Daily News Analysis (Hindu, Economic Times, Times of India : 17-01-2014)



American schools under scrutiny for violation of tax and visa rules

  • As the American Embassy School in New Delhi has come under the scanner for violation of India's tax and visa laws, the US has distanced itself from the issue by saying that it was not run by the embassy. Many American teachers in this school are spouses of US diplomats, the teachers work without permits in violation of Indian laws.
  • Talking on a defensive tone the US has said that it is committed to resolving the issue through diplomatic channels and address the concerns that have been raised.
  • The American Embassy School has come under scrutiny as a retaliatory step taken by India to lessen the privileges of US diplomats in India over the Dec 12 Devyani Khobragade issue, India's deputy consul general in New York. Khobragade was indicted by a New York court on charges of visa fraud and underpaying her nanny but India had declined to waive her diplomatic immunity. As a part of the settlement to calm the situation she returned home.

Supreme Court says no to review reservation policy

  • The Supreme Court left it to the central government to decide whether there should be reservations for lower caste candidates to faculty positions in the All India Institute of Medical Sciences (AIIMS) and other institutes, which offer specialty and super-specialty courses. But the court has said it would retain the power to examine the issue, if and when the government takes a decision on it.
  • A 5 judge bench disposed of a review petition filed by the Centre challenging a July 18 decision of the court.
  • Earlier(on july 18th), a five-judge constitutional bench had endorsed the views expressed in 1992 by a nine-judge bench in the Indra Sawhney versus Union of India case, popularly known as the Mandal case, and said there had to be certain scenarios where merit alone would count for selecting candidates. The verdict emphasised that “the very concept of reservation implies mediocrity”. The Centre had questioned the verdict by arguing that it went against the Mandal judgment, which did not prohibit reservation to posts in any particular service.

India tells Pakistan, not NDA but NDMA

  • India says no to the term Non-Discriminatory Access (NDA), suggested by Pakistan in place of the Most Favoured Nation (MFN) status. Instead, it has come up with the term “Non-Discriminatory Market Access” (NDMA).
  • India wants three outstanding issues to be addressed by Pakistan. The issues, are: Permission for use of containers, operationalisation of 24X7-trade across the Wagah border and dismantling of the two negative lists still in use by Pakistan against India. There are no issues pending on the Indian side as India has already operationalised MFN status for Pakistan.
  • Pakistan has imposed a ban on import of 1,209 items. Also, the country does not permit import from India of items under the Sensitive List of the South Asian Free Trade Area (SAFTA). Still Indian exports land up in Pakistan indirectly through Dubai and Singapore.

India and Pakistan to allow 3 banks in each other's country to facilitate trade

  • India and Pakistan are working to allow three banks to set up branches in each other's country to help improve trade relations. Earlier, both sides had agreed to issue a full banking licence to two banks from each country. The Indian banks were State Bank of India and Bank of India. National Bank of Pakistan and United Bank Ltd are the Pakistan banks selected.
  • The RBI has since relaxed its restrictions and says that it is no longer two banks. Any bank that fulfils the requirement can apply. For the time being, it was working on three banks each.
  • The biggest hurdle in having normal trade ties is the restrictive visa regime (a non-tariff barrier) followed by both countries. People are not able to travel freely to another country and see firsthand and analyse the economic opportunities, thus affecting business.
  • The two countries could also think of allowing communication link, like allowing Pakistan SIM cards to be used here under roaming facility provided the security concerns of India are addressed by the Pakistan authorities.
  • All above measures can not only improve trade but also bring the hearts of millions of people across the borders together.

India assures South Korea on POSCO

  • India and South Korea signed nine pacts improving their bilateral ties that have seen intense growth over the past four years. During a meeting between Prime Minister Manmohan Singh and visiting South Korean President Park Geun-hye, India assured her that work on the multi-billion-dollar Posco steel plant in Odisha would start very soon and also mining concessions would be extended to it .
  • Also the possibility of setting up a Korean Industrial Park in India were discussed and negotiations concluded for revision of the existing Double Taxation Avoidance Convention.
  • Cooperation in Science and Technology was discussed and India's decision to extend a ‘tourist visa on arrival facility’ to South Korean nationals was conveyed. The volatile situation in the Korean peninsula which could easily snowball in to a nuclear war was also discussed.


