported how the Indian Embassy in Washington D.C. had been spied on by the United States. Then, the Indian government mouthed the U.S. position that monitoring “patterns of communication” through the Internet did not amount to espionage. In the past few days, The Hindu has revealed how the NSA systematically tapped conversations between Indian government officials and elected representatives, whether it be through phone calls, e- mail, texts, chat or Skype videos. The Snowden files also reveal Indian embassies in Washington and New York were bugged, facilitating the NSA’s easy access to confidential and classified information on India’s military secrets, negotiating positions, and overseas commercial ventures. As many as four different electronic devices were used to eavesdrop on our diplomatic outposts in the U.S., some of which could copy entire hard drives from computers. Our revelations cut through the express assurance offered by U.S. Secretary of State John Kerry that raw data — such as individual e-mails or telephone conversations — is not monitored. During the long journey from New Delhi to Washington, presumably his last as the chief executive of this government, Prime Minister Manmohan Singh would have had ample opportunity to mull over India’s ties with the U.S. There is no denying the fact that the “natural alliance” has run into choppy waters. The main reason for this is that the U.S. believes it has the right to collect economic and strategic rent from India in return for the lifting it did on the nuclear deal between 2005 and 2008. In the face of relentless American demands, the Indian government has yielded ground across a wide range of issues, from civil nuclear energy, the Montreal Protocol, and greater intellectual property protection, to defence purchases, NATO’s intervention in Libya, and sanctions on Iran. In return, Washington has only intensified its effort to spy on India, suggesting this relationship is a one-way street. In his meeting with Barack Obama, and then in his speech at the U.N., the Prime Minister will have an opportunity to air publicly, for the first time, India’s protest against the NSA’s outrageous surveillance programmes. Brazilian President Dilma Rousseff has led the way, calling U.S. actions a “breach of international law.” If there was ever a talking line on NSA

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CURRENT AFFAIRS snooping that the government could parrot, it is Brazil’s: that the U.S. cannot carry on with its illegal activities and pretend everything is normal by simply endorsing India as its strategic partner. Freeing the other judiciary -The Indian Express

The parliamentary debates on the Constitution (120th Amendment) Bill, 2013 saw an all-out attack on the opaque and unaccountable collegium system of the Supreme Court where judges appoint judges. For a Parliament that has done almost nothing towards judicial reform in the last decade, the decision to replace the collegium with a Judicial Appointments Commission (JAC) is a welcome start. But why stop with the SC and the high courts? There is the "other judiciary", consisting of a fleet of tribunals, which is at the other end of the spectrum of judicial independence. While the SC was busy digging itself into a moat of judicial independence, the bureaucrats in the Central government were chopping off portions of the high court's powers to create tribunals that were then assimilated into the cosy arms of the executive. The backbone of commercial litigation, such as tax, company law and intellectual property cases, debt recovery and environmental cases, have been taken over or proposed to be taken over by tribunals from high courts.

The origins of the "other judiciary" can be traced to the 42nd Amendment to the Constitution, enacted in 1976 during the Emergency. Those amendments were widely seen to be the reaction of an executive furious with the independence of the SC and the high courts, both of whom had repeatedly tripped the executive on several of its policies. The new Articles 323A and 323B, inserted via these amendments, empowered both Parliament and state legislatures to create tribunals that could be firmly controlled by the executive. The audacity of the exercise was obvious from a mere reading of the provisions that were designed to be the very antithesis of judicial independence. For starters, the provisions were silent on the most important feature to determine judicial independence: the appointment mechanism.

Given that these constitutional amendments specifically excluded the jurisdiction of the high courts over the new tribunals, a person aggrieved with these tribunals was left only with an option to approach the SC through a Special Leave Petition under Article 136 — an infeasible and undesirable option. The move to exclude judicial review was particularly troubling because, although tribunals historically did exist in India, especially for administrative issues, they were always subject to the review of an independent judiciary. The tribunals created under Articles 323A and 323B slipped into their role rather comfortably, usually identifying themselves as arms of the government of India on their "letterheads". This was no surprise, given that it was the Central government that had the power to appoint retired judges and bureaucrats to the tribunals, pay their salaries, sanction their leave and implement pay commission recommendations for each tribunal. The "mai- baap" in this case was certainly the Central government. Not only did this process affect the independence of the tribunals, but also that of the judges of the high courts and SC, who would now angle for post-retirement appointments in the tribunals.

Thankfully, the SC, through three judgments, started dragging back the tribunals within the fold of the judiciary. The first blow against tribunalisation was in Sampath Kumar (1987),

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CURRENT AFFAIRS when the SC-ordered Central Administrative Tribunal appointments to be made in consultation with the judiciary. The second blow was struck with the decision of the Chandra Kumar case (1997), whereby the SC held that the writ of the high courts could not be excluded, thereby bringing all tribunals under the ambit of their respective high courts. The third blow was in the case of R. Gandhi (2010), whereby the SC once again reiterated the need for judicial consultation while making appointments and also forcing bureaucrats out of some positions in tribunals.

The SC's judgment was implemented only with respect to the tribunal that was the subject of the litigation, while ignoring similar problems in all other tribunals. Other important directions of the SC pertaining to the independence of tribunals across the board have simply been ignored by the Central government. This was not surprising, given that it is the secretaries to the government of India who get the cosiest positions on these tribunals. As a result, it was but natural that a whole series of tribunals, including the Intellectual Property Appellate Board (IPAB), the National Green Tribunal (NGT), the National Tax Tribunal (NTT) and the Armed Forces Tribunal (AFT), amongst others, continue to face multiple litigations in high courts across the country. The underlying theme in all these cases centres on the excessive control of tribunals by the executive. Indeed, last month, the Punjab and Haryana High Court has issued a notice on a contempt petition to both the defence secretary and the law secretary (justice) for not implementing SC-directed measures to ensure the judicial independence of tribunals.