US Congress says yes to $1.1 trillion spending bill also puts conditions on Pakistan aid

  • The US Senate passed the USD 1.1 trillion spending bill that would remove the threat of another government shutdown at least till October and puts conditions on Pakistan for continuation of aid.
  • Earlier, the bill was passed by the House of Representatives, the bill now goes to the President to sign it into law, thus preventing another shutdown.
  • As per the practice the Congress has to be certified by officials and the government about the Pakistan role for the aid to be released. The Secretary of State also requires to certify the Congress that Pakistan is not supporting terrorist activities against US or coalition forces in Afghanistan, and Pakistan's military and intelligence agencies are not intervening extra- judicially into political and judicial processes.
  • Also, the Congress has also stopped USD 33 million assistance until Pakistan releases Dr Shakil Afridi, who helped the US in locating Osama bin Laden, from prison.

Egyptian voters support the new constitution of the Army

  • Egyptian voters have supported a new constitution that makes way for the army chief to run for president. The new constitution promises greater protection for freedom of speech and women’s rights. The new constitution would ban political parties based on religion and protect the status of minority Christians. It also gives the military special powers to name its own candidate as Defence Minister for the next eight years and bring civilians before military tribunals.
  • The army had come to power after a coup bringing down the Mohd Morsi government. Mohd Morsi is the head of Muslim Brotherhood (an Islamist party). The Muslim Brotherhood had come to power after the revolution when the Hosni Mubarak government was brought down.
  • Initial counts reported by state media gave 90 percent support for the new constitution, the referendum was boycotted by the Muslim brotherhood party. The results pave way for the army chief Abdel Fattah al-Sisi to run for the presidential elections slated to be held later this year.

Russia to strengthen its ties with Iran and Syria

  • Russia has praised the Iranian leadership for its positive role in the talks with US and other western powers on Iran’s nuclear programme. The Foreign Ministers of Russia, Iran and Syria held a trilateral meeting to come to a common position ahead of Syrian peace talks next week.
  • Russia wants Iran to be a part of the talks in Geneva-2 talks on Syria. But Washington insists that Tehran must first commit to results of the first Geneva conference on Syria last year.
  • Russia and Iran are negotiating a possible oil-for-goods exchange deal that would make Moscow a major importer of Iranian oil, this move comes inspite of concerns raised by the United States that the deal opposes western sanctions imposed against Tehran.


GoM gives nod for raw sugar export

  • The group of ministers (GoM), headed by Agriculture Minister Sharad Pawar has approved incentives to sugar industry for exports of up to 40 lakh tonnes of raw sugar for two years.
  • The PM had set up the panel to solve the financial problems being faced by the sugar industry. As per its recommendations, the Centre has already announced interest subsidy on bank loans to be availed by sugar mills for paying cane farmers arrears.
  • The government said that the policy of incentives is in line with WTO norms and would be reviewed constantly. The Food Ministry has proposed an incentive of Rs 2,390 per tonne on raw sugar with the burden to be shared by both the Centre and state governments.
  • Export of raw sugar currently leads to a loss of Rs 4,500 per tonne as global prices are at Rs 22,500 per tonne as against the production cost of Rs 26,500 per tonne.
  • Traders say that an incentive below Rs 3,500 per tonne is not viable for sugar mills to undertake raw sugar exports at current global prices.
  • Sugar mills are facing loss as sugar prices have come down below the cost of production in view of surplus availability. An incentive of Rs 2,390 per tonne as suggested by the Food Ministry would cost the government around Rs 1,000 crore for two years.

Government comes up with new land policy for major ports

  • The Union government has come with new policy guidelines for major ports, aimed at helping them use their land resources more effectively for commercial advantage.
  • This helps the ports to carry out leasing and licensing of port land in a transparent manner. Discretionary powers have been reduced and tender-cum-auction has been prescribed as the most preferred method of allotment.
  • Land utilization at major ports has not been optimum and often yielded lesser returns. Under this policy the land can be allotted only through licensing in custom bond areas by inviting competitive bidding, while land outside custom bond areas can be leased through tender-cum-action.

IOC stake sale to ONGC, OIL gets EGoM nod

  • The Empowered Group of Ministers (EGoM), headed by Finance Minister P. Chidambaram approved the sale of 10% government stake in Indian Oil Corporation (IOC) to Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), which is likely to garner Rs.4,800-5,000 crore to the exchequer. The government said that it had taken a decision for a block deal, and the modalities for the same would be formulated shortly.
  • The EGoM to exercise the block deal option after the Petroleum Ministry opposed selling of IOC shares in the stock market like other disinvestments.

Mind Map

Click here for Mind Map of DNA - 17 Jan 2014.