If the opposition and the government are really worried about accountability and maintaining the separation of powers in the Constitution, they should agree to tribunals having the same degree of independence from the executive as that enjoyed by the SC and the high courts, especially for those tribunals that took over the functions of high courts. Law Minister Kapil Sibal should understand that if it is good for the goose, it is good for the gander. Although the ultimate aim should be to delete Articles 323A and 323B from the Constitution and reintegrate tribunals into the judicial system, a good first step would have been to ensure that appointments to tribunals were reformed by shifting the entire process from the mostly "in- house" mechanism of the Central government to the proposed mechanism under the Constitution (120th Amendment) Bill.

Company and community -The Indian Express

Chhattisgarh's new CSR policy only deepens the disconnect between the two. The Chhattisgarh government, in its quest for a different paradigm for financing social development, has gone beyond the provisions of the new Companies Act. While the act mandates that a defined percentage of profits should be devoted to socially useful activities, it leaves individual companies free to choose which activities, only broadly indicating what is considered socially useful. Chhattisgarh's Corporate Social Responsibility Policy 2013 makes it compulsory for companies to pay CSR contributions into the Chief Minister's Community Development Fund, whose purpose is the holistic development of districts affected by mega industrial projects. The Chhattisgarh State Industrial Development Corporation, which will operate the fund, will pass on the amounts to the concerned district.

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CURRENT AFFAIRS Non-compliance is punishable by the withholding of grants or facilities by the state government, albeit after a hearing. Admittedly, companies have not contributed to the welfare of local communities as much as they can and should. Or it has been done in such an ad hoc manner that there is a disconnect between the needs of the community and the local industry's plans for it. The Central enactment and state policies have brought the need for CSR into the corporate consciousness. However, the Chhattisgarh policy is misconceived for a variety of reasons. Making companies channel their CSR resources into a common pool under state control runs counter to the spirit of CSR, which is to encourage companies to be responsible for the welfare of communities because it is in the interests of both company and community.

Ultimately, the business of business is business, not social development. It will contribute to the latter only when it becomes obvious that the goodwill generated by the CSR contributions adds to the bottom line in the long run, that is, out of enlightened self-interest. A company is interested in doing good, even if out of compulsion, if it can also be seen to be doing good. This means the community must be aware of the identity of the donor company. Moreover, a company would always prefer direct engagement with the community because it provides greater psychological satisfaction. The pooling of CSR resources into a common kitty creates a disconnect between the company and the community, and transfers the credit from the company to the government and politicians who dispense the largesse as part of their own agenda.

The new policy also raises the questions of whether state disposal of wealth is more efficient than private agency, whether the state should directly control the utilisation of private charitable resources (although mandated CSR is not exactly a charitable contribution). The experience of state control of philanthropic funds would suggest that both answers are in the negative. The National Culture Fund (1996) and the Bharat Shiksha Kosh (2003) were set up to mobilise funds from private sources, but both failed to meet their objectives. That they could not attract contributions was partly to do with state control of the funds donated. Even those who did not mind the funds as a mechanism to mobilise resources objected to routing these through government, and withdrew. Though companies have no such option in the present case, the government will lose an opportunity for innovative development with private cooperation.

The idea of creating a large pool of charitable resources to supplement government budgetary provision is not bad in itself. Individual corporate initiatives, while useful in themselves, are often unable to effect sustained change on a large scale because they are not linked to larger national goals and government programmes. The Chhattisgarh fund can perhaps help provide this scale and the linkages, provided the private donors are allowed a say in the operation of the fund. It might be best for the state to leave CSR funds in private hands, and to indirectly control the flow of funds into the desired fields. One suggestion is to encourage the establishment of community funds out of CSR contributions, owned and run by the people in partnership with the donor companies, in the locations where they are needed. The government could participate as partner instead of ringmaster.

Pay and purpose -The Indian Express

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CURRENT AFFAIRS Government employees should be better paid. But government must also be restructured and reformed. Like certain bamboos, pay commissions bloom after long but naturally ordained spans of time. But announcing the Seventh Pay Commission for central government employees smack at the beginning of the run-up to a general election is liable to invite speculation. To avoid the charge that it is trying to please several million voters who are or were in safari suits or other government vardi, the government could have started the process months earlier. However, the government can still approach this central pay hike with some creativity. Government employees should be better paid, but what are they being paid for?

Government initiatives routinely underperform because they are locked within the steel frame of pay structures. Staffers are not offered performance-linked incentives. Poor performance has no impact on pensions and benefits, the prized portion of the lifetime package. Certainty of advancement needs to be tempered by transparent and meaningful appraisal systems. Besides, there are far too many foot soldiers and insufficient investment in generalship, though a modern administration needs exactly the opposite — fewer attendants and more executives. At the lower levels, government salaries may be several times the compensation offered for corresponding posts in the private sector. At higher levels, the differential may be reversed. This is an anomaly that needs to be rationalised if the government is to attract professional talent at every level, by lateral induction, and if government jobs are not to be seen as lifelong sinecures where the main point is to secure a good pension.

Though every pay commission brings on a bout of heartburn among private sector employees, they are necessary. When existence has been reduced to scheming relentlessly to stay ahead of inflation, government employees cannot be expected to work without the prospect of periodic revisions in pay scales. In fact, the government could consider instituting pay commissions more frequently and implementing their recommendations more rapidly. This would reduce the burden of arrears, which may be larger than the hikes, with implications for the deficit. We should not complain about government spending on human resource. But as taxpayers, we should insist that the government secures meaningful returns on investment.

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